In compiling the Dividend Champions list I get to see which companies are nearing the anniversaries of their previous dividend increases. Most of these firms raise their payout about the same time every year, but some companies go longer before boosting their dividends, and this can raise concerns about their streaks of increases.
Which dividends might be in the greatest danger? Some companies, such as REITs (Real Estate Investment Trusts) and MLPs (Master Limited Partnerships), are structured to pay out more than earnings per share, so we can't easily tell much from seemingly high payout ratios or P/Es. Some alarming Payout Ratios and/or P/Es, like those at Harsco and Meridian Bioscience, might suggest great risk, but a look ahead at the estimated earnings per share for this year and next might provide a bit of comfort.
Source: Seeking Alpha
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Fall has started here in Bumpass, Virginia with the corn crop being harvested (what's left of it after Hurricane Irene). The schools have restarted in trailers after the earthquake, and the weather has cooled down. Just when things were looking up, the stock market has tanked on the Federal Reserve's assessment of the economy. What should the potential retiree do now? My answer is “stay the course” by implementing the income stream reinvestment program using dividend growth stocks, diversified by Sector.
During the present market turmoil, preservation of capital is paramount. The above dividend growth stocks provide a high enough yield to place a floor under the stock price. The companies have long enough histories of earnings growth to weather this downdraft, in my opinion. The chart below (click to enlarge) comparing these three stocks over the last 5 years shows the cyclical nature of all three stocks.
Source: Seeking Alpha
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For every yin there is a yang. When it comes to the markets, high unemployment, debt crises in Europe and low growth in the U.S., are all leading to higher risks and general declines of late. So if that is the ‘yin’, where is the ‘yang’? It comes from those rare opportunities to generate higher income portfolios for life. We may be approaching one of those in the coming months.
Who cares if you don’t have a corporate pension. A weak market with strong dividend yields can be even better over the long term. It is a rare opportunity to be treasured, if you can build a retirement portfolio of strong companies with divided yields of 5 per cent or more. If you have had good advice or been smart yourself, you may just be able to take advantage of these investments in the coming weeks and months. If it is built right and timed right, you may just start your retirement with one of the best pensions around.
Source: Globe and Mail
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These are the highest-yielding dividend stocks among predictable companies, according to GuruFocus data: Shaw Communications Inc. Cl B (SJR), Alliance Resource Partners L.P. (ARLP), Strayer Education Inc. (STRA), Grupo Aeroportuario del surest S.A. de C.V. ADS S (ASR), Telefonica S.A. ADS (TEF).
Shaw Communications Inc. is a diversified communications and media company that provides broadband cable television, High-Speed Internet, Home Phone, telecommunications services (through Shaw Business), satellite direct-to-home services (through Shaw Direct) and television programs (through Shaw Media). The company has over 2.3 million basic customers, making it the largest cable company in Canada. Including satellite, it has over 3.2 million Canadian customers.
Source: Guru Focus
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OK, I admit it, I am an interloper when it comes to investing in blue chip dividend stocks. It is only over the past year or so that I've added some targeted exposure to this sub-sector to overweight it in my portfolio. However, I am already starting to have some second thoughts as I see storm clouds reappearing on the horizon in the form of the likely changes in tax policy towards dividends.
Prior to EGTRRA (the so-called "Bush Tax Cuts"), dividends were taxed as ordinary income while capital gains enjoyed a comparatively lower rate, however EGTRRA coupled the tax rates for these items and reduced the top rate to 15%. EGTRRA was to expire on 12/31/10 but it was extended to 12/31/12 during the contentious negotiations between Congress and the President at the end of last year. Now with Washington seemingly ever more dysfunctional, there is an increasing chance EGTRRA could fully expire at the end of 2012. If it does, dividends will again be treated as ordinary income.
Source: Seeking Alpha
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Defensive investors like stocks with sustainable, high dividend yields even in bear markets. David Fish’s US Dividend Champions list consists of all US stocks that have increased their dividend payouts for at least 25 consecutive years. Fish also created two separate sub-lists: “Dividend Contenders” that have increased their payouts for 10-24 years and “Dividend Challengers” that have increased their payouts for 5-9 years.
Although such stocks with high-quality dividends are appealing to defensive investors, some of them did not perform well during the year. Below we compiled a list of S&P stocks with dividend yields of at least 3%, and most of them have lost at least 15% YTD. All companies are S&P constituents and are on David Fish’s list, which means that they have increased their payouts for at least 5 years.
Source: Seeking Alpha
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If you can look past the pain of your losses and the fear that, three years after the Lehman Brothers bankruptcy, the global financial system is about to melt down again, the current market rout is an opportunity. It’s an especially important opportunity for investors who are within ten years or so of retirement, and who have been planning to use income from their portfolios to fund part of that retirement.
If you can manage a long-term view that gets your thinking beyond the next quarter or two or three, you’ll realize that one of the biggest challenges facing anyone thinking about retirement is where to find decent yields—and that this sell-off has created some commendable yields in some very good stocks.
Source: MoneyShow
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Many U.S. companies have reinstated (or) increased dividend payments since the credit crisis of 2008-09. The amount of payouts and the number of companies with positive dividend actions have increased in recent months. According to Standard & Poor’s, in the first half of 2011, net cash payouts among S&P 500 companies rose by a record $25.5 billion. In addition, the number of companies that raised or initiated dividends during this time rose to 204 from 140 in the prior-year period.
Companies in the S&P 500 have amassed a near-record $3.6 trillion in cash and marketable securities. According to the report, corporate dividend payouts are poised to rise substantially in the following years due to the following three factors: Strong Earnings, Strong Balance Sheets and Historically Low Payout ratio.
Source: Top Foreign Stocks
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The use of gold as a medium of monetary exchange spans the entire history of mankind and is even prominently mentioned in the Bible. Consequently, there is no question that mankind has always valued gold. However, the real question is what is the proper intrinsic value of this coveted element? When attempting to answer this question, consideration needs to be given to the fact that gold, unlike a stock or bond, does not pay income. Therefore, gold's future value and return potential must come from appreciation in its price. Of course, this implies the need to buy low in order to sell high.
Since the S&P 500 represents the average, and we endeavor to be better than average, we have screened the universe in order to compile a list of high quality companies offering a dividend yield greater than 3%. Moreover, each election had to have increased their dividends every year for at least 15 years and possess high financial strength ratings. Consequently, each of these selections offers an entry yield greater than the 10-year Treasury bond and most of them offer an entry yield this is remarkably greater than even the 30-year Treasury bond. As the first graph in this section, courtesy of Bloomberg, suggests, quality stocks with reliable earnings are very cheap today.
Source: Safe Haven
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With the risk of a second downturn in the U.S. economy rising and debt problems continuing to plague Europe, many investors are shunning the equities market altogether. Meanwhile, the rush to safety in fixed-income investments has driven yields down to “incredibly low” levels, according to analysts.
In this scenario, the analysts at Morningstar say dividend-paying stocks offer a good alternative that often -- as is the case now -- significantly outperform the S&P 500 and the bond market. Brett Horn, associate director of equity research at Morningstar, points out that the list of top dividend-paying stocks has changed dramatically over the past few years, shifting away from financials -- there are none on this year’s list -- to pharmaceutical companies, which now occupy five of the 10 spots on the list.
Source: Financial Planning
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In June, I invested my money equally in a selection of 10 high-yield dividend stocks. Those names offer triple the yield of the average S&P 500 stock. You can read all the details. Now let’s check out the results so far. The portfolio has now broken into positive territory, against the S&P's decline of 6.1% over the same time period, for outperformance of 6.2 percentage points. Eight of our 10 picks are beating the S&P. Despite the gains for the week, we actually lost ground on the S&P, which we were beating by 7.1 percentage points last week. But that performance is also a reminder of the stability of dividend payers over time -- good downside protection and continued income but also less upside volatility.
I'm not particularly concerned about short-term fluctuations, though. In the meantime, we'll cash our dividend checks and wait for an opportunity to reinvest those proceeds. In particular, Frontier is bringing the average return down, meaning the stock could be an attractive place to add reinvested dividends. I've been a fan of big dividends for a while, and I think this portfolio will outperform the market over time through the power of dividends.
Source: Motley Fool
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Stocks that pay dividends can usually withstand a downturn because their payouts cushion the market's blow. But betting on them backfired in the credit crisis, when financial firms, which accounted for nearly a third of all S&P 500 payouts, slashed payments to stay afloat. A record $58 billion in dividends were cut in 2009. Now, thanks to big reserves and a greater mix of industries throwing off cash (financials account for just 12% of payouts today), dividend stocks can resume their role as shock absorbers.
Plus, in a slow-growth market, "we expect more of total return to come from dividends rather than capital appreciation," says Emanuele Bergagnini, Oppenheimer's director of U.S. equities. This year, the S&P 500 Dividend Aristocrats index is down 2.9%, vs. the 6.4% loss for the broad market. You can buy a mix of reliable dividend payers through SPDR Dividend ETF (SDY). It invests only in firms that have boosted payouts annually for at least 25 years.
Source: CNN Money
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Gov. Sean Parnell and Commissioner of Revenue Bryan Butcher will tell us the amount of the 2011 Permanent Fund dividend this morning. This will be the 30th consecutive year that the state has paid to each qualified Alaskan an individual share of the earnings from the state's oil wealth fund. Thirty years and more than $32,000 (not counting this year) if you've qualified for all of them. Since 1982, Alaska has paid out more than $18 billion to its residents. And that doesn't count the resource rebate of $1,200 in 2008.
This is still a jaw-dropper for our neighbors Outside, especially in these days of high unemployment and uncertainty, widespread layoffs and state governments scrambling to maintain services as they cut. Alaska has no state income tax, no state sales tax, reasonable vehicle licensing fees -- and on top of that we send each legal resident from toddler to tottering a yearly check just for being a legal resident. It's amazing, isn't it? But those of us who have lived here for some years tend to get used to it. The dividend seems normal, a pleasant rite of October.
Source: The Anchorage Daily News
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For millions of investors, dividend stocks have become the gold standard on which they base their entire portfolios. Even better are stocks that increase their dividend payments every year. But as the end of the year approaches, some stocks that have long streaks of annual dividend increases on the line are getting into crunch time. Although nothing in investing is certain, you can usually count on these companies to do everything they possibly can to keep their streaks going.
The pinnacle of achievements for dividend stocks is inclusion in what's known as the Dividend Aristocrats. Every year, Standard & Poor's goes through the thousands of stocks that trade on U.S. exchanges looking for those that have increased their dividends every year without interruption for at least 25 years. The resulting list is a select group of top stocks that usually numbers between 40 and 50.
Source: Motley Fool
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I focus upon finding stocks that pay monthly dividends. This rational assumes I am building a monthly income stream to live on. My monthly income cannot have wild swings in net monthly dividends. My goal is to achieve financial utopia with a reliable, ongoing revenue stream. This is what I refer to as my personal pension.
I personally monitor the security of each name to ensure the company’s business model is operating smoothly. Due to the nature of requiring monthly income for living expenses, the stocks must be fairly stable. The business models must be relatively easy to understand. Here are seven securities which pay a monthly dividend, and are part of my personal portfolio.
Source: Seeking Alpha
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In the decade that ended Dec. 31, 2010, the Standard & Poor's 500 dropped 4.7 percent. Yet if dividends are included, the stock index returned a positive 15 percent. Such is the appeal of stocks that pay their shareholders each quarter. Even if stock prices stagnate, dividend stocks provide income--usually more lucrative, if less secure, than bonds, which sport record-low interest rates.
Since 2001, Robert Shearer has managed the BlackRock Equity Dividend Fund (MDDVX), a $14.2 billion fund started in 1988. Every stock in Shearer's fund must pay a dividend, even if it's small. "We like the discipline a dividend instills on company management," he says. Shearer points to data showing dividend-paying stocks outperforming both the broad stock indexes and non-dividend-paying stocks over the long term.
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I have a low seven-figure investment portfolio and am about to retire. Is it better for me to continue to own a ladder of individual bonds and some 15 to 20 dividend paying stocks, or to move to a pure ETF portfolio?
The more important question to ask yourself is how diversified do you think you want to be? You are going to indirectly own more stocks through the ETF versus owning the 15 to 20 individual dividend paying stocks. The more diversified you are, or the more stocks you own, lowers your risk and volatility relative to the market.
Source: Globe and Mail
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According to Benjamin Graham's margin of safety principal -- a measure of relative value between stocks and bonds -- buying an S&P 500 index fund poses less risk than purchasing long-term U.S. debt. However, the dividend yield of the S&P 500 -- at 2.09% -- is scraping against all-time lows. This puts income investors in a bind: Bonds with a strong credit rating don't yield much, exposing investors to a substantial amount of interest rate risk on the 10-30-year end of the curve.
One strategy that income-focused investors should consider is allocating their portfolios toward a blend of U.S. fixed income and carefully chosen dividend stocks. Regarding stocks, there are several high-yield opportunities that -- with diversification -- offer reasonable opportunities for income, capital appreciation and safety.
Source: The Street
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Investors face some difficult choices in today's markets. The recovery in the U.S. economy seems to have stalled, and talk of a double-dip recession is in the air. Meanwhile across the pond, Europe faces the specter of widespread government defaults. In this light, and given the recent downturn in the markets, equities look like a fairly risky option. But given the rush toward safety and fixed income investments over the past few years, yields on fixed income securities are incredibly low. The yield on 10-year treasuries is less than 2%, while opting for a 30-year note yields investors little more than 3% per year on their investment.
This sort of environment makes stocks with good dividend yields a potentially attractive option for investors. A healthy and safe dividend yield offers some solace in the midst of market volatility, and relative to fixed income, patient dividend investors could potentially get the benefit of both higher yields and the prospect of long-term capital appreciation. Investors following this type of strategy would have generated relatively pleasing results so far this year.
Source: Morningstar
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Kelvin Tay, Singapore-based chief investment strategist at UBS Wealth Management, talks about the outlook for financial markets. Tay speaks with Susan Li on Bloomberg Television's "First Up."
Source: Washington Post
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Do you know what the ultimate investment protection is? It's not gold, and it's certainly not Treasuries. It's dividend stocks. Companies that pay consistent dividends are in better fiscal shape than the U.S. government and the payouts significantly outpace those of Treasuries. The advantage over gold of course is that the yellow metal yields nothing - it's simply a store of value. And yet dividend stocks also protect against inflation, since profits for the companies behind them tend to rise alongside prices.
To understand the advantages dividends can provide an investor during a down market, just look at the implosion of the dot-com bubble in 2000. According to Morningstar research, the Standard & Poor's 500 Index lost 9%, while dividend-oriented mutual funds - including high-yielding stocks in the financial-services, mutual-fund and real-estate sectors - gained anywhere from 10% to 30%. And I shouldn't need to remind you that dividends account for the majority of the stock market's returns. A study by Yale economist Robert Shiller showed that in the 109 years from 1889 to 1998, the average real return on common stocks was 7%, of which 4.7% was represented by dividends.
Source: Money Morning
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Nowadays, income-hungry investors simply can't get enough of dividend stocks. But while some stocks are famous for their high dividend yields, others lurk beneath the radar of many investors -- yet their shareholders enjoy the same great income that more popular dividend stocks sport. Most dividend stocks pride themselves on having predictable, dependable payouts. Quarter after quarter, they'll pay the same amount in regular dividends -- with the occasional increase to spice up investor interest. Whenever you look up the dividend yield on these stocks, you'll see a number that reflects the full value of everything the stock paid to its shareholders.
Even rarer are companies that have made a habit of paying special dividends. They don't want to lock themselves into the pattern of making a particular dividend payment only to have to cut it later. So rather than characterizing their payouts solely as regular dividends, they make a relatively modest distribution to shareholders that they call a regular dividend, but then add a special dividend on top of that amount. And they'll keep doing it, time and time again.
Source: Motley Fool
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As the market volatility continues, this is as good a time as any to invest in high quality businesses selling at a quality price. One of the best indicators is a company that has been paying a consistent dividend for many years through every business cycle as that can assure us it will keep paying us a nice income many years into the future. Moreover, when we can buy them cheap like when our favorite stores have those clearance sales, why should it be any different than with our favorite stocks?
The four companies left with the coveted AAA rating - Automatic Data Processing, (ADP) Exxon Mobil (XOM), Johnson & Johnson (JNJ) and Microsoft (MSFT) - average a fantastic yield of 2.9%, while the S&P 500 (SPY) as a whole only yields about 2.2%.
Source: Seeking Alpha
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Real Estate Invest Trusts (REITs) have some of the highest yields on Wall Street. To be classified as a REIT, a company must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends. Earlier this month mortgage REITs took a sizeable hit after the Securities and Exchange Commission launched a review that could subject these companies to tighter regulation.
The SEC announced that it will solicit public comment to determine if mortgage real estate investment trusts should be regulated as investment companies and therefore subject to the Investment Act of 1940. The SEC noted the Investment Act didn't foresee the explosive growth of mortgage securities or the flood of other mortgage investors that have entered the industry. According to The Wall Street Journal a big concern for mortgage REITs is they will lose their ability to employ high levels of leverage if they are subject to the Investment Act. Mortgage REITs have high dividend yields partly because the managers use high leverage, which can boost returns.
Source: Market Watch
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In today's low interest rate environment, long-term investors may wish to consider dividend stocks as an alternative to fixed income investments. At 2.13%, the dividend yield of the S&P 500 index generates more income than a 10-year Treasury note, but is still scant by absolute standards.
Income investors might find better opportunity in a diverse basket of carefully chosen stocks. TheStreet Ratings stock-rating model favors defensive investments with a bias towards conservatively financed companies that have demonstrated a history of favorable shareholder returns. As always, stock ratings should not be treated as gospel -- rather, use them as a starting point for your own research.
Source: The Street
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In this screen, we turned our attention to comparatively low-risk stocks that have good records for dividend growth. In addition, our selection criteria focused on those issues that our analysts project will continue providing investors with dividends that are likely to increase at above-average rates.We began our search with stocks whose dividends have advanced at a compounded annual rate of at least 7% over the last five years. Similarly, we next narrowed the list to equities with projected annual dividend growth rates of at least 7% over the next three to five years.
The set of stocks that made the final cut are not only judged to be safer than most, but also possess proven and prospective dividend growth rates that have and are likely to advance at a rate exceeding the average rate of inflation under the time periods chosen for this review. Consequently, the list will likely appeal to conservative investors in search of current income. We note that this group is comprised of a fairly wide range of companies, not just regulated utilities and financial institutions as per past dividend-focused screens. Indeed, other industries, such as food processing, had a strong showing. Not surprisingly, our list is dominated by large-cap industry leaders.
Source: ValueLine
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A lot has been written about dividend stocks in the past year. According to Google Trends, the search and news volume for the phrase "dividend stocks" has been on the rise, and quite naturally so as income-thirsty investors find few alternatives in this low interest rate environment. I believe boring is beautiful when it comes to dividend investing, but I also understand that there are investors who want to benefit from a long-term dividend strategy while spending most of their time on other, perhaps more exciting, stocks.
For these investors, I offer the "Coffee Can Dividend Portfolio": seven high-quality dividend-paying stocks from different industries whose share certificates I think you could literally stick into a coffee can, bury in the backyard, focus on other investments, and be happy with your Coffee Can returns when you dig it up a decade or more from now.
Source: Motley Fool
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With the sovereign debt problem in Europe, slowing growth in China and the U.S., investors need some kind of protection in their portfolios. Dividends have proven to be a strong source of protection against capital loss, as investors are more likely to flow to names that have strong dividend yields then those with higher growth potential in a recession.
Having companies in emerging markets is also beneficial, as these countries are still growing, albeit less then they were previously. Investors want as much growth in their portfolios as possible, and if the stocks offer solid dividend yields, that is the icing on the cake.
Source: Benzinga
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Warren Buffett is one of the top investors of the past century. His every move is closely followed by investors and mainstream media. Unfortunately, he doesn't trade very often. When he buys stocks, he holds them for years. So investors who are worried about short-term returns can't really gather much intelligence from Buffett's holdings.
We compiled 10 Warren Buffett stocks that are relatively cheap because they have P/E ratio of below 12 and 52-week returns of lower than 5.%. 1. Wells Fargo & Co. Del (WFC), 2. Wal-Mart Stores, Inc. (WMT), 3. US Bancorp (USB), 4. Washington Post Co. (WPO), 5. M & T Bank Corporation (MTB), 6. Torchmark Corp. (TMK), 7. General Electric Co. (GE), 8. Bank of New York Mellon Corp. (BK), 9. Ingersoll-Rand Company LTD. (IR) and 10. Gannett Inc. (GCI)
Source: Seeking Alpha
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It's probably the #1 question on every gold investor's mind right now: Why are gold stocks underperforming gold? Aren't they supposed to bring us leverage to the gold price? Yes, they are, and their performance been both disappointing and puzzling. There are some exceptions, to be sure, but in the majority of cases the stocks are lagging the metal. And it's been happening for most of the year. What's going on?
I think part of the answer lies in the state of our current environment. Recent headlines and developments around the globe have ratcheted up fear... from the S&P's downgrade to European bank solvency, from fears of another recession to worse-than-expected unemployment. The nervous climate has pushed investors toward gold for safety, simultaneously reducing the demand for gold equities.
Source: SafeHaven
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- Warren Buffett's Dividend Stocks
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The case for dividends is strong. What do investors want most but can’t get easily? Yield and income. So dividend-paying stocks deserve a prominent place in your portfolio, especially shares of companies that are flush with cash, do business around the world, and can weather a stretch of low inflation or even deflation.
“Ignore dividends at your peril,” said John Buckingham, editor of The Prudent Speculator newsletter. “Over time, dividend-paying stocks have tended to be a little less volatile than non-dividend payers.” But not just any dividend stocks. Steer clear of stocks that have high yields for the wrong reasons.
Source: Market Watch
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I'm delighted that dividend stocks are back in vogue on Wall Street. But because they seem to be everywhere nowadays, it's become increasingly difficult for investors to separate the true winners from the losers. If you've mastered the basics of dividends and want to plan your next move, here are eight red-hot dividend stocks that deserve their massive popularity.
Consumer sentiment is at its lowest point since the depths of the Great Recession. Home sales remain at levels comparable to the early 1980s. And unemployment is stuck at 9.1% -- or 16.2%, if you factor in people who have stopped looking for work. For only the second time since the 1950s, the average dividend yield on the S&P 500 is higher than the 10-year Treasury bond. Investors accordingly face the opposite problem -- namely, that there are too many amazing dividend stocks to choose from.
Source: Motley Fool
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August was agonizing, to say the least. The volatility-laden indexes have scared the heck out of investors, and now everyone is asking the same question: “What am I supposed to buy now?” Well, one option is to follow Warren Buffett into banking stocks. Buffett — via Berkshire Hathaway (NYSE:BRK.A) — just plunked down $5 billion for a stake in Bank of America (NYSE:BAC), which immediately forced investors to start looking at the industry.
I have respect for Buffett, but you shouldn’t follow in his footsteps on this one. Buffett got a special preferred-stock deal on Bank of America that other investors can’t get, so you’d be taking a huge risk that Buffett is not. What I would recommend you do is get serious about the real trends in this market, and when you look at the options investors have right now, there’s only one place for them to go this September — dividend stocks.
Source: InvestorPlace
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Writing recently in The New York Times, the famed chairman of Berkshire Hathaway complained that his federal income tax last year was "only 17.4% of my taxable income" — less than $7 million on a taxable income of about $40 million. Buffett claimed that, like himself, other "mega-rich pay income taxes at a rate of 15% on most of their earnings," but that is not at all common. The average income-tax rate of those earning between $1 million and $10 million was 29.5% in 2009.
Warren Buffett is the second wealthiest person in America, but he reports surprisingly little taxable income for someone who owns more than $50 billion of Berkshire shares. Increasing the tax rate on salaries and interest income would barely affect him. He pays himself a salary of just $100,000, which explains how he pays less than his employees do in payroll taxes.
Source: Investors.com
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A lousy end to summer for world stocks has left fat dividend yields easier to find. The MCSI All Country World Index lost 13% during the third quarter through Tuesday and carries a 3% dividend yield, according to Bank of America Merrill Lynch (BAC: 7.05, 0.07, 1.00%). Its euro-zone component, which tumbled 22%, now pays 5.5%. Even in the U.S., where yields are much stingier, one-quarter of S&P 500 members now pay more than 3%.
For long-term investors, that might be reason enough to put spare cash to work. Gains are grand, but even sleepy stocks can pay off nicely given the combination of dividends, reinvestment and time. Consider New York City's power company, Consolidated Edison (ED) 1.20%. It's old-economy, to say the least: One of its predecessor firms, New York Gas Light Co., was listed on the New York Stock Exchange 23 years before Thomas Edison was born.
Source: SmartMoney
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Defensive investors like high dividend yielding stocks and consider them as viable options in especially inflationary environments. We expect high dividend stocks to outperform the 10-year Treasuries over the next 10 years.
In addition, defensive investors may also seek sustainable dividend payments from each high dividend yielding stock. Since high dividend yielding companies with lower dividend payout ratios are more likely to continue paying high dividends in the future, we believe conservative investors like to pick such companies when seeking sustainability and inflation protection.
Source: Seeking Alpha
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Is income investing always a game of low, but slowly accumulating, dividends that compound for a reasonable return over a very long period of time? Is it possible to achieve high capital gains while padding the account with abnormally large dividends?
I outlined such an income investing system recently that targeted dividend stocks whose yields were jumping as prices were compressed. This allows investors to lock-in at very high yields while simultaneously providing a strong upside for capital gains.
Source: Seeking Alpha
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We’re all hearing about dividend payers being the best bet right now, but how do you filter out the right ones? Fred Fuld of Stockerblog.com shares his method and one of his favorite picks. Well, Fred, tell me what I should be looking for.
Well, one of the things that I look for is dividend coverage. In other words, how much operating income they receive versus how much they send out in dividends to their shareholders. As long as that margin is not decreasing on a regular basis or it’s not right at the edge, you’re at pretty good shape. Any other things that I should be looking for? Management? History of dividend payouts? Yes, definitely history of dividend payouts is a good thing to look at. There are companies like Kinder Morgan (KMP). As an example, they’ve been paying dividends for many years. They’re in the business of transporting petroleum, and not really owning the petroleum they don’t really have that market risk of whether the price of oil goes up and down. But they just transport the petroleum, and the stock yields in excess of 10%.
Source: Money Show
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The current 2.2% dividend yield on the S&P 500 may not sound very promising in absolute terms, but that yield is about the same as the yield on the 10-year bond. The difference between the dividend yield on stocks and the yield on bonds, known as the "yield gap," can be used as an indicator of the attractiveness of stocks relative to bonds. While the yield gap was slightly more attractive in March 2009 during the financial crisis, stocks are at their most attractive point since 1958. Buying stocks at that point paid off, as they returned an inflation-adjusted 8% per year over the next 10 years compared with less than 2% for bonds.
The long-run performance of stocks has been far superior to bonds. But there is no free lunch in the markets; that excess return from stocks comes at a high cost in the form of gut-wrenching volatility, which can make investors turn their backs on equities. The past decade taught many of us the painful lesson that we can't just buy stocks at any price and expect to beat bonds--valuation matters. While it's impossible to time the market in the short run, valuation measures give us a decent way to calibrate return expectations over a decade or more. Looking at the U.S. market through the lens of price/earnings, dividend yields, and our equity analysts' projections, we see a mixed bag. Stocks aren't cheap, but they seem poised to offer a decent return.
Source: Morningstar
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Dividend policies are generally driven by the needs of the business. The stage of maturity of the company can play a role. Younger companies, which are still growing, could prefer to deploy capital in acquisitions and expansion opportunities. Dividend policies also often differ based on tax regimes. If the tax regime is favourable, controlling shareholders could decide to distribute themselves dividend rather than pay salary.
In environments where bank funding is easy to get, companies can be more generous in paying dividends as they can turn to banks for their funding needs. This can be country and company specific. So, for example, Indian companies may choose to conserve capital rather than pay dividends because liquidity in the banking market is limited. We see a similar situation developing in China now that banks are no longer following expansionary lending policies. Companies in China may have to increase their internal funding once access to bank loans diminishes.
Source: Finance Asia
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Looking for a good reason to buy Apple [AAPL 389.76 5.14 (+1.34%) ]? We may have uncovered a whopper. According to Morgan Stanley analyst Katy Huberty the tech titian could soon attract a truckload of new capital - with the announcement of a dividend! “It’s now it’s more likely than ever,” she says. Here's why.
With Apple on the edge of going from the #2 to the #1 largest US company by market cap, Huberty thinks a dividend could be just the catalyst to push Apple permanently into the top spot – and bump Exxon onto the back burner. But the quest to be #1 comes with a price. If they want to secure that top position, “it’s important the company looks for ways to expand its investor base,” Huberty explains. “And a return of cash in the form of a dividend would bring value investors into the stock.”
Source: CNBC
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Stop me if you've heard this one. Stocks are stuck in a lost decade. The Dow Jones currently trades at around 11,000. In 2000, it was about the same. A full decade of zero returns. It's a tough statistic to swallow. But it's equally flawed. Add in dividends, and the Dow has actually increased some 43% over the past 10 years.
Albert Einstein called compound interest "the most powerful force in the universe." Dividend investing is powerful stuff that can lead to phenomenal long-term wealth generation. When a business earns a profit, it can do one of three things: keep the cash in the company to expand operations or repair its balance sheet, repurchase shares, or pay a dividend.
Source: Motley Fool
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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.
Medallion fund usually trades in small quantities. The median position size is less than $2.5 million. However, Jim Simons has some positions in his portfolio that are as large as $445 million. These positions were probably acquired for Simons' Renaissance Institutional Equities Fund (RIEF). RIEF isn't nearly as successful as Medallion but managed to beat the index funds since inception. We compiled Jim Simons' high dividend stock picks that were at least $50 million at the end of June.
Source: Seeking Alpha
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It has been reported that Microsoft Corporation (NASDAQ:MSFT) may disappoint some investors, even with a 19 percent dividend boost. The software giant is readying an announcement of a 19 percent dividend boost this week, but some investors who were looking forward to a bigger payout may be a bit frustrated, reports say.
Neil Herman, an analyst at Ticonderoga Securities, said in a report that, “If Microsoft were to match its peers on payout ratios, it would equate to a dividend yield increase to 6 percent from the current 2.6 percent, and include an approximate doubling of the company’s dividend”.
Source: eMoney Daily
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Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks. One particular area has garnered interest over the years are royalty trusts. Investors are drawn to royalty trusts for their high yields. Royalty trusts don't pay taxes at the corporate level, so the tax burden then gets passed to the investor. One thing to consider, however, is that unlike normal operating businesses, most trusts are depleting assets. Eventually the income-producing ability of the trust will end.
The highest yields can be very tantalizing. As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock. Since yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business and driven down its stock price. However, certain types of companies such as royalty trusts have to pay out most of their cash flow as distributions, so their yields will be higher than "normal." Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.
Source: Motley Fool
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Given the level of uncertainty in the market, investors should be looking to recession-proof their portfolios. The U.S. economy is weak and there are a number of things that could tip it over into recession. Several main ones I am watching include: Further deterioration in consumer spending, Disorderly resolution of the European debt crisis and Slowing in China and other emerging economies. Investors with the right strategic framework and proper implementation, though, can have confidence.
In the long-term part of their portfolio, investors need stocks to grow and overcome the reduction in their purchasing power caused by inflation. The good news is that sentiment is so low that there are many stocks on sale now. I currently like high-quality companies with solid balance sheets, strong dividends and upside opportunity for earnings growth.
Source: Market Watch
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Stocks are in a global tailspin. If and when the latest market flash fires dissipate, Verizon Communications (NYSE:VZ) is one of the safest, high-yielding, large-cap names investors can add to their portfolio when the time is right.
Perhaps the best reason to own Verizon as a safe haven is the robust 5.7% dividend yield that is only getting bigger as the stock falls. As far as yields go in the telecom space, Verizon trails AT&T's (NYSE:T) 6.1% annual payout and
Source: Investopedia
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Welcome to the third issue of The Big Dividend Report! For new readers, in this series my aim is to check under the hood of the biggest dividends in the market and to keep you updated on the latest and greatest. We will limit ourselves to the biggest 20 dividends coming from companies with at least $2 billion in market cap.
The most interesting (read: potentially alarming) news regards the mortgage REITS here. On Aug. 31, the U.S. regulator sought comment on whether mortgage REITs should lose their tax exemption or their ability to use leverage. The plan seems to be to force them to choose one of two options: become a regular corporation—and get taxed like one—but keep the leverage or lose the leverage and keep the tax exemption.
Source: Motley Fool
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Advisers warn that investors should not to be so tempted by the allure of fat yields that they overlook two fundamental questions: How safe is the dividend, and does the company have the wherewithal and inclination to increase it in the future? "Looking at pure yield is not going to give them all the information they need," said Tom Huber, who manages T. Rowe Price's $1.9 billion Dividend Growth Fund (PRDGX).
Fund managers who specialize in dividend stocks say a better measure of a company's ability to maintain and increase its dividend is its free cash flow, essentially the cash a company generates minus what it spends. "I'm looking at free cash flow," said Daniel Peris, co-manager of Federated Investors' $3.2 billion Strategic Value Dividend Fund (SVAIX). Mr. Peris also looks at a company's dividend history and gauges the willingness of a company to pay a dividend regularly and increase the payout over time.
Source: Pittsburgh Post Gazette
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As if it isn't telling enough that the dividend yield on the S&P 500 is higher than the 10 year Treasury yield, here's another sign that stocks are extremely cheap right now compared to bonds: the difference in the yield on a 23 year Procter & Gamble (PG) bond (quote via Scottrade) and the dividend yield on its equity is just 60 bps.
Unlike S&P 500 dividends and Treasury coupons, Procter's coupons and dividends are paid out of the exact same cash flow, which was $13.2B in 2011. Yet the relative price of Procter's debt vs. equity makes it look like these are securities from two totally different companies.
Source: Seeking Alpha
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When Microsoft holds its annual meeting with Wall Street's bean counters on Sept. 14, investors' obsession with higher dividends for tech companies will be on full display. But I don't mean to pick on Microsoft exclusively. The subject of tech shareholders' returns more broadly speaking was brought nicely into focus last week with a report from Morgan Keegan's Tavis McCourt, who has been a relentless voice for greater payouts.
McCourt, who argues that hoarding cash is "destroying equity value" in tech stocks, points out that despite better growth prospects than many industries, tech as a whole trades at a lower price-to-earnings multiple than many other sectors, including moldy old industrials. With the highest cash balance of all the sectors he tracks relative to total capitalization, and some of the best earnings growth prospects, tech stocks also have the lowest valuation on average, by his estimation. Cash makes up on average 28% of tech companies' enterprise value.
Source: Baron's
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Investors are pulling out all the stops to try to get more income from their portfolios. But with interest rates at historically low levels, it's hard to find that precious income just anywhere. Fortunately, there are still some investments that not only provide healthy payouts for investors, but also have the wherewithal to consistently increase those payments.
So which dividend stocks are most likely to keep you happy? Personally, I like to see stocks consistently raise their dividends. And although some stocks have years-long streaks of increasing their payouts annually, today I want to look at dividend stocks that are tailor-made for impatient income investors.
Source: Motley Fool
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Over the last few weeks, stocks have plummeted, regrouped, plummeted again, regrouped ... I think you get the picture. To say there's been upheaval in the market is hitting the nail on the head. Some companies have seen stock prices fall for valid reasons, but others have seen stock prices fall just because fear is running rampant. This is great news for investors looking for terrific companies on sale.
Yes, the market has taken a pretty heavy beating over the last few days, and that has many investors worried about their portfolios. However, it also means that there are some pretty great companies on sale. I don't know about you, but great companies on sale is something I can appreciate. 3 stocks being unfairly punished are United Technologies (UTX), General Electric (GE) and ExxonMobil (XOM).
Source: Motley Fool
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Perhaps because I have time on my side, I get excited when the market sells off like it did a few weeks ago. I know that I’ll be able to buy quality stocks at a lower price. That’s especially interesting to income investors who might be able to pick up an extra half a percentage point or so of yield with no real changes to a company’s ability to generate cash.
When stocks decline, one of the first places I look is the list of S&P Dividend Aristocrats. Dividend Aristocrats are stocks that are members of the S&P 500 that have increased their dividends every year for the past 25 years. And their track records are welcome signs in a tough economy.
Source: Investment U
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