McCormick: One Fantastic Dividend Payer

I recommended McCormick to Inside Value members back in October, but it wasn't until recently that I was able to visit its headquarters. I came away impressed with McCormick's people, process, and strategy and, as I'll explain, I am confident that this wide-moat dividend dealer has years more of great returns ahead. Got spice?McCormick is like a modern-day Dutch East India Company -- without the powdered wigs and tyranny. The 122-year-old company's branded spices, herbs, seasonings, and sauces can be found in nearly 100 countries. Odds are you have some on your pantry shelves, including Lawry's, Old Bay, and the eponymous McCormick brands.... more

Battle of the Airborne Dividends: Boeing vs. Honeywell

The Boeing Company (BA) and Honeywell International (HON) are among the largest American corporations, which are pioneers of aerospace and defence industry. Boeing's market capital is $56.9 billion, whereas Honeywell has slightly lower market cap of $46.8 billion. Both are entrenched companies, founded about 100 years ago. These companies are not exactly in the same business: Boeing is a producer, whereas Honeywell is a supplier. However, they are very much related to each other: Boeing is one of the biggest customers of Honeywell. Here is a brief fundamental analysis of the Boeing Company and Honeywell International Incorporation (data from Finviz): The Boeing Company, headquartered in Illinois, was embarked on aircraft manufacturing in 1916. Today it has been composed of different... more

Is W&T Offshore'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 flow per... more

Five Financial Companies Expected To Hike Dividend This Year

The financial industry was hit harder than any other in the massive economic downturn of 2008 and 2009. The global recovery has been tepid, but the economic environment has certainly improved a lot from a couple years ago. From a dividend standpoint, however, financial services is still lagging. Five years ago, the financial sector was one of the highest dividend-yielding sectors in the market. In 2010, very few financial companies even paid a dividend of any kind. The amazing drop in dividend payouts over a short period of time proved just how quickly a dividend can be dropped when a company doesn't have a strong balance sheet. Many large banks and other financial institutions have spent the last year or two trying to focus on building up the bottom line. There are fewer risky... more

15 Dividend Increasing Dividends For A Rainy Day

Life often deals us difficult circumstances to work through at what seems to be the most inopportune time. During economic downturns, many people lose their jobs at a time when companies aren't hiring. When things like this happen, those with an alternative income, including dividend growth stocks, are in a better position to deal with the circumstances thrust on them.
Below are several companies increasing their dividends and in turn better preparing their shareholders for a financial rainy day:... more

2 Undervalued Business Development Companies Paying High Dividends

Looking for undervalued high dividend stocks? Check out the unloved Financials sector, which is barely up 1% year to date, and lags all other sectors. Business Development Companies, (BDCs), are a sparsely-covered Financials sub-industry with some high dividend paying stocks, and low PEG ratios. We've also included an undervalued private equity firm which uses mezzanine debt. BDCs are similar to venture capital funds, in that they're created to help grow small companies in the early development stages. Many BDCs are set up much like closed-end investment funds and are listed on the NYSE, AMEX and Nasdaq. A big difference between a BDC and a venture capital fund is that BDCs allow smaller investors to invest in startups. BDCs have become popular because they provide permanent capital to... more

20 High-Yield Stocks Undervalued Relative to Levered Free Cash Flow

Here we offer an alternative to the widely used Price to Free Cash Flow ratio: Levered Free Cash Flow to Enterprise Value. P/FCF is a very helpful ratio for comparing the price of companies, however there are some drawbacks. Using market cap in the numerator limits comparisons to companies with similar capital structures, and using free cash flow ignores financing costs. For these reasons, we use a ratio of levered free cash flow to enterprise value. Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm’s value from all ownership sources: market cap, outstanding debt, and preferred shares (i.e. the theoretical takeover value).click for expanded image From this value we subtract cash holdings because,... more

15 Companies That Have Announced Dividend Increases During May

Life often deals us difficult circumstances to work through at what seems to be the most inopportune time. During economic downturns, many people lose their jobs at a time when companies aren't hiring. When things like this happen, those with an alternative income, including dividend growth stocks, are in a better position to deal with the circumstances thrust on them. Below are several companies increasing their dividends and in turn better preparing their shareholders for a financial rainy day:Safeway Inc. (SWY) is one of the largest food and drug retailers in North America based on sales. May 19th the company increased its quarterly dividend 21% to $0.145 per share. The dividend is payable on July 14, 2011, to stockholders of record at the close of business on June 23, 2011. The yield... more

Defensive Investing: 6 High Dividend Business Services Stocks

Recently, we discussed the viability of defensive investing for mega-cap Services stocks. Although high dividend yielding Services stocks have recently underperformed the risky Services stocks with no dividend yields, it seemed investors might benefit more by switching to high dividend stocks in the current monetary environment. For different industries within the Services sector, such as Business Services, this defensive strategy can yield better results. High dividend stocks in these industries usually deliver higher current returns and can be considered as alternatives to T-bonds. As we are concerned about the upcoming inflationary environment, we believe investors should pick the stocks with higher dividend yields. We compiled a list of 33 Business Services Stocks (the sector... more

6 Stocks Reaching 52-Week Lows, With High Dividend Growth Rates

Looking to boost you portfolio’s income? Then this may be an interesting starting point for your own analysis. To construct this list we looked for stocks trading close to their 52-week low and with a dividend yield greater than 2%. Last, we compared their 5-year dividend growth rate vs. their industry and kept only those companies that outperformed their peers.click for expanded image We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. As the graph shows (click to enlarge), the list has steadily underperformed the market average over the previous month. To access a complete analysis of this list's recent performance, click here. Considering your knowledge about these... more