Time to Rotate to High Yielding Services Stocks

Recently, we argued that defensive investing with high dividend yielding Industrials may be a better strategy for the near future. Although defensive investing in some sectors doesn’t usually bring in the best returns in bull markets, investing with a margin of safety can be highly valuable in down markets. The same strategy can be applied to other sectors, such as the Services sector. Since August, the risky services stocks with low dividend yields may have performed better than the defensive services stocks with high dividend yields. However, defensive stocks are generally safer and provide better protection in down markets. We believe investors should be cautious about the upcoming inflationary environment. Like Jim Rogers and Ray Dalio, we are concerned about the Fed’s... 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. Let's start with Cognex (Nasdaq: CGNX). The maker of barcode readers and other machine vision systems is juicing up its quarterly distributions by 13% to $0.09 a share. This is the third time over the past year that Cognex has jacked up its rate. You don't need a barcode scanner to see where this welcome trend is heading. PepsiCo (NYSE: PEP) is also fizzing up its disbursements. The soda and salty snack giant is boosting its quarterly dividend by 7% to $0.515 a share. PepsiCo... more

3 Foreign Utility Stocks Going Ex-Dividend This Month

Aside from emerging market ETFs and commodities producers, it's been hard to recommend buying stocks in the current financial climate. Consumption, incomes and other vital components of the United States' economy are sustained by federal stimulus and Federal Reserve asset buying, neither of which can continue much longer at current levels without a major loss of faith in the US dollar. The Dow Jones and Nasdaq had an off week to start May, while foreign stocks suffered a bit more and commodities got slugged in the proverbial gut. The concept of value may be creeping back into investing circles, following an extended period of unhindered asset appreciation and dollar devaluation. With so much of the ever-globalizing world economy intertwined and codependent, companies with operations... more

Are Your Dividends Under Threat?

When it comes to having the ear of the boardroom, few advisers come more influential than consulting giant McKinsey. Simply put, when McKinsey thinks that there's an argument for doing something, it takes a bold chief executive to simply ignore the firm's high-priced advice. So it's worth keeping an eye out for the latest thinking to circulate among McKinsey consultants -- especially when that thinking is driven by the firm's extensive research program.... more

Why Price Decline Often Equals Dividends Cancelled

The question of retaining profits on quality dividend companies through the selling of a position seems to counter the whole point of dividend investing. After all, aren’t you supposed to allow the dividends to compound? In a small way, we described one approach and our rationale for selling quality companies after small gains in this article: Our Primary Concern: Retaining Profits.However, there is another way to view the rationale behind selling a dividend stock after a “fair profit.” In the early years of his Dow Theory Letters, Richard Russell would often cite a Robert Rhea quote about the impact of a stock decline. Rhea would say: Buying in bear markets is merely gambling and not very good gambling at that. Why not have cash instead of investments in bear markets? Why... more

Investing in High Dividend Consumer Stocks

In a previous study, we showed that the average return of high dividend yielding stocks was 13.04% between 1927 and 2009. Dividend stocks beat the overall market by an average of 1.36% per year during that period. In another article, we compiled a list of the top 30 US Financial Stocks and showed that high dividend yielding financial stocks performed better than low dividend yielding ones during the last 52-week period. We prefer high dividend stocks since they generally perform better and usually increase dividend payments over the succeeding 5-10 years. In addition, we are concerned about the Fed’s inflationary monetary policy and want to protect ourselves against inflation. One of the best ways to play defense in an inflationary environment is by investing in high dividend... more

The Most Promising Dividends in Farm and Construction Machinery

Yields and growth rates and payout ratios … oh, my! Before we get to those companies, though, you should understand just why you'd want to own dividend payers. For starters, these stocks can contribute a huge chunk of growth to your portfolio in good times and bolster it during market downturns. As my colleague Matt Koppenheffer has noted: "Between 2000 and 2009, the average dividend-adjusted return on stocks with market caps above $5 billion and a trailing yield of 2.5% or better was a whopping 114%. Compare that to a 19% drop for the S&P 500."... more

The 'Magnificent Seven' Dividend Growth Stocks Overlooked by the Stock Market

This article is about a group of dividend growth stocks that I have admired over most of the 40-plus years I've been in the investment business. But even though I have always admired these great companies, which I now dub the “Magnificent Seven,” I have rarely owned them because the markets have normally overpriced them. However, as you will soon see, the great recession of 2008 changed all that. These magnificent blue-chip stalwarts, each a recognized giant in its industry, have finally become reasonably priced based on earnings and cash flows. Positioning Statement However, before we elaborate on the valuation opportunity that we believe this group of blue-chip stocks offer, a few comments on investing principles are in order. An efficient way to accomplish this is to share a few... more

Sustainable Profits: 6 Dividend Champions with Encouraging DuPont Breakdowns

If you are considering a stock as a source of dividend income, it is important to remember that dividends are not a guarantee of continued future payments – thus an analysis of dividend sustainability is important. There are several ways to assess this. One way is to look at the historical dividend trends of the company. Another way is to analyze the profitability of the company, which funds their dividend payments to shareholders.With these considerations in mind, we performed a DuPont analysis of the sources of profitability for dividend champions, i.e. companies with a history of increasing dividends for at least the past 25 years. From this analysis, we found 6 companies that passed all requirements for positive results.click to expanded imageWe broke the ROE equation into... more

5 Safe Dividend Stocks With Very Generous Yields

All of these companies pay very generous dividends of up to 15%. In this low rate environment, these stocks offer great alternatives to other low yielding investments. Furthermore, the dividends look to be safe with these companies as their earnings power per share indicates they are not at risk of a meaningful dividend cut. With the dividends looking solid here, and earnings continuing to grow, it's possible these stocks could see significant share price appreciation as well. Here are the high yield dividend stocks to consider: Banco Santander (STD) is trading at $11.96. STD is a major bank and is based in Spain. These shares have a 52 week range of $8.65 and $14.80. The 50 day moving average is $11.67 and the 200 day moving average is $11.55, so the shares are trading close to... more