Best Buy'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

Dogs of the Dow: Dividends vs. Options

We checked the top 5 current Dogs of the Dow (the current Dow component stocks with the highest dividend yields) to see how their dividends stack up vs. their covered calls and cash secured puts. Selling covered calls can be an effective way to protect your portfolio in a down market. The current Dow Dogs are (click to enlarge images): As is often the case, telecoms have the highest dividend yields in the group, with AT&T (T) and Verizon (VZ) topping the list. These two dividend paying stocks are in the telecoms section of our High Dividend Stocks By Sector Tables. Two healthcare dividend stocks and tech giant Intel (INTC) round out the list. Verizon has the most aggressive dividend payout ratio, and Intel the most conservative. Performance-wise, only Pfizer (PFE) has gained much... more

5 Oversold Dividend Stocks With High Liquidity Growth

A company’s liquidity is vital to its ability to continually pay a dividend. If you’re considering a stock for its dividend, be sure to check the company’s liquidity first. To illustrate this, we ran a screen on Friday’s technically oversold stocks, with RSI(14) readings below 40. We searched for those that pay a handsome dividend yield (between 2 and 7%, based on the most recent quarter) under a sustainable payout ratio (of less than 35% of earnings). Among these stocks, we searched for those with the best 10-year track record for improving liquidity. We found those with 10-year compounded annual growth rates (CAGR) for current assets exceeding the 10-year CAGR for current liabilities by at least 5%. Interactive Chart: Press Play to compare changes in analyst ratings over the... more

Dividend Income Progress Update: May 2011

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in May, extending the streak to 11 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 40 of the last 42 months. My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2011 Investing Goals post. Below is an updated version of the table found in the original post. Description Dividend Income Annualized Yield on Cost 2027 Goal 110,000 10.00% 2017 Goal 30,000 5.80% 2011 Goal 15,500 4.70% December/2010 11,407 4.55% Purchases YTD 2,398 -0.15% Div. Changes YTD 359 0.04% Sales YTD (777) 0.02% May/2011 13,387 4.46% Purchases 298... more

Picking the Best Mid-Cap Basic Material Dividends for the Next 5 Years

Recently, I introduced O-Metrix as a simple valuation tool to estimate the future return of a stock. Based on this technique, we can make a strong connection between EPS growth and annualized future returns. Reader interest was quite high, given the simplicity of this powerful ranking system. This article, the third in a series, questions the suggested ranking technique to see whether it works with mid-cap ($2 billion to $10 billion) basic material companies. You can find a full list of articles in this series here. Review of O-Metrix O-Metrix is a simple grading technique based on stock's dividend yield, future expectations, and current valuation... more

3 Solid Yielding Tech Stocks With Low Valuations

A decade ago if I would have told you that I would be writing an article today about some of the high dividend yields available from some well known technology companies, you probably would have thought I needed to spend some time on a psychologist’s couch. Times have certainly changed. Today I highlight three large capitalization tech stocks with low valuations as well as good prospects for growing earnings and dividends over the next few years and already providing a solid dividend yield currently. Taiwan Semiconductor Corporation (TSM): Taiwan Semiconductor Manufacturing Company Limited engages in the computer-aided designing, manufacturing, packaging, testing, and selling of integrated circuits and other semiconductor devices; and manufacturing masks. It offers a range of wafer... more

Heavyweight Contenders: Dividend Stocks With a Decade of Growth, Yielding Over 3%

The dividend contenders is a list of all the companies that have paid increasing dividends every year for at least 10 years. Created and maintained by David Fish, this list is a must have for any serious dividend growth investor. You can find it at dripinvesting.org. In order to narrow down the list for further investigation, I cut any stock yielding less than 3% (my preferred entry point). So here they are, all 64 dividend contenders with yields over 3%, ordered from highest to lowest current yield. Vector Group LTD (VGR) Current Price - $18.65 Current Yield - 8.58% Years of Dividend Growth - 13 The Company is principally engaged in the manufacture and sale of cigarettes in the United States through its Liggett Group LLC (Liggett) and Vector Tobacco Inc. (Vector Tobacco)... more

Dividends Matter a Lot, But Not More Than Proper Diversification

There were a couple of interesting comments on the blog earlier this week about what I've called dividend zealots, DZ for short. The way some of the articles and comments by the DZs read it would seem buying companies with long histories of increasing their dividends is an infallible investment strategy. Owning nothing but dividend growers is far from the worst strategy one can implement and while it should be obvious that plenty of people do have success with this, there are people who have success with all other types of strategies. Whatever you think is the worst possible way to invest/trade, I promise you someone is having success with it.It should also be obvious that any strategy can fail for whatever reason. Constructing a portfolio of stocks that have some lengthy track record for... more

3 Dividend Stocks at Risk

Corporate management can often paint a rosy picture complete with optimist earnings guidance. But these forecasts are often biased to the upside. This is why cash dividends are important to investors. They provide a tangible measure of a company's success and a signal of future corporate stability. When companies raise dividends, this is a tangible signal of future strength. When a company decreases its dividend, it signals future fundamental weakness. Beware of the dividend paying stocks listed below. We speculate that their yields could be at risk. 1. Nokia Corp (NOK) Dividend: $0.46 / 7.00%The cellphone maker has had a rapid fall from grace. Despite still being one of the world's largest smart phone and cell phone makers, the company stock price dropped from around $40 in early 2008... more

Is Dow Chemical's Dividend 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