Sometimes growth stocks and income-producing stocks are arrayed against each other as some sort of "bubblegum vs. potato chips" argument. In reality, though, investors can usually find a pretty healthy menu of choices among companies that not only return a meaningful dividend to shareholders, but also have growth prospects strong enough to drive future capital appreciation. Although an investor should always hold a diversified portfolio to minimize company-specific risks, a selection of these stocks could offer a bit of the best of both worlds.
All of the companies on this list have a long history of success in their chosen fields. They also offer investors a middle route alternative between capital gains investing and the hunt for dividends. While investors must of course do their own due diligence and buy these names only at compelling prices, the underlying businesses are such that long-term holders should expect a good mix of earnings and dividend growth.
Source: Investopedia
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Jim Simons' Medallion Fund is the best hedge fund that we have come across. The firm charges a fixed 5% management fee and takes 44% of the returns generated. After these expenses are deducted Medallion provided an average annual return of 35% to its investors. A couple of months ago, our calculations showed that Medallion's annual alpha is 34%. The success of Medallion fund is why Jim Simons is one the wealthiest people on the planet.
Simons' favorite high dividend stock was LO, which returned more than 17% since the end of March. This has been an amazing pick for Simons this year. Simons had $360 Million in LO at the end of December, and the stock returned 18% during the first quarter as it was revealed that the regulation on Menthol cigarettes weren't as restrictive as feared. Simons' trimmed his position by 38% during the first quarter, yet it was still his third largest position. First Eagle Investment Management and Paulson & Co.
Source: Seeking Alpha
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You know what’s not sexy? Dividend stocks. You know what is totally beating the market right now? Dividend stocks. If you drive a high-priced Ferrari or Porsche, this article might not be for you. If you use a fancy financial advisor to manage your stock portfolio, then maybe you like the sex appeal of the high flying IPOs coming to the market. If you have multiple accessories for your dog -- you should probably just stop reading.
After the financial crisis of 2008, companies worldwide cut back on just about everything. They laid off employees, cut back on perks, chopped dividends, and trimmed overhead wherever they could. The result today is that global companies have more cash on hand than they’ve had in ages. As of late March this year, U.S. companies were holding $1.9 trillion in cash -- a record not seen for a long, long time. So many of them are now starting to put that cash to use by increasing their dividends and rewarding shareholders who have stuck by their side. In 2010, dividend increases in the S&P 500 went up 62% (from 157 to 255), and 2011 should shape up to be even better. For investors, this means greater gains in the market
Source: Motley Fool
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Six weeks of dropping stock-market indices and dimming prospects for the global economy have investors looking for a safe harbor. That may very well be summed up in one word: dividends. More than in many years, especially since the Great Recession, dividend-yielding stocks are a crucial consideration for investors.
Dan Newhall, a principal in Vanguard's Portfolo Review Department, is among the overseers of the Vanguard Dividend Growth Fund(VDIGX), which has $5.7 billion in assets. He says there has been "an incredible amount of interest in anything that is income-oriented. ... It is not too far in the past where people didn't pay much attention to dividends," he says. "Frankly, companies and their management weren't very incentivized to pay dividends, especially with stock-option plans that were based entirely upon stock price appreciation and that is how they were getting compensated. They didn't really see the benefit. They'd rather plow everything back into growth projects that may or may not deliver the kinds of returns that they should deliver, or buy back stock."
Source: Business Insider
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Six straight weeks of stock declines has shaved about 6% off the top in major market averages in April. That hasn’t been good for income investors holding high-yield equity securities, but it has been for Treasury bond holders. In fact, the flight to quality in Treasury bonds has caused the price of long-term Treasuries to soar. Over the past six weeks, long-term Treasury bonds, as represented by the iShares Barclay’s 20+ Year Treasury Bond ETF (NYSE: TLT) have climbed about 4%.
By comparison, dividend-paying equities such as the ones found in the iShares Dow Jones Select Dividend Index (NYSE: DVY), are down about 1.7%. The relative performance of DVY versus broader indices such as the S&P 500, which is down about 4.6% over the past six weeks, shows that dividend stocks are actually holding up a lot better than the overall market. Still, the recent decline in dividend stocks can’t compare to Treasury bond ownership during this downturn.
Source: InvestorPlace
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A review of the S&P 500 reveals that 78 percent of its components are currently paying a dividend, with an average yield of 2.28 percent, and a median value of 2 percent. The current average yield represents a 19 basis point increase from the figure at the end of 2010. The average dividend yield for the entire S&P 500 stands at 1.77 percent.
According to Standard and Poor's, dividend increases rose nearly 28 percent during the first quarter of 2011 to 510 from 399, and only 30 companies out of 7,000 reduced their dividend payments, compared to 48 during the first quarter of 2010. Dividend investors searching for the highest-yielding stocks can find guidance by looking at the major sectors.
Source: MSNBC
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Dividend payments are not guaranteed, and are dependent, in large part, on the company’s ability to generate free cash flow and pay dividends and interest to senior securities holders. Debt covenants and poor future prospects can also restrict the ability of companies to pay out dividends in the future. Among the companies on this list, Nokia’s dividend payments going forward are obviously at risk. Dividend yield is calculated as (Most Recent Full-Year Dividend) / (Current Share Price). This means that the dividend yield moves inversely to the stock price: as the stock price declines, the dividend yield goes up, and vice versa. High dividend yields may be the result of a company’s stock declining due to adverse market conditions.
The following 10 stocks have the highest dividend yield among all companies whose market capitalization is at least $10 billion: 1 Telecomunicacoes de Sao Paulo (VIV), 2. Annaly Capital Management, Inc. (NLY), 3. iShares Barclays TIPS Bond Fund (TIP), 4. Banco Santander SA (STD), 5. Telefonica, S.A. (TEF), 6. Banco Bilbao Vizcaya Argentaria SA (BBVA), 7. National Grid PLC (NGG), 8. Nokia Corporation (NOK), 9. YPF Sociedad Anonima (YPF) and 10. AstraZeneca PLC (AZN).
Source: Wall St Cheat Sheet
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The market's 7% or so tumble since the end of April has plumped up yields on some prosperous companies to well more than 3%. For the truly greedy, the names listed below might hold interest. High-yielders, they're not, but by today's standards they pay plenty--and dividends will help dampen the blow if the market continues its recent slide.
Consider the link between dividend payments and earnings growth. As noted earlier this month, companies that return as dividends a healthy portion of their winnings to stockholders tend to go on to produce faster earnings growth than those that don't. Perhaps that's because the companies that are most confident in their future are also ones that are willing to part with cash today. Consider:
Mine Safety Appliances (MSA) Four-week price decline: 12% Dividend Yield: 3.1%
Genuine Parts (GPC) Four-week price decline: 10% Dividend Yield: 3.6%
Intel (INTC) Four-week price decline: 9% Dividend Yield: 3.4%
Source: SmartMoney
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Earlier this year, the Ultimate Stock-Pickers team put together an article highlighting some of the better-yielding stocks that our top managers held coming into 2011. Since that time, unrest in the Middle East, natural (and not so natural) disasters in the Asia-Pacific region, an ongoing European debt crisis, a falling U.S. housing market, a pathetic showing for domestic job creation, and the impending end of QE2 have all had an impact on the markets.
So it should not come as too much of a surprise that industries that have historically been popular because of their higher-yielding stocks have performed well in 2011. And yet individual investors continue to plow an overwhelming amount of money into fixed-income funds, which continue to offer little in the way of yield, in response to the ongoing volatility in the markets.
Source: Morningstar
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The low interest rate environment has everyone and their dog looking for yield and income, which means a more aggressive version of dividend capture is bound to get more attention. Essentially, it involves constantly rotating between dividend paying stocks with offset dividend payment dates to dramatically increase your yield. I know I sometimes sound like a broken record, but this is another case of “in theory, theory and practice are the same, but in practice they are not.”
There are a number of reasons why this doesn’t work as smoothly as it appears to. Commissions are one big reason. Buying and selling 25 stocks quarterly means 200 trades a year. When you are trading that much you also have to consider the potential capital gains that may drag down your after-tax returns in non-registered accounts. Capital gains might be the least of your worries if you consider that stocks are supposed to drop in price on the open of their ex-dividend dates by the amount of the dividend per share to be paid out.
Source: The Globe and Mail
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Top fund managers share several different qualities. They tend to stick around for awhile, they adhere to a strict investment discipline and they like stocks paying higher dividends with strong performance records.Morningstar this morning takes a look at 26 top-rated mutual fund managers to weed out which high dividend paying stocks are their favorites. Interestingly, a minority focus on dividends as their prime investment thesis.
The 10 most widely held stocks by top fund managers are (by current yield as listed by M*):Vodafone (VOD): 6.1%, Nestle (NSRGY): 5.7%, Eli Lilly (LLY): 5.3%, GlaxoSmithKline (GSK): 5.1%, Total (TOT): 5%, Bristol-Myers Squibb (BMY): 4.8%, Merck (MRK): 4.3%, Pfizer (PFE): 4%, Abbott (ABT): 3.8% and Philip Morris (PM): 3.8%
Source: Barron's
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Nervous times again. Suddenly everyone is afraid of a double dip. The Dow Jones Industrial Average is down six weeks in a row, tumbling below 12,000 for the first time since the Japanese panic in March. Nervous investors are stampeding into the "safety" of Treasury bonds instead, driving up prices across the board. Should you follow suit? The rush into Treasurys has driven the yield on 10-year bonds tumbling, below 3%. Meanwhile, the sell-off on Wall Street has driven stock yields in the opposite direction.
You can now find top quality blue-chip stocks that offer dividend yields better than 3%. No, they're not perfectly comparable. Stock dividends, unlike Treasury coupons, aren't guaranteed. But neither are they capped: Over time, companies increase their dividends. Regular Treasury bonds don't hike their coupons after a good year. Furthermore, bond coupons are taxed as ordinary income. Stock dividends are taxed more lightly.
Source: SmartMoney
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Many investors, such as Warren Buffett, praise defensive investing. As Buffett’s mentor Benjamin Graham recommended, investing with a margin of safety can be highly valuable in especially inflationary environments. Defensive portfolios of such investors generally contain high dividend yielding stocks since these stocks provide better protection in inflationary environments.
On the other hand, high dividend yields are not the only important criteria to be sought in defensive stocks. Investors also look for consistent dividend growth in each high dividend yielding stock. We think the stocks that have long records of increasing dividend payments are appealing to defensive investors that demand consistency and some inflation protection.
Source: Seeking Alpha
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With the S&P 500 Volatility Index up nearly 30% from its April lows, we have no choice but to accept the fact that volatility and worry are creeping their way back into the marketplace. Luckily, we have a wide swath of companies to choose from across a wide range of industries. We don't have to immediately turn to short-selling in a volatile environment to try to make a profit or preserve our capital. Sometimes, finding winning stocks in a down market can start with something as simple as following a company's beta.
This search was aimed at larger companies because they have historically stronger earnings track records and usually possess higher dividend yields. As you'd expect, from the roughly 90 results or so, I ended up with a lot of stocks from the same sectors. So I further filtered the results to find the best balance between beta and dividend yield, with an emphasis on finding a diversified set of companies from different sectors.
Source: Motley Fool
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Six weeks of dropping stock-market indices and dimming prospects for the global economy have investors looking for a safe harbor. That may very well be summed up in one word: dividends. More than in many years, especially since the Great Recession, dividend-yielding stocks are a crucial consideration for investors.
Dan Newhall, a principal in Vanguard's Portfolo Review Department, is among the overseers of the Vanguard Dividend Growth Fund(VDIGX_), which has $5.7 billion in assets. He says there has been "an incredible amount of interest in anything that is income-oriented." That's because a sluggish economy has produced slow inflation -- outside of energy and food prices, he says. Plus, Newhall says, investors have shied away from the equity market.
Source: The Street
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Donald Yacktman founded Yacktman Asset Management in 1992, and the firm’s value-oriented approach has trounced the market ever since. Over the last decade its two funds, The Yacktman Fund and The Yacktman Focused Fund, returned 223% and 243%, respectively. The S&P 500 gained just 38% during the same period.
Yacktman favors quality companies that churn out so much cash they’re able to adequately reinvest in operations and still have plenty leftover for smart acquisitions, share buybacks, and yes… dividends. He has said on many occasions, however, that it’s not the actual dividends he’s after, once telling Conseulo Mack: “We’re more concerned with the capacity to pay a dividend, rather than the dividend itself.” Whether dividends are a by-product of Yacktman’s stringent investment criteria or an understated requirement, there’s no denying The Yacktman Funds are filled to the brim with dividend-paying companies.
Source: Guru Focus
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Young investors rarely get involved in investing in individual stocks for a number of reasons. Whether it is a lack of money available to invest or the inability to navigate the stock market due to a lack of experience and knowledge, it can be difficult to start investing. With that said, starting while young can be very fruitful in many ways. Obviously, your money has more time to grow, but even more, learning how to invest takes years and the experience gained from starting early can be very lucrative.
I believe dividend stocks are a great area to focus on for new and young investors because they tend to be less volatile, provide a slight buffer against loss because of the dividend, and most importantly, because the philosophy of investing in such stocks tends to be a more conservative long-term approach rather than trading for a quick buck. I believe dividend stocks are a great area to focus on for new and young investors because they tend to be less volatile, provide a slight buffer against loss because of the dividend, and most importantly, because the philosophy of investing in such stocks tends to be a more conservative long-term approach rather than trading for a quick buck.
Source: Seeking Alpha
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Rough market performance is pushing investors to the dividend stocks this month, as major market indices such as the S&P 500 teeter just a few points from sliding into the red for 2011. While capital gains continue to pummel investors in June, dividend are looking considerably more auspicious this year. Already, dividend increases for the S&P in 2011 have surpassed those of last year, and strong company fundamentals should continue to mean hefty payouts for income investors.
And research points to dividend-payers' ability to outperform on a capital gains basis in the long-term as well: Over the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to a study from NDR.
Source: The Street
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A slumping stock market and economic difficulties make this a challenging time for investors looking for the best place to put their money. No consensus emerged among the nearly 1,700 financial planners and fund managers attending the annual Morningstar Investment Conference. But many floated ideas for good buys and strategies in this difficult environment. Several professionals offered up their single best investment ideas:
According to Josh Peters, equity income strategist for Morningstar: Procter & Gamble (PG) and Abbott Laboratories (ABT) as dividend stocks to hold for the long term. Both have yields of more than 3 percent. "Their stocks haven't moved in years but both their dividends and revenues are moving." Both are businesses that are going to be around and still strong 15 years from now. P&G's rise in product sales is coming from emerging markets countries with good growth prospects. Abbott's top-selling drug, Humira, which is used to treat inflammatory diseases like rheumatoid arthritis, is "not going to fall off the cliff" and the company keeps finding new uses for it.
Source: Daily Journal
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With a stock market that's offered just 2% returns -- and that's not annually, that's 2% total returns! -- over the last decade, it's no surprise that investors are crazy about dividends and the ability to gain consistent income even in environments where the overall market is flat. However, what could be shocking to many investors is that many dividend darlings paying juicy yields north of 5% have been consistently paying high yields for over a decade. Take dividend darling Annaly Capital Management (NYSE: NLY ) . The company currently yields an astonishing 13.4%. That can't be sustainable, right?
Well, past results on its yield might surprise investors. At this date in each of the past 10 years, Annaly's dividend has exceeded 3.4%, a total nearly double where the S&P 500's overall 1.8% yield sits at today. Take a gander at the continued outsized dividends Annaly has paid out on this day over the past 10 years! The best part is, during the same period, Annaly's stock actually rose in accord with paying out all these dividends. Annaly's stock is 43% higher than it was at this time 10 years ago. Adjusted for dividends, the stock is up 327% during that time!
Source: Motley Fool
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With bond yields expected to hold near record lows for an "extended period," experts say investors should turn toward dividend stocks to get better returns. "Interest rates are very low, and the Federal Reserve has made it clear that it wants to keep it that way," said Robert Johnson, Morningstar's director of economic analysis at the firm's annual investment conference in Chicago. "But inflation is running at an annualized rate of about 3.5%, so anyone invested in short-term Treasuries is losing money."
For higher real returns and relatively low risk, stocks that pay dividends are a solid bet in the current trading environment, said Josh Peters, an equity strategist at Morningstar. "P&G doesn't get much credit for its exposure to emerging markets," said Peters, adding that the company's growth allowed it to boost its dividend by a healthy 9.5% in fiscal 2010, a trend which is likely to continue. Peters also likes Abbott Laboratories (ABT, Fortune 500) and American Electric Power (AEP, Fortune 500).
Source: CNN Money
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Pacific Investment Management Co. (Pimco) managing director Bill Gross is perhaps the nation’s foremost bond guy, but he says investors looking for real returns should turn to consistent dividend-paying stocks like Coca-Cola, Johnson & Johnson or electric utilities rather than U.S. Treasuries.
Specifically, he noted the Federal Reserve has kept interest rates lower than they should be in hopes of inflating the economy and boosting riskier asset classes, such as stocks. That’s been a boon for the latter but hasn’t translated into success for the former. Meanwhile, much of the Treasury yield curve wallows in negative territory compared with expected future inflation.
Source: Financial Advisor
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Stocks appear inexpensive based on price-to-earnings ratios, but Stattman said he expects profit margins will shrink over the next few years. He is also worried that stocks will be hurt when the Federal Reserve eventually ends its aggressive measures to stimulate the economy. On the other hand, BlackRock is "very underweight" bonds in the allocation fund, he said. "You are not getting any reasonable sort of coupon on any of the world's sovereign debt," Stattman said.
Given the risks to equities, BlackRock favors large-capitalization stocks paying relatively high dividends. Top holdings at the end of March included Exxon Mobil (XOM), General Electric (GE) and IBM (IBM), according to BlackRock's web site. "The global integrated oil companies seem dirt cheap to me," Stattman said. "They seem to be compelling investments."
Source: Reuters
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Investors concerned that the equities markets and the economy seem to be hitting a soft patch might think about looking at stocks that have a long history of paying dividends. That’s the take-away from a new report out by equities analysts at Standard & Poors. The report, titled Dividend Aristocrat Exposure Through Funds, finds that “in this current environment of slow economic growth, dividend yields could again become a major source of an investor's total return.” Consider these facts:
Since 1926, dividends have accounted for more than 40% of the total return for the S&P 500. More recently, during the period from Dec. 31, 1999 through May 31 of this year, a group of 42 stocks, dubbed the S&P Dividend Aristocrats, that have all consistently paid increased cash dividends year on year for at least 25 years and showed a total gain of 141%, including dividends. Over that same time period, the total return of the S&P (including those 42 companies) was just 13%.
Source: Financial Planning
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During the recent economic crisis, the central banks around the world chose to lower interest rates and inject money into the financial system. This created the potential for an inflationary nightmare -- a situation where a larger amount of money chases the same number of goods, creating price increases that erode the value of money. The worst-case scenario? If inflation starts accelerating, investors could be faced with a situation where guaranteed investments, like savings accounts or government bonds, will offer interest rates that are lower than the rate of inflation.
That's why we wanted to find companies with a long track record of boosting dividend payments. In addition, all of these companies have significant current assets to current liabilities -- meaning that they are liquid enough to cover their ongoing expenses (which increases the stability of the dividend). To further refine the quality of the list, we collected data on institutional money flows, and identified dividend growth stocks that have seen significant institutional buying during the current quarter.
Source: Motley Fool
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If a stock offers a high dividend yield, it often signal trouble at the company. The dividend yield, after all, is calculated by dividing the annual dividend by the current price -- if the price collapses due to a fundamental weakness in the company's outlook, the dividend yield is going to shoot higher. In other words, just because a stock offers a high dividend yield doesn't mean that the company will have the resources to continue paying the dividend.
To protect you from such a scenario, we looked for dividend stocks that have significant cash flows relative to dividend per share estimates. Companies with low dividend payout ratios choose to retain most of their income, instead of paying it out as dividends. This income can then be reinvested into projects that will hopefully generate future growth, which will help the company increase future dividend payments.
Source: Motley Fool
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Amid a time of uncertainty for the largest U.S. banks, grappling with a regulatory and political onslaught, TheStreet has identified the 10 actively traded bank stocks with the highest dividend yields, all of which are much smaller than the national players dominating the headlines.
Some of these stocks have performed well over the past year, although most have not. When considering this group, it's important to keep your investment objective in mind. If you are looking for income, some of these names have very attractive dividend yields, especially in the prolonged low-rate environment. Then you need to consider how likely it is for the company's earnings to sustain the dividend, while also building or maintaining sufficient capital to keep operating in a stable manner.
Source: The Street
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If you don’t have dividend stocks in your portfolio, you’re making a costly mistake. Why? Because the best-performing stocks over the long haul are dividend stocks. Period. Countless studies prove it, too. But don’t waste your time on Google trying to verify that claim. The evidence is right here.
As you can see, dividend payers – especially companies that consistently increase their dividends – trounce non-dividend paying stocks by a country mile. So why do investors routinely shun dividend investing? Well, aside from being “boring,” many investors actually consider dividend stocks risky due to the financial crisis. But don’t be so influenced. It’s actually easy to find high-yield, dividend investments in this zero-yield world. And not only that, ones that are reliable and virtually immune to dividend cuts or suspensions.
Source: Wall Street Daily
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It's not a dividend investor's world these days. Most investors see dividends as a quaint concept like a bed and breakfast in the countryside, a horse-and-buggy ride through the city, or a pocket full of butterscotch suckers. They know that dividends are there, but they don't really take them seriously as a way to beat the market. Overlooking dividends is a big mistake.
dividend investors know that the best part of waking up is knowing that the companies that they own are sharing their profits through cash payouts. And that love of the ka-ching of dividend checks is well-placed, because it doesn't matter how you slice it: Dividends give investors a leg up. Between 1999 and 2010, the median return from all stocks with a market cap above $1 billion was a 3.2% loss. The median return from stocks with a market cap above $1 billion and a dividend yield of 3% or better was a 28% gain. And that's not adjusted for the dividend returns.
Source: Motley Fool
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One of the reasons dividend investing has always been so appealing is that it never required much skill. All you had to do was go to the same spots visited by virtually every other income investor -- namely, the financial, health care, and industrial sectors -- and reel in blue-chip stocks sporting fat yields. Yet in the wake of the financial crisis, one thing has become clear. Some of those traditional sources of dividends are no longer overflowing with income.
So it's time to trawl for dividends in altogether different places. Whether you're a conservative investor who favors companies that give you a cut of the profits (because you don't think management knows how best to spend the money), or you're a retiree seeking to maximize yield and minimize risks, you'll want to diversify your sources of income. Fortunately, these new sources of dividends will help you do that. They're also in a position to grow their payouts over time, reducing the chance that you'll fall short of your income needs down the road.
Source: CNN Money
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While stocks might look risky in the short-term, they offer the highest yield in the long-run, says Prof. Jeremy Siegel, of the University of Pennsylvania, Wharton School of Business. In his book Stocks for the Long-Run, Siegel suggests that stocks offer more stable real returns than bonds in the long run, thanks to the mean reversion effect.
His book also offers many different ways for choosing the best stocks for the cheapest price. One of the interesting methods suggested uses a combination of three metrics: A rule of thumb for stock valuation that is found on Wall Street is to calculate the sum of the growth rate of a stock's earnings plus its dividend yield and divide by its P-E ratio. The higher the ratio the better, and the famed money manager Peter Lynch recommends investors go for stocks with a ratio of two or higher, avoiding stocks with a ratio of one or less.
Source: Seeking Alpha
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Hunting for a safe, decent yield these days is a lot like looking for the perfect house: Even if you find it, you start worrying right away that it may lose its value. Just look at what's happening in the neighborhood. Banks are offering less than 1% if you give them your money for a year. Hand it to the U.S. government for a 10-year bond, that bedrock of safety, and you'll get less than 3%.
Some big consumer-staples stocks are offering some attractive dividend yields right now. Coca-Cola (ticker: KO) yields 2.9%; General Mills (GIS), 2.9%; Johnson & Johnson (JNJ), 3.4%; and Procter & Gamble (PG), 3.2%. While the yields will decline when the stocks strengthen, you could end up with some nice capital appreciation. You can also play dividends through mutual funds. Carrie Coghill, chief executive of Coghill Investment Strategies in Pittsburgh, likes the Federated Strategic Value Dividend Fund (SVAAX), now yielding about 3.3%. It has the benefit of geographic diversification, with exposure to both U.S. and overseas shares.
Source: Barrons
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The first security I was ever aware of was a dividend-paying stock, the AT&T shares that my grandfather, a retired postman, owned when I was little. Those shares along with some other dividend-paying stocks formed the foundation of his nest egg. By reinvesting his dividends, he was able to amass sizable savings for someone who probably never earned more than $20,000 a year.
So when I heard recently that some advisers were using dividend-paying stocks to coax people who still hold their money in cash or low-yielding bonds back into the equity markets, my ears perked up. After all, dividend-paying stocks were largely ignored in the high-growth years for much of the past two decades. Companies that pay dividends, like Coca-Cola, McDonald’s, Caterpillar and Johnson & Johnson, are established corporations with none of the go-go appeal of a technology start-up.
Source: Gainesville Sun
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If you’re interested in high yield income stocks that may be currently undervalued, this list may be a place to start your search. All of the stocks listed below meet the following criteria: 1.) Market cap above $300M, 2.) Dividends between 4-7%, 3.) Rallying above their 20-day, 50-day and 200-day moving averages and 4.)Undervalued by the Levered Free Cash Flow / Enterprise Value ratio (LFCF/EV)
With this in mind, do you feel these companies are truly undervalued? Do they have the potential for more upward momentum? Use the data below to draw your own conclusions. 1.) Icahn Enterprises, L.P. (IEP), 2.) Vivo Participacoes S.A. (VIV), 3.) Baldwin & Lyons Inc. (BWINB), 4.) Alto Palermo S.A. (APSA), 5.) Telecom Corp. of New Zealand Ltd. (NZT) and 6.) EV Energy Partners LP (EVEP).
Source: Seeking Alpha
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Dividend investing can be a safe haven in an economic storm, and investors are increasingly turning to dividend stocks as yields become tougher to find. One area that has seen particular interest from investors is the mortgage REIT sector, because of the massive yields on offer.
Investors should fully understand the risks involved in buying mortgage REITs. Such high yields suggest that the good times won't continue for too long and are usually a bad sign for a stock. High yields often mean that investors have lost confidence in the company, pushing its stock prices down and raising its yield. But by law, these REITs have to pay out most of their earnings as dividends, so it's normal for their earnings to be higher than usual. Nevertheless, these yields suggest that the market is pricing in bad times ahead for the sector.
Source: Motley Fool
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The yield on a 10-year U.S. Treasury is 2.96%. For a seven-year U.S. Treasury, you will earn 2.28% to maturity. Think about it: You will receive less than 3% for locking up your money for seven to 10 years. Sure, you will most certainly not lose any of your principal, but you will be at risk for a rise in interest rates.
There are several important criteria in substituting investment-grade fixed-income instruments with high-dividend stocks. So before I throw out some investment ideas, let's understand some of these prerequisites to income replacement using stocks.
Source: The Street
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The sailing adage "any port in a storm" might apply to dividend-paying stocks as economic growth slows. They're a good place to anchor up while the economy sorts itself out. The stocks offer strong returns via dividends as well as the potential for share-price appreciation. While they can't guarantee you won't have losses, dividend stocks can help limit them. Plus, a steady dividend is indicative of a company with growing earnings.
Dividend stocks are more attractive than ever. The U.S. economy produced only 54,000 jobs last month, more than 100,000 less than forecast by most economists, according to a government report today. That's as the housing industry falls into a deeper slump, and consumers rein in spending. U.S. benchmark equity indices today fell to their lowest closing levels since March.
Source: The Street
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When the market fails to produce gains, investors always seek alternatives. And right now, dividend-payers are a good option. That's because dividend stocks produce returns regardless of what the broad market is doing. Provided that corporate fundamentals remain intact, these companies will continue to pay out cash to their investors.
Now, with solid earnings continuing to trickle down to Wall Street, dividend hikes are continuing to be a major theme -- all told, 21 companies announced increases in their shareholder payouts last week, up from 20 the week before. That's a significant metric for shareholder returns: Over the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to a study from NDR.
Source: The Street
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Even for dividend stock investors May was mostly a tough time. Stocks fell about 3.5% in the first three weeks of the month. The final week of May saw some bargain buying, but then June 1, stocks got slammed with a big 2%-plus sell off nearly across the board. The decidedly downbeat mood in the market has many income-oriented investors simply ignoring the price of their stocks, and choosing just to focus on the fact that they’re still getting a dividend.
Many investors are still desperately clinging to traditional dividend names that have struggled mightily in terms of share price, but yet still pay a respectable dividend. Well, I say it’s time to jettison some of those dead-end dividend stocks, and to rotate your capital into higher yielding stocks with much more upside potential. Here are five dividend plays to dump now: Pfizer (NYSE: PFE), General Electric (NYSE: GE), Hewlett-Packard (NYSE: HPQ), Gap Inc. (NYSE: GPS) and Xerox (NYSE: XRX).
Source: InvestorPlace
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Welcome to TheStreet's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format. Tom Cameron, manager of the Rising Dividend Growth Fund(ICRDX_), has outperformed 97% of his rivals in the past five years by picking companies that consistently raise their dividends.
The mutual fund, which garners a full five stars from Morningstar(MORN), has returned 24% over the past year, better than 80% of its peers in the large blend (growth and value stocks) category. During the past five years, the fund has risen an average of 6.6% annually, outpacing 97% of its Morningstar rivals. Two of his favorite companies are Novo Nordisk(NVO) and Walgreen(WAG).
Source: The Street
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As stock prices rise on many of the stocks we all watch, the dividend yield for new money drops. Many of these publications, which offer their readers recommendations to find high yielding investments, are having a tough time finding stocks with decent yield. While it's tough to sell newsletters by recommending sitting in cash each month, the focus of many of these publications is changing.
When an adviser who typically recommends high yielding investments can't find any yield, the focus will often turn to dividend growth as a replacement. Sure, you can't get a decent yield on your money now, but by buying this stock, you can get that decent yield down the road because this company has an excellent track record of increasing its dividend every year.
Source: Seeking Alpha
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Typically, people will select their interest-bearing securities for all the wrong reasons. I can remember vividly when I wrote a piece talking about how silly it was to be a buyer of Citigroup (C) just because it paid a dividend. It wasn’t the piece that was so memorable but the response I got from some very angry readers. One proceeded to tell me that I clearly had a "hidden agenda" and that even if Citigroup "fell another 20% he’d sleep soundly at night knowing his dividend was safe." Well in a way he was right -- my hidden agenda was to protect someone like him from getting clobbered, but I guess he didn’t see it that way.
Over the years I’ve seen many fall into the dividend trap. The stock could be getting annihilated but someone will find security in the hefty dividend the company is supposed to pay. It all sounds backwards to me that someone would be willing to lose 10% to gain 3% over the course of a year. Net net, isn’t it still a 7% loss?
Source: Minyanville
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Although he’s chief executive of the world’s largest money management firm these days, BlackRock’s (BLK) Larry Fink made a name for himself as a fixed-income guru of sorts. His prowess as an analyst and manager in bonds built his reputation on Wall Street, which he obviously has continued to expand upon.
Dividend-paying stocks look particularly appealing now, he added. “If you just could get a 4% growth in equity markets and a 3.5% dividend, you’re earning 7.5%, basically approaching what your liabilities are,” Fink said. “Global liabilities are anywhere from 7.5% to 8% and you can’t earn your liabilities earning 3.5% in 10-year Treasuries.”
Source: Barrons
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Investing for retirement has changed significantly in modern times. Previously retirement investing meant selling stocks (typically with low yields) and reinvesting that money in high grade bonds with higher and dependable yields. Capital preservation was all important. The background for this thinking was that retirees would live quietly and life expectancy was not long. Now many retirees have more active lives and life expectancy is longer. At a retirement age of 65, many expect to live for 20-30 years, and, more importantly, enjoy a much higher quality of life than in the past (some work full or part time). Lifestyle changes make it necessary to rethink investment objectives and a longer life expectancy requires a more aggressive approach for growing investment values.
The concept of capital growth should not be forgotten or discarded during retirement years. Growth in investment portfolios increase the value of the estate. More importantly, larger investments provide additional funds in later years when expenses can rise dramatically. Each person must decide what balance of income and growth is appropriate, but growing investment worth should be considered an essential objective. With more of the population living active lives in their 70s, 80s and even 90s, Dividend Aristocrats are excellent investments, which have rewarded stockholders with dividend growth and capital gains. Investing in retirement years requires as much attention as in prior years. Long term goals shouldn't change much in later years, growth remains a key consideration.
Source: Seeking Alpha
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Dividend investing is a tried-and-true strategy for generating strong, steady returns in economies both good and bad. But as corporate America's slew of dividend cuts and suspensions over the past few years has demonstrated, it's not enough simply to buy a high yield. You also need to make sure those payouts are sustainable. Let's examine how Aflac (AFL) stacks up in four critical areas to determine whether it's a dividend dynamo or a disaster in the making.
Assuming no monumental insurance claims, Aflac exhibits a fairly clean dividend bill of health. Its yield appears affordable and quite conservative, leverage seems manageable, and growth is impressive.
Source: Motley Fool
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With savings accounts and bonds yielding such low returns (and negative real returns), money has been pouring into stocks and definitely dividend growth stocks. With investors finding it difficult to find yield in a number of assets, a logical place to turn has been to the stock of companies that have a track record of increasing dividends over the years. Of course, this has steadily pushed the prices up on these stocks.
Dividend growth stocks are indeed attractive assets to continue to grow and build your portfolio around. I will absolutely continue to do so, but I might be in the minority hoping for a correction in the broad market so I can get more shares for my money, which will ultimately lead to larger portfolios of dividend stocks.
Source: Seeking Alpha
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One thing you know for sure is that the coupon payment on a 10-year note is not going to rise. A yield of 3.06% does not offer much of a cushion against inflation. Investors interested in getting income from their investments are in sort of a tough place. Dividend-paying stocks are a very good place to look for a replacement.
If you are buying a stock for income, the last thing you want to see is a cut in the dividend. The best defense against that is a low payout ratio. Managements generally will try to avoid dividend cuts, but paying out more than you earn each year is not sustainable. A company needs to retain at least some of its earnings to grow, not just earnings, but the dividend as well. I therefore required that the company pay out no more than 60% of its earnings so there is a very strong cushion against dividend cuts.
Source: Zacks
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When the financial crisis hit, many companies cut back on their dividend payments or cut them out entirely. But things are finally looking up in that department. Since 1926, dividends have accounted for one-third of the total return for stocks, and today, exchange-traded funds that pay high dividends are gaining attention among investors who want secure income. What is so appealing about dividend paying ETFs and which ones should you focus on?
These are exciting times for investors who are looking for more dividend income. News of well-established companies reinstating or increasing their dividend payouts has been a highlight of the New Year and focusing on the areas discussed in this article is one way to squeeze more income for your investment portfolio.
Source: ETF Guide
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With the help of AlphaClone, an online hedge fund research and investment management firm that provides data on the portfolios of hundreds of different hedge funds and institutional investors. Over the past several months, I've been tapping AlphaClone to try to come up with better stock ideas from Wall Street's finest. Today, I'm going to show you the five favorite dividend stocks that top professional investors own in their portfolios.
Using AlphaClone, I searched through the customized database of 324 institutions to figure out which stocks most often came up among their top holdings. That resulted in a list of 20 stocks. I narrowed down the list to include only those dividend stocks with current yields of 3% or more. Here's the final cut, ranked by dividend yield: 1.) Pfizer (PFE), 2.) ConocoPhillips (COP), 3.) Johnson & Johnson (JNJ), 4.) General Electric (GE), 5.) Procter & Gamble (PG) and 6.) Chevron (CVX).
Source: Motley Fool
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I should probably begin by re-emphasizing that I believe in investing for the long term. I subscribe to Warren Buffett’s philosophy that you should buy a stock with a plan to hold onto it for 10 years or more. Any gains earned from short term trading tend to be eroded by higher taxes and commission fees. With that disclaimer out of the way, it is helpful to look for stocks with potential catalysts that could push the stock higher in the coming months.
At the beginning of 2011 we did a similar exercise and identified our top five dividend stocks for 2011. That dividend portfolio has returned 10% YTD and has doubled the performance of the S&P 500 index. Now we have identified six blue chip dividend stocks that we expect to outperform the Dow Jones index over the next six months. 1.) Boeing (BA), 2.) General Electric (GE), 3.) Caterpillar (CAT), 4.) Walt Disney (DIS), 5.) Alcoa (AA). JP Morgan (JPM) and Bank of America (BAC).
Source: Seeking Alpha
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Dividend stocks are most useful when utilized as a source of stable income, preferably when the dividend payout can be counted on to grow over the years. There are several Magic Formula stocks with dividend yields that can be considered high (over 3%). But how can we determine if the yield is sustainable and likely to go up in the future?
One common way to measure the sustainability of a dividend is through the payout ratio. For most financial sites, this is the amount paid out in dividends divided by net income over the past 12 months. But this is not really the best way to do it. Since the cash flow statement tells us directly how much cash was produced by the business ("cash from operations"), we don't need to guess! Also, we need to subtract capital expenditures needed to maintain the business: The result is known as free cash flow. This is the best figure to use when calculating dividend payout ratio, instead of net income.
Source: The Street
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I'm always peppered with questions about dividend stocks. But one question is asked more than any other: "What should I buy?" It can be a tough one to answer. After all, everyone has different goals for their portfolio. Some want the safest dividends possible. Others want the highest yields they can find. Still others are looking for a combination of growth and yield.
So when I answer, I make it simple on myself. I tell people to buy income stocks they'll want to own forever. In my mind, these "hold forever" gems are the safe, reliable securities that increase dividends year after year. The securities you want to hold forever should come courtesy of businesses so fundamental that demand never falters. For income stocks, this kind of unwavering demand drives reliable dividend growth. Year in and year out, regardless of circumstance, these stocks can power -- and even raise -- dividends.
Source: Investing Answers
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According to recent research, it turns out that dividends have played a major part in investment performance over time. Total return from an investment includes the price appreciation of the investment and the income it generates. A study provided by International Strategy and Investment explains that 53.8 percent of the stock market’s total return since 1930 is attributed to dividends alone.
According to a study by Ned Davis Research Inc., dividend payers have outperformed nonpayers in four out of the last five decades, with the only exception being the 1990s. Dividend-paying companies also have outperformed nondividend-paying stocks with considerably less volatility in the period between December 1973 and March 2011. Dividend growers and initiators had an annualized total return of 9.6 percent and a standard deviation of 17.2, while the nondividend-paying stocks returned 1.7 percent and a standard deviation of 25.9. Standard deviation is a measure of risk, so the higher the number, the more volatile the price.
Source: Times Free Press
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