PepsiCo: Dividend Dynamo or Blowup?

Let's examine how PepsiCo (NYSE: PEP) 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

What to Do When Your Dividends Die

Far from a sure thingOver the long haul, dividend stocks have a lot going for them. Countless studies have shown how much better dividend-paying stocks do with long-term performance compared with their non-dividend-paying counterparts. But before you run out and by just any dividend stock, you need to realize that there's always the risk that the stock you choose will have to cut its dividend. If it does, you'll have to figure out whether you should dump your shares and move on to another high-yielding stock or hang on in the hopes of seeing an eventual recovery.... more

PetMed: Dividend Dynamo or Blowup?

Let's examine how PetMed (Nasdaq: PETS) 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

6 Undervalued Dividend Stocks Ready to Shoot Higher

We took at look at the equity universe for stocks offering solid dividend growth prospects and the opportunity for capital appreciation this year. Here are six names we think could shoot higher. Walgreen (WBA) operates thousands of drugstores across the United States. Just like a typical drugstore, Walgreen’s offers a pharmacy, general toys, cosmetics, health supplies, photo processing, food and drinks, and other miscellaneous items. WAG also owns 37 strip malls and has a market cap of $40.68 billion. Walgreen currently has an annual dividend of $0.70 and a dividend yield of 1.6%. WAG also has operating cash flow of $4.03 billion, which is a nice surplus over the $0.70 per share dividend it is currently paying. It has a payout ratio of 28% and we think WAG looks like it will continue... more

Dividend Growth vs. High Yield: Some Surprising Findings

Dividend investors can make hours of chummy chit-chat. We rhapsodize endlessly about rising yield-on-cost, low payout ratios, inflation-beating income and related marvels that somehow elude other investors.But trouble lurks beneath this pleasant facade. Two dividend camps, high-yield fans and dividend-growth lovers, sometimes seem to feud like Hatfields and McCoys. “How can you write about a 2% yield!?! I need 6%,” the high-yield fans protest. “But with dividend growth your dividends will climb even higher,” the other side counters. Ok, let’s settle this old fashioned way. With numbers. We’ll look at three different objectives: high current income, building a future income stream and investing for total return. It turns out, perhaps surprisingly, there’s a clear-cut winner... more

4 Dividend Stocks Showing You the Money

Readers of the Income Investor newsletter can certainly appreciate that kind of thinking. Let's take a closer look at some of the companies that inched their payouts higher this past week. Let's start with Chesapeake Energy (NYSE: CHK) . The country's second-largest producer of natural gas is fueling its quarterly dividend 17% higher to $0.0875 a share. Investors may view energy stocks as steady income producers, but this is Chesapeake's first increase in three years.... more

Paychex: Dividend Dynamo or Blowup?

Let's examine how Paychex (Nasdaq: PAYX) 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

Billionaire John Paulson's 4 Newest Dividend Stocks

We took a look under the hood of billionaire investor John Paulson's portfolio to uncover some of his newest dividend stock picks. Here's what we found, plus some commentary on each. As always, use the list below as starting point for your own due diligence. Hewlett Packard (HPQ): HP is one of Paulson's largest positions. It makes up almost 3% of his portfolio. During the reporting period, he picked up 25 million shares of this hardware powerhouse. For the entire FY 2011, the Street expects non-GAAP EPS to be $5.23 (+41.65%) with revenues of $130.6B (+3.60%). The company issued guidance of non-GAAP EPS of $5.20 - $5.28, with revenues between $130.0B and $131.5B. Looking into the near future, for FY 2012, the Street forecasts a non-GAAP EPS of $5.68 (+8.60%) alongside revenues of $136.1B... more

Income Without the Dividend (Part II): Market Neutral, Iron Condor Strategy

As the U.S. economy continues to flash mixed signals, investors are becoming more skeptical of a near-term recovery. Every positive economic report seems to be followed by two or three negative reports. If this roller coaster ride continues (which we believe it will), income investors would be wise to consider implementing some conservative market neutral strategies to complement their dividend stock and fixed income portfolios. One of our favorite market neutral strategies is the Iron Condor option strategy. Similar to the cash-secured put selling strategy that we highlighted in Part I of this series, the Iron Condor strategy is a conservative option selling strategy that generates income in a market neutral environment. However, unlike the put selling strategy, an investor is not forced... more

Income Ideas: Top 5 High Yield Stocks With Decreasing Payout, Encouraging DuPont

If you are looking to boost your portfolio’s income, then this article will provide you with an interesting group of companies that you may want to keep an eye on. To construct this list we looked for stocks with dividend yields above 2% and: Trailing Twelve Month (TTM) payout ratio < 3-year average payout ratio Expected dividend per share > most recent dividend per share And increasing returns on equity (ROE) Then, for the sake of quality, we then sifted through this universe of stocks and kept only those that had encouraging DuPont breakdowns – which implies: Improving profit margin, i.e. higher Net Income/ Revenues Improving asset turnover, i.e. higher Sales/Assets Decreasing leverage ratio, i.e. lower Assets/Equity Interactive Chart: Press Play to compare... more