Are 20% EPS Growth and 20% Dividend Growth a Winning Combo?

Are 20% EPS growth and 20% dividend growth a winning combination?At first glance the answer seems obvious, but historical performance does not necessarily indicate future success. Value investors often look for strong dividend growth and attractive fundamentals, while growth investors look for -- naturally -- growth. Some companies have both. Table 1 shows a list of companies that have achieved historical 5-year dividend growth in excess of 20% and historical 5-year EPS growth in excess of 20%, and currently are providing at least a 1.5% dividend yield. Since we're in the middle of the NBA season and right around from the NCAA March Madness tournament, I'll refer to these stocks as double-doubles, a term which traditionally refers to a basketball player getting at least 10 in two... more

Top 10 Industrial Product Dividend Stocks

As the economy recovers and manufacturing picks up again, industrial product stocks should benefit. These high yield dividend stocks would potentially make a good addition to many portfolios by providing exposure to improving economic conditions with the added benefit of current income. Analysis The analysis was conducted by screening through stocks within in the sector and limiting the selections to stocks with a greater than 1% dividend yield with a desire to find at least a 2% dividend yield. The initial screen showed that there were 442 stocks in this sector and 116 offered a dividend yield at .1% or higher with the maximum yield at 9.1% for Ituran Location and Control Ltd. (ITRN). This analysis is limited by the stock screening tool that I used and one clear issue is that the... more

Analyzing the Top 5 Holdings of the S&P Dividend ETF

As investors' search for yield continues, the ability for a company to continue raising payouts year after year becomes even more important. That search can begin with a group of stocks known as the Dividend Aristocrats. These companies have increased their dividend every year for at least the past 25 years. It is important to note that purchasing the top 50 Dividend Aristocrats can be accomplished through the exchange traded fund, SPDR S&P Dividend ETF (SDY). In this article, I will break down the top five holdings of SDY. These five holdings represent some of the highest yielding stocks in the fund. Pitney Bowes (PBI) Pitney Bowes provides mail processing and integrated mail solutions in the United States and internationally. The company has a market cap of $5.2 billion. The stock... more

Are Dividend Paying Stocks Poised to Outperform?

Domestic equities have rebounded dramatically from their lows of March 9, 2009. From its close on that date through the end of 2010, the total return on the Russell 1000 has been 96.73%, or 45.22% annually. The total return on the Russell 2000 has been 134.03%, for an annualized gain of 59.81%. Initial rallies from bear market lows are often characterized as “junk” rallies, led by companies with weak fundamentals, poor earnings quality, and weak management. Many of these stocks are in the most economically sensitive sectors and trading for less than $10/share. More often than not, small and mid cap companies outperform large and mega cap issues during such rallies. The initial rallies from the market lows in 2002 and 2009 exhibited these characteristics.... more

Enterprise Product Partners: Expanded Distribution, High Dividends

Enterprise Product Partners (EPD) has been on a tear the last few years. After swallowing up TEPPCO in 2009 and then buying out their general partner (EPE) in 2010, the company has continued to grow both in size and in distribution. Benefitting from its size, strong management, and positive trends in both the US oil and gas industries as well as economic growth in other industries, EPD will continue to expand its distribution and reward unit holders. EPD owns and operates the largest pipeline network in the US. With a heavy concentration of assets around the Gulf of Mexico, pipelines expand up into New York through the Marcellus shale, as well as into Minnesota, North Carolina, and Wyoming, passing trough most other states in-between. This large network allows EPD to benefit from all the... more

Hormel Foods: A Delicious Addition to the Dividend Aristocrats

Company Overview Hormel Foods Corporation (NYSE: HRL) is engaged in the production of a range of meat and food products and the marketing of those products throughout the United States and internationally. The Company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store (JOTS), Specialty Foods, and All Other.EPS, Dividends, FCF (click to enlarge images):... more

Bank on These 7 Preferred Dividend Shares

To hedge against uncertainties in capital appreciation, consider preferred stocks. Preferred stocks don’t offer the same profit potential as common stock. However, they are more stable investment vehicles because they guarantee a regular dividend that is typically tied to company cash and earnings rather than future cash flow considerations. This type of stock guarantees dividends, which common stock does not. Considering the low interest rate environment in today’s market, the following companies’ preferred stocks have shown solid performance by paying out consistent dividends alongside positive price movements. It seems unlikely Bernanke will raise rates in the first half of 2011, given the precarious nature of the recovery, so we believe risk of erosion in the following names... more

A Mexican Agriculture Small Cap With a Reliable Dividend Policy

Stocks are expensive right now. Let me re-phrase that: Large-cap stocks are expensive right now. According to John Hussman, head of the Hussman Investment Trust, the S&P 500 currently sells for about 24 times earnings based on 10-year average earnings. In his latest weekly letter, Hussman explains how he uses a cyclically adjusted measure of PE that incorporates inflation to reach his conclusion that the S&P 500 is overvalued. According to his research, the only time that the broad market sold for 24 times earnings was in 1929, 2000, and 2008. I’ll let you draw your own conclusions about entering the broad stock market at such a valuation. My point is: If we’re going to find value right now, it’s probably not going to be in large-cap stocks. So I recently found a... more

Why Income and Dividend Investors Should Consider a Covered Call Strategy

With the stock markets close to making new three year highs, many investors looking for income and capital preservation should consider the covered call strategy on a portion of their equity holdings. The CBOE S&P 500 Buywrite Index (BXM) has meaningfully outperformed a long only investment in the SPY index fund for a substantial period of time, although such a strategy has underperformed recently, given the rapid upward trajectory of stocks and commodities over the past year. The covered call strategy essentially involves selling near month call options against your stock holdings to collect the option premium you receive from the buyer of the call option. Most investors who are very optimistic in their stock holdings do not want to sacrifice any upside for a deeper margin of safety and... more

Watching Dividends Rise: Putting Together a Focused Dividend-Growth Portfolio

In 2008, I re-tooled an existing aimless portfolio to become a focused dividend-growth portfolio. I did this in conjunction with publication of the first in what has become an annual series of e-books on dividend investing. The current edition is TOP 40 DIVIDEND-GROWTH STOCKS FOR 2011: How to Create Wealth or Income from Dividend-Growth Stocks. When I retooled the portfolio, I gave it a great name (Dividend Growth Portfolio) and used the e-book as a guide not only to what stocks to select but also to how to manage the portfolio. I created a strategy document and set of rules to govern the portfolio.The Dividend Growth Portfolio's purpose is to demonstrate the results that can be achieved by following sound dividend-growth investing principles. I consider it in many ways to be a typical... more