Top 7 Dividend Champions With Excellent Dividend Coverage
If you are considering a stock for its dividend income, it is important to have both a backward-looking and forward-looking perspective on its sustainability. Here we offer a list of seven stocks that appear to have sustainable dividends from both perspectives.We began by searching for “dividend champions,” i.e. stocks that have consistently increased their dividend over the past 25+ years. From this universe, we then searched for those with enough TTM operating cash flow and TTM levered free cash flow to cover their annual dividend. (Note: All companies have dividend yields above 1%.) Do you trust these companies to continue paying their dividends? Use this list as a starting-off point for your own analysis. List sorted by TTM operating cash flow per share / dividend per share.1.... more
Dividend Scan: SFL, CINF, DV, CRWS, WLK
Despite the negative movement of the US stock indexes, several companies declared their future plans. Some notable dividend payers are discussed here. Shares of Shipping Finance International Ltd. (NYSE: SFL) lost 0.35 percent or 7 cents to trade at $19.92 despite raising its quarterly dividend by 2.5 percent to 39 cents per share. Cincinnati Financial Corp. (Nasdaq: CINF) announced a regular quarterly cash dividend of 40 cents per share, payable on July 15, 2011 to shareholders of record on June 22, 2011. Shares fell 1.73 percent or 52 cents to trade at $30.17. DeVry Inc. (NYSE: DV) announced a semi-annual cash dividend of 12 cents per share on its common stock, payable on July 12, 2011 to shareholders of record on June 20, 2011. However, shares fell 0.85 percent or 44 cents to... more
9 Real-World Reasons to Own Dividend-Growth Stocks
Dividend investors seem a usually cheerful bunch. And why not? Every few months nice people at companies all over the globe send them money, just for owning their stocks. Stock went up? Here's your money. Stock went down? Here's your money. You own the stock, you get the money. Cheers! But not everyone likes the party at this particular punchbowl. Now and then some persistently stubborn soul takes a dusty book from the shelf, pulls out an adding machine and some green eyeshades, and figures that investing in dividend stocks violates the most sacrosanct rules of book value, business management and common sense. When companies pay dividends, these party poopers bluster, it technically reduces the companies’ value. On top of that, the companies could have used the money themselves.... more
Seven Dividend Stocks Increasing Distributions
I browse through the list of weekly dividend increases, in order to uncover hidden dividend gems. I typically weed out companies which have raised distributions for less than five years. I have highlighted seven income stocks, which have raised distributions for five years in a row. Not all of these stocks are buys however. I require at least ten years of consistent dividend raises before I include stocks in my portfolio. You could read more about my entry criteria here. The stocks raising dividends include: The Clorox Company (CLX) engages in the production, marketing, and sales of consumer products in the United States and internationally. The company operates through four segments: Cleaning, Lifestyle, Household, and International. The company announced an increase in quarterly... more
Community Trust Bank Corp. (CTBI) Dividend Stock Analysis
This article originally appeared on The DIV-Net May 16, 2011. Linked here is a detailed quantitative analysis of Community Trust Bank Corp. (CTBI). Below are some highlights from the above linked analysis: Company Description: Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company. Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1. Avg. High Yield Price 2. 20-Year DCF Price 3. Avg. P/E Price 4. Graham Number CTBI is trading at a discount to only 3.) above. The stock is trading at a 5.4% premium to its... more
Is Ashland'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
4 Dividend Stocks Showing You the Money
Some of the market's better performers are easing up on their purse strings, sending more money out to their shareholders. Readers of the Income Investor newsletter can certainly appreciate that kind of thinking. Let's take a closer look at four of the companies that inched their payouts higher this past week.... more
Xerox'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
Picking Dividend Stocks for the Next 5 Years
According to market efficiency hypothesis , the markets are informally efficient. If investors have access to the same information, they cannot beat each other. There are three types of market efficiency: The weak form of efficiency suggests that prices reflect all publicly available information. Semi-strong form of efficiency suggests any new information is quickly reflected in the prices. Thus, unless you are a super-fast trader you cannot beat the market. The strong form of market efficiency suggests that the prices reflect all available and yet to be released information. Even an insider cannot beat the market. I am not in favor of efficient market hypothesis. There are so many different types of investors in the stock market. They do differ in their primary investment... more
Recommended Paired Trade for a 14% Annual Distribution Yield
I recommend a paired trade with a long position in two securities. The first is Gabelli Global Gold, Natural Resources & Income Trust (GGN), a closed-end fund that's owned for insurance against U.S. monetary inflation and to proactively participate in the Federal Reserve's quantitative easing policy. The second is American Capital Agency (AGNC), which pays a significant dividend based upon the Federal Reserve's intent on keeping U.S. Treasury Bond interest rates artificially low. Both GGN and AGNC pay significant distribution yields whilst mitigating risk by owning both in tandem. GGN pays a 14-cent monthly distribution, which equates to a $1.68 annual payout. I typically focus upon closed-end funds with a 10% annual distribution payout, and selling at a discount to net asset value. GGN... more