3 Stocks in Danger of Dividend Cuts

We took a look at 9 dividend paying stocks to see if any were at risk of a dividend cut in the foreseeable future. Here's what we uncovered. AvalonBay Communities (AVB): AvalonBay is bouncing, but with a plan to invest around $700 million in new properties, the company will be expending a large amount of resources on a risk-fraught move. The economy is not out of the woods yet, but AvalonBay has just put a pretty big bet in place with what may turn out to be unwarranted optimism. Also, even relative to its peers, its earnings multiple is rich, around 85. AVB has a 229% payout ratio relative to earnings, so unless it can get its earnings power up, there is a possibility that continued payments of the 2.75% dividend will come to a halt. AvalonBay is $4B in debt with around $250 million in... more

10 New Dividend Kings for Safety and Yield

Dividend stocks are favorites of famed value investors like Warren Buffett and George Soros, and for good reason. Dividends are paid out by companies who earn excess cash and can create the most value by returning these earnings to investors, rather than by funding internal projects. When a firm can safely put out a high yield dividend every quarter, the stock is a solid return-generating investment choice for any portfolio. Investment Underground looked at 10 stocks paying out high dividends, and here’s what we found: AT&T (T): This telecom giant is well known to consumers for providing cellular phone service, landline telephony, cable television, and wired internet. Over the past year, AT&T paid out $1.72 in dividends per share for an incredible 5.67% yield. The great news is that the... more

Dividend Kings: 8 High-Yielders for the Summer Market

The summer's here. Investment Underground took a preview of the dividend investing scene to see if any new dividend kings are worthy of being crowned. Here's what we uncovered: Verizon (VZ) : We think this once sleepy telecom has the potential to enter a new growth phase as it grabs market share from competitors with its adoption of the iPhone handset. The company should be able to handle the new services demanded by customers, and on a relative basis, outperform its peers. Average revenue per customer should get a shot in the arm over the next few years as Verizon rolls out higher revenue bundled plans and increases smart phone penetration. The company is worth $37 per share using a 10% discount rate. Though the AT&T (T) deal does throw a curve ball into Verizon’s plans, should the... more

Selecting the Best Industrial Dividends for the Next 5 Years

The profitability of the industrial producers is directly correlated with that of other sectors. These companies play an essential role in the development of the new technologies as well as services. Consequently, the performance of the large-cap industrials is a solid indicator of the strength of the U.S. economy. In the last 5 years, the average EPS growth of industrial companies was 7.02%, whereas the average EPS growth estimate for the next 5 years is 14.66%. While the year-to-date performance of 1.38% is disappointing, one year performance of 23.25% is promising. As of June 13, the average yield of industrial companies was 1.81%. Some large caps offer substantial dividends, whereas some have no dividend policy yet. This... more

InterDigital'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... more

Beat a Volatile Market With These 15 Stocks

We investors have been absolutely spoiled with an eight-month rally that began last September and extended through April. Recently, though, the wheels appear to be coming off the magic bus, and major stock indexes have suffered through six consecutive losing weeks. So how should one invest in light of an increasingly volatile and downtrending market? With the S&P 500 Volatility Index up nearly 30% from its April lows, we have no choice but to accept the fact that volatility and worry are creeping their way back into the marketplace. Luckily, we have a wide swath of companies to choose from across a wide range of industries. We don't have to immediately turn to short-selling in a volatile environment to try to make a profit or preserve our capital. Sometimes, finding winning stocks in a... more

DRDGOLD'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.... more

More Dividends and Diversification

As a followup to Saturday's post I wanted to outline some ideas for building a dividend tranche for a portfolio where someone might have different buckets within a portfolio. So high yielders might be one bucket, themes another, core another and so on. I could see where it might be easier for some people to think of their portfolio this way. Although not my preference it is perfectly reasonable. Anyone going down this road might want to own high yielders from various parts of the market to capture some business diversification or maybe cyclical diversification. The following are just examples, I don't own any of them for clients. First is Brookfield Infrastructure Partners (BIP). This is sort of an investment product as opposed to a company. It manages a portfolio of infrastructure... more

David Meier's 11 Incredible Dividend Stocks as a Portfolio

Dividend stocks are key in the sense that they deliver income even while there is continuing market turbulence. David Meier of the Motley Fool summarized the current conditions as follows: "It's not a dividend investor's world these days." For the long term investor, dividend stocks have significant benefits in terms of providing income and growth potential. We continue to examine different portfolios to see what we can learn. Meier outlined 11 outstanding Dividend stocks which are summarized here: Classics Wal-Mart (WMT) Pepsi (PEP) International PM -- Philip Morris for which we use BTI as a proxy as it has longer history Pharma Juggernauts Abbott Labs (ABT) Johnson and Johnson (JNJ) Quietly Consistent Aflac (AFL) Bemis (BMS) Tech up and comers Intel (INTC) KLA... more

Corning'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