American Electric Power: Dividend Dynamo or Blowup?
Let's examine how American Electric Power (NYSE: AEP) stacks up in four critical areas to determine whether it's a dividend dynamo or a disaster in the making. 1. YieldFirst and foremost, dividend investors like a large yield. But if a yield gets too high, it may reflect investors' doubts about the payout's sustainability. If investors had confidence in the stock, they'd be buying it, driving up the share price, and shrinking the yield.... more
5 Dividend Paying Giants Of Technology Trading At Absurdly Low Valuations?
Any owner of a business will tell you that the value of their business is based upon the earnings and cash flows it generates on their behalf. The more profitable the business is, the more valuable it is to its owners. In addition to just being common sense, this principle is also mathematically sound. When it comes to how much money the business makes, more money is better than less. Consequently, the more money the business makes for the owner, the higher the price they would ask if they decided to sell it. This would not be a surprise to any prospective buyer. What would surprise a prospective business buyer is finding a business that generates above-average earnings and cash flows being offered for sale at a below-average price. If a prospective business buyer was lucky... more
Teva'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 1 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 flow per... more
Frontier Communications' 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 1 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 flow per... more
This Generous Dividend Is Calling You
Today is a different communications world, and AT&T is a different communications company. But it's still a pretty safe investment -- and a rewarding one: Its dividend gives a 5.6% yield. Paying dividends has been part of the AT&T culture since the company's inception in the 1880s. AT&T has continued paying a dividend since the 1984 breakup, and has had six consecutive years of dividend growth -- the last five years at an average 5.67%. The current payout ratio is a realistic 48%. The AT&T of today is also on the verge of becoming the largest American wireless carrier -- if its proposed acquisition of T-Mobile makes it past the government's antitrust and Federal Communications Commission oversight. If that does happen, AT&T will add 34 million more subscribers. Barring any divestitures... more
4 Dividend Stocks to Transform Your Portfolio
During the traditionally weak period that May through October brings to the markets, I like to look at dividend paying stocks to add to my portfolio. With so many companies out there today paying dividends, it is hard to sort through the countless numbers of research reports and choose just a few solid ones. Let’s look at just four dividend paying stocks this week that have attractive yields as well as healthy free cash flow. Altera Corp. (ALTR) is a leading supplier of programmable semiconductors and related products that mainly serve customers in the telecom and wireless, industrial automation, military, networking and computer storage sectors. First quarter sales were up 33 percent from the first quarter of 2010 at $535.8 million and new product sales increased 13 percent... more
Valero Energy'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
High Yielders Unlikely to Blow Up
My real-money Rising Star portfolio uses a smart screening process to find great stocks. Today, we're going hunting for the most attractive high-yielding companies out there -- those with businesses strong enough to hopefully avoid a devastating dividend cut. Most people now recognize the power of dividend investing. Higher-yielding stocks tend to offer higher returns over time than low- or no-yield stocks, according to research from Jeremy Siegel and others. In fact, the 20 best-performing survivor stocks from the original S&P 500 in 1957 are all dividend payers.... more
3 Dividend Opportunities for Income Investors
With the U.S. stock market affected by all of the global economic crises, from oil prices in the Middle East to the debt problem in Europe, it becomes harder for investors to rely on any one particular investment as a safe vehicle to secure their future. For five weeks in a row, the S&P 500 slipped and is now on steady ground with news of an imminent Greek bailout. With the QE2 program ending this month, it remains to be seen how this will impact the stock and bond market.We are currently in a sideways market. This is how the market has been over the last few years. Market valuation and technical indicators do not work too well in a sideways market. Investors end up selling when they should be buying and buying when they should be selling. At some point a correction will come around and... more
5 Dividend Paying Giants of Technology Trading at Low Valuations
Any owner of a business will tell you that the value of their business is based upon the earnings and cash flows it generates on their behalf. The more profitable the business is, the more valuable it is to its owners. In addition to just being common sense, this principle is also mathematically sound. When it comes to how much money the business makes, more money is better than less. Consequently, the more money the business makes for the owner, the higher the price they would ask if they decided to sell it. This would not be a surprise to any prospective buyer. What would surprise a prospective business buyer is finding a business that generates above-average earnings and cash flows being offered for sale at a below-average price. If a prospective business buyer was lucky enough to... more