Dividend stocks generally do not appear to be overpriced at this time. This article explores data that supports that conclusion. Some individual dividend stocks may have risen sufficiently in price to be considered overvalued, but overall the category still appears to be reasonably priced relative to its own recent history, and in comparison to non-dividend stocks.
In a future study, we plan to analyze an even larger group of dividend and non-dividend stocks over a longer time series, and to segment the dividend stocks into those (1) that have a yield well below the market yield, (2) those that have a yield near the market yield, and (3) those that have a yield well above the market yield. Overall, we feel dividend stocks as a group have a way to go before they are too expensive.
Source: Seeking Alpha
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With rates on traditional savings accounts near zero, many are flocking to the stock market for yield. While I don’t normally advocate running with the crowd, the fact is, people need income. I recently read an article saying that about 10,000 people turn 65 every day and will continue to do so for the next 18 or so years. These boomers are understandably worried that they won’t be able to maintain their pre-retirement income levels. Dividend stocks are perceived to be the answer, and a host of advisors have jumped on the bandwagon.
Never mind that the Bush tax cuts will expire at the end of the year, people want cash income and many corporations, flush with cash, are more than happy to oblige. Of course there is an added benefit in that income stocks tend to be less volatile than stocks that don’t pay dividends. With the help of financial Web site YCharts, Forbes Newsletters has put together a useful free investment report detailing 22 super high-yielding dividend payers. The stocks range from mortgage REITs like American Capital Agency (AGNC) that pays more than 16% to blue chips like like Eli Lilly (LLY) and AT&T, (T) paying 5.9% and 5% respectively.
Source: Forbes
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It has been suggested that TIPS-Treasury Inflation-Protected Securities-are a better choice for dividend growth investors than dividend stocks themselves. The reasoning is that in periods of high interest rates, the income from TIPS will keep up with inflation, while the annual growth in dividends of dividend growth stocks will not. The income advantage of dividend growth stocks over the past few years is dismissed as "recency bias."
At the current time, TIPS cannot touch dividend growth stocks in initial yield. It would take a sizable increase in interest rates for TIPS to become competitive with dividend growth stocks in yield. Since my focus in dividend growth investing is on the income stream, this is pretty much a knockout factor for me. It is realistic for me to put together a dividend growth portfolio with an initial yield of around 4% and a likely annual dividend growth rate that places a goal such as 10 by 10-10% yield on cost within 10 years-in reach. You simply can't do that with TIPS. As we saw in the example above, even a TIPS that began with a decent interest rate of 3% 10 years ago has a yield on cost now of less than 4%. While that cash flow has been protected from inflation, it has also been constrained by inflation.
Source: Seeking Alpha
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If Obama's plan comes to pass, it would mean taxes would rise by 2.5 times their current level. (From about 20% for Indiana residents to nearly 50%). Fear not. This does not have a chance of passing the present Congress. It's pure politics. My reason for such a short response was not as a time saver or to be flip, it was to state the obvious. We already have ample evidence of failed attempts by President Obama seeking to raise taxes on the rich. Republicans in the House of Representatives have blocked all tax hike attempts from the president, even if it meant shutting down the government. I can see no reason why they would suddenly change now.
I also disagree with a recent Wall Street Journal article entitled "Obama's Dividend Assault," suggesting that the entire stock market would come under pressure if the tax hikes were to be enacted. That just will not happen. You only have to go back and look at what happened prior to and after President George W. Bush pushed through the dividend tax cuts of 2003. Dividend-paying stocks acted no differently from non-dividend payers immediately prior to or after the cuts. The reason for this is simple, as much as 70% of all stocks are held by non-taxable accounts such as retirement plans, foundations, life insurance, annuities, trusts, and mutual funds that have the ability to manage taxes.
Source: Rising Dividend Investing
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Martin Hutchinson: In today’s market, dividend investing is the best way to achieve a decent income stream without taking on too much risk. On the other hand, this is also true: emerging markets give investors the benefit of the world’s fastest economic growth. Investors would be wise then to combine these two strategies by buying emerging markets stocks that pay steady dividends.
In practice, this is more difficult than it ought to be – but it’s not impossible. In fact, as you’ll learn later I have found numerous ways to profit from this best of both worlds strategy. Dividend-paying stocks in emerging markets have the same advantages as they do in the U.S. market. Just like here in The States, a sizeable dividend from overseas is not only money in your pocket, it’s also evidence that the management is working in your interests as a shareholder. And by paying dividends investors can be sure that at least some of the earnings the company is generating are real and not the result of an accounting flim-flam.
Source: ETF Daily News
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Baron seemed to be good at investments since he was young. His first attempt was when he turned $1,000 from selling stuff and having different jobs into $4,000 by investing in stocks. After that, he worked for some brokerage firms and became a good short-seller in a bear market in the '70s. He is now founder of Baron Capital Management which was first established in 1982. The firm engaged in two takeovers in 1984 but they were not successful.
His strategy essentially consists of investing in small and mid-size growth companies using a value-oriented purchase discipline. Here are Ron Baron's top yields: Corporate Office Properties Trust (OFC), PAA Natural Gas Storage LP (PNG), National CineMedia (NCMI), Entertainment Properties Trust (EPR) and Chesapeake Lodging Trust (CHSP).
Source: Guru Focus
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Investors seeking long term value, or return, have been as elusive as finding a bank willing to loan a mortgage to an individual with a credit score below 720. The market has been reacting to news from Washington or the Euro Zone, leaving fundamental company analysis completely out the window. The recent performance of the market would have been worse had it not been for the old, boring dividend paying companies. Dividend paying companies produced all of last year’s 2.1% return and made positive economic contributions for all of the 2000s.
This, I am sure, came as a shock to Baby Boomers who were accustomed to stock dividends, in the 1990s, paying 2.8% versus rallying stock prices of 15.3%. It should come as no surprise to see investors seeking stable, less risky ground in the market through cash rich, yield paying companies. The demand for stable dividend payers is supported by various demographic trends, including the recent increase of nearly 7,000 Baby Boomers turning 65 years old every day, seeking ways of earning income that can keep pace with inflation.
Source: Forbes
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Dividend stocks are an investor's security blanket during periods of market instability, relieving some pressure to make every stock picked a rock-solid growth story for years to come. Instead, dividend stocks offer shareholders a reliable revenue stream that can help make rocky times feel, well, not quite so rocky.
The following three widely held companies are examples of high-dividend stocks with shaky futures that are better left untouched: SuperValu (5.2% Yield), AstraZeneca (6.2% Yield) and RadioShack (6.7% Yield). Meanwhile, there are companies with exceedingly low payout ratios that have the means to give investors a much-deserved dividend hike.
Source: MSN Money
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Here is a current overview of the best yielding stock buys from Steven Romick as of Q4/2011. From his seventeen stock holdings he bought pay thirteen dividends. He has two high yields and three shares yielding above 3 percent. A full overview of Steven Romick’s - FPA Crescent Fund - portfolio movements as of Q4/2011 (December 31, 2011) can be found here. In total, he has 44 stocks with a total portfolio worth of USD 4,483,551,000.
Here are Steven Romick’s best yielding dividend stock buys: Transocean (RIG), Vodafone Group (VOD), Johnson & Johnson (JNJ), Walgreen (WAG) and Ensco (ESV).
Source: Guru Focus
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Down 90 yesterday. Up 40 today. Welcome to volatility, 2012-style. Indeed, as of Feb. 15 there wasn't a single trading day this year where the Dow Jones Industrial Average finished down 100 points or more. That's why many pros still want to own the stocks of stable businesses, ones that won't buckle when volatility returns. A strategy of finding so-called calm stocks paid off during the market's manic 2011. Investing in the S&P 500 stocks with the lowest volatility relative to the broad market in 2010 returned nearly 10% in 2011, while the most volatile fell, on average, 19%, according to Bespoke Investment Group.
The strategy is hardly sexy. Companies with less-volatile stocks are typically mature, slow-growing businesses, as opposed to those with dramatic increases in sales or profits each quarter. (In other words, you're not likely to find a Google or Coach among them.) But not all fit the bill. The key, say experts, is to find firms that are generating cash as well. "If you are essentially going to close your ears to the risk on-risk off nature of the market and hold on for the long run, these can work," says Jay Kaplan, comanager of the Royce Total Return fund.
Source: SmartMoney
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Euro-zone finance ministers are continuing to insist that politicians in Greece provide them further commitments especially with regard to debt servicing. Meanwhile, recent economic data from the United States was mixed and Federal Reserve meeting minutes showed that some members consider another round of quantitative easing may be needed to support the economy. In China, foreign direct investment last month fell 0.3 percent year-on-year, the third consecutive drop in the past three months.
One wonders whether investors would be more risk-averse and worried about the fundamentals, or tend to believe that further possible quantitative easing may push the Hang Seng Index higher as in 2009 and 2010. To be defensive, keep buying high-dividend shares.
Source: The Standard
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Recently, I screened several sectors by the best-yielding stocks with highest growth. Links to the research results can be found below. The only sector we lack is the industrial goods sector, a part of the financial market with a total market capitalization of USD56.9 trillion, served by 350 companies. Here is a final sheet of the best-yielding industrial stocks with highest expected earnings per share growth for the next five years (at least 10 percent). In total, there are 198 companies with such an impressive growth but only nine of them have a dividend yield of more than 3 percent.
Here are my favorite stocks: Elbit Systems (ESLT), General Electric Company (GE) and Emerson Electric (EMR). The average price to earnings ratio (P/E ratio) amounts to 21.56 and forward P/E ratio is 10.50. The dividend yield has a value of 3.41 percent. Price to book ratio is 1.79 and price to sales ratio 1.00. The operating margin amounts to 9.64 percent.
Source: Guru Focus
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In today's market, dividend investing is the best way to achieve a decent income stream without taking on too much risk. On the other hand, this is also true: emerging markets give investors the benefit of the world's fastest economic growth. Investors would be wise then to combine these two strategies by buying emerging markets stocks that pay steady dividends. In practice, this is more difficult than it ought to be - but it's not impossible. In fact, as you'll learn later I have found numerous ways to profit from this best of both worlds strategy.
Dividend-paying stocks in emerging markets have the same advantages as they do in the U.S. market. Just like here in The States, a sizeable dividend from overseas is not only money in your pocket, it's also evidence that the management is working in your interests as a shareholder. And by paying dividends investors can be sure that at least some of the earnings the company is generating are real and not the result of an accounting flim-flam. If a company in a fast-growing emerging market is able to pay a decent dividend and participate in local growth, then you can anticipate very good returns indeed, since the dividend itself is likely to grow on the back of the company's rapidly increasing profits.
Source: Money Morning
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While the yields of the usual high dividend payers have been driven down by income investors, there are many stocks still offering dividend yields greater than 12%. These stocks tend to be overlooked by most investors. You can find these stocks in an overlooked place called American Depository Receipts (ADR). These are international stocks that are also registered to trade on the U.S. stock exchanges. According to my research, there are 72 ADRs with a dividend yield greater than 5%.
We found five stocks on this list with dividend yields above 12%. All of these stocks have a price/earnings ratio of 10 or less and a beta within reasonable range of the market. These stocks are value plays that pay investors high yields to wait for capital appreciation: Partner Communications Company Ltd. (PTNR), Telecom Corporation of New Zealand Limited (NZT), Telefonica Brasil SA (VIV), France Telecom (FTE) and Alto Palermo SA (APSA).
Source: Guru Focus
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“Apple dividend” are the two magical words investors are aching to hear. How long will it be until they are satisfied? While I wouldn’t hold my breath, the rumor mill has produced some interesting evidence to suggest the day may be coming sooner rather than later. With roughly $98 billion in cash and liquid short-term investments on hand there’s really no limit to what Apple could do. But that’s just it, Apple has not applied it or earmarked it for anything noteworthy, or anything at all for that matter. So why not dividends? And why not now?
“No company in its right mind would keep $100 billion lying around. But then, as I’ve been arguing frequently of late, Apple is no normal company. It does just about everything differently, including how it socks away its money,” writes Adam Lashinsky, Sr. Editor at Fortune. A nice snippet of information has emerged from UBS’s wealth management group: Apple is polling large shareholders on the subject of paying out dividends.
Source: Kapitall
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A crash course in income investing would quickly throw up a reference to large, established companies offering the highest dividend payouts. On a sector basis, this certainly appears to be the case with defensive sectors such as telecoms and utilities again expected to provide the highest average dividend yield in 2012. However, there are growing reasons to question the over-reliance on these traditional income stalwarts, with an approach based on the quality and sustainability of dividends likely to deliver stronger returns over the longer term.
The challenges facing traditional income payers are best illustrated by the telecoms sectors. Firms within this sector are expected to generate an impressive dividend yield of 5.5% this year. However, a deteriorating market environment, with the possibility of recession in Europe looming and consumers less willing to splash out on high-end smartphones, is expected to add pressure to these firms’ ability to maintain both revenue and dividend growth. The utilities sector is another traditional favourite of the income investor but there are signs that yield levels are also starting to come under pressure.
Source: InvestmentWeek
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Tom Gayner is the Executive Vice President and Chief Investment Officer of Markel Corp. and he also presides over Markel Gayner Asset Management, Inc., a subsidiary of the first. He has been in such position since 1990. From an investment perspective, Gayner is a long term player. He follows Warren Buffett and Benjamin Graham´s thoughts and investing principles. At an interview with Morningstar he explained what he thinks a company must have to become a good pick.
In the last three years, Gayner´s largest investment has been Carmax, which has returned almost 90% since 2008, thus surpassing the market. As regards his long-term holdings, they have gained 25.06% since 2010. Tom´s long term peaks are extremely successful. Now let´s look at some of them: Washington Real Estate Investment Trust (WRE), NuStar GP Holdings LLC (NSH), Altria Group, Inc. (MO), Federated Investors, Inc. (FII) and Enterprise Products Partners L.P. (EPD).
Source: Guru Focus
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I've received a couple of messages over the past month (I've been away) from readers asking me whether a dividend growth investing strategy should be an "exclusive" strategy in the sense that an investor should put all his money into stocks that pay rising dividends over time. Of course, the answer to this question is the same as the answer to almost every portfolio allocation question: It depends.
Different investors have different investing goals and circles of competencies. Someone who has very little knowledge of individual stocks is probably best off going the index fund route. A man in his late 40s who has spent his career working in the natural gas industry might have a particular talent for finding undervalued companies in the natural gas sector which do not pay dividends. And an investor in his late 50s desiring to create a stock portfolio to generate enough income for living expenses might desire to focus the majority of his investing within the dividend growth realm.
Source: Seeking Alpha
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If you're depending purely on growth to meet your investment goals, you might end up being sorely disappointed. Prudent investors instead should turn to something a little more reliable: income. Traditional income investments like bonds and CDs pay virtually nothing in interest these days, but it still is possible to get a decent cash income return in the world's stock markets.
Let's take a look at these five foreign dividend strongholds: China Mobile (CHL), Telefonica (TEF), Nestle (NSRGY), Unilever (UL) and Philip Morris International (PM). The good news is that with a properly constructed dividend stock portfolio, you can earn a respectable return in either event.
Source: MSN Money
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Moore Capital Management LLP, the $15 billion hedge fund founded by Louis Moore Bacon, bought an exchange-traded fund that tracks home builders and sold an ETF that tracks the performance of high-dividend paying stocks.
The firm sold 3.55 million shares of iShares DJ Selected Dividend fund, valued at $171.3 million, according to the filing. Moore had purchased the iShares ETF in last year’s third quarter.
Source: Businessweek
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Dividend-paying stocks are still a “winning theme” for investors even though they have gotten off to a relatively slow start this year, according to Gina Martin Adams, a strategist at Wells Fargo Securities LLC. While the dividend-aristocrat index rose 4.2 percent for the year through yesterday, the gain was 2.6 percentage points smaller than the S&P 500’s advance. By contrast, the indicator fared better than the S&P 500 in the past two years, its first back-to-back wins since 2002.
Payout ratios suggest companies can distribute plenty more money to shareholders, Martin Adams wrote yesterday in a report. She noted that dividends equal 27 percent of S&P 500 earnings, the lowest figure in more than a century, according to data compiled by Yale University Professor Robert Shiller. “Companies may be only just beginning to catch on to the fact that investors are keenly interested in dividend-paying stocks,” the report said.
Source: Bloomberg News
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Total return from stocks comes two sources: price appreciation and dividends. Most investors focus on the former much, much more than the later. And following the go-go days of the 1980's and 1990's, it's understandable why. But for long-term investors, dividends are a very important part of the equation. Over the last 80 years for instance, they have contributed a whopping 44% of the total return of the S&P.
There are a some stocks out there with huge dividend yields that look sustainable. I've highlighted 3 below that currently yield more than 7.5%. Neither has cut their dividend in the last 10 years and all were able to pay their dividends from operating cash flow in the last year. And each one is expected to see earnings growth in 2012: Dynex Capital (DX) Dividend Yield: 12.2%, Windstream Corp (WIN) Dividend Yield: 8.1% and Boardwalk Pipeline Partners LP (BWP) Dividend Yield: 7.9%.
Source: Stock Markets Review
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The dividend trade is crowded, with almost every investor on the hunt for high yields. Wells Fargo analysts, however, say companies may only now be catching on to how investors are selecting stocks based on dividends. Dividend-paying U.S. shares have been a favorite for investors following a 20% decline in stock market indices late last year. With economic growth expected to plod along and interest rates likely to remain incredibly low, investors have been forced to look for yield and steady income in other places.
"Companies may be only just beginning to catch on to the fact that investors are keenly interested in dividend paying stocks, for while dividends are increasing, payout ratios are at an all-time low," Adams writes. "Dividends still have plenty of room to grow."
Source: The Street
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"The search for income is driving people to look more at equities because they just aren't getting it from bonds, money market accounts or CDs because interest rates are so low," she said. Corporations declare dividends to distribute a portion of the company's profits to shareholders. Like it or not, dividend stocks may be one of the few high-yield alternatives for the foreseeable future.
"High-quality companies not only offer attractive yields relative to cash, but also have the potential to grow their dividends over time, which should help keep up with inflation," said George Emanuele, a vice president and investment adviser at PNC Wealth Management, Downtown. "Not only do dividend-paying equities offer an attractive income stream," he said, "but since 1926, dividends have accounted for approximately 44 percent of total return and dividend payers have outperformed non-dividend payers."
Source: Post-Gazette.com
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Dividend stocks have never been more popular. With interest rates on most competing investments at rock-bottom levels, dividend yields remain attractively high -- almost unimaginably high in many cases. Regardless of whether it's a smart move from a risk perspective, investing in dividend-paying stocks is probably the only thing giving many investors the income they need from their hard-earned nest eggs.
That could all change, though. With the new proposed federal budget, a much larger tax penalty for dividends could push the pendulum back toward alternative methods of returning capital to shareholders -- methods that haven't worked nearly as well historically. It's not just taxpayers that are fighting the new proposed dividend tax rates. Many high-profile companies are also backing opposition as part of more general concern about the uncompetitive state of U.S. taxation on businesses compared to other nations.
Source: Motley Fool
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CDs and money market funds are OK for parking cash, but certainly not for earning income. One-year CDs averaged yield of 0.68% going into Monday, according to Bankrate.com. And the average taxable money fund's seven-day yield was 0.03% as of Feb. 7, according to Money Fund Report. To cope, money professionals are telling investors to think beyond traditional sources for income. Michael Fredericks, head of U.S. Retail Asset Allocation for BlackRock Multi-Asset Client Solutions, recommends a go-anywhere tack.
This can tap anything from U.S. dividend-paying stocks to foreign bonds. Similar themes are popping up in several presentations at the Charles Schwab Investment Outlook 2012 conference, taking place Tuesday in Boston. Income from high-yield bonds and funds is among the highest of nonsavings account vehicles. Junk bond funds tracked by Morningstar Inc. average a 7.07% yield.
Source: Investors.com
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As global stocks return to a bull market, the losers in the U.S. are companies least tied to economic growth. For the first time since 1999, Standard & Poor’s 500 Index utilities, phone companies and providers of consumer staples posted the only monthly losses, slumping at least 1.5 percent with dividends in January, and continued to lag behind this month.
It’s a reversal from 2011, when the three defensive industries returned more than 6.3 percent as investors embraced stocks thought to do well during a slowdown. Investors are shifting toward riskier assets as U.S. manufacturing expanded the most since June and the jobless rate fell to a three-year low of 8.3 percent. Investors flocked to defensive industries in 2011 as the U.S. unemployment rate held at or above 9 percent until October and the European debt crisis led economists to cut forecasts for American and global growth.
Source: Business Week
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Last week, our award-winning columnist Morgan Housel penned a piece exploring the possibility of a dividend bubble. "Just as investors ran blindly into subprime bonds five years ago in search of yield, they're running blindly, carelessly into dividend stocks today," says Housel. I don't disagree with him on that. In the aftermath of the recession and in such a low-interest-rate environment, dividend stocks have been all the rage.
But Housel's conclusion is this: "The more I look, the more it becomes apparent that stocks known for their dividends trade at unfortunate valuations that could leave investors disappointed." In the short to medium term, he's probably right. But if you're investing with a decades-long time horizon, I think this could be the best news you could hear. The power of holding dividend stocks when prices are depressed -- you simply accumulate more and more shares than you otherwise would.
Source: Daily Finance
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- Are You Patient Enough To Be Wealthy? These 12 Dividend Stocks Will Help You Wait
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With interest rates continuing to hover at historically low levels, investors looking for income are understandably frustrated. Perhaps it should come as no surprise, then, that more people are recommending dividend stocks as an alternative to bonds, CDs, or even savings accounts.
As such articles sometimes (but not always) point out, stocks are not bonds, and they’re sure as heck not CDs or savings accounts. Stocks have an entirely different risk profile and, no matter how high their yield, they’re not a reasonable replacement for fixed income investments or cash equivalents.
Source: Forbes
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To dividend or not to dividend, that is the question? In 2011, most of what we have been saying about dividend stocks for the last 15 years came into full view for everyone to see. In a weak stock market, the cash payments distributed by dividend-paying companies were more highly valued than betting on the come with the non-dividend payers. During most of the year, the dividend yields of many stocks were higher than the yield on a 10-year U.S.Treasury bond. This fact alone lifted many consumer staple, energy, health-care, and utility stocks. Taken as a group, dividend-paying stocks significantly outperformed non-dividend paying stocks.
In 2011, dividend-paying companies, particularly those that have a history of consistently raising dividends, gradually were seen to be bond substitutes. This is due to the compounding effect of rising dividends. A company with a 3% dividend yield today will be yielding 6% in ten years if its dividend grows at a 7% annual rate. A company yielding 2% today with its dividend growing 12% per year will yield near 7% in 10 years. During the year, dividend paying stocks became the equity asset of choice.
Source: Rising Dividend Investing
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“Right now bonds should come with a warning label,” investing magnate Warren Buffett said in a recent interview with Fortune magazine. Apparently the safety of fixed income is no longer real. According to Buffett, bonds are “among the most dangerous of assets” right now because interest rates are not compensating investors for risk of lost purchasing power (i.e. inflation). With the Fed keeping borrowing costs near zero through 2014, current interest rates “do not come close to offsetting the purchasing-power risk that investors assume”
For a brief refresher: Treasury bonds generally pay their par value at maturity in U.S. dollars. Since the par amount is fixed, if the US dollar’s purchasing power decreases (i.e. inflation occurs) between today and maturity, the value of the bond will decrease as well. Coupons can counteract this, but only to a degree. This is why bondholders are highly exposed to inflation risk. If you heed the words of Warren Buffett, as many investors do, here are some non-bond ideas to keep in mind. If you’re interested in income, dividends offer an alternative to bond coupons.
Source: Kapitall
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Contrarians, rejoice: Last year’s most beaten-down stocks are among the biggest winners this year. And investors are buying them to chase the rally. But nothing’s changed, professional investors say. U.S. large-cap stocks that pay a dividend remain as attractive as they have been over the past year.
Peery says that over the past 30 years, which includes nearly all types of markets and economic conditions, the price appreciation of the S&P 500 is close to 1,000%. When dividends are factored in, the gain is over 2,000%, he says. That shows that historically, dividends have been more than the returns of the capital appreciation. In other words, dividends are important for building wealth.
Source: Forbes
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We recommended some dividend paying stocks in December and January. We revisit them and see they have been paying off. Making the cut for our dividend stock picks are Corning Inc. (GLW), Microsoft (MSFT), Verizon (VZ), and NY Mortgage Trust (NYMT).
We still like GLW, MSFT, VZ and NYMT. There's much more to gain from these four players and we expect 2012 to be great year for their share price and dividend yield.
Source: The Stock Masters
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I began this year looking to build a solid portfolio, and I believe I started it off right with my first selection. After establishing a solid foundation for my portfolio, I went looking for some dividend-paying stocks that not only paid solid dividends, but also had some room to grow the dividend over the life of my investment.
I first narrowed my list down to five, and now it is time to select the two I will be adding to my portfolio. After careful consideration, the next two stocks I'll be buying will be Waste Management (NYSE: WM) and Ford (NYSE: F).
Source: Motley Fool
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If you’re an income investor in search of strong, stable dividend yields, there’s a lot to love about electric utilities. And sector stalwarts such as Consolidated Edison (NYSE:ED), Exelon (NYSE:EXC), CenterPoint Energy (NYSE:CNP), Progress Energy (NYSE:PGN) and Duke Energy (NYSE:DUK) are offering a sort of gift-with-purchase deal right now — ex-dividend dates during Valentine’s Week.
Ex-dividend dates are important for investors because they determine whether you or the stock’s seller receives the most recently declared dividend. Let’s say a stock has an ex-dividend date of Valentine’s Day. If you buy that stock and settle on Feb. 14 or later, you don’t receive the declared dividend — the seller does. But if you buy that stock on Feb. 13, the declared dividend is paid to you
Source: InvestorPlace
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The story was picked up by the major news sources as a “cute” human interest feature. You might have seen the headlines like “How a Secretary Made and Gave Away $7 Million.” But for me, this wasn’t some light news piece. This was a story that resonated deeply with me. I didn’t know Grace Groner, from Lake Forest, Illinois. From the stories, she was a woman who lived frugally. Her passing was of interest because her three shares of Abbott Laboratories (NYSE: ABT) grew into thousands of shares through decades of stock splits and dividend reinvestment. In total, her estate came in at roughly $7 million when she passed.
And while I didn’t know Grace Groner, I did know Lillian Calistri. When Lillian died in 1993, her estate was worth north of $5 million. One of Aunt Lillian’s investments was International Business Machines (NYSE: IBM). IBM dished out its first dividend in 1913. Since then, it has gone on to pay nearly 400 more. In the past decade, IBM’s dividend has increased 436%. Neither ABT nor IBM had a particularly juicy yield at the time these women bought their shares. But they had something equally powerful: a corporate culture dedicated to rewarding shareholders — especially with growing dividends. And those growing dividends add up a lot quicker than you’d think.
Source: Trader's Blog
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The search for retirement income in today’s low-yield environment inevitably comes back to dividend paying stocks. How could it not? Money market funds and short-term bank CDs pay about .5%; the 10-year Treasury bond pays only about 2%. Lots of blue chip stocks pay significantly more, including Verizon (5.3%), Merck (4.4%), Pepsico (3.1%), Lockheed Martin (4.7%), Intel (3.1%) and Abbot Labs (3.5%). In fact, the average dividend yield for stocks in the S&P 500 is above 2%–higher than the venerable T-bond. That’s crazy. For most of the past 50 years, the T-bond’s yield has been at least double what you could get by owning a basket of S&P 500 stocks.
No matter how you cut it, though, dividend-paying stocks usually end up in the conversation. So it’s worth reminding yourself that even blue chip multinational stocks are, well, stocks. They are far more volatile than bonds, meaning that the market value of stock holdings swings higher and lower in a much broader range. You could easily have a year’s worth of dividend payments wiped away by a declining share price if you sell before the stock recovers.
Source: Time
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Growth is an important item for wealth. If you own a business that doubles sales and income in 10 years, your investment should have a return of 7.2 percent. If you double it in five years, you will have a return of 14.9 percent. Let’s take a look at the best growth stocks with attractive dividend yields within the utility sector. Utilities are wonderful investment objects because they generate stable revenues. Seventy-seven percent of all listed utility stocks have a beta ratio (volatility measure) of less than one.
I screened the sector by stocks with the highest earnings per share growth for the upcoming five years (at least 10 percent yearly). In addition, the company should pay today more than 2 percent in cash dividends. 10 stocks fulfilled my criteria of which two are high yields. Seven stocks have a buy or better recommendation. Here are my favorite stocks: 1. TransAlta (TAC), 2. American Water Works (AWK) and 3. NV Energy (NVE).
Source: Guru Focus
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It has long been the contention of many articles on www.smallcapnetwork.com that dividend paying small cap stocks such as Penn Virginia Corporation (NYSE: PVA), Lexington Realty Trust (NYSE: LXP) and Anworth Mortgage Asset Corporation (NYSE: ANH) have a place in a portfolio. A recent article The Wall Street Journal by Shefali Anand, "Goodbye to Market Timing," confirms this.
Mr. Merriman-Cohen observed that, "I disagree with the advisers that think they can reliably beat the markets. The more complicated (the systems) are, the less likely they are to be effective." There is nothing more reliable and less complicated than receiving a dividend check in the mail or having it transferred into your brokerage account. Small cap dividend paying stocks such as Penn Virginia Corporation, Lexington Realty Trust and Anworth Mortgage Asset Corporation are the answer to those believe that profits from market timing are out-of-the-question.
Source: Small Cap Network
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IBM(IBM), Qualcomm(QCOM) and Microsoft(MSFT) offer investors that perfect combination of dividend stability and robust growth, say analysts. From IBM's booming software sales to Qualcomm's ongoing smartphone success and Microsoft's 2012 resurgence, the trio offer plenty of growth opportunities, while still paying decent dividends.
Clearly, the days when tech dividends were perceived as the antithesis of growth are over. "In the years of the dot.com boom, in Silicon Valley there was a firm dividing line between what would classically be called value stocks and growth stocks," explained Charles King, principal analyst at tech research firm Pund-IT. "Dividends were in the purview of stodgier, older stocks -- it was considered déclassé for tech stocks."
Source: The Street
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Looking for a stock that regularly pays you money? Then a dividend stock may be for you. You may think dividend-paying companies are slow-growth firms that don't have anything better to do with their cash. But history has shown that investors get a better return when investing in dividend stocks."There are a lot of statistical studies showing dividend-paying stocks outperform nondividend stocks," says Josh Peters, director of equity-income strategy at Chicago-based Morningstar Inc., which provides investment research. "Companies that pay dividends have better established competitive positions and a better return on their capital."
Breiter says when it comes to dividend investing, there are two camps: those who invest for the high yield and those who buy stocks that pay a lower dividend today, betting it will increase down the road. No matter which way you choose to invest in dividend stocks, financial pros say to look for those companies that have enough cash flow to sustain their dividends, have a long history of paying a dividend and have shown a propensity to raise it on a regular basis.
Source: Fox Business
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For the past couple of years, I have been searching for ways to meld my own beliefs about dividend growth investing with the best ideas I can find about asset allocation. My intent had been to write an article when I had it all figured out. That's looking like it may never happen, so I've decided to write this article about where I am now. Perhaps the article will help readers who have been pondering the same subjects, and the comments will help all of us.
Asset allocation is about where to put capital, retirement is about how to generate income. Therefore the basic question always comes back to converting one to the other. Usually the conversion being discussed is capital to income, because capital is what the retiree owns, and income is what he/she needs.
Source: Seeking Alpha
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Investors normally love stocks which have a record of both long-term profitability and high dividend yield. These stocks best suit long-term and income investors. In order to choose the stocks that fit the above criteria, I set the screening parameters with three main following points: 1) profitable for the last five years, 2) at least 10% return on equity for the last five years, and 3) current dividend yield at least 12%.
Here are the four candidates: Portugal Telecom SA (PT), Life Partners Holdings (LPHI), Shipment Finance International (SFL) and Great Northern Iron Ore (GNI).
Source: Guru Focus
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Most days, I spend a fair amount of time scouring several online sites for articles and information related to dividend stocks. Besides being a simple homework exercise, it's also a great way to get fresh ideas, and to see what others are saying about our current or prospective holdings.
After wading through 39 of 40 slides, I found something of interest. The last slide identified Vale VALE +0.19% , the Brazilian miner, as a stock expected to "...boost its dividend by 32% this year." SocGen also states Vale's 2011 yield as 7.4%. I'd take a 32% increase on that. I soon saw why I had overlooked Vale. For the company’s US-traded ADRs, according to MarketWatch , the dividend yield is "N/A". However, during the course of the year, they also paid out a total of $1.3846 per share in "special dividends." This is not included in the dividends yield as reported by most services.
Source: Market Watch
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When things looked depressingly bleak in early 2009, I started inching into corporate bonds and found that I could buy bonds of excellent companies for 25-39 cents on the dollar. The idea was: Why buy the stock when you can get all of this upside with the bonds and get paid 25% while you are waiting? The "bond fire sale" closed down pretty quickly and, as I redeployed into stocks, I constantly tried to compare the relative merits of individual stocks and the stock market in general to bonds. It is a complex, difficult and ultimately arbitrary exercise, but I think that every investor has to think it through - especially now.
In a world starved for yield, income delivered to shareholders as dividends should be treated differently from income retained by the corporation. I think investors are beginning to put a higher value on dividends, and, more importantly, dividends are more directly comparable to interest payments on bonds. An investor gets the dividend check in the mail and can invest it or spend it as he or she pleases.
Source: Seeking Alpha
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has rewarded shareholders for more than a century. The nation's largest rail operator has paid a dividend for 113 years. Last week, the company declared a quarterly payout of 60 cents a share. The dividend will be paid April 2nd to shareholders of record Feb. 29. Union Pacific raised its dividend twice in 2011. It last hiked its payout by 26% to the current 60 cents a share in November. The company's quarterly dividend has more than doubled in three years.
On an annual basis, Union Pacific pays $2.40 a share, which works out to a current yield of about 2.1%. That represents the third-highest yield among the seven dividend-paying stocks in the Transportation-Rail group. At 97, Union Pacific has the highest Composite Rating in the 11-member group. Last month, the company announced record Q4 and full-year 2011 results. Union Pacific's quarterly earnings grew 28% to $1.99 a share as price hikes and improved volumes offset a 28% surge in fuel costs. The gain was the best in three quarters.
Source: Investors.com
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Treasury bonds provide safety to investors but, after a rally that started in late 2008, now lack return. Dividend stocks, on the other hand, can easily give you twice the gain with little additional risk in certain cases. With uncertainty over the direction of the European and U.S. economies, the stock market is worrying investors. Over the past year, more money was poured into bond funds than equity funds. As a result, the spread between bond and equity mutual fund investing reached $1.2 trillion in 2011, an unprecedented level.
Federal Reserve Chairman Ben Bernake is committed to keeping the Fed Funds rate at zero for at least three years. The 10-year Treasury yields 2%, just above the recent low of 1.8%. Doubling the 10-year Treasury yield isn't that difficult. There are plenty of dividend-paying stocks that pay at least twice what the government or certificates of deposit will give you. The key is to ensure the stability of the dividend and health of the company.
Source: The Street
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Amid the volatility in 2011, many investors took shelter in high-yield blue chips with stable operations. Tobacco giant Philip Morris International (NYSE:PM) tacked on 35% last year. Utility stocks like Dominion (NYSE:D) and Consolidated Edison (NYSE:ED) tacked on 25% gains. All while the S&P 500 struggled to stay flat. A focus on dividends persists in 2012, even though stocks have recorded their best January since 1997. After all, a little gain in your portfolio is not a sign that problems like the eurozone debt crisis or the beaten-down U.S. housing market have been solved.
A good middle road to walk, therefore, is midcap companies with decent upside potential for shares that still pay out a substantial dividend. These stocks are riskier and the dividends sometimes can be less stable, but they also show the power of investing in a growth stock that pays a dividend instead of a mature business already bumping its head against the ceiling.
Source: InvestorPlace
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What's unique about Edison and Altria? They pay enormous dividends. And starved of yield with interest rates near 0%, investors are tripping over themselves to get dividends these days. S&P 500 companies with the highest dividend payouts currently have the highest P/E ratios. In 2007, it was the other way around: Stocks that didn't pay dividends had far higher valuations.
But don't get too comfortable with the dominance of dividends. There's a bad precedent here. Last decade, the Federal Reserve kept interest rates far too low for far too long. Starved of income from Treasuries, investors were tempted to search for yield wherever they could find it, which back then meant subprime mortgage bonds. You know how that went.
Source: Motley Fool
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For many investors who crave steady income, bonds don't look as good as they used to. With U.S. Treasury yields languishing near historic lows, some people believe they've found a great alternative: dividend-paying stocks or dividend-focused mutual funds. Many investment pros say it can be a reasonable move for at least part of an income-oriented portfolio. But they caution that investors need to understand the risks.
The most basic concern: Equities don't behave the way bonds do, and investors face a much greater chance of capital losses with stocks and stock funds. "People may not appreciate that moving from bonds to stocks is a major change in asset allocation," says Joseph Davis, chief economist and principal at Vanguard Group. Investors should also remember that dividend-paying stocks don't always behave like other stocks, either. Dividend payers are often larger, established companies—which means they often aren't perceived to have the same potential for earnings and revenue growth as smaller firms.
Source: Wall Street Journal
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In the past few years, I've continually marveled at the stunning piles of cash parked on the balance sheets of many high-tech firms. These companies had been holding lots of cash to stay strong in case industry conditions waned. But even with the sharp economic blows of 2008 and 2009, their cash piles just kept growing. They've been saving for a rainy day that's likely to never arrive.
I've also been noting how these companies could boost shares by committing much of that cash to stock buybacks. Yet software giant CA Technologies. (NYSE: CA) may have upended that theory. In late January, the company announced plans to super-size its dividend, from $0.20 a year to $1 a year. The dividend yield suddenly shot up from 1% to more than 4%.
Source: Street Authority
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What is there to look for in a dividend stock? It’s important to remember that past dividends are not guarantees of payments in the future – if you want to be able to rely on a company’s dividend for an extended period of time, make sure the company can support it through its profitability or sources of liquidity. The current ratio, or current assets divided by current liabilities, is a popular gauge for a company’s liquidity, with ratios above 3 considered healthy.
Another consideration, as with any stock, is whether it is fairly priced. One idea is to consider a company’s ratio of levered free cash flow/enterprise value, with higher ratios indicating the possibility that the stock is undervalued. Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm’s value from all ownership sources: market cap, outstanding debt, and preferred shares.
Source: Kapitall
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