“After getting married I started to really focus on my future and when I looked at my nest egg, I thought it should have been a lot bigger,” Steve Wood says. So he decided to investigate. Mr. Wood ended up selling his mutual funds. “I learned how mutual fund fees were eating away at my return and decided to cut out the middleman by investing on my own.”
What resonated with him instead was investing in dividend stocks. “I read a lot of books, magazines and websites about dividend investing, and learned a lot. “My investment strategy is simple,” Mr. Wood says. “I buy solid, blue-chip Canadian companies that pay growing dividends.” He prefers to buy when the stock price is lower than normal and the yield is high. Bear markets are thus often good times to buy shares in these types of companies.
Source: Globe and Mail
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Chuck Carlson, CEO and portfolio manager for Horizon Investment Services, says the firm's market outlook is based on the Dow Theory, which says the primary trend is bearish. "We're getting a retest of the July 2 lows of 9686.48," Carlson says. "That's the point we're focusing on closely. If the Dow breaks below that level, there will be more selling ahead."
Right now, Carlson says high-quality dividend-paying stocks in the Dow as good buying opportunities. Twenty-nine of the 30 companies in the Dow pay dividends, and two-thirds of those are yielding 2.5 percent or more, he notes. "Four of these stocks have good value, decent operating momentum and dividend growth," Carlson says."And should experience solid gains over the next 24 months."
Source: CNBC
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Not all stocks are going down. Dividend stocks are stealthily rising – some of them, anyway. Investors apparently want to own companies that send them cheques every three months or so. Stocks that might pay dividends are also doing relatively well. You wonder why more companies don’t.
Take Mainstreet Equity, (MEQ-T) a real estate concern out of Calgary that focuses on smaller rental properties. Buying back more stock isn’t really an option. CEO Bob Dhillon owns about 40 per cent of it and the float is already pretty thin. Mr. Dhillon doesn’t rule out a dividend, but he seems reluctant to go in that direction now (technically, it’s the board’s decision, but he’s chairman and major shareholder so he has veto power). He wants to acquire more properties when prices are low and financing is cheap. He says he can borrow five-year money for less than 3 per cent and prices are softening.
Source: Globe and Mail
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With uncertainty surrounding the durability of the economic recovery and Europe's lingering sovereign debt problems, volatility is back in full force. In stormy seas, it's important to have dependable income streams from dividend-paying stocks to steady your portfolio. Although dividends generally mean reliable returns, they can also signal good health for a company -- especially after the worst year on record for dividends since 1955. Mature companies that still have more cash than they need are some of the strongest businesses out there.
What's more, companies took steps during the depths of the recession to cut payroll and other costs and widen their profit margins, equipping them with a lot of cash.In fact, nonfinancial corporations now hold a record $1.8 trillion in cash on their balance sheets as of the end of March, according to the Federal Reserve. That means corporations are poised to either invest that cash, or return it to the shareholders in the form of a dividend.
Source: Motley Fool
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Market analysts are recommending that investors should buy stocks that offer healthy dividend payments since they are seen as one of the safest investments as sentiment turns bearish. “Investors should look into buying dividend stocks, especially in the period between August and October,” said Choi Won-kon, an analyst at Hana Daetoo Securities. He said that investors could see high dividend yields even if they hold the stock for only a short period of time.
Analysts say high-yield dividend stocks are also attractive when both interest rates and the price-to-earnings ratio are low. Those who prefer to receive cash now rather than uncertain yields in the future because of possible falls in share prices should definitely consider buying dividend stocks, analysts said.
Source: JoongAngDaily
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It’s becoming increasingly difficult to invest in the current environment. Over the last few weeks some of the legends of the investment business have said this market is too difficult and have subsequently shut down their businesses. It’s no wonder that we’ve seen an increasing demand for bonds and bond related instruments. But that doesn’t mean equities are dead. In fact, Morgan Stanley believes this is a perfect environment for high quality dividend paying stocks. MS believes there is an opportunity here.
An outlook for weak long-term earnings growth that leaves a reduced possibility of P/E expansion, meaning that dividends have to be a dominant part of total returns. Historically a dividend yield of 2% would equate to a P/E multiple of nearly 17x (or alternatively a dividend yield near 3% supports the current market P/E of 14.5x). We do not think a 3% dividend yield is unrealistic. It would require the payout ratio to rise into the low 40% range – a move that would put it back close to the long-term average.
Source: Business Insider
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The dog days of summer have increased the dividend yields on many quality bank and thrift names, underscoring how cheap these stocks are right now and presenting fantastic long-term growth and income plays for investors.
With so many healthy bank and thrift holding company stocks continue to pull back over the summer, this is a good time to once again highlight quality growth and income names using conservative criteria. Starting with regulatory data and market data from Friday's close provided by SNL Financial, we pared down the list of 1,001 publicly traded bank and thrift holding companies.
Source: TheStreet.com
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Over the course of the last few years, the Dow Jones has lacked consistency, presenting a volatile platform of figures that are making investors ever more hesitant. What market analysts are now seeing is the growth and solidarity contained in dividend stocks, exposing growth stocks as being somewhat precarious. Over long periods of time, dividend stocks outperform non-dividend stocks, and dividend-increasing stocks outperform dividend stocks in general. This finding is not being ignored as dividend investors see a much better long-term return when investing in dividend stocks, especially those that increase their dividends regularly.
One of the main reasons why dividend increasing stocks are proving to be so much more lucrative is that they embody a select group of companies which have enough in earnings to reinvest back into the business itself, but have plenty left over to distribute to shareholders. Rising profits also means rising dividends for shareholders, which ultimately equates to rising stock prices in the long term.
Source: FavStocks
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Whether you're a beginning investor or a near-retiree, the importance of purchasing stocks that pay dividends cannot be overstated. Not only do companies that have quarterly or annual payouts provide you with a steady stream of income, they also have the potential for capital appreciation. Simply put, dividend stocks can give your portfolio what almost no other investment can -- both income and growth.
Wal-Mart Stores' payout ratio seems to be above the peer average, which means if you're a prudent investor, you may want to look elsewhere for the most secure payment possible. Of course, this entire group of companies looks very attractive from a sustainability perspective, so I don't foresee any problems for any of the stocks. The bottom line, however, is to make sure that with anything -- whether it be a dividend, a share repurchase, or an ordinary earnings report -- you do your own due diligence. Looking at all of the numbers in the best context possible is just the best place to start.
Source: MSNBC
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Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks. The highest dividend yields can be very tantalizing.
As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock. Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business, and driven down its stock price. However, certain types of companies, such as REITs have to pay out most of their income as dividends, so their yields will be higher than "normal." Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.
Source: Motley Fool
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While human nature compels many investors to seek out wave after wave of glamorous growth stocks or newsworthy story stocks, the reality is that the most impressive long-term returns are often generated by relatively boring, yet profitable, companies. Among that cohort, many of the more well-established companies consistently pay out sizable dividends to their shareholders. Indeed, while stable companies that consistently pay dividends have been traditionally labeled "widow-and-orphan stocks," the fact of the matter is that they are not only suitable, but also desirable, for the equity portfolios of many different types of investors.
While any given dividend-paying stock could turn out to underperform the market average, especially if its dividends end up being reduced or removed entirely, an entire portfolio of dividend-paying stocks is likely to exhibit less volatility than the overall market. Drilling down beneath the surface, stocks that offer a solid dividend yield combined with positive earnings outlook, as the case appears to be the with Lorillard, are even more likely to end up producing healthy returns than the average dividend-paying stock.
Source: Investopedia
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As the stock market has flattened out in recent months, investors are increasingly recognizing the value of dividend-paying stocks in building wealth. Yet while many investors gravitate toward the highest-yielding stocks they can get right now, thinking past immediate payouts from your dividend stocks may well pay even greater rewards in the long run.
Look for growth: The general point, though, holds true: Dividend growth can be even more attractive than a high current yield, especially if you have a long time horizon for your investing. So even though those high yields are the most obvious sign of a powerful dividend stock, looking beyond them to signs of future growth could pay even larger rewards.
Source: Motley Fool
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It is comforting to receive regular dividends on your investments. You can get a monthly payout on some invested assets. There are some steady high yielding names you can find that you may not have heard of. I have read at least two books on dividend investing that I can recall. An earlier book was "Dividends Don't Lie" by Geraldine Weiss and Janet Lowe. It discusses why dividends, not earnings, are a better gauge of when to buy a company.
Then there is a more recent and relevant book by Bryon Perry "The 25% Cash Machine, Double Digit Income Investing." The 10-year U.S. Treasury bond is not paying out a very good yield lately. These are some ways to make a steady income from your portfolio and the have the added benefit of capital appreciation.
Source: AssociatedContent
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One of the best long-term retirement strategies an investor can use investing in dividend-paying stocks within their Roth IRAs. Roth IRA Distributions, including capital gains, interest, and DIVIDENDS are tax-free if you are at least age 59 1/2 years old, and the account has been established for longer than five tax years. Dividends paid into a Roth account are never taxed, even when withdrawn.
This special treatment differs from dividends accumulated in a Traditional IRA, which would be taxed during withdrawals. Do remember, though, that withdrawals taken from an IRA account before age 59 1/2, including income from dividends, is subject to a 10 percent penalty tax in addition to ordinary income taxation. Always consult with a tax specialist before making any moves that may incur tax consequences.
Source: Dividend.com
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The easiest way to build wealth in the stock market is to invest regularly and watch your investments grow over long periods of time. Buying dividend stocks is the perfect way to make the most of the long-term power of compounding returns, especially if you take the important step of reinvesting those dividends.
Nowadays, a lot of the attention that dividend stocks are getting comes from two big factors. First, with bonds and other fixed-income investments producing almost no income, many income-hungry investors have no choice but to look to the stock market for dividend stocks that will pay them the regular income they need. Second, with the overall market having been flat to lower over the past several years, investors know they can't count on capital gains to provide them with big returns, so they're instead looking for companies that offer solid dividend payouts as a major component of their total returns.
Source: Motley Fool
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Yield-hungry investors have been scouring the landscape for attractive stocks and dividend-based mutual funds. Still, it's possible to find yields that are much better than current returns on certificates of deposit and even longer-term government debt. The key, of course, is how much risk you're willing to accept in return for an attractive yield. Using Standard & Poor's MarketScope Advisor, several "10 best" lists of high-yielding stocks can be created. S&P now tracks nearly 14,000 equities around the world.
Among these MarketScope stocks, nearly 2,400 currently pay a dividend that provides an annualized rate of return of at least 5 percent, based on the price of the stock as of the market close on Aug. 13. Just picking the highest dividend yields from this list is not a good strategy. You, your broker, or financial advisor also must evaluate the sustainability of that payout. For example, the highest dividend yield on the S&P list was nearly 1,940 percent! Hey, that's nearly as good as a 2007 real estate hedge fund that bet against the housing market. But S&P says the company is losing money and the cumulative market value of all its shares is only $340,000. Don't call us, we'll call you.
Source: US News and World Report
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Whether you're a beginning investor or a near-retiree, the importance of purchasing stocks that pay dividends cannot be overstated. Not only do companies that have quarterly or annual payouts provide you with a steady stream of income, they also have the potential for capital appreciation. Simply put, dividend stocks can give your portfolio what almost no other investment can -- both income and growth.
Free cash flow -- all the cash left over after subtracting out capital expenditures -- is used by firms to make acquisitions, develop new products, and of course, pay dividends! We can use a simple metric called the cash flow coverage ratio, which is cash per share divided by dividends per share. Normally, anything above 1.2 should make you feel comfortable; anything less, and you may have a problem on your hands. AT&T's coverage ratio is 1.65, which is more than enough cash on hand to keep pumping out that 6.29% yield. Barring any unforeseen circumstances, there really shouldn't be any major problems moving forward.
Source: Motley Fool
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If we’re talking sheer numbers of above-average yields and the highest likelihood for continued dividend increases, I continue to believe the best sectors are consumer staples and utilities. As a bonus, both groups are less economically sensitive, too. However, I have been finding good potential opportunities in nearly every corner of the market — telecom, energy, even technology. The key right now is paying a fair price. A lot of stocks that I would love to recommend just look a bit expensive at the moment. So I’m keeping them on my watchlist and waiting for pullbacks.
And when I am issuing new buy orders, I’m providing limit orders as insurance against overpaying and getting caught in a “bear trap,” a market rally that ultimately fades. What about really high yields — ones that exceed 7 percent, 9 percent or even reach double-digits? There are a couple relatively conservative companies I like that are touching those levels at the moment. But if I had to name one sector that had the largest selection of really big yields right now with some degree of dividend safety, I would point to telecom companies.
Source: Jutia Group
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The dividend payback period is the time it takes for an investor to recoup his or her investment in a stock through dividends alone. Say you bought a $50 stock that pays $2 in dividends annually. Assuming no dividend growth, it would take 25 years for you to get your $50 back through dividends alone (and you would still own the stock, of course).
If the dividend grows – as it should, if you’re investing in good companies – the payback period will be shorter. The payback period is determined by two factors: the current yield, and the projected growth rate of the dividend. The higher the yield, and the faster the dividend grows, the shorter the payback period.
Source: Globe and Mail
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Fixed-income investors may find it hard to justify holding corporate bonds when dividend yields of the same companies offer a higher rate of return for at least the next five years. Corporate bond yields have fallen to the lowest levels in more than a generation. According to monthly information collected by the Federal Reserve dating to 1919, AAA corporate bonds fell to 4.72% in July, the lowest since December 1965. The high was in September 1981, when the rate was 15.49%.
Keith Goddard, president of Capital Advisors Growth Fund(CIAOX), says his clients are looking for an alternative investment strategy as bonds that used to pay a 4% yield are down to 1.5%. He recommends investors with 40% of their portfolio in bonds move to 30% and put the difference in high-dividend-yielding stocks. If an investor is willing to own a bond for five years, he should weigh the pros and cons of a basket of high-quality stocks that may deliver an attractive dividend yield.
Source: TheStreet.Com
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Dividend-paying stocks should be a part of most retirees' portfolios. Over time, dividends account for an enormous part of the stock market's earnings. For example, the Standard and Poor's 500-stock index has gained 209 percent the past 20 years. Throw in reinvested dividends, and it's up 370 percent.
For retirees, dividends are especially useful. Most bonds will never increase their interest payments. But companies can increase dividends over time, which offers some inflation protection. Although it's entirely possible for companies to cut dividends - and many did during the past recession - they will often go to great lengths to avoid doing so. Cutting a dividend is a sign of weakness, and on Wall Street, they eat the weak.
Source: News-Press.com
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Quality matters in a market like this. That's a no-brainer. But how do you know if a stock is "quality"? Dividends are one indicator. That's because dividend income—which is essentially a portion of company profits paid out to shareholders—helps offset fluctuations in a stock's share price, often creating a cushion during volatile markets.
Stocks that pay dividends "tend to be very solid, stable types of investments and often end up being the class act of corporate America from an investor's standpoint," says Morningstar analyst Christopher Davis. "These companies ... tend to have some sort of competitive advantage that allows them to generate excess free cash flow that they can distribute to shareholders." Funds that focus on dividend-paying stocks vary in strategy. Some sit squarely in the value camp and contain bargain-priced stocks with above-average yields. Some search for dividends abroad. Others focus more on future dividend growth than on high current yields.
Source: U.S. News and World Report
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Should Apple(AAPL) break with tradition and start paying a dividend? Apple stopped paying dividends in 1995, preferring to focus on growth at a time of stiff competition from the likes of Microsoft(MSFT). Fast forward 15 years, and now Apple sits astride a vast pile of cash.
"In our conversations with shareholders, one common source of frustration -- which is now bordering on exasperation -- has been Apple's burgeoning cash balance," explained analyst firm Bernstein Research in an open letter to Steve Jobs and the Apple board. "We implore you to consider returning cash to your shareholders, along with a longer-term road map for how you plan to use your cash balance and why."
Source: TheStreet.com
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Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks. The highest dividend yields can be very tantalizing. As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock.
Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business, and driven down its stock price. However, certain types of companies, such as REITs have to pay out most of their income as dividends, so their yields will be higher than "normal." Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.
Source: Motley Fool
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Automatic Data Processing Inc. is one of the world’s largest independent computing services companies, provides a broad range of data processing services.
A weak economy and low employment levels have negatively impacted ADP, and will likely continue to do so in the near-term. However, as the industry leader ADP enjoys advantages of scale and a respected brand. Financially, the company has a strong balance sheet and steady cash flows from a recurring revenue stream. Recently moving up to a 4-Star rating, ADP is worthy of additional consideration when trading close to my buy price of $39.62.
Source: Dividends Value
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In an investing world that seems almost maliciously unpredictable, dividends are a true friend to investors. That’s why so many financial experts are telling people to focus on dividend stocks these days. Smart dividend investing requires some discipline, however. This is especially true in the area of yield, which is a term that describes the rate of return you get from the dividends paid by a stock. To calculate yield, divide the annualized dividend by the share price and multiply by 100.
Dividend yields move inversely to share prices, which means a high yield is a sign investors are worried about a stock and are selling their holdings. MTS had a yield of about 9 per cent before the dividend cut was announced. By comparison, the yield on the S&P/TSX 60 index of big blue-chip stocks is about 2.8 per cent.
Source: Globe and Mail
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Interest rates are falling for Treasury bonds, beloved for their safety and steady payout. The stock market is wobbling, and equity prices may fall further if the economy continues to weaken. Since most portfolios contain an element of both asset classes, what's an investor supposed to do now? It may seem like there's nowhere to turn. Interest rates on 10-year Treasurys, the kind retirees like to sock away in their portfolios, have fallen from 3.84% at the beginning of the year to 2.72% now. The S&P 500 is down 1.11% for the year, but off nearly 11% from its 52-week high.
Lawrence Carrel, author of Dividend Stocks for Dummies, says current market conditions raise the appeal of high-dividend stocks. "In a volatile environment, where the stock market can go down and bonds are paying extremely low interest, a good place to beat the rate of return on bonds is dividend stocks," Carrel says. "If you can get potential upside in your investment at a yield that is 60% to 100% better than the 10-year Treasury, why wouldn't you take it?"
Source: Daily Finance
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Dividend stocks have outperformed their non-dividend-paying peers for decades. There’s absolutely no denying the power of reinvesting your dividends and being paid quarterly or annually to hold the stock you own. Dividend stocks, simply put, are value-creating machines.
I have two suggestions that can help you feel more comfortable about the dividends you’re currently receiving. First, take a look at the company’s payout ratio; this metric tells you what percentage of a company’s net income is being paid out in cash. A high payout ratio (anything more than 60% deserves a red flag, in my book) means that a company may have issues continuing its dividend in the future and warrants additional attention. Second, look at the company’s history. Has it been paying dividends for quite some time? Has it consistently been increasing those dividends? If you can answer “yes” to both, chances are that your dividends are relatively safe.
Source: Motley Fool
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In the past we have looked at the importance of a company’s ability to sustain its dividend. However, as an investor in dividend growth stocks, it is not enough to simply sustain the dividend – I want to own companies that are capable of sustained dividend growth. Needless to say, this is a little more difficult to evaluate, but here are few important things to consider…
Needless, to say before buying you must consider the future prospects for each company and determine if the growth rates are sustainable in the future. As with yield, dividend growth carries its own risk. If the rate is too high, the company will have a hard time maintaining it going forward. If the rate is too low, it will not keep up with inflation and the shareholder will lose purchasing power.
Source: Dividends Value
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The U.S. unemployment rate held at 9.5% last month as companies added only 71,000 jobs, missing economists' forecast of 90,000. Friday's report was conclusive proof that the economy is softening. The S&P 500 Index is little changed this year and Treasury bonds have rallied. The following Dow stocks may be the safest bets in equities.
Dow stocks are expected by analysts to outperform mega-cap peers and hold massive cash hoards for acquisitions. If the economy continues to weaken, these companies can increase market share by purchasing smaller rivals and squeezing weaker competitors.
Source: TheStreet.com
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Are you confident and secure in your investing process? It appears many people are not, including the famed Canadian dividend investor Derek Foster who sold all his investments and friends/family who jump in and out of the market. I believe that most investors will lose money in the stock market over their lifetime.
It is not that the market is a bad place to invest your money, but left unchecked the psychology of the market will lead you to do just the opposite of what you should to be doing. We must follow a process we are 100% confident in. Doubt is the gateway to destructive behavior. For me, dividend growth investing is what I am confident and secure in. Selecting stocks with increasing dividends is critical for an income growth strategy. As always, due diligence should be performed before buying or selling any stock.
Source: Dividends Value
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High yield dividend stock investing seems to be all the rage right now, as investors look to insulate themselves from share price depreciation via a guaranteed quarterly payday. But the result has been a lot of misinformation about dividends, yield and income investing – and that has confused and frustrated many long term investors.
For instance, if a stock paid a $1 dividend for three straight quarters but cut it to a penny last week, does it really have an annual payout of $3.01? Or if a company pays a massive special dividend, can you really use those numbers to inflate the stock’s yield? If your stocks are only paying back pennies a share despite claims of being a “high yield dividend stock,” are you really playing it safe?
Source: InvestorPlace
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As a dividend growth investor, two of the best dividend lists for further research that I have focused on have been the S&P Dividend Aristocrats and the Dividend Achievers Indexes. The first list focuses on stocks which have increased dividends for 25 consecutive years in row, while the second list focuses on stocks which have consistently raised distributions for over one decade. The Dividend Aristocrats index has supposedly outperformed the stock market over the past five years. In my research I have uncovered many dividend stocks however which have raised dividends for more than 25 years in a row, yet they are not included in the Dividend Aristocrats Index. I discussed this in dividend conspiracies.
The limitations behind the dividend aristocrat’s index are that first a company has to be included in the S&P 500 before it qualifies. In addition to that, S&P requires minimum market capitalization of $3 billion and an average daily trading volume of $5 million. This means that even if a company has managed to raise annual dividends for 25 years in a row, it might not be included in the elite dividend index if it has a low market capitalization or that it is relatively illiquid. As a dividend investor, the last two criteria are irrelevant to me.
Source: Dividend Growth Investor
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Investors who put their money in high dividend stocks usually look for all the wrong things. Stocks with a high yield are not always as good as they look. There are many important factors to consider before investing. Dividend stocks are providing steady returns in an unpredictable stock market. Investors buy these stocks to provide a hedge against inflation or a downturn in the stock market. Dividends can provide a steady source of income or can be reinvested to purchase more shares. Savvy investors look to buy stocks that have a safe dividend and a stock price that is expected to go higher.
While most investors will be trapped into focusing on the yield alone, Dividend Stocks Online ranks stocks based on the dividend payout ratio, dividend growth, yield, net income growth rate and one year return. The yield is important, but it's even more important to find stocks that will go higher and provide steady dividend income year after year.
Source: PRWeb
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Dividend income, one of the few certainties in any market cycle, deserves a closer look and a more strategic approach by financial advisers as Congress decides how to deal with the expiring Bush administration tax cuts. Corporate cost cutting over the past few years, combined with reduced spending, has left a lot of companies with huge piles of cash on the books. This usually bodes well for dividend investors.
A major part of the appeal of dividend-investing strategy, particularly in times of extreme market uncertainty and volatility, is that it helps investors take advantage of market declines. “In March 2009 when the stock market bottomed, a lot of people sold low, but reinvested dividends helped investors buy low,” said Donald Schreiber, chief executive of Wealth Builders Inc., which has nearly $500 million under management. Left to their own devices, investors will not buy when risk is high,” he added. “But dividend payments create automatic dollar cost averaging, and forces investors to buy low.”
Source: Investment News
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Bill Turnbull is the living definition of the phrase “long-term investor.” The 89-year-old former bank manager has been saving money for more than 40 years — starting in the late 1960s, when his kids were young and his mortgage was new. Turnbull's investment style has evolved over the years, but since the '90s he has focused almost exclusively on blue-chip stocks that pay juicy dividends.
Given the extreme volatility in the markets over the past few years, many like the idea of investing in solid, reputable companies that make enough cash every year to pay a good chunk of it out directly to shareholders. Even better, historical data show that over long periods of time, stocks that pay high dividends — especially those which regularly increase their dividends — soundly beat the market. If you invest in such stocks along with the right mix of bonds, you'll get what many investment advisers say is the perfect retirement portfolio. Not only is it easy to set up and maintain, it's crash resistant, dependable, and once you're retired, it will provide a steady stream of income for years.
Source: Canadian Business
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If you are a responsible saver, the Federal Reserve isn't doing any you favors. The Fed unsurprisingly left a key short-term rate near 0% Tuesday, meaning that rates on money-market accounts, CDs and other savings products are likely to remain as anemic as they've been for the past two years.What's an income-hungry investor to do then? Stocks that pay healthy dividends may now be a better way to chase yield.
"You have to get creative. Bonds and CDs are not earning you much so dividend payers are a nice way to get you some income," said Andrew Fitzpatrick, director of investments with Hinsdale Associates, a money manager in Hinsdale, Ill. "But you have to be careful because there are still a lot more risks with stocks over bonds." What's more, companies that pay rich dividends have begun to outperform the broader market lately.
Source: CNN Money
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What's the next piece of a well-diversified portfolio? Cramer said its a high-yielding dividend stock. He said while dividend stocks might not be as sexy as a high flying tech stock, they work. Since 1926, about 40% of the return from the S&P 500 has come from dividends, he said, a fact that few investors realize. He said dividend stocks are not just about safety, they're also about capital appreciation through the compounding reinvestment of those dividends. Cramer said "accidental high yielders," stocks yielding over 4%, are great stocks to own, as are the stocks of companies that have recently raised their dividends, the ultimate sign of strength and confidence in their business.
Be wary of stocks with dividend that are too high however, warned Cramer. He said that sometimes a high dividend can be a red flag. Cramer said his rule of thumb is that a company must earn at least twice its dividend payout for him to consider that dividend safe. "Dividends protect your stocks," Cramer told viewers, and since there's a terrific way to make money as well, "what's not to like?"
Source: Investopedia
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Sysco Corporation, through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily for foodservice industry in the United States and Canada. Related Articles:
The weak economy has led to weak consumer discretionary spending. In 2009, 62% of SYY’s sales were to restaurants; thus they have felt the full brunt of the downturn. This has carried over to the company’s financials. With a 116% free cash flow payout, SYY is treading water hoping the economy will turn soon. Although SYY is trading close to my buy price of $30.59, I plan to wait on its free cash flow payout to improve before adding to my position.
Source: Dividends Value
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- More Stock Analysis
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It is no secret that stock investing is highly unpredictable in today’s market. That’s why investment strategies increasingly are turning to high-yield dividend stocks hoping to add some reliable returns. Dividend stocks providing a healthy yield per share can reward equity investors handsomely. As long as they know which dividend stocks to pick, that is!
To help add some security to your dividend investments, take a look at these dividend stocks with big yields and big annual paydays. Each of these dividend stocks offers a +4% yield and more than $3 per share annual returns.
Source: Investor Place
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Anyone buying individual stocks is doing so for one reason: We think we can beat the market. If we can't, then we should be sticking with long-term positions in mutual funds and ETFs exclusively. With that warning aside, I will be highlighting three different types of stocks (complete with examples) that you should look into if you want to beat the market. I am emphasizing these stocks in particular because I believe they offer great opportunities today.
Many investors lump dividend payers into one bucket. But there are many different flavors of dividend stocks. There are the safe dividend payers that people normally think of. These are companies that are mature but still have the ability to grow their businesses and dividends. Further down the road are the companies that have diminished growth prospects that wisely pay out large dividends to return wealth to shareholders. And then, for some more spice, there are the real estate investment trusts (REITs) and master limited partnerships (MLPs) that sport eye-popping dividend yields because they're obligated to pay most of their profits out as dividends to ensure favorable tax treatment.
Source: Motley Fool
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In this screen, we turned our attention to low-risk stocks that have good records for dividend growth. In addition, our selection criteria focused on those issues that our analysts project to continue providing investors with dividends that are likely to increase at above-average rates.
We began our search with stocks whose dividends have advanced at a compounded annual rate of at least 7% over the last five years. Similarly, we next narrowed the list to equities with projected annual dividend growth rates of at least 5% over the next three to five years. We also set a minimum estimated yield for the year ahead of 3.1%, which is 100 basis points (100 basis points equals one percentage point) higher than the current median for all dividend-paying stocks under our review.
The set of stocks that made the final cut are not only judged to be safer than most, but also possess proven and prospective dividend growth rates that have and are likely to advance at a rate exceeding the average rate of inflation under the time periods chosen under this review. Consequently, the list will likely appeal to conservative investors in search of current income. We note that this group is comprised of a fairly wide range of companies, not just regulated utilities and financial institutions as per past dividend-focused screens. Indeed, other industries, such as aerospace/defense, had a strong showing. Not surprising, however, is the fact that our list is dominated by large-cap industry leaders, several of which are Dow 30 components.
Source: Value Line
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I was born in 1962 which puts me on the tail-end of the Baby Boomers (those born between 1946 and 1964). We have been described by some as “the pig in the python.” Over the decades, the sheer size of our group has redefined many aspects of society. As we approach the tail of the python and look toward retirement, once again we have the government and others scrambling to figure out how to handle this aging and albeit disruptive force.
Instead of turning over your life-savings to an insurance company (that could be the next AIG), why not build a diversified portfolio of dividend growth stocks? This works best if you have time before retirement. The initial rate may not be as high as the 5.85% quoted above, but careful stock selection will allow growth well in excess of inflation. Unlike depending on a single insurance company, a diversified portfolio of at least 30 stocks will greatly reduce the risk.
Source: Dividends Value
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With savings accounts and Treasuries barely yielding sufficient interest, there has been a renewed interest in dividend stocks as of late. Investors know that historically, dividend stocks have outperformed their non-paying brethren, and that along with that nice cash cushion is the potential for capital appreciation as well. One of the old-school classes of dividend payers are telecom companies -- they typically have gobs of free cash flow and hence can afford to shell out nice payments to shareholders.
Foreign telecoms have seen their share prices dip lately, mostly due to the EU debacle, so some of their yields have reached new and impressive heights. In order to find the seven most impressive telecoms, I ran a screen for companies with a market cap above $2 billion, dividend yields above 2.5%, and price-to-earnings multiples below 15 (in order to ensure good value).
Source: Motley Fool
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Most investors are not surprised when a company cuts its dividend. They saw the early warning signs well in advance of the actual cut. Here are three signs that a company is heading toward a dividend cut:
1.) An abrupt or permanent shift in a company’s business model as a result of business conditions.
2.) A dividend yield that is higher than average and/or higher than others in the industry.
3.) Diminishing cash available to pay dividends.
Ultimately, the ability of a company to pay its dividend is determined by its cash position – both cash on its balance sheet and its ability to generate cash flow. Below are several companies that are NOT cutting their dividends, but instead raising them:
Source: Dividends Value
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Bill Gross is a bond fanatic. He co-founded Pacific Investment Management Company (PIMCO) and is the chief investment officer of PIMCO Total Return, the largest mutual fund in the world. With $234 billion of assets under management and a history of totally outperforming his peers, it is safe to say that, yes, Bill Gross is a true bond junky. That's why I did a double take when I read in this weeks' Economist that Gross said bond returns "stand at the threshold of mediocrity."
If you're a retiree or close to retirement, you probably have two main concerns: saving enough money to last your lifetime and having enough current cash to pay for your daily expenses. This is where dividend stocks come into play. Similar to bonds, dividend stocks dish out a quarterly or annual payment, however, they also have unlimited potential for capital appreciation. Dividend stocks satisfy both of your main concerns by paying you cash up front to help with rent, groceries, and other expenses, but they can also increase their value over time, helping to raise your portfolio in the process.
Source: Motley Fool
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Many investors have been told that buy and hold does not work anymore. With almost everyone glued to screens streaming real-time quotes, news and charts and with so many institutional investors having extremely short term timeframes, one would certainly believe that buy and hold investing
is a dinosaur strategy.
Despite the increasing noise in the markets, buy and hold investing does work. Investors who dismiss buy and hold investing altogether due to the poor performance over the past decade might be missing out on some great opportunities. Most of the quality dividend companies that were overvalued in 2000 are still quality businesses. Those businesses are attractively valued today, and yield much more than what they did in the year 2000. These businesses are also still growing, which means that investors should expect strong dividend growth in the future, which would increase their yield on cost. In addition to that, by reinvesting dividends, investors would be able to further compound their dividend income.
Source: Dividend Growth Investor
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Dividend-paying stocks are often seen as being higher-quality and more stable than their non-dividend-paying stock counterparts. Thus, they can be viewed as the next step up on the risk/return spectrum from lower-risk bonds to higher-risk stocks. But there is a point at which dividend-paying stocks actually become more risky than the average stock. Earlier this summer, shares of BP offered a trailing 12-month dividend yield of 9%. But the market was correctly forecasting that this dividend would be cut. Another example is New Century Financial, a subprime mortgage REIT that offered a dividend yield of around 18% at the peak of the housing bubble. That dividend did not last long, as the firm filed for bankruptcy when the bubble burst. In this article, we take a look at the ways that dividend-focused exchange-traded funds look to avoid this siren song.
Dividends have historically accounted for 40% of the returns from investing in stocks, and despite conventional wisdom, high-dividend-payout companies tend to have stronger earnings growth. So, the case for investing in companies that pay dividends is a strong one. It would seem that a logical way to achieve a high yield on a dividend fund would be to weight stocks by their dividend yield, so that high-yielding stocks would make up a larger percentage of the fund. But unfortunately, it is not correct that if dividends are good, a higher dividend yield must be better. The fact is that neither of these approaches would do anything to screen out the low-quality, risky companies that are likely to cut their dividends, or even file for bankruptcy.
Source: Morningstar
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