Want to Seek 'Significant' Alpha? Look Beyond Dividend Stocks

On March 30, 2011 an author that I have a great deal of respect for published an article titled "Investors who seek Alpha should seek out dividend stocks". Although I share an appreciation and penchant for owning quality dividend paying growth stocks, I also took exception to the innuendo and conclusions that his 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 fearful because the article suggested that a study, which the article quotes and is primarily based on, alleges to prove that dividend stocks outperform... more

Income Ideas: 8 Dividend Champions With Healthy Levered Free Cash Flows

When searching for companies that pay reliable dividends, it’s important to consider the free cash flow that the company is generating – after all, dividends are paid from free cash flow.On that note, we wanted to see which historical dividend champions (i.e. those that have increased their dividend for 25+ consecutive years) are best positioned today, by looking at levered free cash flow as a percentage of market cap. click for expanded images Levered free cash flow is the free cash flow available after paying interest to bondholders and re-paying any principal as it comes due. From this cash flow, the Board can decide to pay all or some in dividends to shareholders, or re-invest the money back into the firm to support growth.We ultimately found 8 companies with levered FCF... more

The Market's Hottest Dividend Sector

With eye-bulgingly huge yields, the mortgage REIT sector has become a true market darling. Yields such as Annaly Capital's (NYSE: NLY ) 14.4% or American Capital Agency's (Nasdaq: AGNC ) 20.1% have become too tempting for yield-starved investors in a near-zero interest rate world. And financial backers sponsoring IPOs have been rushing to market to take advantage of the opportunity. According to The Wall Street Journal, seven of the nine real estate investment trusts that have filed for IPOs so far this year will invest in mortgage-backed securities. Those nine deals are looking to raise $2.6 billion in capital, the largest amount for mortgage REITs since 2009. Among the largest REIT IPOs are Pimco REIT, which is looking for $600 million, and American Capital Mortgage Investment, which... more

Dividend Scan: AIR, SJR, HOFT, FHCO, CCL, JPM

As the US markets continued trading on a positive territory in the mid-day session, several companies declared their future dividend plans. Some notable dividend payers are discussed here. AAR Corp. (NYSE: AIR) announced a regular quarterly cash dividend of 75 cents per share, payable on may 2, 2011 to shareholders of record on April 22, 2011. Shares of the company lost 2.05 percent or 53 cents to $25.33 despite the dividend. Shaw Communications, Inc (NYSE: SJR) shares slipped 2.72 percent or 58 cents to $20.73 despite declaring a regular monthly dividend of $0.076667 on its Class B non-voting participating shares, and $0.076458 on its Class A participating shares. The dividends will be payable each on June 29, July 28 and August 30, 2011. Hooker Furniture Corp. (Nasdaq: HOFT)... more

15 Dividend Stocks With a 15% Yield in 15 Years

"I skate to where the puck is going to be, not where it has been." - Wayne Gretzky I know very little about hockey, but I have always loved this quote. It can be applied to so many things in life, including investing. Just as Gretzky has a vision as to where the puck is going, investors need to have a similar vision, and not get caught up on short-sighted distractions. Investing in dividend growth stocks requires a long-term vision. It is easy to run a screen and find stocks that are paying a 15% yield today; but how long will they be able to sustain it? Instead you may want to skate to where the future 15% yielders are going to be. To do that, here are some things you need to know… Tracking Yield On Cost Yield-on-cost (YOC) is simply Current Annual Dividend by Original Cost Per... more

15 Dividend Stocks With A 15% Yield In 15 Years

"I skate to where the puck is going to be, not where it has been." - Wayne Gretzky I know very little about hockey, but I have always loved this quote. It can be applied to so many things in life, including investing. Just as Gretzky has a vision as to where the puck is going, investors need to have a similar vision, and not get caught up on short-sighted distractions. Investing in dividend growth stocks requires a long-term vision. It is easy to run a screen and find stocks that are paying a 15% yield today; but how long will they be able to sustain it? Instead  you may want to skate to where the future 15% yielders are going to be. To do that, here are some things you need to know… Tracking Yield On Cost Yield-on-cost (YOC) is simply Current Annual Dividend dividend by Original... more

Reinvesting Dividends Pays Off

I consider myself a fairly frugal person. I like cutting recurring expenses, which is why I drive a ten year old car and only have a discounted cell phone with the lowest plan possible. Saving money and investing in quality dividend stocks is just one of the strategies I utilize to increase my dividend income. Cutting expenses however can only go so far however. That's why generating extra income is so important to me. Besides the dividend income from my portfolio, I often look for brokerage deals in order to find brokerage bonuses or free trades. I also like teaching young people how to save and invest for their future. Back in 2008 Sharebuilder had a promotion, where investors who put $50 in their account and executed one trade could earn a $50 cash bonus. I shared this deal with a... more

28 'Overdue' Dividend Increases: Reason to Worry?

In compiling the Dividend Champions list (found here) I get to see which companies are nearing the anniversaries of their previous dividend increases. Most of these firms raise their payout about the same time every year, but some companies go longer before boosting their dividends, and this can raise concerns about their streaks of increases. New Series This is the first in what I hope will be a monthly series listing companies whose latest dividend increase might be considered “overdue.” In other words, these companies have gone more than a year since their previous increase, something that might be considered a sign that the dividend (or at least the streak of increases) is in danger. (Note that the dates for these companies appears in Red in the Dividend Champions spreadsheet... more

4 Underperforming Blue Chips With Solid Valuations and Good Dividend Yields

I continue to grow more bearish on the short term prospects of the market. Oil prices mercilessly fell Monday after a long run up, but still remain very elevated. Portugal is still working through its bailout terms with the European Union and the IMF, and Spain is now on the clock. Company profit margins are likely to be negatively impacted by rising commodity inflation and the end of QE2 could have a lot of negative consequences that are not factored into the market.All that being said, it is imprudent to keep your entire portfolio in cash while waiting for a significant pullback; especially in an inflationary environment. One of the few areas that appear undervalued, or at least fairly valued are well run, large cap blue chip stocks that have not had the same run up as other sectors... more

8 Growing Companies With High Yields, Low Debt, and Reasonable Valuations

We can use the Screener.co stock screener to find attractive investment opportunities for income-oriented investors. To do this, we first limit our scope to US-markets and then employ the following conditions: Field op Criteria Current year dividend per share estimate / Price-closing or last bid > 0.02 Current year dividend per share estimate >= Dividends per share-trailing 12 month Total Debt(I) < 2 * EBITDA(A) EPS Change-TTM over TTM >= 0 Revenue Change-TTM over TTM >= 0 Current EV/EBITDA <= 10 We require at least a 2% forward yield, stable or growing dividends, stable or growing revenue and EPS, manageable debt loads (using a... more