For older investors seeking reliable income, quality dividend-paying stocks have always been a compelling alternative to bonds. With interest rates still near record lows, payouts on cash and bonds are negligible, plus there are three other disadvantages.
First, interest income is taxed harshly outside registered plans like RRSPs and TFSAs. Second, given rising amounts of inflation, interest-bearing investments may not provide a positive “real” rate of return net of inflation. And third, once interest rates do start rising, bond prices may fall, inflicting capital losses, particularly on issues with longer maturity dates.
Source: Times Colonist
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Investors today have instant access to minute by minute changes in the stock prices of their portfolio holdings in real time. Since stock prices tend to fluctuate wildly from one day to the next, I for one do not feel that this information overload is a good thing. What makes matters even worse is how wildly the value of a stock can change from one day to the next. It's not uncommon to see a stock rise or fall by 10% or more on any given trading day. Yet common sense would dictate that the intrinsic value of a large publicly traded company could not possibly change that much that quickly.
The world's leading investors have long understood that current stock price is not always the best indicator, and certainly not the only indicator of a company's True Worth™. These experienced investors acknowledge and understand that market prices can overvalue or undervalue a company at any given point in time. These astute investors will take advantage of overvaluation as an opportunity to sell, and conversely, exploit fear-based undervaluation as an opportunity to buy. Smart investment decisions are made based on the prudent practice of calculating a company's intrinsic value based on fundamentals, primarily earnings and cash flows.
Source: Safe Haven
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This is the fourth in a monthly series listing companies whose latest dividend increase might be considered “overdue” because these companies have gone more than a year since their previous increase, a possible sign that the dividend (or at least the streak of increases) is in danger. Some firms regularly go more than a year between increases, so this is only an “early warning” sign that some of them may warrant concern.
So which dividends might be in danger? Some companies, such as REITs (Real Estate Investment Trusts) and MLPs (Master Limited Partnerships), have a tendency to pay out much more than earnings per share, simply because of their legal structure, so we can't tell much from seemingly high payout ratios or P/Es in such cases. Some alarming payout ratios and/or P/Es, like those at Harsco (HSC) and Meridian Bioscience (VIVO) may suggest great risk, but a look ahead at the estimated earnings per share for this year and next might provide a bit of comfort. As always, comments and suggestions are welcome below.
Source: Seeking Alpha
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US regulated gas and water utilities’ credit quality should remain steady in 2011: That’s the opinion credit rater Standard & Poor’s issued this month, even as the threat of an unprecedented default by the US government looms ever larger. In contrast to its sanguine view for essential services, S&P believes “failure to raise the debt ceiling would cause significant and long-lasting financial and economic disruptions.” That’s essentially the same point of view stated by financial institutions and economists across the board
As an owner of dividend-paying gas and water utilities--both personally and in my Utility Forecaster model portfolios--I’m encouraged that Wall Street considers these companies as safe havens, particularly with so much uncertainty in the broader economy and investment markets. And the best companies have been taking advantage of the high regard in which investors hold them now.
Source: Investing Daily
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Attracted to a stock with a fat dividend yield, but not so sure about the underlying company? Think about whether you would invest in the company’s debt. Plenty of people are talking about dividends these days, for a wide variety of reasons, ranging from worries about inflation to the slim yields on U.S. Treasury notes and beyond.
With big dividend payers, “you’re getting predictable cash flow that exceeds a 10-year Treasury out of the box.” Genter continues. The goal is to capture the bulk of moves higher – ceding the upper echelon to faster-moving stocks and high-fliers – but protect against a large portion of the downside by being assured (or at least promised) an income stream, it’s a win.
Source: Forbes
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Value investors search for stocks that appear underpriced relative to their intrinsic value, which is based off of company metrics such as earnings or book value. One helpful way to find undervalued opportunities is from the “godfather of value investing” himself, Benjamin Graham.
We used the Graham Number to screen for potentially undervalued stocks among the universe of dividend stocks paying yields above 2% and sustainable payout ratios below 35%. We also screened for companies with low debt, with most recent quarter total debt to assets less than 0.2. 1. Unitrin Inc. (UTR), 2. Northrop Grumman Corporation (NOC), 3. Horace Mann Educators Corp. (HMN), 4. Whirlpool Corp. (WHR) 5. American Greetings Corp. (AM), 6. A. Schulman, Inc. (SHLM) and 7. BancFirst Corporation (BANF)
Source: Seeking Alpha
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Dividends can be an investor’s best friend. But not all dividends are created equal. In 2008 and 2009, the dividend landscape was turned upside-down. The GFC took its toll on companies from all sectors, with many cutting their dividends, including the big banks. Amid all the dividend cuts and suspensions, it’s worth reminding ourselves of five key lessons we can use to our advantage in the future.
1. Stock dividends are a privilege, not a right
2. Beware of chasing high yields
3. Focus on cash, not earnings
4. Diversification still matters
5. Selectivity is paramount
Source: Nine MSN
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With S&P warning there is 50-50 chance of a downgrade to the US' Credit Rating, investors are looking for safe havens. Traditionally, high yielding REITs garner attention due to their reliable income. However recent reports warn that a downgrade to US government debt could have a sizeable impact on REIT earnings -- and their dividends.
Several mortgage REITs are trading close to 52 week lows at the moment as analysts consider these companies at risk from the potential downgrade of US government debt. Agency Mortgage REITs such as American Capital Agency have portfolios made up principally of mortgages insured by the federal agencies Fannie Mae, Freddie Mac and Ginnie Mae. A downgrade in US debt would make paper from these federal agencies suffer a downgrade along with most other government-related bonds.
Source: Market Watch
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One of the best strategies for beating the market is having a diversified portfolio. Think about it: If you invest in only one area, say technology, and the technology sector takes a hit, your portfolio is going to suffer as well. However, if you have a diversified portfolio, one sector can take a hit while the others continue to grow, thus growing your pocketbook. Let's consider three dividend-paying companies that would make a great addition to your watchlist, and help you diversify your portfolio.
Bring on the soda with: PepsiCo (PEP), Coca-Cola (KO) and Pepper Snapple (DPS). Give your portfolio some defense with: Northrop Grumman (NOC). Can't go wrong with these utilities: National Grid (NGG), Duke Energy (DUK) and American Electric Power (AEP). Unfortunately, there is no guaranteed way to know how a company will do in the future, but by diversifying your portfolio, your chances of success greatly improve.
Source: Motley Fool
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When interest rates get too low, eyes turn to equity income. Dividend-paying stocks aren't just your Grandma's stock pick anymore. In these risk-averse-yet-yield-hungry times, more investors are turning to these stalwart market workhorses as a way to participate in the stock market's gains and earn a little income. Dividend-paying stocks, or the so-called "equity income" funds mutual funds that own them, are companies that give investors a piece of their profits in the form of a dividend payout, typically quarterly. These companies tend to be larger, more stable companies that have been around a long time. Think 3M, General Mills and Medtronic.
Most investors own several dividend players, but probably don't think of them in such terms. Three-quarters of the stocks in the Standard & Poor's 500 now pay dividends, according to research from Brian Belski, Oppenheimer Asset Management's chief investment strategist.
Source: StarTribune
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With gold at record levels and interest rates on savings still derisory, there is no better investment at this stage than shares in companies that pay dividends. While gold may rise further if there is a further flight from currencies, I think that most of the bad news on sovereign debt is priced in and there could be a fallback over the next few weeks. U.K. interest rates will certainly not be rising in the near future, so savings will remain a very poor option, one that is certain to lose money in real terms.
The Bank of England has been consistently overoptimistic about inflation falling back to the 2% target. Now it admits that inflation will peak ‘a little higher’ and sooner than the monetary policy committee had expected. Higher, yes, although the word ‘little’ may prove to be an understatement. There is still a hint of overoptimism in the implication that inflation will start to fall back soon. Perhaps that is why the committee is still voting overwhelmingly to keep interest rates on hold. For as long as they do so, shares remain the best investment.
Source: Morningstar
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There has been a lot of interest lately in Intel (INTC) as a dividend or dividend-growth stock, especially after they announced that they will increase their dividend 16% in Q3 2011. That follows a similar increase at the end of last year. With the two increases, Intel’s current (projected) yield has jumped above 3.5%.
Intel just fell short of making my Top 40 Dividend-Growth Stocks compilation earlier this year, being one of the last stocks eliminated when I finalized the list in January. I always encourage investors to keep checking out new ideas throughout the year, so I decided to re-rate Intel to see whether it would make the list now. The answer is Yes.
Source: Seeking Alpha
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Wall Street doesn't like uncertainty, which is why it's a good time to own value stocks that pay solid dividends, says John Buckingham, manager of the Al Frank Dividend Value Fund(VALEX). The mutual fund, which garners three of five stars from Morningstar(MORN), has returned 23% over the past year, better than 57% of its peers in the large-cap value category. During the past five years, the fund has risen an average of 1.3% annually, better than half of its Morningstar rivals.
Buckingham: Given that we favor broad portfolio diversification with more than 90 stocks held in the Al Frank Dividend Value Fund, it is difficult to choose just one favorite as we like names like Cooper Tire & Rubber(CTB), Archer Daniels Midland(ADM), Waste Management(WM) and Abbott Labs(ABT). We also would highlight Intel(INTC) and Freeport McMoran Copper & Gold(FCX) as our top picks as each sports a generous yield while trading for very low multiples of earnings and offering solid long-term growth prospects.
Source: The Street
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In today’s market, relying on capital appreciation in order to achieve investment goals is increasingly difficult. It is exceedingly important for all types of investors to bolster their portfolios by adding stocks that pay dividends in order to position their investments to deliver reliable gains.
When researching companies and securities prior to making an investment decision, it is imperative to avoid searching for stocks that you are counting on to significantly outperform the market. This type of aggressive speculation involves assuming unnecessarily high levels of risk and often results in a substantial loss of capital.
Source: Seeking Alpha
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Two years ago, you might not have thought we'd ever get to this point. Back then, the history of dividend-paying stocks had been turned upside down, as more companies were cutting their payouts than raising them. During the second quarter of 2009, Standard & Poor's said that fewer companies raised their dividends than ever before -- just 233, which was less than the 250 that made dividend cuts in the same period.
Fast-forward to today, however, and the picture is entirely different. Last quarter, 444 companies paid more in dividends than in the previous quarter. Meanwhile, dividend cuts were practically nonexistent, with just 21 companies wielding a knife to their payouts. The rapid acceleration of dividend payouts will come to an end at some point. In the meantime, though, dividend investors have a lot to celebrate -- and at least for now, the party doesn't look like its set to end anytime soon.
Source: Motley Fool
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Wharton professor Jeremy Siegel came up with the term "corporate El Dorado" while studying the common characteristics of the greatest stocks in S&P 500 history. He found that 97% of the total after-inflation accumulation from stocks came from reinvesting dividends. Dividend-paying stocks act, in Siegel's words, as "bear-market protectors" and "return accelerators." When dividends get reinvested, they purchase more and more shares at lower prices during a bear market. These extra shares act as a bear-market protector. Then, when share prices reverse, the extra shares act as a return accelerator and rocket total returns higher.
If you need more proof, consider that the 20 best-performing survivor stocks in Siegel's study from the original S&P 500 in 1957 are all dividend payers -- names like Altria, Abbott Labs, Bristol-Myers Squibb, and Tootsie Roll Industries, as well as Coca-Cola. Altria, as Philip Morris, was the top performer in Siegel's 1957-2003 study period, with an incredible annualized return of 19.75%. That was enough to turn an original $1,000 investment into $4.6 million!
Source: Motley Fool
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Today we're taking a closer look at Buffett's 10 highest-yielding stocks, based on Berkshire Hathaway's most recent quarterly 13F filing with the SEC, which reflects holdings as of March 31, 2011.
10. Coca-Cola (KO) recently yielded 2.8%
9. UPS (UPS) with a current yield of 2.9%
8. General Electric (GE) yields 3.3%
7. M&T Bank (MTB) with a current yield of 3.3%
6. Kraft (KFT) with a current yield of 3.3%
5. Procter & Gamble (PG) with a yield of 3.3%
4. Sanofi (SNY) which yields 3.4%
3. Johnson & Johnson (JNJ) with a current yield of 3.4%
2. ConocoPhillips (COP) with a current yield of 3.5%
1. GlaxoSmithKline (GSK) remains Buffett's highest-yielder at 4.9%
Source: The Street
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By history's standards, a 3% dividend yield shouldn't seem suspiciously high. U.S. shares yielded an average of 3.7% between 1950 and 2000, and much more during earlier periods. Today, however, it's worth asking: What's wrong with these 3% yielders? That's because nearly one-quarter of the country's largest 500 publicly traded firms pay nothing. Among the rest, the average yield is just 2.2%.
Shares that pay more than 3%, in other words, ought to attract enough buyers to push their prices higher and their yields lower -- unless investors have good reason to stay away. The companies below face challenges that seem manageable, and their sales and profits have increased of late.
1. Darden Restaurants (DRI)
2. Procter & Gamble (PG)
3. Intel (INTC)
Source: Smart Money
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An insurance company can generate tons of cash. Just ask Warren Buffett; he built Berkshire Hathaway on the shoulders of insurance businesses. If you're unfamiliar with how this works, here's a very simplified version, using car insurance as our example: 1. You buy a car insurance policy and pay monthly premiums to your insurer. 2. The insurance company takes that money -- called the float -- and invests it. 3. If you get in an accident, the insurance company pays your claim. If you don't, it keeps your money and continues to invest it.
The investments that companies make with this money are incredibly important. In some cases, a company may pay out more in claims than it brings in on premiums -- but in the end, it's OK because the company invested the money wisely in the interim. These investments allow cash to build up over the years, which usually makes insurance stocks ripe for dividend payments.
Source: Motley Fool
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Volatility has run rampant in 2011, as fears of slower growth both at home and abroad have spooked traders. The broader market averages have scratched out single-digit gains year-to-date, but I believe that investors looking for more stability should focus on stocks that pay dividends. According to a report from Standard & Poor's earlier this month, U.S. companies increased aggregate dividend payments by $30 billion in the first half of 2011 -- already exceeding the increase posted for all of 2010.
My favorite dividend stocks carry the highest yields in their respective industries and can cover the payouts at least two times with annual earnings. I also focus on companies that yield at least 3.0%, which is higher than the benchmark 10-year Treasury note. But unlike Treasuries, high-quality dividend-paying stocks offer both income and growth potential.
Source: The Street
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Intel’s laser focus on research and innovation has paid huge dividends. Apple’s move from its long standing reliance on IBM’s chips to Intel’s in 2005, augured its entry into the mainstream PC market. Last year Apple cracked 10% of domestic PC sales; there’s no doubt that the shift to the widely-accepted Intel standard had much to do with its transformation from niche-player to third-largest PC manufacturer. With the breakthrough of mobile devices, Intel is well positioned to dominate a new market once again. After buying the wireless unit of Infineon and ramping up work on its Medfield mobile chipset, Intel reports seeing huge interest from manufacturers of Android-based tablet devices.
The Street and Intel have a rocky relationship, one that revolved around the quarterly numbers game and granular financial results. True, its $7.7B acquisition of McAfee left many analysts scratching their heads, but Intel is making a bet that it can integrate security products as a value-add with its mobile products, a market that is going to be doubling in the next few years. At less than 9x forward earnings, you can get long Intel cheaply and with a yield that bests Treasuries. With a 3.3% yield cushion for investors and its $13B cash cushion, Intel is one of the cheapest, most compelling long-term plays on the huge secular growth store of mobile, and by proxy, Apps.
Source: Market Watch
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Having risen from the ashes of the financial crisis in 2008 and early 2009, hundreds of companies have put in a full recovery. You can see the clearest sign of the stock market's health by looking at how many companies are paying and increasing dividends on their stocks. Yet as good as things are going now, prudent investors have to wonder whether the good times have to come to an end -- and if so, when.
Perhaps most importantly, investors have made it clear that they'd prefer to see healthier dividend payouts over other, less efficient uses of capital. Too often, corporate management wastes cash on overpriced acquisitions or ill-timed share buybacks. The easiest way to avoid criticism for a bad strategic decision is simply to turn the money over to shareholders and let them make their own capital investment decisions. The rapid acceleration of dividend payouts will come to an end at some point. In the meantime, though, dividend investors have a lot to celebrate -- and at least for now, the party doesn't look like its set to end anytime soon.
Source: Motley Fool
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I have a fairly focused stock portfolio. On a regular basis, I review my holdings to sell, buy, add additional shares, or do nothing. My portfolio is based upon dividends. Thus I typically have incoming money to add to the portfolio. Here are the top-10 dividend stocks I currently own, in order of preference.
1. American Capital Agency Corp. (AGNC)
2. Hatteras Financial Corp (HTS)
3. Cypress Sharpridge Investments (CYS)
4. CVR Partners, LP (UAN)
5. Gabelli Global Gold, Natural Resources & Income Trust (GGN)
6. StoneMor Partners LP (STON)
7. Enerplus Corporation (ERF)
8. MV Oil Trust (MVO)
9. Anworth Mortgage Asset Corporation (ANH)
10. Collectors Universe Inc. (CLCT)
Source: Seeking Alpha
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Companies with strong balance sheets and high dividends will end up as one of the few safe harbors for investors if the economy continues to cool. It is hard to imagine how the recent stock market rally can continue if July's jobless figures show little employment growth, third quarter GDP expansion looks weak, and home prices continue to drop.
A number of publicly traded firms with attractive share yields may have to cut those dividends if their earnings are damaged for the rest of the year. Big U.S. banks, which have only recently reinstated payouts, face difficult quarters as bad loans for homes and credit cards remain relatively high, and investment bank income drops as M&A, corporate finance and equity finance deals slow. Proprietary trading operations, once the most profitable divisions of financial firms, have been spun off due to financial reform regulations. Still, there are a few large companies with high yields that will almost certainly keep dividends as they are. These have ironclad balance sheets and cash flow which is not likely to be undermined badly even if the economy falters.
Source: Daily Finance
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Dividend investing is a strategy that focuses on generating gains from dividend income, rather than capital growth. Historically, dividend payouts were a primary motivation for investors (Wharton School of Business professor Jeremy Siegel has pointed out that over 90% of the gain of the Dow since 1900 has been from reinvested dividends), but this mode of investing largely fell out of favour during the 1982-1999 bull market, as company valuations rose dramatically for such a sustained period.
Contrary to conventional wisdom, a Standard & Poor's study has shown that dividend-paying stocks actually do better in the long run in terms of total returns (price appreciation plus dividend income) - payers outdistanced nonpayers by 1.9 percentage points annually from 1980 through 2003. A study by David Dreman - in collaboration with Vladimira Ilieva of the Institute of Psychology & Markets – has also looked at a broader universe of equities, the 1,500 of the largest companies trading in U.S. markets. From 1970 through 2003, the top fifth of the payers had an annual 14.5% total return vs. 8.8% for the lowest yielding group.
Source: Stockopedia
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When investing for income, it is of course necessary to look beyond dividend yield at the underpinnings of the dividend and the company itself. Is the dividend secure for the short term? Will future cash flows cover stable, or even increased dividend payments? And is there a possibility of principal appreciation in addition to our income?
The following list offers 6 profitable companies with little or no debt, strong cash positions, and solid dividend yields. These companies appear undervalued on an enterprise basis and thus, not only provide security of income, but a real chance for capital appreciation. 1. American Eagle Outfitters (AEO), 2. Intel Corporation (INTC), 3. US Global Investors (GROW), 4. PetMed Express (PETS), 5. Superior Industries (SUP) and 6. Cato Corporation (CATO).
Source: Seeking Alpha
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I couldn’t begin to estimate how many different stocks are traded around the world on the various exchanges. Like everything else, there are many participants, but few players. Though the population of stocks may be large, there are only a precious few that are worthy dividend stocks. Increasing dividends is one attribute that separates the good dividend stocks from the rest.
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: Dividend Growth Stocks
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Lots of long-term investors love dividend stocks, and with good reason. Simply put, the best dividend stocks give you reliable gains year in and year out, thanks to that steady stream of dividend income. This is especially true if you can keep the tax man away by holding your dividend stocks in an IRA. Deferring the need to pay taxes (or avoiding them altogether with a Roth IRA) lets you reinvest all of those dividends, giving you more shares to grow with the market over time.
Every year, Standard & Poor's publishes a list of what it calls "Dividend Aristocrats." Despite the slightly dorky name, it's a really useful tool: All of the companies listed have raised their dividends at least once every year for the last 25 years. That's an impressive feat, particularly when you think about the gyrations we've seen in the market (not to mention the economy) over that time. Lots of companies have cut or even eliminated their dividends during hard times, but these firms not only kept paying, they kept boosting their payouts. That's why the Dividend Aristocrats list is one of my favorite places to look for solid, established companies that I can count on to pay a good dividend year in and year out -- the kinds of companies that will look particularly good in our retirement portfolios.
Source: Motley Fool
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As uncertainty has reared its ugly head, I've started to become more and more interested in dividend stocks. Stocks certainly have problems, but they're preferable to bonds because of today's historically low interest rates. It's hard to beat guaranteed returns in the form of cash dividend payments. What's more, companies can raise their dividend payouts from year to year unlike bonds, which have fixed coupon payments. This is a double-whammy -- stocks have the potential to pay more than bonds and to grow those payments.
Health care and consumer staples companies make excellent dividend payers and generally belong to the low-yield, high-growth side. I'd like to examine the other side of the spectrum today. The part of the market that's chock-full of high-yield, low-growth companies is the telecommunications services sector. Telecommunications companies often pay out fat dividends, but they also come with their own unique sets of problems. They require plenty of capital investment, are usually mature, slow-growing businesses, and are often burdened with a lot of debt.
Source: Motley Fool
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The Financial Services Sector includes insurance companies, banks, brokerages, mutual funds and other similar companies. Before the 2008-09 financial services meltdown, these stocks were the cornerstone on many income portfolios. The companies were flush with cash, the stocks provided relatively high yields, good dividend growth rates and carried very little perceived risk.
Unfortunately, things are not always as they seem. Under the surface banks were making questionable loans, while investment firms were creating and peddling exotic financial instruments. In effect, their CEO's were building houses of cards in a hurricane - it was destined to come tumbling down, and it did. As a result, investors learned some very valuable, but expensive lessons. This should serve as a warning when investing in the Financial Services Sector - not a stop sign. Many of these companies are now in very lucrative positions.
Source: Dividend Growth Stocks
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Arnold Van Den Berg is the chairman and co-chief investment officer of Century Management, which he founded in 1974. Since its inception more than 36 years ago, the firm’s flagship CM Value I Composite fund has achieved an annualized return of 13.4% net of fees, beating the S&P 500′s annualized return of 11.7% over the same period.
After loading up on just Cisco to start the year, Van Den Berg found plenty of opportunities elsewhere during the second quarter. Century’s flagship fund added to 15 existing investments and created ten new positions, with five of those new buys being dividend-paying stocks. Here they are, ranked by how much capital the firm committed to each. 1) Target Corporation (TGT), 2) ABM Industries (ABM), 3) Penn Virginia Corporation (PVA), 4) Micrel (MCRL) and 5) Pool Corporation (POOL).
Source: Guru Focus
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In the late 1990s, telecom companies like Global Crossing and Worldcom were Wall Street darlings, making investors the easiest money ever. But by 2002, the gold had turned to dust, sweeping away more than $1 trillion in telecom companies’ market value in just 24 months. Even the survivors who have present day dominance like AT&T (NYSE:T), Verizon (NYSE:VZ) and Century Link (NYSE:CTL) took a hit in stock price and dividends.
But times are changing in the sector as surging demand for broadband video and wireless data applications has put the telecom industry back on track. The industry even posted growth in the depth of the recession. And while telecom stock growth is not likely to rival the fast times of the late-1990s, the best companies in the telecom sector like AT&T, Verizon and Century Link are going strong. Still, investors shouldn’t be fooled into buying these top telecom stocks for their growth. The biggest reason to buy VZ, AT&T or CTL stock is for the income.
Source: InvestorPlace
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Over the past few weeks, financial markets have gotten concerned about the possibility that US congress would not raise the debt ceiling on US government debt. The implications range from credit downgrades on US Treasuries to de facto default by the US government if it chooses to delay payment of Social Security Benefits. Currently, US Treasuries are rated AAA, and are regarded as the safest investment instrument in the world. As a result, institutions and foreign governments hold trillions of dollars of this highly liquid and safe investment. The high budget deficits as well as the high level of US government debt however, have some experts doubting whether the status quo of US Treasuries as “safe investments” will change.
So if investors doubt the safety of an instrument rated AAA by credit agencies, what alternatives do investors looking for AAA safe investments currently have? I did a little research and found several dividend growth stocks, which have global operations that currently spot AAA ratings. Purchasing the stock of any of these four companies would likely provide investors with greater total returns over the next 5, 10 or 30 years. In addition, three of these companies have a history of growing dividends for several decades. As a result, investors in these companies can expect a rising dividend income stream, that would exceed inflation over time.
Source: Dividend Growth Investor
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The power of dividend investing is pretty well-known these days. Higher-yielding stocks tend to offer higher returns over time than low- or no-yield stocks do, according to research from Jeremy Siegel and others. In fact, the 20 best-performing survivor stocks from the original S&P 500 in 1957 are all dividend payers. What's more, reinvesting dividends acts as a "bear-market protector and return accelerator," according to Siegel. The extra shares purchased and accumulated at higher dividend yields during down periods act as a protector in falling markets, and these extra shares turn into a "return accelerator" when prices rise.
I constructed a screen to find some promising high-yield, low-risk utilities for further research. I made sure the stocks met the following criteria: a. Market cap > $1 billion, b. Payout ratio < 60%, c. Three-year dividend growth > 0% and d. Utilities sector, as defined by Capital IQ. Here are some of the highest yielders the screen produced: 1. PPL (PPL) 5.0%, 2. Entergy (ETR) 4.9%, 3. Exelon (EXC) 4.9%, 4. Avista (AVA) 4.3% and 5. Xcel Energy (XEL) 4.2%.
Source: Motley Fool
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Dividend stocks are back in favour on Wall Street as many investors seek to limit their downside with guaranteed payouts. Banking the dividends from your portfolio can help replace some of the value lost when shares slide - or if the payout is good enough and the stock is stable enough, actually grow your nest egg even while other investors are in the red.
When the stock market is volatile, it usually doesn't matter what the company is. You will end up with lost value. Dividend stocks are no different. The share price is just as likely to drop in a down market as all the other stocks heading down. The dividend advantage is seen as you continue receiving a payment for your shares. If a company has solid fundamentals, it is likely to continue paying a dividend. This means you still get some benefit - even in a volatile market.
Source: Jamaica-Gleaner
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Dividends are not paid with sales, earnings, EPS, EBIT or EBITDA. Instead dividends are paid with cash. As an investor, you want to pay close attention to the cash flow statement. Unfortunately, it is probably the least used and most misunderstood statement. Ultimately, cash flow is what drives the value of any financial asset. The reason analysts look at revenue, EPS, EBIT, EBITDA and margins, they are trying to estimate the level of cash the company will generate in the future.
When a company consistently generates more cash than it uses, it is able to increase dividends paid, buy back shares, reduce debt, or acquire another company. However, as we learned in the 2008-2009 economic downturn, businesses sometimes go through lean times. When the economy slows, investors in dividend growth stocks not only expect their dividend to continue, but they also expect it to continue to grow. Some companies do it with debt or by issuing shares. However, some really fortunate companies are able to access the cash from an unusual place...
Source: Dividend Growth Stocks
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Several profitable banks with attractive dividend yields saw their shares pull back significantly during the first half of 2011, and in a prolonged low-rate environment, are worth a second look by income-seeking investors and for growth investors who can commit for the long haul. Some bank stocks with attractive dividend yields showed weakness because investors were concerned about increasing dividend payout ratios.
To come up with our list, we began with publicly traded U.S. bank stocks with dividend yields exceeding 4%, with three-month average daily trading volume of more than 50,000 shares, and then isolated the five names that pulled back the most during the first half of 2011. We left out one name that has no analyst coverage. 1. Bank of America (BAC), 2. Citigroup (C), 3. Wells Fargo (WFC) and 4. JPMorgan Chase (JPM).
Source: The Street
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Today's dividend stock is going to come from one of the most unlikely sources: groceries. And though I expect this stock to benefit from a nice dividend bump over the years, it's the stock's price appreciation that will really supercharge returns.
Three years from now, I fully expect today's pick, Whole Foods Market (WFM), to handily trounce the market because of its leading position in a growing organic-food trend. The market for groceries is attractive for two fundamental reasons: 1. This is an enormous market -- everyone needs food and 2. The product is always in demand -- ideally, three hearty meals a day for everyone. From this large and sustainable market, organic foods have started to take up a larger slice of the pie. The move toward healthy organic foods is an undeniable, long-term trend that's here to stay.
Source: Motley Fool
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ETFs and mutual funds are great for total-return investing, but for a flow of dividend income that grows, stocks look better. Dividend-growth investing provides a steady, rising income, it offers good capital-gains potential, and it offers very competitive returns in all kinds of markets.
But it's tough to harness dividend growth if you're an investor who has a small account, and is thus better served by mutual funds or exchange-traded funds than individual stocks. It's worth noting that you can buy any number of shares you want—forget about having to buy "board lots" of 100 shares. The lesson here seems to be that ETFs aren't ideal for generating a steadily growing stream of dividend income. You can get more dividends from year to year, but you can also get less.
Source: Money Show
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Investing in China is fraught with risk but there are strategies that can help investors avoid getting burned. The bulk of Chinese companies that have been embroiled in recent scandals have been firms that list their shares on exchanges in the United States or Canada though so-called reverse mergers. And while there's no foolproof strategy, Cragg also said that companies with a track record of paying dividends are good bets.
Portfolio managers Bruce Brewington and Jesper Madsen only invest in Chinese companies that pay dividends. They say the strategy allows investors to capture China's robust growth, while providing a buffer against accounting shams. "If companies can pay out dividends, that means they are generating earnings," said Madsen, who manages the Matthews China Dividend Fund. The fund's top holding is China Mobile, which pays a 4.2% annual dividend.
Source: KTVU.com
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Wisconsin-based National Presto Industries (NYSE:NPK) is a mini-conglomerate that operates three unrelated but successful operating units. Sales and profit generation have grown steadily over the past few years, and a special dividend awarded each year to shareholders may be of interest to income-minded investors
National Presto's stated dividend yield is only 1% as it pays a regular quarterly dividend of 25 cents, for an annual payout of $1.00. However, for at least the past five years it has also paid out an extra dividend, and it has grown from $1.20 per share in 2006 to an impressive $7.15 in 2010. For last year, that works out to a dividend yield in excess of 7%, based on where the stock is currently trading.
Source: Investopedia
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THERE has been a big buzz around dividend stocks since the last global financial meltdown as investors and funds start to see the importance of establishing a regular income source, especially when the going gets tough. Dividend stocks also serve as an avenue to generate income to fund retirement especially for investors with weaker saving habits. However, are dividend stocks really such a god-send, or have they been over-hyped by financial media?
The key point to drive home is that whether one is planning for his retirement or is merely seeking extra side income, quality is still of paramount importance. A high yielding stock does not always mean it is a good stock. Though a stock with sound fundamentals and with attractive yields to boot would be a wise investment option.
Source: Business Times
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In a recent article by SA Contributor Low Sweat Investing, the author, who deservedly earned an Editor's Pick and garnered at least 242 comments, discussed the relatively friendly “feud” between “high-yield fans and dividend-growth lovers.” He went on to report some surprising findings that seem to favor the high-yield fans...up to a point.
Comparing a static 6% yield with dividend reinvested to a 3% yielder with a dividend growing at 7.5%, he found that it would take until Year 13 for the latter to catch up in terms of current income and until Year 19 before the dividend growth stock pulls even in terms of cumulative dividends received. Of course, the dividend growth lover often counters that his or her stock is more likely to enjoy capital appreciation, so it would provide better total returns over time.
Source: Seeking Alpha
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Short sellers as a group aren’t necessarily right any more often than buyers are. We’re all human and every investor needs to look at the world through his or her own eyes. The portion of market rumors that wind up having even a grain of truth to them is a lot worse than one in a hundred. But many more could still have an impact on a company’s share price. If you’re serious about building wealth, it’s vital to be able to focus on facts, even when the rumor mill is working overtime.
Know the vulnerabilities of your companies to the worst-case scenarios that may hit the economy and markets later this year. And by all means take action if you’re in any way uncomfortable with the risks. But if a company does stack up well, don’t let others panic you into abandoning it. Buying and holding healthy and growing dividend-paying companies through thick and thin is a proven road to wealth building. But it only works if you have the courage of your convictions. And that means relying on your own eyes and ears rather than the rumor mill.
Source: Investing Daily
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Warren Buffett boasts a number of qualities that make him appealing to Wall Street and Main Street. For the investing public, however, the trait that places the billionaire in a class of his own is his near-unmatchable knack for reading the markets and picking out winning companies. Over his mutli-decade long career, Buffett has managed to outpace the broader S&P 500 by a comfortable margin.
Those looking to follow Buffett's lead, however, do not have to turn to a firm like BRK.A to mimic the billionaire's investing preferences. Rather, an ETF like iShares Dow Jones Select Dividend Index Fund (DVY) boasts a number of Buffett-like qualities. What makes DVY particularly attractive for investors looking to weather turbulence is the fund's yield, which stands at over 3%. This consistent payout will provide individuals with some comforting income, no matter the investing climate.
Source: Minyanville
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In this low-interest rate environment, investors are understandably looking for stocks that pay meaningful dividends. However, many companies continue to use stock buybacks to return shareholder cash in lieu of dividends. For the quarter ended December 2010, S&P 500 companies bought back $86 billion of stock and paid out $55 billion in dividends. Frankly, I'm generally not a big fan of buybacks and think dividends are a better deal for most individual investors.
When I spoke with NYU professor Aswath Damodaran in February, he suggested that in light of the buyback reality, investors should consider the "augmented" dividend yield, which combines the cash dividend yield and the stock buyback yield. I've since applied the augmented dividend yield to my regular stock screens and focus on those stocks with a cash dividend yield higher than 3% and an augmented dividend payout ratio below 100%.
Source: Motley Fool
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With the S&P 500 up less than 4% during the first half of 2011, it is no surprise investors are looking for high-paying dividend stocks to boost their returns. Below are four stocks with above-average dividend yields that look attractive right now.
1. Crosstex Energy LP (Nasdaq:XTEX)
2. Southern Company (NYSE:SO)
3. Seacube Container Leasing (NYSE:BOX)
4. WP Carey & Co. LLC (NYSE:WPC)
Source: Investopedia
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After reading last week’s post about turning forty, a few people asked me, “What about turning fifty? I don’t have 20 – 25 years to plan my retirement; I have a little over 10 and I am concerned about growing my money but also am much more concerned about what could go wrong.”
Here are five financial moves to make at fifty: 1) Investigate long-term care insurance, 2) Consider converting term policies to permanent life insurance policies, 3) Review your estate planning documents, 4) Adjust your investment risk tolerance and 5) Diversify out of company stock.
Source: Forbes
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S&P Indices announced today that dividend increases rose 32.5% during the second quarter of 2011 to 444 from the 335 recorded during the second quarter of 2010. Of the approximately 7,000 publicly owned companies that report dividend information to S&P, only 21 decreased their dividend payment during the second quarter of 2011 versus the 34 that lowered their payment during the second quarter of 2010.
"If dividends were a paycheck, dividend investors would have received an 11.1% raise in the first half of 2011," says Howard Silverblatt, Senior Index Analyst at S&P Indices. "Dividend increases are commitments not just to current payments but to upcoming obligations. Companies need to be sure that their earnings and cash flow will continue into future periods to satisfy payments."
Source: PR Newswire
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Dividend payers deserve a berth in any long-term stock portfolio. But seemingly attractive dividend yields are not always as fetching as they may appear. Let's see which companies in the banking industry offer the most promising dividends. When hunting for promising dividend payers, unsophisticated investors will often just look for the highest yields they can find. But extremely steep dividend yields can be precarious, and even solid ones are vulnerable to dividend cuts.
I usually like to look at long-term dividend growth rates, but the banking industry has suffered so much upheaval in recent years that those growth rates are negative, and sharply so, for many big banks. The industry seems to be getting its act together, though, and many dividends are rising. I've compiled some of the major dividend-paying players in the banking industry, ranked according to their dividend yields: BB&T (BBT), PNC Financial Services (PNC), US Bancorp (USB), Wells Fargo (WFC) and KeyCorp (KEY).
Source: Motley Fool
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Five Dividend ETFs Your Broker Forgot To Mention. Thus far, many things can be said about 2011 from an investor's point of view. That the year has been kind to dividend investors is certainly one of them as scores (we're talking in the hundreds) of companies have been rewarding investors with all that cash they stored up during the dark days of the financial crisis.
Yes, it's going to take the big money center banks a few more years to get back to paying pre-crisis dividends, but investors have had plenty of other places to turn. In addition to the usual suspects at the sector level (staples, telecom, utilities, etc.), dividend ETFs have proven to be another sanctuary for income-hungry investors. For your consideration: 1) Guggenheim Multi-Asset Income ETF (NYSE: CVY), 2) WisdomTree DEFA Equity Income Fund (NYSE: DTH), 3) Guggenheim International Multi-Asset Income ETF (NYSE: HGI), 4) Global X SuperDividend ETF (NYSE: SDIV) and 5) WisdomTree International Utilities ETF (NYSE: DBU).
Source: International Business Times
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Technology is a perennially hot space for investors looking for momentum or growth ideas, but it can also be a fertile area for investors who like to couple earnings growth with dividends. Although the range of "dividend growth" options in the tech sector is still limited when compared to more traditional sectors like consumer staples, dividend investors have a few valid options when it comes to diversifying toward the tech sector.
It is admittedly difficult to find tech stocks that pay out enough of their earnings and trade at a reasonable enough valuation to offer yields that would interest dividend-growth investors. In many cases, even the most successful tech companies prefer to spend their cash on M&A or share buybacks rather than tie themselves down to the responsibilities and obligations of meaningful, regular dividends. That said, investors willing to take on a little risk and do a little digging can find at least a few ideas here that could help diversify their portfolios and strike a good balance between income and growth.
Source: Investopedia
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There’s a problem with what is supposedly one of the best all-around investing strategies for all kinds of investors. Dividend growth investing provides a steady, rising income, it offers good capital gains potential and it offers very competitive returns in all kinds of markets. But it’s tough to harness dividend growth if you’re an investor who has a small account and is thus better served by mutual funds or exchange-traded funds than by holding individual stocks.
Are mutual funds better suited to your needs? A search for dividend growth mutual funds uncovered a bunch of names with “dividend growth” in the title, but no apparent priority placed on companies that regularly increase quarterly cash payouts to shareholders.
Source: Globe and Mail
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Crises provide opportunity as long as investors take a more cautious approach and buy solid stocks with excellent management teams that have a record of dealing successfully with difficult economic situations. Thus, this month I will recommend high-quality, well-known international companies selected from the list of 30 Dow Jones Industrial Average stocks that have fallen to support zones and are priced to provide excellent long-term potential appreciation. Each selection has a strong history of dividend payments.
Finally, each selection has a history of recent insider buying - a strong indicator that the stock is valued highly by those who know it best - the corporate officers and directors of the company: AT&T (NYSE:T), Chevron (NYSE:CVX), DuPont (NYSE:DD), JPMorgan Chase (NYSE:JPM), Wal-Mart (NYSE:WMT) and Disney (NYSE:DIS).
Source: NASDAQ
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