Investors Who Seek "Significant" Alpha Should Not Seek Out Only Dividend Paying Stocks

I recently read an article by an author I have a great deal of respect for that concluded that dividend stocks outperform non-dividend payers. Although I share an appreciation and penchant for owning quality dividend paying growth stocks, I also took exception to the innuendo and conclusions that the article presented. Ironically, the article started out with one of my favorite and most cherished quotes by Thomas H. Huxley: "The deepest sin against the human mind is to believe things without evidence." The opening of the article, utilizing this extremely relevant quote, stirred up a great deal of FEAR on my part. I was FEAR-ful because the article suggested that a study, which the article quotes and is primarily based on, alleges to prove that dividend stocks outperform... more

10 Stocks With Low Payout Ratios and High Yields

We are in the search for the winning combination of metrics in dividend stocks. We will start with two common ratios: yield and payout ratios. Do high yielding stocks produce better investing results or are they less sustainable due to the bigger payouts? What about low payout ratios vs. high earnings retention to fuel future growth? Should companies save earnings or give them back? Conflicting DataOne study presents the argument that low payout ratios are associated with lower subsequent earnings growth (Does Dividend Policy Foretell Earnings Growth, Robert Arnott and Clifford S. Asness). The concept is that management may boost payout ratios when they feel confident of future growth. Also, having less retained earnings from high payout ratios may force the business to be very... more

The Most Promising Dividends in Perfumes and Cosmetics

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. 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

8 High-Yield Dividend Kings for 2011

We ran a screen for large cap companies with big dividend yields alongside price stability. Here are the dividen kings we found: CenturyLink (CTL) currently yields 7.2%. The company has paid dividends since 1991. Moreover, the 52 week trading range is $14.16 - $46.87. Shares are now trading over $40. The next dividend payment should be announced in late May for payment in late June.... more

Dividend Scan: VALE, UTX, PNR, VIP, CAT, AON

Despite the US market remaining in the negative territory, several companies declared their future dividend plans. Some notable dividend payers are discussed here. Vale SA (NYSE: VALE) shares added 1.29 percent or 41 cents to $32.42 as the company announced to pay a dividend of $0.766 per outstanding common or preferred share, payable on two installments on April 29 and October 31, 2011. United Technologies Corp. (NYSE: UTX) shares slipped 1.08 percent or 91 cents to $83.30 despite increasing its quarterly dividend of 12.9 percent to 48 cents per share from 42.5 cents. Pentair, Inc (NYSE: PNR) declared a regular quarterly cash dividend of 20 cents per share, payable on May 13, 2011 to shareholders of record on April 29, 2011. However, shares of the company lost 1 percent or 38... more

An Unprecedented $16.6 Billion Dividend Opportunity Revealed

I'm currently positioning my portfolio to profit from this unprecedented event, and in the next four minutes, I will show you how to do the same. Get ready to do something extraordinary. What's at stake?$16.6 billion! That's the amount S&P analyst Howard Silverblatt is reporting S&P 500 companies are increasing their dividends. That's spread across 117 different companies. Today, I'm revealing my five favorites of the group and also sharing with you how to get free access to 13 more outstanding dividend payers identified by The Motley Fool's expert analysts.... more

Stocks Going Ex-Dividend the Third Week of April

Here is our latest update on the stock trading technique called "Buying Dividends." This is the process of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend. This technique generally works only in bull markets. In flat or choppy markets, you have to be extremely careful. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can't sell the stock until after the ex date. The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend during the next week or two. The list contains many dividend paying companies, all with market caps over... more

7 Dividend Paying Buyout Targets for 2011

BEST BUY CO (BBY) Market capitalization: $11.82 billionDividend: $0.60 (2.00%)The electronics retailer has been a dominant force in its niche but continues to struggle against dual headwinds. On the one hand the company's consumers have reduced spending capacity because of rising costs like food and fuel. On the other hand, rising input costs have pressured Best Buy's margins as online competitors like Amazon grab market share in part because of their regulatory tax arbitrage. These factors along with the weak economy have had a negative effect on the business. For example, from 2006 to 2010, revenues increased from $30.848 billion to $49.694 billion. While sales grew, operating margins stumbled in the last two years from around 5.5% to around 4.5%.While we discuss Sears Holding as the... more

Top 30 Dividend Stocks That Hedge Funds Love

Hedge funds usually don’t invest in dividend stocks because these are generally defensive stocks with little growth and they are generally efficiently priced. Hedge funds invest in misunderstood securities that are mispriced by the market. They view dividend stocks as long-term treasury bond substitutes. However, sometimes dividend stocks are mispriced and that’s when hedge funds start investing in these stocks. We gathered the holdings of the top 175 equity hedge funds and analyzed their investments in high dividend large-cap stocks. Here are the hedge funds’ top 30 dividend stocks that yield at least 4% and have a dividend payout ratio of at most 67%. The dividend data is sourced from Fidelity. Company Name Symbol Dividend Yield HF Holdings (Millions) ... more

10 Growing, Dividend Paying Technology Companies at Reasonable Valuations

When investors look for dividend paying stocks, they do not usually think of the technology sector. In fact, there are a number of dividend paying technology stocks with strong balance sheets, healthy yields, revenue growth, and reasonable valuation multiples. Using the Screener.co stock screener, we can limit our search to companies that trade on US exchanges and meet the following criteria: Field op Criteria Sector = "Technology" Current year dividend per share estimate / Price-closing or last bid > 0.005 Current EV/EBITDA <= 10 Revenue Change-TTM over TTM >= 0 Revenue Change-year over year >= 0 Total Debt(I) < 2 * EBITDA(A) We are searching... more