11 Dividend Stocks Trading At A Double-Digit Discount

Getting a discount of 10%, 20% or even more is awesome. When it is on a big ticket item like a automobile, there are a lot of dollars to be saved and people have been known to drive great distances to receive the discount. Everyone loves a sale! Well, maybe not everyone. When stocks go on sale it seems to depress a large number of market participants. However, for those of us that like buying stocks at a discount, the recent market pullback has finally provided a little relief. My fair value model was constructed back in 2007 at a time many stocks had already fell from grace. So as to focus on only the best companies, I took an extremely conservative stance with my model. Ultimately, determining fair requires the investor to accurately determine free cash flow, dividend growth... more

Six No-Tricks High Yield Dividend Stocks

If you do a search or  stock screen for high yield stocks, the list will be heavily populated with stocks working under special tax provisions. These stocks will be organized as master limited partnerships - MLPs - or real estate investment trusts - REITs. These companies must pay out the majority of earnings as dividends, which leaves little cushion if earnings fall. These stocks can also be a pain at tax time. A list of dividend stocks not including REITs and MLPs will provide companies from a more diversified list of sectors and paying out a smaller portion of earnings as dividends. The six stocks discussed here meet the following criteria:   ·U.S. companies listed on the NYSE or Nasdaq ·Dividends have increased for at least 10 consecutive years ·No MLP or... more

News Corp.'s Dividend Is Safe

Here, we'll highlight a given company and its closest competitors to see just how safe their dividends are, with a little help from three crucial tools: The interest coverage ratio, or earnings before interest and taxes, divided by interest expense. The interest coverage ratio measures a company's ability to pay the interest on its debt. An interest coverage ratio less than 1.5 is questionable; a number less than one means that the company is not bringing in enough money to cover its interest expenses. The EPS payout ratio, or dividends per share divided by earnings per share. The EPS payout ratio measures the percentage of earnings that go toward paying the dividend. A ratio greater than 80% is worrisome. The FCF payout ratio, or dividends per share divided by free cash... more

Yield Face-Off: Blue Chip Equities vs. Same Company Blue Chip Bonds

Blue chip equities are often priced for perfection. Indeed, most income investors automatically commit their investment funds to blue chip stocks. This can be a mistake since in some cases, blue chip equities offer lower dividend yields than those available via same company debt issues. We examine a few debt offerings that permit income investors to earn comparable yields with blue chip bonds and preferred shares. AT&T (T)Background AT&T is currently a holding company... more

Backtested Strategy: 7 High-Yield Utility Stocks Undervalued by the Graham Number

This is our third time writing about high-yield utilities undervalued by the Graham number - we also wrote about this screen on May 13 and April 8, 2011. On May 13, the screen produced 8 companies. Since then, 6 out of 8 companies mentioned in that article have outperformed the S&P 500 index (a success rate of 75%). The screen averaged a price-weighted rate of return of 1.9% vs. an index return of -3.14%. Click here to access a full breakdown of the screen's past performance. Many investors buy utilities stocks for their dividends or generally low volatility relative to the market. Here we present an interesting list of high-dividend utilities that are currently undervalued based on the Graham equation. Benjamin Graham, the man who developed the equation for the Graham number, was a... more

13 Dividend Warriors Fighting for Higher Yields

Some companies can survive for decades, others can survive for centuries. The latter are dividend warriors: Those with operating history, strong brands and the ultimate ability to go round after round through all seasons and recessions. All while fighting for dividend payments for investors. Here are a few warriors fighting for your retirement income.Procter & Gamble (PG): A powerhouse on the “dividend champion” scene that's increased its payouts for 54 straight years. The 3.1% current yield is reasonable, but might get even better in the next month. PG looks to mirror IBM with an expected 10% increase to yield on cost. The 53% payout ratio appears to be in line for this consistent consumer goods company. A near 12% average five-year dividend growth rate, coupled with the expected... more

11 Dividend Stocks Trading at a Double-Digit Discount

Getting a discount of 10%, 20% or even more is awesome. When it is on a big ticket item like an automobile, there are a lot of dollars to be saved and people have been known to drive great distances to receive the discount. Everyone loves a sale! Well, maybe not everyone. When stocks go on sale it seems to depress a large number of market participants. However, for those of us that like buying stocks at a discount, the recent market pullback have finally provided a little relief. My fair value model was constructed back in 2007 at a time many stocks had already fell from grace. So as to focus on only the best companies, I took an extremely conservative stance with my model. Ultimately, determining fair requires the investor to accurately determine free cash flow, dividend growth rates and... more

3 Flavors of High Yield Investments

Traditional income investors have been in despair for years now since the Fed adopted its zero interest rate policy and doesn’t appear to be changing course any time soon. Conventional safe investments like savings, CDs and money markets have continued to actually lose money to real inflation and will likely do so for years to come. Investors willing to take on some equity risk can be rewarded and protect themselves simultaneously by seeking out income instruments across various classifications as outlined below. Foreign High Yielders There are some interesting ADRs (American Depository Receipts) that trade on US exchanges that provide investors with numerous benefits: High Yields, Currency Hedging and Geographic Diversification. Let’s take a look at just one of these. British... more

Is Your Dividend Income Riskier Than Expected?

I try to maintain a conservative portfolio of dividend growth stocks, where I maintain proper asset allocation, position sizing and have exposure to asset classes and markets outside of the US. You could see my portfolio here.Since my investments are spread out in several brokerages, it makes sense to keep track of them in one place using spreadsheet software. This makes it easy to compare the overall position size of each stock that I own in relation to my total portfolio. In an ideal world, in a dividend portfolio consisting of 40 stocks, one would expect to have a 2.50% allocation to each one of them. In reality however, building a dividend portfolio takes time. The companies which might have been great buys in 2008, might not fit in my entry criteria today. Since I only sell after a... more

5 High Yield Dividend Stocks

Monthly dividends provide a stable, reoccurring revenue stream. The safety of the dividend stream is crucial if the individual's income is necessary for anticipated living expenses. Here are 5 securities which pay a monthly distribution and offer a relatively safe distribution. Anworth Mortgage Asset (ANH)Business Model Anworth Mortgage Asset is a mortgage real estate investment trust. ANH invests in mortgage backed securities (MBS) backed by government sponsored entities (GSE). These GSEs include Fannie Mae (FNMA.OB), Freddie Mac (FMCC.OB), and Ginnie Mae. The fund earns profits by borrowing short-term Treasury Bills and buying longer-term Treasury Bills or Treasury Bonds. Dividend Per the 1st quarter 10Q, page 30 (.pdf), ANH management did slightly increase leverage from 6.8x to 7.1x.... more