Dividend Investing: Make Sure Free Cash Flow, Not Debt Issuance, Backstops Your Investment

In my last article "20 Relatively Safe and Cheap Dividend Stocks for Income Investors", I highlighted several companies paying decent yields with quality franchises and global operations (getting out of Dollars is more important than stock picking in my mind). High quality dividend paying stocks should be fully researched and many dividend investors can rebalance their portfolios toward higher quality, out of favor Blue Chip companies paying 3% or higher yields without chasing last year’s returns. Many dividend payers are located overseas or have a global customer base which should help investors protect against a collapse in the Dollar.... more

Dividends: A Macro Look at Yields, Past and Future

It is said: An Investor is someone who buys asset for income, a speculator is someone who buys assets in the hopes of selling it at a higher price.The current average dividend yield on the S&P 500 is only 1.71%. With the yield being so low, I wanted to check out the historical data of dividends to better give justice to any conclusion about dividends being either high or low currently.Over the last 30 years now, the average dividend yield has been lower than historical average. Below is a chart from Doug Short showing historical perspective of Dividend yield and the S&P 500. (Click charts to enlarge) Taking data from the Federal Flow of Funds reports, compiled by the... more

Top 10 Basic Materials Dividend Stocks

These basic materials (metals, energy but excluding utilities, chemicals) stocks are well positioned to take advantage of rising commodity prices while offering an attractive dividend yield. Some names on this list may be more familiar than others. One goal was to select companies that represent a broad range of industries. Analysis The analysis was conducted by screening through stocks within in the sector and limiting the selections to stocks with a greater than 2% dividend yield. I also looked at the full universe of basic materials stocks to compile some general statistics about the sector. The initial screen showed that there were 268 stocks in the basic materials category and 144 offered a dividend yield at .1% or higher with the maximum yield at 12.9% for Great Northern Iron Ore... more

Top 5 Quality Dividend Paying Companies: A Performance Assessment

In my previous article entitled Top Five Quality Dividend Paying Companies, I asked the questions: Which companies survived relatively well in the last 3 years with good profit margins, reasonable levels of debt, ROA, ROE, and pay dividends? What volatility did these companies experience in their share price over the last 52 weeks? What sort of returns could I potentially gain holding these companies medium to long term? We found Johnson & Johnson (JNJ), Coca-cola (KO), Southern Copper Corp. (SCCO), Altria Group (MO) and Abbot Labs (ABT) using the following screening criteria: Mid to Large cap; Dividend yield above 3%; Profit margin above 10%; ROA above 10%; ROE above 20% and Total Debt to Total Capital ratio below 50% (Total Capital... more

Two Dividend Paying Real Estate Companies With Monthly Disbursements

A little over a year ago, I predicted that the bottom of the real estate market would take place in November of 2009. There were positive signs in 2010 but as I mentioned in my article, real estate is like a giant ship; it takes a long time to turn, unlike the stock market, which can turn on a dime.If you think real estate is turning around, there are alternatives to buying a rental house. Alternatives include real estate investment trusts (REITs) and closed-ended funds (CEFs) that invest in real estate securities. These investment... more

19 Dividend Growth Stocks Consistently Raising Distributions

Dividend investing is all the rage these days. One of the reasons is that dividend investors tend to earn the same amount of equity returns, but with lower risk and volatility. However, they should only seek safe dividends, which can grow at least as fast as inflation, so that they are not losing the purchasing power of their money over time. Particularly appealing are companies which have a record of consistent dividend increases. Companies that make a point of raising dividends every year will continue to do so and typically have a long record that’s built in with a remarkable degree or stability and predictability. When these companies announce a dividend increase, they show their confidence that the business model that has produced a long string of consecutive dividend increases is... more

Reload Your Dividend Portfolio for a Yield-Boosting Strategy

Last week we went over a few reasons why I think the market could be at or approaching a short term top. Give it a read. It's a quick article that looks at how some of the internals are flashing yellow have diverged with the rest of the market. Since then a couple more indicators have starting flashing yellow, particularly a rolling-over in emerging markets. And if the psychology of this whole rally has you bewildered, perhaps this might bring you some peace. Today we're going to use all this knowledge to design a simple strategy that will get you some more bang for your buck out of the section of your portfolio that you've carved out for income investing.Step one is to sell all your dividend stocks. I know. Calm down. It's OK. If you really don't want to sell them or you've owned them... more

Income Investors: Consider These 5 High-Yielding REITS

With the commercial and residential real estate markets bottoming out, now is an opportunity to ride the wave on up with REITs. Additionally, given the nature of REITs, collecting dividend payments is an added bonus. By law, REITs have to pass on 90 percent of their taxable income to stockholders. Below are 5 REITs that you should consider for your fixed-income portfolio. And if REITs aren’t your thing, we came up with 5 safe dividend ideas you can read about here and 10 other cheap, high-yielding dividend “kings” for 2011. Annaly Capital Management (NLY) has been around since 1997, and has paid a healthy quarterly dividend going back 10 years. The most recent dividend was $0.64, which is a 14.7 percent current yield. The Company also beat 2010 earnings expectations, reigning in... more

3 Very High-Yielding Income Stocks You May Not Know About

High-yielding dividend stocks with sustainable payouts are hard to come by. First you need a large cash-generating company with a low relative PE (otherwise they cannot pay the big yields compared to share price). You often expect a lower price to book ratio of a value company. Other aspects you look for are increasing dividends, a history of some growth (you do not want a stock with declining fundamentals), and a lower downside risk of falling prices. But what do you do when there are few high yielding stocks that fit this category? You make your own by selling covered calls on stocks that fit the above description... more

6 High-Yielding Electric Utilities for Consideration

Utilities continue to offer a reasonably high yield with better protection from inflation than some other income-oriented investments, like high-quality bonds. I first addressed this issue almost a year ago and followed up in November with a list of high-yielding utilities. While the group has been facing the headwinds of rising rates, it seems to be holding up to those challenges. The SPDR Utilities ETF (XLU), which consists of a broad range of utilities beyond just electric utilities, has lagged the market but performed better than high-quality bonds, which is represented by the iShares Barclays Aggregate Index (AGG): The blue line is XLU, while the red line is AGG. As you can see, over the past year, XLU is up about 11% while AGG is hugging the flat line. These numbers are not total... more