This article explains why I will buy stock symbol PM and hold on to it
forever because the dividend income goes up every year. This is an
investment, not gambling. How Philip Morris International Lights Up Portfolios
It's important to be extremely wealthy. The idea is to never have to work again unless that's your favorite hobby.
forever because the dividend income goes up every year. This is an
investment, not gambling. How Philip Morris International Lights Up Portfolios
It's important to be extremely wealthy. The idea is to never have to work again unless that's your favorite hobby.
Never contribute anything to a charity unless that charity is yourself. Do not be like the Christian suckers who think giving away their hard-earned money will help them get into a magical heaven. There's nothing more disgusting than atheists who for some idiotic reason think it's a good idea to imitate Christian stupidity. Don't be a looney liberal.
When a relative drops dead, dispose of the stinking dead body for the cheapest possible price. Don't be like the Christian idiots who think wasting money on the dead is a good idea. We're just animals, and when we're dead we're worth no more than a dead cockroach.
The career you choose must be something you know you're going to love or else you will never be successful at it.
The career you choose must be lucrative.
Get the education required for your chosen career. Remember, don't go into debt for it.
Get a job in your new lucrative career.
Stop spending like an idiot. Live like a poor person no matter how much money you're making. Be extremely frugal. Be proud to be a cheapskate.
Open a Charles Schwab brokerage account. While you're there (at one of their offices or preferably on the internet) open a Charles Schwab checking account which allows you to use any ATM in the world for free. Get your paychecks directly deposited into this checking account because then it's quick and easy to transfer funds to your brokerage account.
Use the internet for research and to invest in the stock market extremely carefully.
Instead of crying when the stock market crashes, learn how to love when that happens because that's the best time to buy more shares of corporations. The lower the price the higher the dividend yield.
Never buy a mutual fund or get into a 401K retirement plan where you don't have complete control over your investments. In other words, don't share your investment income with professional idiots.
With careful and thorough research develop a long list of corporations that have a business that is likely to never go obsolete. Your list should only include corporations that pay a healthy dividend. If a company pays a small dividend or no dividend, don't buy it no matter how successful they are. Be careful to avoid companies that pay a too high dividend because that dividend might not be safe. Also, avoid companies who have to borrow money to pay the dividend. The corporation should have an extremely long history of always gradually increasing the dividend. When a corporation announces a dividend cut anyway, and you own shares of that company, sell everything immediately and never have anything to do with them again.
Your plan should be to buy stocks you might be able to hold on to forever. When the share prices go down, that's a good thing because now the dividend yield is higher so you have an excellent buying opportunity. Remember you're in it only for the dividends (which you will reinvest to buy more dividend paying shares of the same company or another company on your list).
On your list (which should be a spreadsheet) calculate how low the price has to go before the dividend yield is high enough to make it worth buying. Don't buy anything until a company on your list has a price that's low enough.
You must aggressively (but very carefully, this isn't a game) invest as much as possible during your entire career. Live frugally so you can invest most of your paycheck. Reinvest all your dividends. Only buy shares of companies on your spreadsheet that have reached your required price at which the dividend yield is high enough. If necessary don't buy anything until there's a good buying opportunity. Don't invest everything the same day so you can take advantage of even better buying opportunities later. When the price of your purchased shares goes down, be thankful for the opportunity to buy more shares. While idiots panic, you calmly do what's required to become rich which is to carefully take advantage of buying opportunities.
Never take a vacation because the money saved is more important. If you think you need a vacation anyway you have made a poor career choice.
After you start investing in the stock market you will know how much you're making a year from your dividends. Don't retire until this amount is at least twice what you think will be necessary.
Both before and after you retire, remember you must never touch the principal. In other words never sell part of your investments to spend it on yourself. You are only lowering your future dividend income when you do that.
There's nothing more stupid than the idea a person should have to worry about living too long. You will never have to worry about that if you never touch the principal. If you can't live on just the dividends you retired too early.
You don't have to make that much money to become wealthy. It's not how much you make that's important. It's how much you can save and invest wisely.
After you become a filthy rich pig (and if you're an American), be grateful to our previous idiot president who actually did something right. He made the maximum tax on dividends and capital gains only 15%.
Instead of complaining about rich pigs, become one yourself. It's easy to do and it's fun.
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The So-Called Problem with Dividends 12/6/2012
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DECEMBER 2012 Are These Weekly Ex-Dividend Stocks Naughty Or Nice?
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AT&T: When High Yield Can Trump Dividend Growth
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THIS IS FROM DECEMBER 2013, EXCELLENT SUGGESTIONS: Secure Your Future With 9 Rock-Solid Dividend Stocks
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Genocide is very lucrative.
Philip Morris: My Favorite 2012 Dividend Stock Idea
http://seekingalpha.com/article/756191-philip-morris-nothing-can-stop-this-industry-leader
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DECEMBER 2012 Are These Weekly Ex-Dividend Stocks Naughty Or Nice?
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AT&T: When High Yield Can Trump Dividend Growth
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THIS IS FROM DECEMBER 2013, EXCELLENT SUGGESTIONS: Secure Your Future With 9 Rock-Solid Dividend Stocks
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Genocide is very lucrative.
Philip Morris: My Favorite 2012 Dividend Stock Idea
http://seekingalpha.com/article/756191-philip-morris-nothing-can-stop-this-industry-leader
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Selling garbage food to stupid fat customers is very lucrative.
McDonald's And The Power Of Dividend Growth
McDonald's Headed For The Value Menu
McDonald's stock symbol is MCD. They have a very long history of large increases in their dividend every year, including during recessions. MCD is, in my opinion, a must-buy stock.
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Selling garbage food to stupid fat customers is very lucrative.
McDonald's And The Power Of Dividend Growth
McDonald's Headed For The Value Menu
McDonald's stock symbol is MCD. They have a very long history of large increases in their dividend every year, including during recessions. MCD is, in my opinion, a must-buy stock.
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Thousands of retired people (and people who are saving for their retirement) are doing everything wrong. Please see Low-interest CDs are eating up South Florida retiree nest eggs.
Some quotes from the news article and my comments:
"The average one-year CD now yields just a 0.4 percent return -- a paltry $400 on a $100,000 account."
Nothing could be more wrong than buying a CD no matter what interest it pays. And buying a CD that pays next to nothing is worse than stupid.
These old idiots should get rid of their CD's immediately and buy shares of corporations that pay safe dividends that increase every year.
A good example of safe is McDonald's Corporation (I wouldn't feed their crap to a dog but that's another subject). Right now their annual dividend yield is only 3.20% but that's a lot more than 0.4%. What's important is McDonald's has increased their dividend every year, even during recessions. During the last four years (including during the worse recession since the 1930's) McDonald's has increased their quarterly dividend per share from 38 cents to 50 cents to 55 cents to 61 cents.
"About one in four people over 50 have already exhausted all their savings, according to a recent nationwide AARP Public Policy Institute survey. The bad economy has forced them to spend their nest eggs, said Victoria Funes, associate director for the AARP Florida."
These idiots outlived their savings because they violated the most important rule of becoming wealthy and staying wealthy: Never touch the principle. If they're not able to live on just the dividends of their investments (which should be only dividend paying stocks) then they retired too early and/or don't know anything about investing and saving. The idea is to buy dividend paying stocks of corporations with a business that will never go obsolete and who have a long history of increasing the dividend every year, so that it's never necessary to sell those shares.
"Comcast retiree Ed Schwartz of Weston said he and his wife saw $10,000 evaporate just in the last week from their stock portfolio."
So what? Who cares? If these shares were paying safe dividends it should make no difference to the investor whether the value of those shares go up or down. There's no reason to sell so there's no reason to worry about what the stock market does this week or next week or next year. In fact, a crashing stock market, where all the idiots are selling everything, is exactly what an intelligent investor should hope for, because here's an opportunity to buy more shares of the same companies which are now paying a much higher dividend yield thanks to their cheaper price.
"He said the couple sold some of their stock and decided to cut back on expenses and curtailed vacation plans."
He probably owned shares of corporations that paid low dividends or no dividends. That was a mistake. He bought those shares hoping they would go up in value. If he had bought other companies that pay a large, safe, and growing dividend he would not have had to care about their value decreasing by $10,000 or more because he would never have any reason to sell those shares.
"Joe Cashman, 55, of Pompano Beach, recently retired from the Department of Justice, but has started going to find job fairs to try to find a job. He is looking to make a little extra cash to make up for losses due to low CD rates."
Nice going Mr. Cashman. You could have increased your annual interest income from 0.4% to about 6.0% by selling your CD's and buying AT&T and Verizon and countless other corporations who pay large safe dividends. Instead you're going back to being a slave.
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Dividend Champions a Rare Undervalued Opportunity
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That’s one way to look at it, by dollar amount.
But the $2.65 per-share quarterly dividend works out to a 1.81% yield at Apple’s current stock price.
While that’s more than the 1.2% average in the tech sector, it’s hardly exceptional.
The S&P 500 average yield is 2.2%. Cracker Barrel, the restaurant chain with the country-store theme and $85 million in profits (300x less than Apple’s), offers 1.8%. Suit outlet Men’s Wearhouse guarantees it too.
Even the 10-year Treasury yield is higher, currently at 2.32%.
Put another way: Apple will pay out about $10 billion each year in dividends, while it generates $75 billion to $80 billion in free cash this year (according to an estimate from brokerage firm Sterne Agee.)
Here’s a look at how Apple compares with other select tech giants. The pressure is now on Google, which has yet to issue a dividend:
AT&T – 5.61%
PFIZER - 4.02%
PHILIP MORRIS INTERNATIONAL - 3.57%
GENERAL ELECTRIC - 3.36%
THE CocaCola COMPANY - 2.90%
JPMorgan Chase & Co. - 2.67%
ExxonMobil - 2.16%
QUALCOMM - 1.50%
Verizon – 5.09%
Microsoft – 2.42%
Hewlett-Packard – 2.01%
Apple – 1.81%
Cisco – 1.6%
IBM – 1.51%
Oracle – 0.81%
Google – 0%
http://online.wsj.com/article/SB10001424052702304724404577291071289857802.html
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http://seekingalpha.com/article/318369-david-dreman-s-high-dividend-stock-picks
David Dreman, founder of Dreman Value Management, is also the author of four investment books and many scholarly articles. His new book, "Contrarian Investment Strategies: The Psychological Edge," will be published this week. In addition to publishing books and articles, he is also the writer of a column for Forbes, the co-editor of Journal of Psychology and Financial Markets and is on board of directors of the Institute of Behavioral Finance, which publishes Journal of Behavioral Finance. He is currently managing about $5 billion. He used to have $22 billion AUM in 2007 but he was hit hard by the financial crisi in 2008.
In this article, we are going to focus on the dividend stock picks of Dreman. All companies have at least $10 billion market cap and dividend yields of over 3%. As of September 30, 2011, Dreman Value Management invested at least $10 million in these positions.
The biggest high-dividend position in the latest 13F portfolio of Dreman is Altria Group Inc (MO). As of September 30, Dreman Value Management reported to own $34 million worth of the MO shares. The stock has a dividend yield of 5.69%. It returned 9% since the end of September, versus 13.87% for SPY in the same period. Tom Russo’s Gardner Russo & Gardner also had $190 million invested in MO at the end of the third quarter.
Pfizer Inc (PFE) also has a dividend yield of higher than 4%. It has a dividend yield of 4.07% and returned 23.43% since the end of the third quarter, beating the market by nearly 10 percentage points. At the end of September, Dreman disclosed owning $28.5 million worth of PFE shares. Ken Fisher’s Fisher Asset Management also had $389 million invested in PFE.
Another mega-cap dividend stock that Dreman is bullish about is General Electric Co (GE). At the end of the third quarter, Dreman Value Management had $23 million invested GE. The stock has a dividend yield of 3.67% and gained 23.09% since the end of September, outperforming the market by more than 9 percentage points. GE is quite popular among hedge funds. There were 44 hedge funds with GE positions in their portfolios at the end of the third quarter, including Ken Fisher’s Fisher Asset Management, Bill Miller’s Legg Mason Capital Management, and Warren Buffett’s Berkshire Hathaway.
Other large-cap dividend stocks that Dreman likes include ConocoPhillips (COP), Philip Morris International Inc (PM) and Intel Corp (INTC). During the past few years, central banks all over the world have been trying to stimulate the economy by using expansionary monetary policies. We are concerned that the Fed’s actions will lead to inflation in the near future. Therefore, we have been recommending investors play defensively by investing in dividend stocks. And one of the most practical ways of picking dividend stocks is to focus on the stock picks of good fund managers like David Dreman.
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Recommended by somebody on Nightly Business Report on 12/16/2011 these dividend paying stocks: EXC RAI PAYX INTC ETN
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On 12/23/2011 shares of McDonald's Corporation went above $100 for the first time. See Two Stocks Making new Highs and Paying a Good Dividend.
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From the 1/11/2012 New York Times:
http://www.nytimes.com/2012/01/11/business/rising-dividends-expected-in-2012-as-companies-woo-investors.html
Companies that pay high dividends were some of the best performers in the markets last year.
Telecommunications, utilities and health care shares had the highest yield rates at the end of 2011, at 5.86, 4.13 and 3 percent, respectively.
McDonald’s had double-digit percentage stock returns, at more than 30 percent, and dividend yields that exceeded the S.& P. index. Other companies with similar performance included Bristol-Meyers, Consolidated Edison and Home Depot. The dividend yield is the amount paid per share as a percentage of the stock price. In McDonald’s case, that equals 2.8 percent, or $2.80 for each share, which are now trading at $99.70.
stock symbols MCD BMY ED HD
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12/19/2011 Wall Street Journal: Dividend Stocks Become the Heroes
http://online.wsj.com/article/SB10001424052970203733304577105420378284462.html
Urging investors toward dividend-paying shares has been an easy sell. This year, the 100 stocks in the Standard & Poor's 500-stock index with the highest dividend yields are up an average of 3.7% before dividend payouts, according to Birinyi Associates. The 100 lowest-yielding stocks are down an average of 10%.
Dividend yield is calculated by dividing a company's annual per-share dividend by share price. In the third quarter, share-price returns on high-dividend payers exceeded those of lower-paying companies by 17 percentage points, AllianceBernstein calculates.
Investors hungry for stock-price gains have been barreling into dividend-paying shares, long regarded as "widow-and-orphan stocks" because of their steady but stodgy performance. Some analysts say such stocks are the most "crowded" trade around these days. Investors have been dazzled by dividend yields of more than 4% on many utilities, household-goods manufacturers and telecommunications companies. That is twice as much as recent paltry yields on 10-year Treasurys.
Dividend-stock fans say the unusually strong performance is likely to last as long as volatility driven by Europe's debt crisis and the global economic fits and starts continues to grip financial markets. Stocks that pay steady dividends tend to fall less than others when times are tough.
And there could be a new boost if companies with record-high mountains of cash on their balance sheet give in to prodding from shareholders to spread it around by increasing dividend payments. Overall, companies are paying out a smaller chunk of profits in the form of dividends than they typically have in the past.
"Investors are demanding the money back in one form or another," says Jennifer Ellison, principal and portfolio manager at Bingham, Osborn & Scarborough in San Francisco, which manages $2.2 billion in investments. Buying stocks with healthy dividends is "not the holy grail that's going to solve all your problems, but it's one more way to mute that volatility," she says.
Skeptics contend that dividend-rich stocks aren't as safe as they look.
The recent run-up is unsustainable, these doubters say, especially if economic conditions improve, which could cause investors to switch to higher-growth companies that tend to pay lower or no dividends.
In contrast to classic dividend-stock investors who care more about quarterly dividend payments than stock price, many recent converts bought the shares for income and the possibility of price gains. If growth stocks spring back to life, the same momentum that pushed dividend-rich shares higher could reverse with just as much force.
"A crowded trade is always risky," says Vadim Zlotnikov, chief market strategist at AllianceBernstein. Last week, he warned clients in a note that, while dividend stocks might keep outperforming the overall stock market, any signs of an economic upswing could quickly end the winning streak.
Mr. Zlotnikov says he was shocked by the angry response from dividend-stock lovers. "You have a lot of fund managers who are happy because they've seen a lot of new clients," he says. "Anyone who is even neutral will be viewed as being against a fairly clear, good investment theme."
In the first half of the 20th century, companies had to pay richer dividends on stocks than on their bonds in order to compensate investors for the higher risk of holding equity. Over time, high-dividend stocks have gotten less attention from investors than growth stocks, except for scurries during periods of economic stress.
High-dividend companies have typically seen their price-to-earnings ratios trade 20% or more lower than non-dividend-paying shares over the past three decades, according to AllianceBernstein. This year, though, valuations on dividend-hefty shares caught up with their no-dividend peers for the first time since the late 1970s.
McDonald's is a darling dividend stock of many investors. The fast-food chain's stock-price surge of 27% in the past year leads every other Dow Jones Industrial Average component.
McDonald's has a dividend yield of about 3%, outpacing the 2.625% coupon bond issued by the company in September, due in 2022. McDonald's has boosted its dividend by an average of 27% annually in the past five years, according to Haverford Trust Co.
"You have the best of both worlds: a company that has seen the stock price go up, and they've increased their dividend," says Hank Smith, chief investment officer at Haverford. The firm manages more than $6 billion in assets.
Ms. Ellison of Bingham, Osborn & Scarborough agrees with concerns that dividend stocks are "a defensive, quality play, and if we have big, big returns on stocks next year, no one will care." Still, if events in Europe and Washington keep hovering over the financial markets for years to come, as some investors expect, the recent surge might last, she says.
Such stocks could get an even longer-lasting lift as more baby boomers reach retirement age—and reduce their risk appetite. The first baby boomers turned 65 years old this year.
Haverford isn't changing direction in its portfolios of dividend-paying blue-chip stocks like McDonald's and Johnson & Johnson. The firm spends a few thousand dollars a month on the "Earned Any Dividends Lately?" billboard.
"We think our message about the importance of dividends is a timeless one," says Joe McLaughlin, Haverford's chairman and chief executive. "But obviously, it's also very timely right now."
Haverford is cooking up three new billboard slogans for 2012.
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12/19/2011
http://www.etfchannel.com/article/201112/five-dividend-treats-from-santa-for-the-holidays-lmt-pm-ctl-cvc-avp-dvy-dhs-Santa12192011FRANK.htm/
Santa Claus is coming to town, and he’s checking his list twice for some dividend paying stocks that are not part of the usual sectors that retail investors and dividend-hungry retirees normally flock to. Many individual portfolios are already overweight in sectors like energy, financials, royalty trusts, etc. This concentrates financial and interest rate risk (i.e., Mortgage REITs) or commodity exposure (i.e., energy stocks). Heavy allocations to these sectors can be justified in the current slow-growth, low-rate environment, and these sectors do have some defensive attributes besides healthy dividend yields. But there are other sectors that one can look at that will diversify an investment portfolio while still grabbing some very attractive dividend yields.
Telecom, consumer staples, and consumer non-durables offer additional ways to diversify portfolios while generating new and diversified dividend streams. The yields tend to be much lower than in the financial or energy sectors, but they also have much less operating and financial leverage in their business models. Without being tied directly to the financial sector and hence indirectly to the European debt fiasco, and with products that consumers are loath to discard or cut back on even in recessionary times, their business models tend to be resilient during tough economic times.
Here are 5 dividend stocks whose business models tend to be more stable and less reliant on the ups-or-downs of the U.S. or global economies:
Lockheed Martin (LMT): The defense contractor is trying to shrug off a two-front war: the end of the conflicts in Iraq and Afghanistan, as well as automatic defense budget cuts from Congress. But Lockheed makes important weapons systems with bi-partisan support such as the F-35 Joint Strike Fighter. The last time the U.S. defense sector faced cutbacks were the 1990’s, which ironically produced some of the best returns for many defense companies, even compared to the Cold War buildup of the 1980’s. This is because improved capital management – share buybacks and dividends – take priority instead of dubious R&D on expensive potential weapons systems. Excess costs and overhead tend to be eliminated during the lean times, too. Lockheed Martin’s strong cash flows cover the dividend with room to spare (close to 3x coverage forecasted over the next few years) so even some minor setbacks in divisions impacted by slowing revenue growth should not affect dividend sustainability or prevent small increases in the payout. LMT yields 5.2% after a mid-teens return YTD for 2011.
Philip Morris (PM): Philip Morris is the international operation spinoff from Altria. It is the largest privately-owned cigarette company in the world with about 16% market share of the global cigarette market. Flagship Marlboro and other brands continue to make excellent penetration in emerging markets like Asia, Turkey, South America, and Eastern Europe. The biggest risks to Philip Morris are currency-related – all the local revenues must be translated back into dollars, so a strengthening dollar hurts results – as well as smoking restrictions and dubious government lawsuits related to healthcare costs. Philip Morris has large market share and profits generated from Europe, so any economic or Euro currency weakness overseas will hit the bottom line. But Philip Morris raised 2011guidance several times and is looking for double-digit growth in earnings for 2012. If Philip Morris can ever get scale in the Chinese cigarette market (< 1% market share due to government monopoly restrictions), look out. In the meantime, other markets continue to provide growth and PM yields 4.1% at current levels.
CenturyLink (CTL): Telecom shares have traditionally been a defensive sector during troubled times for investors, the proverbial ‘widows and orphans’ stocks. CenturyLink, the successor to Century Telephone, is a rural-based carrier less susceptible to the intense competition seen in more urban markets. CTL recently completed the acquisition of Qwest, the old U.S. West regional spinoff from the 1983 Ma Bell breakup. The recent acquisition of Saavis could help CTL with cloud-based and information technology top-line growth. A rough 2011 saw CTL’s stock price get hit from integration issues regarding Qwest and fears of more dilutive acquisitions. CTL’s operating cash flows cover the dividend by 2x, and the dividend yield is at historically wide spreads to the shares of other telecom companies like Verizon and AT&T. CTL yields 8.2% at current depressed levels.
Cablevision Systems (CVC): Cable companies have traditionally not been a place to seek dividends, but after decades of investment in their fiber optic infrastructure, the payoff is finally taking place. Cablevision has had a very tough 2011 with personnel defections, competition from Verizon’s FiOS, and underwhelming operating results leading to a share decline in excess of 40%. But the dividend is well-covered from cash flows, and the controlling Dolan Family has tried to take the company private in the past and may do so again in the future. The MSG sports empire and the Rainbow programming assets have already been spun-off, so the pure-play CVC assets would appeal to a private equity buyer or a strategic buyer like TimeWarner Cable or Comcast, two long-rumored potential acquirers. Cablevision generates the highest revenue per subscriber figures in the industry, with record levels of triple-play (video, broadband, phone) penetration. After last week’s decline following the surprise resignation of well-respected CEO Tom Rutledge, the shares yield 4.3%.
The ETF Channel Flexible Growth Investment Portfolio is designed to seek growth for investors — anywhere and everywhere. The key to the program is our portfolio strategy allows us complete flexibility in terms of asset allocation as there are no predetermined guidelines as to the level of stocks, bonds, cash, regions, countries, sectors, commodities, or even asset classes in the portfolio! In short, this is a completely flexible portfolio designed to follow the performance trail wherever it leads us.
Avon Products (AVP): Avon has been a dismal performer in 2011, falling over 40% YTD. The roles of Chairman and CEO have recently been separated and Andrea Jung will be concentrating on the former. The dividend has been increased 19 consecutive years, so it is unlikely with the share price drop that management would anger shareholders further with a dividend cut. If Avon holds the payout steady and brings back some cash from overseas that might ease the payout burden since they are currently not earning the dividend from operating cash flow. Borrowing at low rates to fund the dividend while waiting for earnings and cash flow to improve is also a possibility. Better yet, a decline in working capital would boost cash flow and that means reducing inventory and turning over accounts receivable into cash at a faster rate. AVP yields 5.5% at the current depressed share price.
Building a successful portfolio of dividend-paying stocks involves more than buying the highest yielding equities or checking dividend coverage ratios. Diversification is key. Sometimes it pays to buy multiple names within a sector to reduce risk, as with the Mortgage REITs or Energy stocks. Other times, buying best-of-breed in different sectors can spread the risks. Or you may prefer to go the ETF or closed-end fund route. By purchasing a diversified portfolio like the stocks listed above, you can fill out your income needs by reducing stock specific, sector specific, or European contagion specific risks while also grabbing rich dividend yields.
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http://seekingalpha.com/article/299049-3-dividend-stocks-to-keep-an-eye-on
1.) Abbott Laboratories (ABT) is currently trading at $52.5 with a 1 year price target estimate of $57.94 (10.36% upside potential). For the current fiscal year this company boasts: 11.27% EPS growth and 10.44% revenue growth. 5yr dividend growth of 9.86% and a current dividend yield of 3.73%. Current diluted EPS is 3.28 with a P/E ratio of 16.01x. The profit margin is 13.78% with an ROA of 8.03% and an ROE of 22.12%. One thing on the radar to watch closely for this company is its debt/equity ratio of 68.83. Total cash is 8.89B and total debt is 18.22B.
2.) Shaw Communications Inc. (SJR) is currently trading at $20.61 with a 1 year price target estimate of $25.07 (21.64% upside potential). For the current fiscal year this company boasts: 22.76% EPS growth and 28.78% revenue growth. 5yr dividend growth of 40.87% and a current dividend yield of 4.39%. Current diluted EPS is 1.1 with a P/E ratio of 18.81x. The profit margin is 10.99% with an ROA of 6.46% and an ROE of 16.62%. Like ABT, this company does have spiraling debt that does need to be factored in and watched carefully. Current debt/equity ratio is 166.77 with total cash of 609.00M and total debt of 5.52B.
3.) McDonald's Corporation (MCD) is currently trading at $89.49 with a 1 year price target estimate of $97.65 (9.12% upside potential). For the current fiscal year this company boasts: 12.58% EPS growth and 11.19% revenue growth. 5yr dividend growth of 27.53% and a current dividend yield of 3.21%. Current diluted EPS is 4.94 with a P/E ratio of 18.13x. The profit margin is 20.56% with an ROA of 15.80% and an ROE of 37.39%. McDonalds has a solid history and foundation despite its current debt/equity ratio of 82.15. Total cash is 2.07B and total debit is 12.28B, with a beta as low as 0.36. McDonalds seems to be a solid player with good dividend payments. Overall, it seems to be a safe bet.
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http://seekingalpha.com/article/298836-6-strong-dividend-performers-to-have-in-your-portfolio-for-these-times
Picking a bottom in the market is never easy. Many times investors find themselves trying to “catch falling knives” as the saying goes. We have found that there is one way to not financially handicap one’s self by investing in turbulent times and that is simply by doing more of that which is working, and less of that which is not. It seems simple, yet many investors panic and sell their winners to continue to fund, or be able to afford to keep, their losing positions. Below are a few stocks that are at or near 52-week highs and providing a significant yield and thus cash flow. If these were in our portfolio, we would most certainly be holding these stocks and not selling them to hold onto the losers in our portfolio.
Kimberly-Clark Corp. (KMB)
Kimberly-Clark is a solid bet for investors. The stock currently yields 3.9% based upon its $2.80/share dividend. Currently trading at about $71/share, KMB shares are just off of their 52-week high of $71.78 (the 52-week low is $61/share) and have held in quite strongly as of late. The company is best known to consumers for their various brand names including Kleenex, Scott’s, Huggies, Pull-Ups, GoodNites, Kotex, Depend and Poise among others. KMB is a large, financially sound entity with over 50,000 employees and an operating record dating back to 1872.
McDonald’s Corp. (MCD)
McDonald’s is one of those great American growth stories where investors could have purchased the shares at almost any time over the past 40 years and made money. MCD has consistently rewarded investors and after a few missteps in the early 2000s, the company’s stock resumed its upward path. MCD has recently been raising its dividend, now currently $2.80/share (based off the past 12 months), which yields 3.2%. The company has positioned itself to be relevant for the next generation, as well as today, by offering a Dollar Menu, healthy choices, premium coffee and drinks and the burgers and fries that started it all. MCD shares are a bit off of their 52-week high of $91.22 as the stock currently trades at $87.20. With 32,943 restaurants worldwide, located in 117 countries, MCD offers investors exposure to both the US and international markets.
Bristol-Myers Squibb Co. (BMY)
BMY seems to have finally gotten its act together. Once the least favored of the Big Pharma stocks, the company has experienced somewhat of a renaissance in its shares, which trade at $32.33, just off of its 52-week high of $32.75. Although the shares have been rising, BMY still sports a healthy dividend yield of 4.1% (current rate is $1.32/share). According to analyst estimates, both sales and earnings should be down next year, but with nearly $7.7 billion in cash and a tad over $5.2 billion in debt, the company appears in solid financial condition. The payout ratio is at 67%, and is high by most measures, however this payout ratio is below some of its peers in the industry, notably Pfizer (PFE) and Eli Lilly (LLY).
Reynolds American (RAI)
RAI makes some of the best known cigarette brands not owned by Altria. The company has a dividend of $2.12/share and a yield of 5.4%. With its high yield and the uncertain economic times, the stock currently trades at $39.36, just off of the 52-week high of $39.87. Although the smoking population has been shrinking in developed markets for years, RAI and its competitors have found ways to raise prices and cut costs in order to continue to improve revenue and profits and keep the payouts flowing to shareholders. The snus product could prove to be a growth driver for years to come and open up new markets for the company. The company does have an 87% payout ratio but sales and profits are increasing, thus providing what we believe to be a healthy cushion for RAI shareholders.
Duke Energy (DUK)
Duke Energy is in the midst of purchasing Progress Energy, a purchase which it believes will result in considerable cost savings and economies of scale. The acquisition is still awaiting approval from the Feds, but in all likelihood will be approved. Currently DUK has a payout of $1.00/share and yields 5.0%. The shares have held in strongly throughout the economic concerns of late and the acquisition they are performing, which we believe highlights the underlying strength in its shares. Just below its 52-week high of $20.21, DUK trades at $19.79. The company has a payout ratio of 64%, which leaves plenty of room for the dividend and capital expenditures once the Progress Energy acquisition closes and the synergies are realized.
The Southern Company (SO)
SO is a utility company focused on the southeastern United States, and provides services mostly in Georgia, Alabama, Mississippi, and Florida. Other than power services, the company offers wireless and fiber-optic services. The Atlanta based company has a dividend of $1.89/share and provides a yield to investors of 4.5%, the current dividend rate has the company at a 79% payout ratio. Like the other companies we have highlighted, SO is also near a 52-week high with shares currently trading at $42.37, just off of the high at $43.09.
With yields at historic lows for government paper and other debt instruments, investors can lock in healthy yields via dividends from the above mentioned companies. Although riskier than sitting in cash, this option enables one to realize capital gains (and possibly capital losses) and get a revenue stream from the dividends. With the dividends yielding a few times more than most debt instruments and many times more what one could realize by parking cash in a savings instrument we think that these well performing yielders are the way to go. Remember, do more of that which is working and less of that which is not.
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http://seekingalpha.com/article/299069-5-metrics-of-successful-dividend-companies
Everybody likes winners. Looking at the history of the most successful dividend stocks, I have been able to identify several traits, which have been strong predictors of performance.
Rising EPS
A business has to be able to have strong competitive advantages and to deliver value to consumers in the form of goods or services they need. By having a strong brand, a business can afford to raise prices, and have a differentiated product that is more desirable that the competition. A business that manages to grow earnings per share either organically or through acquisitions, can afford to pay a rising dividend.
High Return on Equity
High returns on equity are important to companies. Only a company with a wide-moat is able to charge higher prices. Growing such business might not be as easy simply through additional investments in it. Companies with high returns on equity are typically characterized with having excessive cash flows generated each year, which cannot be easily deployed 100% in the business. Some portion will be deployed, but these companies need to be mindful of the returns generated from new investments. If you generate 20% on your investment, making a new investment might increase earnings per share, but it might not be desirable because it could generate a lower return on equity. I typically want to see a stable ROE, because a declining one shows me that management is taking on any project available, regardless of profitability, without having the best interests of shareholders in mind.
Decreasing number of shares
Some of the most successful companies in the world generate so much cash flow that they tend to have stock buybacks, which decrease the number of shares outstanding. This helps EPS, but also makes each share more valuable as it provides shareholders with a larger percentage of the business, without doing anything. Few companes consistently repurchase shares however, as most end up buying back stock when times are good and stock prices are high and stop buying back shares when times are tough but stock prices are low.
Sustainable Dividend Payout Ratio
Some of the best dividend stocks have been able to create a balance between the amount of money they reinvest in the business, and the amount they distribute to shareholders in the form of dividends or share buybacks. A company that distributes too much to shareholders, might be unable to maintain its business without selling more stock or taking on additional debt. A company that pays too little in dividends might focus too much at growth at any price, which might reduce returns on equity over time.
Dividend Growth History
The companies which are able to generate higher amounts of excess cash flows each year, tend to boost distributions annually. This creates a dividend stream for investors which increases at or above the rate of inflation each year. By strategically allocating these growing dividends through dividend reinvestment, investors are essentially turbocharging their income. There are less than 300 companies in the US which have a culture of sharing their success with shareholders in the form of higher dividends.
Five companies which provide excellent examples of the five metrics above include:
Wal-Mart Stores (WMT) has paid uninterrupted dividends on its common stock since 1973 and increased payments to common shareholders every year for 37 years. The company has managed to deliver an increase in EPS of 12.20% per year since 2001. On average the company has managed to repurchase 2.20% of its stock annually over the past decade. Wal-Mart has one of the largest and most consistent stock buyback programs in the US. The company has had a high return on equity, which has remained in a tight range between 20% and 23% over the past decade. Check my analysis of the stock.
Colgate-Palmolive (CL) is a dividend champion which has increased distributions for 48 years in a row. The company has managed to deliver an impressive increase in EPS of 9.60% per year since 2001. In addition, company has managed to decrease the number of shares outstanding by 1.30% per year over the past decade through share buybacks, which has aided earnings growth. It currently spots a return on equity of 78% and has a sustainable dividend payout ratio. Check my analysis of the stock.
PepsiCo (PEP) is a dividend aristocrat which has increased distributions for 38 years in a row. The company has managed to deliver an average increase in EPS of 10.90% per year since 2000. PepsiCo has a high return on equity, which has remained above 30%, with the exception of a brief decrease in 2004. The company has managed to repurchase 1.35% of its outstanding shares each year since 2001. Check my analysis of the stock.
McDonald’s (MCD) has paid uninterrupted dividends on its common stock since 1976 and increased payments to common shareholders every year for 35 years. The company has managed to deliver an increase in EPS of 15.50% per year since 2001. In addition, the company has managed to repurchase 2.20% of its stock annually over the past decade. The company has been able to increase in return on equity from the high teens in early 2000s to over 30% over the past three years. Check my analysis of the stock.
Procter & Gamble (PG) is a dividend aristocrat which has increased distributions for 55 years in a row. The company has managed to deliver an average increase in EPS of 14.50% per year since 2000. The return on equity has decreased since the purchase of Gillette several years ago, although it is on the increase. Procter & Gamble has spent billions repurchasing stock over the past decade. The only reason why the share count has increased slightly is due to the fact that major acquisitions were made using stock. Check my analysis of the stock.
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This is from the 10/19/2011 New York Times:
Chasing Opportunity in an Age of Upheaval
Ron Carson, the founder of the Carson Wealth Management Group in Omaha, which manages $2.6 billion, said his firm focused on an “advance and protect” strategy, with the emphasis these days on protect. He has investments in dividend-paying stocks like Johnson & Johnson, Microsoft, Verizon, ConocoPhillips and Abbott Laboratories.
Dividend Champions a Rare Undervalued Opportunity
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How Apple’s Dividend Yield Stacks Up Against Others
By Scott Austin
Apple will now pay one of the highest dividends in the U.S. So boasted Chief Financial Officer Peter Oppenheimer on this morning’s conference call.
- Bloomberg News
But the $2.65 per-share quarterly dividend works out to a 1.81% yield at Apple’s current stock price.
While that’s more than the 1.2% average in the tech sector, it’s hardly exceptional.
The S&P 500 average yield is 2.2%. Cracker Barrel, the restaurant chain with the country-store theme and $85 million in profits (300x less than Apple’s), offers 1.8%. Suit outlet Men’s Wearhouse guarantees it too.
Even the 10-year Treasury yield is higher, currently at 2.32%.
Put another way: Apple will pay out about $10 billion each year in dividends, while it generates $75 billion to $80 billion in free cash this year (according to an estimate from brokerage firm Sterne Agee.)
Here’s a look at how Apple compares with other select tech giants. The pressure is now on Google, which has yet to issue a dividend:
AT&T – 5.61%
PFIZER - 4.02%
PHILIP MORRIS INTERNATIONAL - 3.57%
GENERAL ELECTRIC - 3.36%
THE CocaCola COMPANY - 2.90%
JPMorgan Chase & Co. - 2.67%
ExxonMobil - 2.16%
QUALCOMM - 1.50%
Verizon – 5.09%
Microsoft – 2.42%
Hewlett-Packard – 2.01%
Apple – 1.81%
Cisco – 1.6%
IBM – 1.51%
Oracle – 0.81%
Google – 0%
http://online.wsj.com/article/SB10001424052702304724404577291071289857802.html
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http://seekingalpha.com/article/318369-david-dreman-s-high-dividend-stock-picks
David Dreman, founder of Dreman Value Management, is also the author of four investment books and many scholarly articles. His new book, "Contrarian Investment Strategies: The Psychological Edge," will be published this week. In addition to publishing books and articles, he is also the writer of a column for Forbes, the co-editor of Journal of Psychology and Financial Markets and is on board of directors of the Institute of Behavioral Finance, which publishes Journal of Behavioral Finance. He is currently managing about $5 billion. He used to have $22 billion AUM in 2007 but he was hit hard by the financial crisi in 2008.
In this article, we are going to focus on the dividend stock picks of Dreman. All companies have at least $10 billion market cap and dividend yields of over 3%. As of September 30, 2011, Dreman Value Management invested at least $10 million in these positions.
| Company Name | Ticker | Value | Activity | Dividend |
| ALTRIA GROUP INC | MO | 33716 | -1% | 5.69% |
| CONOCOPHILLIPS | COP | 29457 | -1% | 3.61% |
| PFIZER INC | PFE | 28481 | -11% | 4.07% |
| GENERAL ELECTRIC | GE | 23298 | -1% | 3.67% |
| PHILIP MORRIS | PM | 20275 | -1% | 3.94% |
| INTEL CORP | INTC | 19329 | -1% | 3.31% |
| NORTHROP GRUMMAN | NOC | 15605 | 0% | 3.44% |
| ALLSTATE CORP | ALL | 13908 | 1% | 3.03% |
| EMERSON ELECTRIC | EMR | 12782 | -1% | 3.35% |
Pfizer Inc (PFE) also has a dividend yield of higher than 4%. It has a dividend yield of 4.07% and returned 23.43% since the end of the third quarter, beating the market by nearly 10 percentage points. At the end of September, Dreman disclosed owning $28.5 million worth of PFE shares. Ken Fisher’s Fisher Asset Management also had $389 million invested in PFE.
Another mega-cap dividend stock that Dreman is bullish about is General Electric Co (GE). At the end of the third quarter, Dreman Value Management had $23 million invested GE. The stock has a dividend yield of 3.67% and gained 23.09% since the end of September, outperforming the market by more than 9 percentage points. GE is quite popular among hedge funds. There were 44 hedge funds with GE positions in their portfolios at the end of the third quarter, including Ken Fisher’s Fisher Asset Management, Bill Miller’s Legg Mason Capital Management, and Warren Buffett’s Berkshire Hathaway.
Other large-cap dividend stocks that Dreman likes include ConocoPhillips (COP), Philip Morris International Inc (PM) and Intel Corp (INTC). During the past few years, central banks all over the world have been trying to stimulate the economy by using expansionary monetary policies. We are concerned that the Fed’s actions will lead to inflation in the near future. Therefore, we have been recommending investors play defensively by investing in dividend stocks. And one of the most practical ways of picking dividend stocks is to focus on the stock picks of good fund managers like David Dreman.
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Recommended by somebody on Nightly Business Report on 12/16/2011 these dividend paying stocks: EXC RAI PAYX INTC ETN
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On 12/23/2011 shares of McDonald's Corporation went above $100 for the first time. See Two Stocks Making new Highs and Paying a Good Dividend.
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From the 1/11/2012 New York Times:
http://www.nytimes.com/2012/01/11/business/rising-dividends-expected-in-2012-as-companies-woo-investors.html
Companies that pay high dividends were some of the best performers in the markets last year.
Telecommunications, utilities and health care shares had the highest yield rates at the end of 2011, at 5.86, 4.13 and 3 percent, respectively.
McDonald’s had double-digit percentage stock returns, at more than 30 percent, and dividend yields that exceeded the S.& P. index. Other companies with similar performance included Bristol-Meyers, Consolidated Edison and Home Depot. The dividend yield is the amount paid per share as a percentage of the stock price. In McDonald’s case, that equals 2.8 percent, or $2.80 for each share, which are now trading at $99.70.
stock symbols MCD BMY ED HD
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12/19/2011 Wall Street Journal: Dividend Stocks Become the Heroes
http://online.wsj.com/article/SB10001424052970203733304577105420378284462.html
By JONATHAN CHENG
A digital billboard greets commuters backed up in morning traffic along a bend in the Schuylkill Expressway snaking toward Philadelphia: "Earned Any Dividends Lately?"Urging investors toward dividend-paying shares has been an easy sell. This year, the 100 stocks in the Standard & Poor's 500-stock index with the highest dividend yields are up an average of 3.7% before dividend payouts, according to Birinyi Associates. The 100 lowest-yielding stocks are down an average of 10%.
Dividend yield is calculated by dividing a company's annual per-share dividend by share price. In the third quarter, share-price returns on high-dividend payers exceeded those of lower-paying companies by 17 percentage points, AllianceBernstein calculates.
Investors hungry for stock-price gains have been barreling into dividend-paying shares, long regarded as "widow-and-orphan stocks" because of their steady but stodgy performance. Some analysts say such stocks are the most "crowded" trade around these days. Investors have been dazzled by dividend yields of more than 4% on many utilities, household-goods manufacturers and telecommunications companies. That is twice as much as recent paltry yields on 10-year Treasurys.
Dividend-stock fans say the unusually strong performance is likely to last as long as volatility driven by Europe's debt crisis and the global economic fits and starts continues to grip financial markets. Stocks that pay steady dividends tend to fall less than others when times are tough.
"Investors are demanding the money back in one form or another," says Jennifer Ellison, principal and portfolio manager at Bingham, Osborn & Scarborough in San Francisco, which manages $2.2 billion in investments. Buying stocks with healthy dividends is "not the holy grail that's going to solve all your problems, but it's one more way to mute that volatility," she says.
Skeptics contend that dividend-rich stocks aren't as safe as they look.
The recent run-up is unsustainable, these doubters say, especially if economic conditions improve, which could cause investors to switch to higher-growth companies that tend to pay lower or no dividends.
In contrast to classic dividend-stock investors who care more about quarterly dividend payments than stock price, many recent converts bought the shares for income and the possibility of price gains. If growth stocks spring back to life, the same momentum that pushed dividend-rich shares higher could reverse with just as much force.
"A crowded trade is always risky," says Vadim Zlotnikov, chief market strategist at AllianceBernstein. Last week, he warned clients in a note that, while dividend stocks might keep outperforming the overall stock market, any signs of an economic upswing could quickly end the winning streak.
In the first half of the 20th century, companies had to pay richer dividends on stocks than on their bonds in order to compensate investors for the higher risk of holding equity. Over time, high-dividend stocks have gotten less attention from investors than growth stocks, except for scurries during periods of economic stress.
High-dividend companies have typically seen their price-to-earnings ratios trade 20% or more lower than non-dividend-paying shares over the past three decades, according to AllianceBernstein. This year, though, valuations on dividend-hefty shares caught up with their no-dividend peers for the first time since the late 1970s.
McDonald's is a darling dividend stock of many investors. The fast-food chain's stock-price surge of 27% in the past year leads every other Dow Jones Industrial Average component.
McDonald's has a dividend yield of about 3%, outpacing the 2.625% coupon bond issued by the company in September, due in 2022. McDonald's has boosted its dividend by an average of 27% annually in the past five years, according to Haverford Trust Co.
"You have the best of both worlds: a company that has seen the stock price go up, and they've increased their dividend," says Hank Smith, chief investment officer at Haverford. The firm manages more than $6 billion in assets.
Ms. Ellison of Bingham, Osborn & Scarborough agrees with concerns that dividend stocks are "a defensive, quality play, and if we have big, big returns on stocks next year, no one will care." Still, if events in Europe and Washington keep hovering over the financial markets for years to come, as some investors expect, the recent surge might last, she says.
Such stocks could get an even longer-lasting lift as more baby boomers reach retirement age—and reduce their risk appetite. The first baby boomers turned 65 years old this year.
Haverford isn't changing direction in its portfolios of dividend-paying blue-chip stocks like McDonald's and Johnson & Johnson. The firm spends a few thousand dollars a month on the "Earned Any Dividends Lately?" billboard.
"We think our message about the importance of dividends is a timeless one," says Joe McLaughlin, Haverford's chairman and chief executive. "But obviously, it's also very timely right now."
Haverford is cooking up three new billboard slogans for 2012.
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12/19/2011
http://www.etfchannel.com/article/201112/five-dividend-treats-from-santa-for-the-holidays-lmt-pm-ctl-cvc-avp-dvy-dhs-Santa12192011FRANK.htm/
Santa Claus is coming to town, and he’s checking his list twice for some dividend paying stocks that are not part of the usual sectors that retail investors and dividend-hungry retirees normally flock to. Many individual portfolios are already overweight in sectors like energy, financials, royalty trusts, etc. This concentrates financial and interest rate risk (i.e., Mortgage REITs) or commodity exposure (i.e., energy stocks). Heavy allocations to these sectors can be justified in the current slow-growth, low-rate environment, and these sectors do have some defensive attributes besides healthy dividend yields. But there are other sectors that one can look at that will diversify an investment portfolio while still grabbing some very attractive dividend yields.
Telecom, consumer staples, and consumer non-durables offer additional ways to diversify portfolios while generating new and diversified dividend streams. The yields tend to be much lower than in the financial or energy sectors, but they also have much less operating and financial leverage in their business models. Without being tied directly to the financial sector and hence indirectly to the European debt fiasco, and with products that consumers are loath to discard or cut back on even in recessionary times, their business models tend to be resilient during tough economic times.
Here are 5 dividend stocks whose business models tend to be more stable and less reliant on the ups-or-downs of the U.S. or global economies:
Lockheed Martin (LMT): The defense contractor is trying to shrug off a two-front war: the end of the conflicts in Iraq and Afghanistan, as well as automatic defense budget cuts from Congress. But Lockheed makes important weapons systems with bi-partisan support such as the F-35 Joint Strike Fighter. The last time the U.S. defense sector faced cutbacks were the 1990’s, which ironically produced some of the best returns for many defense companies, even compared to the Cold War buildup of the 1980’s. This is because improved capital management – share buybacks and dividends – take priority instead of dubious R&D on expensive potential weapons systems. Excess costs and overhead tend to be eliminated during the lean times, too. Lockheed Martin’s strong cash flows cover the dividend with room to spare (close to 3x coverage forecasted over the next few years) so even some minor setbacks in divisions impacted by slowing revenue growth should not affect dividend sustainability or prevent small increases in the payout. LMT yields 5.2% after a mid-teens return YTD for 2011.
Philip Morris (PM): Philip Morris is the international operation spinoff from Altria. It is the largest privately-owned cigarette company in the world with about 16% market share of the global cigarette market. Flagship Marlboro and other brands continue to make excellent penetration in emerging markets like Asia, Turkey, South America, and Eastern Europe. The biggest risks to Philip Morris are currency-related – all the local revenues must be translated back into dollars, so a strengthening dollar hurts results – as well as smoking restrictions and dubious government lawsuits related to healthcare costs. Philip Morris has large market share and profits generated from Europe, so any economic or Euro currency weakness overseas will hit the bottom line. But Philip Morris raised 2011guidance several times and is looking for double-digit growth in earnings for 2012. If Philip Morris can ever get scale in the Chinese cigarette market (< 1% market share due to government monopoly restrictions), look out. In the meantime, other markets continue to provide growth and PM yields 4.1% at current levels.
CenturyLink (CTL): Telecom shares have traditionally been a defensive sector during troubled times for investors, the proverbial ‘widows and orphans’ stocks. CenturyLink, the successor to Century Telephone, is a rural-based carrier less susceptible to the intense competition seen in more urban markets. CTL recently completed the acquisition of Qwest, the old U.S. West regional spinoff from the 1983 Ma Bell breakup. The recent acquisition of Saavis could help CTL with cloud-based and information technology top-line growth. A rough 2011 saw CTL’s stock price get hit from integration issues regarding Qwest and fears of more dilutive acquisitions. CTL’s operating cash flows cover the dividend by 2x, and the dividend yield is at historically wide spreads to the shares of other telecom companies like Verizon and AT&T. CTL yields 8.2% at current depressed levels.
Cablevision Systems (CVC): Cable companies have traditionally not been a place to seek dividends, but after decades of investment in their fiber optic infrastructure, the payoff is finally taking place. Cablevision has had a very tough 2011 with personnel defections, competition from Verizon’s FiOS, and underwhelming operating results leading to a share decline in excess of 40%. But the dividend is well-covered from cash flows, and the controlling Dolan Family has tried to take the company private in the past and may do so again in the future. The MSG sports empire and the Rainbow programming assets have already been spun-off, so the pure-play CVC assets would appeal to a private equity buyer or a strategic buyer like TimeWarner Cable or Comcast, two long-rumored potential acquirers. Cablevision generates the highest revenue per subscriber figures in the industry, with record levels of triple-play (video, broadband, phone) penetration. After last week’s decline following the surprise resignation of well-respected CEO Tom Rutledge, the shares yield 4.3%.
The ETF Channel Flexible Growth Investment Portfolio is designed to seek growth for investors — anywhere and everywhere. The key to the program is our portfolio strategy allows us complete flexibility in terms of asset allocation as there are no predetermined guidelines as to the level of stocks, bonds, cash, regions, countries, sectors, commodities, or even asset classes in the portfolio! In short, this is a completely flexible portfolio designed to follow the performance trail wherever it leads us.
Avon Products (AVP): Avon has been a dismal performer in 2011, falling over 40% YTD. The roles of Chairman and CEO have recently been separated and Andrea Jung will be concentrating on the former. The dividend has been increased 19 consecutive years, so it is unlikely with the share price drop that management would anger shareholders further with a dividend cut. If Avon holds the payout steady and brings back some cash from overseas that might ease the payout burden since they are currently not earning the dividend from operating cash flow. Borrowing at low rates to fund the dividend while waiting for earnings and cash flow to improve is also a possibility. Better yet, a decline in working capital would boost cash flow and that means reducing inventory and turning over accounts receivable into cash at a faster rate. AVP yields 5.5% at the current depressed share price.
Building a successful portfolio of dividend-paying stocks involves more than buying the highest yielding equities or checking dividend coverage ratios. Diversification is key. Sometimes it pays to buy multiple names within a sector to reduce risk, as with the Mortgage REITs or Energy stocks. Other times, buying best-of-breed in different sectors can spread the risks. Or you may prefer to go the ETF or closed-end fund route. By purchasing a diversified portfolio like the stocks listed above, you can fill out your income needs by reducing stock specific, sector specific, or European contagion specific risks while also grabbing rich dividend yields.
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http://seekingalpha.com/article/299049-3-dividend-stocks-to-keep-an-eye-on
1.) Abbott Laboratories (ABT) is currently trading at $52.5 with a 1 year price target estimate of $57.94 (10.36% upside potential). For the current fiscal year this company boasts: 11.27% EPS growth and 10.44% revenue growth. 5yr dividend growth of 9.86% and a current dividend yield of 3.73%. Current diluted EPS is 3.28 with a P/E ratio of 16.01x. The profit margin is 13.78% with an ROA of 8.03% and an ROE of 22.12%. One thing on the radar to watch closely for this company is its debt/equity ratio of 68.83. Total cash is 8.89B and total debt is 18.22B.
2.) Shaw Communications Inc. (SJR) is currently trading at $20.61 with a 1 year price target estimate of $25.07 (21.64% upside potential). For the current fiscal year this company boasts: 22.76% EPS growth and 28.78% revenue growth. 5yr dividend growth of 40.87% and a current dividend yield of 4.39%. Current diluted EPS is 1.1 with a P/E ratio of 18.81x. The profit margin is 10.99% with an ROA of 6.46% and an ROE of 16.62%. Like ABT, this company does have spiraling debt that does need to be factored in and watched carefully. Current debt/equity ratio is 166.77 with total cash of 609.00M and total debt of 5.52B.
3.) McDonald's Corporation (MCD) is currently trading at $89.49 with a 1 year price target estimate of $97.65 (9.12% upside potential). For the current fiscal year this company boasts: 12.58% EPS growth and 11.19% revenue growth. 5yr dividend growth of 27.53% and a current dividend yield of 3.21%. Current diluted EPS is 4.94 with a P/E ratio of 18.13x. The profit margin is 20.56% with an ROA of 15.80% and an ROE of 37.39%. McDonalds has a solid history and foundation despite its current debt/equity ratio of 82.15. Total cash is 2.07B and total debit is 12.28B, with a beta as low as 0.36. McDonalds seems to be a solid player with good dividend payments. Overall, it seems to be a safe bet.
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http://seekingalpha.com/article/298836-6-strong-dividend-performers-to-have-in-your-portfolio-for-these-times
Picking a bottom in the market is never easy. Many times investors find themselves trying to “catch falling knives” as the saying goes. We have found that there is one way to not financially handicap one’s self by investing in turbulent times and that is simply by doing more of that which is working, and less of that which is not. It seems simple, yet many investors panic and sell their winners to continue to fund, or be able to afford to keep, their losing positions. Below are a few stocks that are at or near 52-week highs and providing a significant yield and thus cash flow. If these were in our portfolio, we would most certainly be holding these stocks and not selling them to hold onto the losers in our portfolio.
Kimberly-Clark Corp. (KMB)
Kimberly-Clark is a solid bet for investors. The stock currently yields 3.9% based upon its $2.80/share dividend. Currently trading at about $71/share, KMB shares are just off of their 52-week high of $71.78 (the 52-week low is $61/share) and have held in quite strongly as of late. The company is best known to consumers for their various brand names including Kleenex, Scott’s, Huggies, Pull-Ups, GoodNites, Kotex, Depend and Poise among others. KMB is a large, financially sound entity with over 50,000 employees and an operating record dating back to 1872.
McDonald’s Corp. (MCD)
McDonald’s is one of those great American growth stories where investors could have purchased the shares at almost any time over the past 40 years and made money. MCD has consistently rewarded investors and after a few missteps in the early 2000s, the company’s stock resumed its upward path. MCD has recently been raising its dividend, now currently $2.80/share (based off the past 12 months), which yields 3.2%. The company has positioned itself to be relevant for the next generation, as well as today, by offering a Dollar Menu, healthy choices, premium coffee and drinks and the burgers and fries that started it all. MCD shares are a bit off of their 52-week high of $91.22 as the stock currently trades at $87.20. With 32,943 restaurants worldwide, located in 117 countries, MCD offers investors exposure to both the US and international markets.
Bristol-Myers Squibb Co. (BMY)
BMY seems to have finally gotten its act together. Once the least favored of the Big Pharma stocks, the company has experienced somewhat of a renaissance in its shares, which trade at $32.33, just off of its 52-week high of $32.75. Although the shares have been rising, BMY still sports a healthy dividend yield of 4.1% (current rate is $1.32/share). According to analyst estimates, both sales and earnings should be down next year, but with nearly $7.7 billion in cash and a tad over $5.2 billion in debt, the company appears in solid financial condition. The payout ratio is at 67%, and is high by most measures, however this payout ratio is below some of its peers in the industry, notably Pfizer (PFE) and Eli Lilly (LLY).
Reynolds American (RAI)
RAI makes some of the best known cigarette brands not owned by Altria. The company has a dividend of $2.12/share and a yield of 5.4%. With its high yield and the uncertain economic times, the stock currently trades at $39.36, just off of the 52-week high of $39.87. Although the smoking population has been shrinking in developed markets for years, RAI and its competitors have found ways to raise prices and cut costs in order to continue to improve revenue and profits and keep the payouts flowing to shareholders. The snus product could prove to be a growth driver for years to come and open up new markets for the company. The company does have an 87% payout ratio but sales and profits are increasing, thus providing what we believe to be a healthy cushion for RAI shareholders.
Duke Energy (DUK)
Duke Energy is in the midst of purchasing Progress Energy, a purchase which it believes will result in considerable cost savings and economies of scale. The acquisition is still awaiting approval from the Feds, but in all likelihood will be approved. Currently DUK has a payout of $1.00/share and yields 5.0%. The shares have held in strongly throughout the economic concerns of late and the acquisition they are performing, which we believe highlights the underlying strength in its shares. Just below its 52-week high of $20.21, DUK trades at $19.79. The company has a payout ratio of 64%, which leaves plenty of room for the dividend and capital expenditures once the Progress Energy acquisition closes and the synergies are realized.
The Southern Company (SO)
SO is a utility company focused on the southeastern United States, and provides services mostly in Georgia, Alabama, Mississippi, and Florida. Other than power services, the company offers wireless and fiber-optic services. The Atlanta based company has a dividend of $1.89/share and provides a yield to investors of 4.5%, the current dividend rate has the company at a 79% payout ratio. Like the other companies we have highlighted, SO is also near a 52-week high with shares currently trading at $42.37, just off of the high at $43.09.
With yields at historic lows for government paper and other debt instruments, investors can lock in healthy yields via dividends from the above mentioned companies. Although riskier than sitting in cash, this option enables one to realize capital gains (and possibly capital losses) and get a revenue stream from the dividends. With the dividends yielding a few times more than most debt instruments and many times more what one could realize by parking cash in a savings instrument we think that these well performing yielders are the way to go. Remember, do more of that which is working and less of that which is not.
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http://seekingalpha.com/article/299069-5-metrics-of-successful-dividend-companies
Everybody likes winners. Looking at the history of the most successful dividend stocks, I have been able to identify several traits, which have been strong predictors of performance.
Rising EPS
A business has to be able to have strong competitive advantages and to deliver value to consumers in the form of goods or services they need. By having a strong brand, a business can afford to raise prices, and have a differentiated product that is more desirable that the competition. A business that manages to grow earnings per share either organically or through acquisitions, can afford to pay a rising dividend.
High Return on Equity
High returns on equity are important to companies. Only a company with a wide-moat is able to charge higher prices. Growing such business might not be as easy simply through additional investments in it. Companies with high returns on equity are typically characterized with having excessive cash flows generated each year, which cannot be easily deployed 100% in the business. Some portion will be deployed, but these companies need to be mindful of the returns generated from new investments. If you generate 20% on your investment, making a new investment might increase earnings per share, but it might not be desirable because it could generate a lower return on equity. I typically want to see a stable ROE, because a declining one shows me that management is taking on any project available, regardless of profitability, without having the best interests of shareholders in mind.
Decreasing number of shares
Some of the most successful companies in the world generate so much cash flow that they tend to have stock buybacks, which decrease the number of shares outstanding. This helps EPS, but also makes each share more valuable as it provides shareholders with a larger percentage of the business, without doing anything. Few companes consistently repurchase shares however, as most end up buying back stock when times are good and stock prices are high and stop buying back shares when times are tough but stock prices are low.
Sustainable Dividend Payout Ratio
Some of the best dividend stocks have been able to create a balance between the amount of money they reinvest in the business, and the amount they distribute to shareholders in the form of dividends or share buybacks. A company that distributes too much to shareholders, might be unable to maintain its business without selling more stock or taking on additional debt. A company that pays too little in dividends might focus too much at growth at any price, which might reduce returns on equity over time.
Dividend Growth History
The companies which are able to generate higher amounts of excess cash flows each year, tend to boost distributions annually. This creates a dividend stream for investors which increases at or above the rate of inflation each year. By strategically allocating these growing dividends through dividend reinvestment, investors are essentially turbocharging their income. There are less than 300 companies in the US which have a culture of sharing their success with shareholders in the form of higher dividends.
Five companies which provide excellent examples of the five metrics above include:
Wal-Mart Stores (WMT) has paid uninterrupted dividends on its common stock since 1973 and increased payments to common shareholders every year for 37 years. The company has managed to deliver an increase in EPS of 12.20% per year since 2001. On average the company has managed to repurchase 2.20% of its stock annually over the past decade. Wal-Mart has one of the largest and most consistent stock buyback programs in the US. The company has had a high return on equity, which has remained in a tight range between 20% and 23% over the past decade. Check my analysis of the stock.
Colgate-Palmolive (CL) is a dividend champion which has increased distributions for 48 years in a row. The company has managed to deliver an impressive increase in EPS of 9.60% per year since 2001. In addition, company has managed to decrease the number of shares outstanding by 1.30% per year over the past decade through share buybacks, which has aided earnings growth. It currently spots a return on equity of 78% and has a sustainable dividend payout ratio. Check my analysis of the stock.
PepsiCo (PEP) is a dividend aristocrat which has increased distributions for 38 years in a row. The company has managed to deliver an average increase in EPS of 10.90% per year since 2000. PepsiCo has a high return on equity, which has remained above 30%, with the exception of a brief decrease in 2004. The company has managed to repurchase 1.35% of its outstanding shares each year since 2001. Check my analysis of the stock.
McDonald’s (MCD) has paid uninterrupted dividends on its common stock since 1976 and increased payments to common shareholders every year for 35 years. The company has managed to deliver an increase in EPS of 15.50% per year since 2001. In addition, the company has managed to repurchase 2.20% of its stock annually over the past decade. The company has been able to increase in return on equity from the high teens in early 2000s to over 30% over the past three years. Check my analysis of the stock.
Procter & Gamble (PG) is a dividend aristocrat which has increased distributions for 55 years in a row. The company has managed to deliver an average increase in EPS of 14.50% per year since 2000. The return on equity has decreased since the purchase of Gillette several years ago, although it is on the increase. Procter & Gamble has spent billions repurchasing stock over the past decade. The only reason why the share count has increased slightly is due to the fact that major acquisitions were made using stock. Check my analysis of the stock.
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This is from the 10/19/2011 New York Times:
Chasing Opportunity in an Age of Upheaval
Ron Carson, the founder of the Carson Wealth Management Group in Omaha, which manages $2.6 billion, said his firm focused on an “advance and protect” strategy, with the emphasis these days on protect. He has investments in dividend-paying stocks like Johnson & Johnson, Microsoft, Verizon, ConocoPhillips and Abbott Laboratories.
“We’ve done the research and think they’re cheap,” said Mr. Carson, who has $68 million of his own money invested in this strategy. “They all pay really good dividends. But if you look at what they could pay versus what they do pay, they could pay substantially more, so the dividend is safe.”
Mr. Berggruen said he, too, favored simple investments like dividend-paying stocks as “something I’d recommend to my mother.” He mentioned multinational corporations with large cash flows and dividends, like Nestlé or Anheuser-Busch InBev, because they spread their risks around in many different markets, so currency or economic crises in a few countries will not damage them. “If I had to put all of my money away and come back in five years, this is what I would do,” he said.
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From page B7 of the Saturday September 10, 2011 Wall Street Journal:
I wrote this comment there:
My goal is to buy only corporations which have a long history of increasing the dividend every year. I will never sell these shares unless a dividend cut is announced. I will keep buying shares every month using most of my paycheck and all of my dividend income. When my dividend income is much more than I need to live on, I will retire. After I retire I will continue to buy shares and never sell anything. By never touching the principle and living only from the dividends, I will never have to worry about outliving my investments. When shares go way down, while watching idiots panic I will take advantage of the higher dividend yield and keep buying. I will never have to sell anything because I will buy only companies with safe growing dividends.
The market storm of the past few months has produced a bright side: dividend yields are on the rise.
For long-term investors, that might be reason enough to put spare cash to work now. Everyone loves price appreciation when it happens—but even sleepy stocks that seem to go nowhere can pay off nicely given the combination of dividends, reinvestment and time.
Dividend yields are simply a company's annualized payment divided by its share price. So when share prices fall, yields rise (assuming dividend payments stay the same).
That is precisely what has been happening lately. The MSCI All Country World Index dropped 12.1% during the third quarter through Thursday and carried a 2.9% dividend yield, up from 2.5% at the end of the second quarter. MSCI's All-Country Europe index, which tumbled 18%, now pays 4.0%, up from 3.5%.
Even in the U.S., where yields are much stingier, the Standard & Poor's 500-stock index now yields 2.1%, up from 1.8%. And a quarter of its members pay more than 3%.
To see how dividends can add up, consider New York's power company, Consolidated EdisonInc. It is 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.
Today, Con Ed has single-digit sales growth and its shares are one-fifth as volatile as the broad U.S. market. (Yawn.) Over the past decade, its stock price has only slightly outpaced inflation. But with reinvested dividends, shares returned 128%. The S&P 500 returned 33% over the same period with dividends reinvested.
Plenty of big dividend payers have performed better than Con Ed over the past decade, assuming reinvestment. Oil producer Chevron Corp. has returned almost 200%, while Altria Group Inc., the U.S. tobacco giant, has returned more than 300%.
These returns don't subtract for taxes. But dividend taxes are capped at 15% at least through 2012, and taxes are deferred altogether in qualified retirement accounts.
What do the aforementioned companies have in common, besides their dividends? They are slow growers. That sounds like a negative, but slow growth can bring two benefits. First, a limited need to spend on expansion allows such companies to boost dividends as profits rise. Con Ed, for example, has increased its dividend for 37 consecutive years.
Second, a lack of attention from growth-obsessed investors tends to keep stocks like these from reaching bubbly levels. That means investors generally can reinvest their dividends at fair prices.
Together, those traits can present ideal conditions for something even more impressive than the compounding power of interest: the compounding power of dividends. (Dividend payments, after all, sometimes grow.)
To some investors clinging to memories of a booming stock market, dividend-collecting might sound boring. But there are two good reasons to believe that boring will outperform in coming years.
First, stock returns don't typically consist of exciting price gains with dinky dividends tacked on. Over the eight decades ended September 2010, dividends contributed 44% of S&P 500 total returns, according to research by Fidelity Investments. And that includes a long, anomalous stretch during the 1980s and 1990s, when valuations bloated and yields shrank. During the 1970s, when returns averaged 5.9% a year, dividends contributed 71% of that figure.
Second, from here, broad-market returns might be smaller than investors are accustomed to. Bradford Cornell, a finance professor at the California Institute of Technology who specializes in valuation, argued in a paper published last year in the Financial Analysts Journal that stock returns are inextricably tied to economic growth, which is necessarily slowing around the developed world. Stock investors, he says, should expect to collect their dividend yields plus about 1% a year in price gains after inflation.
The good news is that more S&P 500 companies have raised or initiated dividends this year through August than during the same period in any of the past seven years. They have plenty of room for more increases; payments are less than one-third of profits, a historic low.
To find companies that might possess that newly alluring combination of slow, steady growth and rising dividends, a good starting point is S&P's Dividends Aristocrats list. These are S&P 500 members that have increased their payments for at least 25 years running. There are 42 altogether, and 15 of them pay at least 3%. In addition to Con Ed, these include Johnson & Johnson, Emerson Electric Co., Pepsico Inc. and Procter & Gamble Co.
For exchange-traded-fund investors, the PowerShares Dividend Achievers Portfolio consists of companies that have raised their payments for at least 10 consecutive years. Wal-Mart StoresInc. is its biggest holding. The fund yields 2.6% and has annual expenses of $60 per $10,000 invested. The Vanguard High Dividend Yield ETF is focused on yield and not payment growth, but it holds plenty of consistent dividend boosters just the same. Its biggest holding: Exxon Mobil Corp., which has increased payments by an average of 5.7% a year for 27 years, making it a Dividend Aristocrat. The fund yields 3.3% and costs a slim $18 a year per $10,000 invested.
Yields like these, if reinvested consistently, might help portfolios expand in coming years even if share prices don't.
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S&P 500 Dividend Aristocrats
Constituent Name 9/9/2011 Constituent Symbol
3M Co MMM
AFLAC Inc AFL
Abbott Laboratories ABT
Air Products & Chemicals Inc APD
Archer-Daniels-Midland Co ADM
Automatic Data Processing ADP
Bard, C.R. Inc BCR
Becton, Dickinson & Co BDX
Bemis Co Inc BMS
Brown-Forman Corp B BF/B
CenturyLink Inc CTL
Chubb Corp CB
Cincinnati Financial Corp CINF
Cintas Corp CTAS
Clorox Co CLX
Coca-Cola Co KO
Consolidated Edison Inc ED
Dover Corp DOV
Ecolab Inc ECL
Emerson Electric Co EMR
Exxon Mobil Corp XOM
Family Dollar Stores Inc FDO
Grainger, W.W. Inc GWW
Hormel Foods Corp HRL
Johnson & Johnson JNJ
Kimberly-Clark KMB
Leggett & Platt LEG
Lowe's Cos Inc LOW
McCormick & Co MKC
McDonald's Corp MCD
McGraw-Hill Cos Inc MHP
PPG Industries Inc PPG
PepsiCo Inc PEP
Pitney Bowes Inc PBI
Procter & Gamble PG
Sherwin-Williams Co SHW
Sigma-Aldrich Corp SIAL
Stanley Black & Decker SWK
Target Corp TGT
VF Corp VFC
Wal-Mart Stores WMT
Walgreen Co WAG
Top 10 Constituents by Market Cap
(as of 09-Sep-2011)
| Constituent | Symbol | GICS® Sector | Price ($) |
|---|---|---|---|
| VF Corp | VFC | Consumer Discretionary | 113.4 |
| Target Corp | TGT | Consumer Discretionary | 50.02 |
| Coca-Cola Co | KO | Consumer Staples | 69.37 |
| Consolidated Edison Inc | ED | Utilities | 55.12 |
| Grainger, W.W. Inc | GWW | Industrials | 149.22 |
| McDonald's Corp | MCD | Consumer Discretionary | 85.02 |
| Kimberly-Clark | KMB | Consumer Staples | 67.23 |
| Clorox Co | CLX | Consumer Staples | 67.48 |
| McGraw-Hill Cos Inc | MHP | Consumer Discretionary | 38.72 |
| Abbott Laboratories | ABT | Health Care | 50.43 |
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I also want to buy shares of these corporations:
Consolidated Edison Inc.
Chevron Corp.
Altria Group Inc.
Johnson & Johnson
Pepsico Inc.
Procter & Gamble Co.
Exxon Mobil Corp.
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The disgusting crap served at McDonalds I wouldn't give to a dog. But it's on my list of companies to buy. Their dividend is not that great but they keep raising the dividend every year.
The parent company of Bell Canada has a better dividend yield and they also raise their dividend frequently.
I look forward to buying shares in these companies and many others that pay dividends.
From a 8/7/2011 news article:
So with a list of uncertainties on the macro level, but with strong fundamentals at the micro level, how should an investor proceed? We think the global outlook calls for continuing with a cautious, defensive stance in September. In this environment, a stock's dividend yield may prove to be an important cushion against market volatility. Plenty of companies are performing well this year and are seeing their share prices hold up and even advance, with the added bonus of rewarding shareholders by paying dividends. With bonds yielding next to nothing, an income stream from a dividend-paying stock is even more attractive.
In the consumer area, shares in McDonald's pay a yield of about 2.8%, with one of the most valuable brand names in the world, and over half of its operating income from overseas operations. McDonald's has been expanding aggressively in emerging markets, with plans to double the number of locations in China alone.
The large-cap telecoms can provide an anchor of stability for a stock portfolio. BCE, Inc. , the parent of Bell Canada, has been producing for shareholders through productivity enhancements (i.e., reducing its cost structure), and by expanding and bundling its wireline, wireless, Internet and data services. The company enjoys a dominant market share in its home markets, and currently provides shareholders a 5.4% dividend yield.
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$34.28 $0.05 (0.15%)Don't let it get away!
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Help yourself with the Fool's FREE and easy new watchlist service today.
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Ever since the Gulf oil disaster, offshore drilling has had a stigma attached to it. But in many parts of the world, you'll find some of the biggest reserves in hard-to-reach places below ocean floors. Seadrill (NYSE: SDRL ) hopes to take advantage of those opportunities. Below, we'll look at how Seadrill does on our 10-point scale.
The right stocks for retireesWith decades to go before you need to tap your investments, you can take greater risks, weighing the chance of big losses against the potential for mind-blowing returns. But as retirement approaches, you no longer have the luxury of waiting out a downturn.
Sure, you still want good returns, but you also need to manage your risk and protect yourself against bear markets, which can maul your finances at the worst possible time. The right stocks combine both of these elements in a single investment.
When scrutinizing a stock, retirees should look for:
- Size. Most retirees would rather not take a flyer on unproven businesses. Bigger companies may lack their smaller counterparts' growth potential, but they do offer greater security.
- Consistency. While many investors look for fast-growing companies, conservative investors want to see steady, consistent gains in revenue, free cash flow, and other key metrics. Slow growth won't make headlines, but it will help prevent the kind of ugly surprises that suddenly torpedo a stock's share price.
- Stock stability. Conservative retirement investors prefer investments that move less dramatically than typical stocks, and they particularly want to avoid big losses. These investments will give up some gains during bull markets, but they won't fall as far or as fast during bear markets. Beta measures volatility, but we also want a track record of solid performance as well.
- Valuation. No one can afford to pay too much for a stock, even if its prospects are good. Using normalized earnings multiples helps smooth out one-time effects, giving you a longer-term context.
- Dividends. Most of all, retirees look for stocks that can provide income through dividends. Retirees want healthy payouts now and consistent dividend growth over time -- as long as it doesn't jeopardize the company's financial health.
Factor
|
What We Want to See
|
Actual
|
Pass or Fail?
|
|---|---|---|---|
| Size | Market cap > $10 billion | $15.9 billion | Pass |
| Consistency | Revenue growth > 0% in at least four of past five years | 5 years | Pass |
| Free cash flow growth > 0% in at least four of past five years | 3 years | Fail | |
| Stock stability | Beta < 0.9 | 1.34 | Fail |
| Worst loss in past five years no greater than 20% | (65.3%) | Fail | |
| Valuation | Normalized P/E < 18 | 16.76 | Pass |
| Dividends | Current yield > 2% | 9.0% | Pass |
| 5-year dividend growth > 10% | NM | NM | |
| Streak of dividend increases >= 10 years | 2 years | Fail | |
| Payout ratio < 75% | 73.9% | Pass | |
| Total score | 5 out of 9 |
Source: S&P Capital IQ. NM = not meaningful; Seadrill just started paying a dividend in June 2010. Total score = number of passes.
With five points, Seadrill gives conservative investors some but not all of what they'd like a stock to have. The company's stock has taken shareholders on a big roller-coaster ride in recent years, and consistent free cash flow burn shows the risks involved in the industry.Even with oil prices having retreated from their recent highs, activity in the deepwater drilling space has never been stronger. Although Seadrill started the trend, traditional oil servicer Transocean (NYSE: RIG ) has worked hard to get into the game. Moreover, competition has also come from an unlikely source: DryShips (Nasdaq: DRYS ) , which spun off its Ocean Rig (Nasdaq: ORIG ) ultra-deepwater drill-ship business just last month.
Seadrill has an impressive list of customers, including Statoil (NYSE: STO ) , Petroleo Brasileiro (NYSE: PBR ) , and Total (NYSE: TOT ) . With operations in many locations throughout the world, Seadrill isn't exposed to the same geographical risks that devastated Gulf-centered drillers after the spill and subsequent drilling moratorium.
For retirees and other conservative investors, Seadrill's volatility takes a little getting used to. But with a 9% dividend, you'll find it easier to ride out the ups and downs of the stock. For someone with the right risk profile, Seadrill would make a good addition to a retirement portfolio.
Keep searchingFinding exactly the right stock to retire with is a tough task, but it's not impossible. Searching for the best candidates will help improve your investing skills, and teach you how to separate the right stocks from the risky ones.
Add Seadrill to My Watchlist, which will aggregate our Foolish analysis on it and all your other stocks.
If you want to retire rich, you need to be confident that you've got the basics of your investment strategy down pat. See if you're on track by following the 13 Steps to Investing Foolishly.
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I read the book about this and I think it's bullshit. I am providing this website anyway because the stock screener might be useful.
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I greatly appreciated the comment on this post from PZ. His "not doing great things, doing work you love" is not fair because I wrote "The career you choose must be something you know you're going to love or else you will never be successful at it." I loved my previous career which was designing and coding custom made software for large corporations. Also, I created some fantastically great things. Being able to make something from intense thinking, that's as great as anything can get.
The rest of PZ's comment was accurate. It was also critical as if there's something wrong with finding an easy enjoyable way to accumulate wealth.
By the way PZ is brilliant. I've learned quite a bit about evolutionary biology from his blog which is for very good reasons the most popular science blog in the world.
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Retiree Tax Heavens (and Hells)
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Retiree Tax Heavens (and Hells)
There is absolutely nothing in your grand plan about creating anything, building up anything, doing anything. You're a parasite who expects to just toss capital out and have other people generate wealth for you. Everything in your idea of a great future involves churning money around -- not doing great things, doing work you love, or changing the world in practical ways.
ReplyDeleteI repeat: your dream is to be a better leech.
Thank you PZ. You described my philosophy perfectly.
ReplyDelete