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>>> Exxon's CEO On How Oil Giant Plans To Maintain Dividend, Focus On Balance Sheet
Benzinga
Jayson Derrick
April 07, 2020
https://www.benzinga.com/news/20/04/15759671/exxons-ceo-on-how-oil-giant-plans-to-maintain-dividend-focus-on-balance-sheet?utm_campaign=partner_feed&utm_source=yahooFinance&utm_medium=partner_feed&utm_content=site
Exxon's CEO On How Oil Giant Plans To Maintain Dividend, Focus On Balance
Oil giant Exxon Mobil Corporation is committed to maintaining its dividend, mostly due to a decades-long focus on maintaining a healthy balance sheet, CEO Darren Woods said Tuesday on CNBC's "Squawk Box."
CEO Says Exxon's Focus Unchanged
Exxon remains committed to satisfying the needs of its large retail investor base in paying dividends, and it won't shy away from tapping its balance sheet to come up with cash if needed in the short-term, Woods said.
The main focus of the balance sheet remains unchanged in that it is needed to support new projects, he said.
Exxon was on the receiving end of an S&P rating downgrade in March from AA+ stable to AA stable, but this has no impact on how management looks at its balance sheet, the CEO said.
Recovery Will Come, Woods Says
An oil recovery is "on the way," but the exact timing can't be anticipated, Woods said.
Exxon's current strategy is to invest in projects with no particular recovery curve to "get through" current headwinds, he said.
What's Next For Exxon
Improving standards of living and economic growth are among the two largest drivers of demand for oil, the CEO said.
These trends will re-emerge in the future. and Exxon needs to "be ready to meet those demands when that recovery happens," he said.
The stock was trading 3.95% higher at $42.07 at the time of publication Tuesday.
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>>> Dividend ETFs may lose out under the $2 trillion coronavirus relief bill
MarketWatch
March 27, 2020
By Andrea Riquier
https://www.marketwatch.com/story/dividend-etfs-may-lose-out-under-the-2-trillion-coronavirus-relief-bill-2020-03-26?mod=article_inline
Know what’s inside your fund, one analyst urges
The U.S. Congress is taking appropriate steps to protect taxpayers, but that means investors need to look after their own portfolios, one analyst says.
The massive stimulus bill approved by the Senate and under consideration by the House of Representatives to offset the economic effects of the coronavirus epidemic has a provision fund investors should pay attention to, according to one analyst.
The “Cares Act” specifies that any companies that borrow from the U.S. government may not buy back shares of their stock or pay dividends to shareholders for at least one year after the loan is repaid.
“While this is a taxpayer-friendly approach to provide support to businesses in need, it is also a reminder for investors to look inside their dividend fund to understand what they have exposure to,” said CFRA’s head of ETF and mutual fund research, Todd Rosenbluth, in an analysis out Thursday.
CFRA expects companies in the travel sector, such as hotels, resort operators and cruise lines, to see a negative impact from the COVID-19 outbreak, while supermarkets, providers of household products, and biotechnology and pharmaceutical companies will benefit.
As a reminder that the coronavirus isn’t the only headwind weighing on financial markets, CFRA noted that companies tied to oil-and-gas equipment and services and exploration and production will be negatively impacted by the global oil price war.
Rosenbluth examined two popular exchange-traded funds to highlight what differences in portfolio composition might mean for dividends. The First Trust Value Line Dividend Index ETF FVD, +3.80% has 12% of its portfolio invested in consumer staples, and 8% in health care, with only 2% in energy, a lineup that might withstand the downturn.
It is worth noting, however, that half of that ETF’s top 10 holdings are in financial companies. Financials face a double whammy in the current environment: it’s very hard for them to make money when interest rates are so low, and they are expected to bear the brunt of a coming wave of corporate bankruptcies and defaults.
In contrast, another ETF, the iShares Core High Dividend fund HDV, +4.51%, has a 24% weighting in energy stocks, Rosenbluth noted. That may be somewhat mitigated by a strong position in health care, he said.
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>>> Here are the best bets for investors seeking income, according to Goldman Sachs
MarketWatch
April 4, 2020
By Andrea Riquier
https://www.marketwatch.com/story/here-are-the-best-bets-for-investors-seeking-income-according-to-goldman-2020-03-30?mod=article_inline
Banks should weather the storm, Goldman’s analysts reckon
Home Depot is one of Goldman Sachs’ best bets for dividends.
It’s hard times for anyone relying on income investments. The stimulus bill signed into law Friday keeps any companies that borrow from the government from paying dividends to shareholders for at least a year after the loan is repaid — even as bond yields have collapsed to to near all-time lows.
That makes it critical for investors focused on income to “consider stocks with both high dividend yields and the capacity to maintain the distributions,” Goldman Sachs strategists wrote in an analysis out Monday.
The provisions of the CARE Act likely exacerbate a trend of companies trying to keep as much cash on hand as possible as the economic downturn worsens. The Goldman strategists estimate dividends for S&P 500 stocks will decline 25% to $44 per share in 2020, and note 12 companies, ranging from Apache Corp. APA, +13.35% to Old Dominion Freight Line ODFL, +0.35% , have already reduced or suspended their shareholder payouts.
“We expect significantly more dividend cuts are likely to be announced during April in conjunction with the release of quarterly financial results,” the analysts wrote.
The Goldman team screened the Russell 1000 for companies with an annualized dividend yield greater than 3%, ample cash on hand, healthy balance sheets, and what they call “reasonable payout ratios.” Each of the stocks they identified have not under-performed the rest of the market since the peak, are rated by S&P as at least BBB+.
“The typical stock on our list has paid its dividend for 90 quarters (23 years) without reducing its distribution,” the Goldman strategists wrote. Their full list contains companies from 10 of the 11 S&P 500 sectors; energy is the only one missing. We’ve listed the top — highest-yielding — stock from each of the 10 sectors below.
COMPANY ANNUAL DIVIDEND YIELD CONSECUTIVE QUARTERS WITH NO DIVIDEND CUT SECTOR
Omnicom Group Inc. OMC, +2.92% 5% 50 Communication services
Home Depot Inc. HD, +4.78% 3.1% 128 Consumer discretionary
Archer-Daniels-Midland ADM, +4.29% 4.3% 23 Consumer staples
Wells Fargo & Co. WFC, +5.54% 6.7% 39 Financials
Bristol-Myers Squibb BMY, +1.74%
Merck & Co. Inc. MRK, +0.55% ) 3.4% 114 Health care, pharmaceuticals
3M Co. MMM, +1.07%
Emerson Electric Co. EMR, +6.69% 4.4% 156 Industrials
IBM IBM, +3.79% 6.0% 102 Tech
Nucor Corp. NUE, +5.12% 4.8% 41 Materials
Regency Centers REG, +4.28% 5.9% 39 Real estate
CenterPoint Energy CNP, +4.68% 7.1% 55 Utilties
Source: Goldman Sachs
About one-third of the stocks that wound up on Goldman’s list of 40 are financials. The strategists wrote that their bank equity research analyst colleagues had modelled stress scenarios and found that “banks are in a position to maintain dividends at or close to the current run rate.”
That’s an important caveat given the particularly precarious position for financials now. It’s not just the economic fall-out from the coronavirus pandemic that’s troubling them, but an expected wave of defaults and bankruptcies from the collapse in oil prices.
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>>> These 60 large U.S. companies are ‘susceptible to a dividend cut,’ according to Jefferies
MarketWatch
April 6, 2020
By Philip van Doorn
https://www.marketwatch.com/story/these-60-large-us-companies-are-susceptible-to-a-dividend-cut-according-to-jefferies-2020-03-31?siteid=bigcharts&dist=bigcharts
Investors who rely on income are already seeing companies reduce or eliminate dividend payouts as the coronavirus spreads
FedEx is among 60 S&P 500 companies that analysts at Jefferies believe are 'susceptible' to dividend cuts.
The deadly coronavirus is taking a toll on financial markets around the world. Stock-price declines have been swift and relentless.
Now there is intense pressure for companies to shore up cash reserves, not only by reducing investment and suspending share buybacks, but by cutting dividend payouts.
Jefferies global equity strategist Sean Darby has listed 60 companies in the S&P 500 SPX, +2.67% that he and his colleagues think are “susceptible to a dividend cut.”
Here’s the entire list, followed by explanations and more background from Darby:
COMPANY TICKER DIVIDEND YIELD DIVIDEND COVERAGE RATIO NET DEBT TO EQUITY
General Mills Inc. GIS, -0.03% 3.62% 1.49 177.3%
Evergy Inc. EVRG, +1.70% 3.42% 1.47 117.3%
Sempra Energy SRE, +5.94% 3.48% 1.46 120.0%
Qualcomm Inc. QCOM, -0.88% 3.59% 1.45 74.8%
PPL Corp. PPL, +4.35% 6.43% 1.44 171.9%
American Electric Power Co. Inc. AEP, +2.77% 3.34% 1.42 149.3%
Genuine Parts Co. GPC, +1.59% 4.78% 1.40 114.9%
Consolidated Edison Inc. ED, +1.30% 3.79% 1.38 117.1%
3M Co. MMM, +1.07% 4.27% 1.38 186.1%
International Flavors & Fragrances Inc. IFF, +4.36% 2.78% 1.38 64.3%
PepsiCo Inc. PEP, +1.40% 3.04% 1.37 187.6%
Duke Energy Corp. DUK, +2.86% 4.53% 1.36 130.8%
United Parcel Service Inc. Class B UPS, +0.51% 4.13% 1.33 683.1%
Eversource Energy ES, +1.97% 2.71% 1.33 117.6%
J.M. Smucker Co. SJM, +0.37% 3.18% 1.32 72.9%
Coca-Cola Co. KO, +2.03% 3.64% 1.30 156.3%
Becton, Dickinson and Co. BDX, -0.08% 1.42% 1.30 89.3%
Kellogg Co. K, +1.38% 3.83% 1.25 243.6%
Bristol-Myers Squibb Co. BMY, +1.74% 3.31% 1.20 60.7%
Equity Residential EQR, +6.99% 3.85% 1.15 84.7%
Las Vegas Sands Corp. LVS, +2.41% 7.27% 1.14 132.3%
American Tower Corp. AMT, +0.90% 1.72% 1.13 448.8%
Campbell Soup Co. CPB, -1.50% 3.01% 1.12 759.3%
Federal Realty Investment Trust FRT, +3.46% 5.60% 1.11 121.6%
FirstEnergy Corp. FE, +3.00% 3.85% 1.10 295.2%
Microchip Technology Inc. MCHP, +3.58% 2.13% 1.03 186.8%
Gap Inc. GPS, +9.43% 13.07% 0.96 181.6%
Kinder Morgan Inc Class P KMI, +6.09% 7.54% 0.96 93.4%
Hershey Co. HSY, +0.69% 2.24% 0.96 228.5%
AT&T Inc. T, +3.54% 6.88% 0.93 87.3%
AvalonBay Communities Inc. AVB, +5.65% 4.18% 0.92 67.3%
Extra Space Storage Inc. EXR, +1.88% 3.72% 0.92 179.9%
SL Green Realty Corp. SLG, +3.89% 7.68% 0.91 92.9%
Welltower Inc. WELL, +3.93% 7.38% 0.88 88.9%
Oneok Inc. OKE, +10.57% 18.66% 0.88 204.4%
NiSource Inc NI, +1.73% 3.22% 0.88 159.7%
Boston Properties Inc. BXP, +1.52% 4.22% 0.86 144.5%
Essex Property Trust Inc. ESS, +6.02% 3.68% 0.86 91.1%
AES Corp. AES, +7.89% 4.19% 0.83 306.6%
Simon Property Group Inc. SPG, +5.68% 14.84% 0.82 767.0%
Mid-America Apartment Communities Inc. MAA, +4.79% 3.73% 0.79 70.9%
FedEx Corp. FDX, +4.84% 2.09% 0.79 86.0%
Alexandria Real Estate Equities Inc. ARE, +2.13% 2.85% 0.79 67.5%
Kimco Realty Corp. KIM, +5.18% 11.09% 0.72 106.8%
Broadcom Inc. AVGO, +2.93% 5.41% 0.64 111.1%
Amcor PLC AMCR, +3.78% 5.64% 0.63 97.0%
Equinix Inc. EQIX, +1.78% 1.65% 0.61 129.0%
Regency Centers Corp. REG, +4.28% 5.96% 0.61 64.0%
Molson Coors Beverage Co. Class B TAP, +2.80% 5.66% 0.57 63.5%
Digital Realty Trust Inc. DLR, +5.10% 3.20% 0.55 100.7%
Realty Income Corp. O, +5.14% 5.26% 0.51 81.1%
Newell Brands Inc NWL, +1.98% 6.74% 0.47 121.1%
Williams Companies Inc. WMB, +8.98% 11.58% 0.47 135.7%
UDR Inc. UDR, +6.30% 3.82% 0.46 111.1%
Dominion Energy Inc D, +4.40% 4.90% 0.46 112.3%
Crown Castle International Corp. CCI, +3.24% 3.24% 0.39 226.3%
Iron Mountain Inc. IRM, +3.05% 9.96% 0.38 711.8%
Ventas Inc. VTR, +5.35% 11.01% 0.37 113.7%
Wynn Resorts Ltd. WYNN, +8.53% 6.55% 0.31 533.9%
Healthpeak Properties Inc. PEAK, +6.14% 6.08% 0.06 95.5%
Source: Jefferies
The table is sorted by declining dividend coverage ratio, which was calculated by the Jefferies analysts by dividing the firm’s estimated earnings for the companies over the next 12 months by the expected dividend payouts based on the current dividend rates. A higher coverage ratio is better. However, a high ratio of net debt to equity is of concern. The net-debt-to-equity ratio was calculated by subtracting cash from debt and dividing by equity.
When asked in an email why he used earnings instead of free cash flow for the dividend coverage ratio, Darby replied: “Many companies will smooth dividend payments, so if we look at earnings measures, we can get an idea of how confident they are about future payments.”
One company that would have made Darby’s list was Macy’s M, +2.77%. However, the retailer suspended its dividend March 20 after temporarily closing all of its stores March 17. Macy’s placed the “majority” of its employees on furlough this week.
Debt-market pressure
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump on March 27. Companies that borrow from the federal government will be unable to pay dividends for a year after the loans have been repaid in full.
Of course, companies that don’t receive federal assistance will be able to continue paying dividends and even buying back shares. But in this new climate, management teams have to be careful.
“As companies become more aware that they are running their businesses for the bond holders (and credit markets) rather than for the equity investors, their focus will turn to managing cash rather than earnings,” Darby wrote in his report March 30.
He explained that debt issuers with sub-investment-grade ratings (below BBB) appeared not to have access to the Federal Reserve’s Primary Market Corporate Credit Facility (PMCCF) or its Secondary Market Corporate Credit Facility (SMCCF), which were established March 23.
Darby went further, pointing out that the ratings firms might cut their ratings for BBB-rated bond issuers, making them likely to lose access to those programs.
So there are all sorts of reasons for companies to think ahead and shore up cash any way they can, by suspending share buybacks, cutting capital expenditures and cutting or suspending dividends.
In a report listing large-cap stocks with “safe dividends,” Goldman Sachs analyst Cole Hunter predicted dividends for the S&P 500 would decline by 25% in 2020.
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>>> Companies Suspend Dividends, Buybacks As Pandemic Weakens Market
Benzinga
Shanthi Rexaline
March 26, 2020
https://finance.yahoo.com/news/companies-suspend-dividends-buybacks-pandemic-201244468.html
Dividend and buybacks are the primary means adopted by companies to reward their shareholders. Shareholders can also find returns from capital gains or stock price appreciation, which may or may not be in the company's control.
As desperate times call for desperate measures, a slew of companies have announced suspensions of dividend, buybacks or both as the coronavirus pandemic wallops the market.
Why Companies Hit The Pause Button
These moves stem from the need to conserve cash as companies navigate through a turbulent phase that's likely to hit their top- and bottom-lines.
There's a political reason to exercise prudence too, with Congress on the cusp of passing a -trillion stimulus package. Lawmakers have expressed their opposition to companies squandering away aid money with buybacks.
The following companies have announced suspension shareholder reward programs in the wake of the pandemic.
Intel Corporation (NASDAQ: INTC) revealed in a 8-K filing Tuesday it is suspending its stock repurchases due to the pandemic. The company termed the decision as prudent, given the length and uncertainty of the pandemic. Dividends, won't be affected, Intel said.
The suspension stalls a $20-billion buyback the company announced in October 2019.
Ford Motor Company (NYSE: F) announced March 19 it's suspending its dividend to preserve cash and provide additional flexibility. The automaker also withdrew its guidance.
Boeing Co (NYSE: BA), which is beset by both fundamental and geopolitical woes, announced the suspension of its dividend program. The company also said it will extend the pause in its share repurchases.
Big banks JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC), Citigroup Inc (NYSE: C), Goldman Sachs Group Inc (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo & Co (NYSE: WFC), Bank of New York Mellon Corp (NYSE: BK) and State Street Corp (NYSE: STT) have all suspended their buybacks until the second quarter in order to lend money to individuals and businesses.
Oil giants Royal Dutch Shell plc ADR Class A (NYSE: RDS-A) and Total SA (NYSE: TOT), which are confronted with a steep decline in oil prices, have also announced a stalling of buybacks, while most other oil majors have hinted at slashing their capital expenditures.
McDonald's Corp's (NYSE: MCD) CEO Chris Kempczinsk said in an interview with CNBC the company suspended its $15-billion buyback several weeks ago.
Department stores Macy's Inc (NYSE: M) and Nordstrom, Inc. (NYSE: JWN) suspended their respective dividends, while Nordstrom also halted buybacks. Peer Kohl's Corporation (NYSE: KSS) withdrew its buyback program while suggesting it is evaluating its dividend.
Miner Freeport-McMoRan Inc (NYSE: FCX) announced the suspension of its dividend.
Marriott International Inc (NASDAQ: MAR) said it is halting dividend payments after the payout of a previously announced first-quarter dividend March 31.
Telecom giant AT&T Inc. (NYSE: T) announced the suspension of its buyback program in a bid to protect its dividend.
Among airlines, Delta Air Lines, Inc. (NYSE: DAL) announced March 10 the suspension of buybacks and the deferring of $500 million in capex. Subsequently, on March 20, the company announced temporary halting of future dividend payments. Alaska Air Group, Inc. (NASDAQ: ALK) also said it is suspending its dividend program while also slashing 70% of its capacity.
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>>> Utilities Plunge: Making Sense Of The Sector's Big Decline
Seeking Alpha
Mar. 23, 2020
by Ian Bezek
https://seekingalpha.com/article/4333697-utilities-plunge-making-sense-of-sectors-big-decline
Summary
Utility stocks dropped nearly 20% between last Tuesday and last Friday.
This has to be concerning to investors that bought these stocks as strong defensive plays.
There are two factors that could hurt utility profitability going forward.
The sector offers fine yields, but isn't compelling yet aside from the income.
This idea was discussed in more depth with members of my private investing community, Ian's Insider Corner. Get started today »
This article was highlighted for PRO subscribers, Seeking Alpha's service for professional investors. Find out how you can get the best content on Seeking Alpha here.
Last week, the Utility Select Sector SPDR (XLU) sector got utterly smashed. From Tuesday's high onward, the XLU ETF lost 18% of its value. I don't recall these names ever getting hit this badly, even in 2008. It's simply been an incredible drop, with the sector giving back 5 years of gains in a little over a month:
Even more incredibly, if you go way back, XLU was trading for $43 prior to the financial crisis. Thus it's only gone up 10% over the past 13 years, with all other returns coming from dividends. Even farther back, XLU traded for as much as $34 in the year 2000, meaning that the ETF is up only 40% over the past 20 years. Of course, with dividends, things look a lot better. Still, it's a stunning turn of events for a sector that had looked unstoppable over the past two years. On a longer-term chart, you can see that XLU is rapidly threatening to breach price levels from more than a decade ago:
What can we take away from this? For one, utilities have reverted to form - they're simply not a great (nor particularly bad) industry historically. Over the past 82 years (data through 2015) utilities were the median sector, coming in 15th out of 30 in the market, producing essentially market-matching returns:
That table comes from this article, where I discussed this data in much more detail. The fundamental return is calculated based on the real annual growth of dividends over the past eight decades.
As for the question of utilities being defensive, though their stock prices suddenly gave way last week, the companies are still favorable ones to hold in an economic downturn. But investors were using them to play offense throughout 2019, hoping that falling interest rates would lead to sustained higher valuation ratios for the sector. In theory, that's probably still a reasonable hypothesis; reliable dividend streams are worth a lot more in a zero interest rate world.
In the short-run, however, above average valuation ratios become their own risk factor. When people are getting margin calls, or simply wanting to shift funds into more beaten-up names, they're going to sell the stuff where they are still showing a profit. Defensive assets can turn into a source of funds during a panic; even gold (GLD) started selling off at the height of the market panic. Simply put, people will get funds in the short-term wherever they can find them.
Over the long-haul, however, utilities should remain a defensive sector. Thus, is now the time to be buying as prices have come in dramatically? In some cases, yes. A lot of individual utility stocks have come down a great deal in March. That said, before you get too aggressive with your purchases, here are a couple of things to keep in mind.
Potential Issues: Declining Demand, Declining Returns On Equity
Interestingly, there's been (at least that I've seen) little discussion of the economic impact of the current situation on utility companies. Sure, some folks are considering the possibility of the government stopping utilities from collecting on past due clients for the duration of the crisis. That could hurt a bit on a marginal basis.
But zoom out. If the economy grinds to a halt for a few months, what happens to electricity usage? Over in the oil market, traders have quickly reacted to the slowdown by absolutely slamming the price of crude, and its refined products such as gasoline. Oil is more sensitive to the economy than electricity, as oil is the dominate transportation fuel. Most electricity uses, by contrast, aren't greatly impacted by a near-term economic slowdown.
Still, it probably isn't reasonable to think that electricity demand will remain steady. What do we have for data? I haven't seen much yet, but I did run across this interesting data point on New York City electricity usage. There's a ton of caveats here, as it's just one city, the weather could be a factor, and so on. But there appears to be a sharp rollover that started in the week of March 16th:
Historically, we can also look back to 2000 and 2009. Interestingly, due to rises in efficiency, electricity usage per person has pretty much stopped going up in the U.S. - it peaked in 2000 and has gone no higher:
Looking at the data, we can see there was a noticeable decline between 2000 and 2001, in some part likely due to the overall economic slowdown and then also specifically the sizable drop-off in economic activity immediately following the 9/11 attacks.
Moving forward, from 2008 to 2009, electricity consumption per capita dropped from 13,663kWh to 12,914. The effect was particularly harsh in the first quarter of 2009, when the economy and stock market were still heading downward. For that quarter, Power Magazine reported that residential electricity consumption was down 2.5%, commercial consumption was down 4.7%, and industrial consumption was down by fully 13.8%.
We should expect as much of a decline, and probably significantly more in the near-term, in 2020. Residential usage may actually go up a touch, as people spend far more time at home. That said, the marginal electricity use from staying at home probably isn't that high, many high-impact uses such as heating and appliances aren't going to change too much.
Meanwhile, commercial use is going to get pummeled. In 2009, stores had less activity, but there wasn't a mass government-ordered shutdown. You had malls with few shoppers, but not malls that were locked up with everything turned off inside as we have now. Similarly, industrial use will plummet for the length of the shutdown, as non-essential factories simply won't operate.
Longer-term, there's also the question of authorized returns on equity "ROE". Utilities tend to bargain with states and localities to earn a set rate on their capital investments. These ROE targets are a balance that should give utilities sufficient incentive to invest in needed services and provide safe and reliable operations for consumers. On the other hand, the locality has an obvious incentive to keep the utility from price gouging. These ROE targets are a well-known feature of the industry - here's a table by S&P from 2017, for example, showing this process in action:
There are now two factors working against utilities going forward. For one, with the economy hurting, look for states to be tougher at the negotiating table. When times are tough, there's less slack to be had overall. Second, the lower interest rates for longer environment is going to drag down the overall "fair" ROE target as time goes on. In a world where a utility's capital costs, say, 5%, a 10% ROE might make sense. But if the utility can now get capital at half that, the state or locality is likely to want a chunk of that savings as well. At the end of the day, utilities are regulated businesses, and as such, they aren't going to get the full benefits of favorable market-pricing developments.
As I showed above, historically utilities have been an average industry, doing no better or worse than the market as a whole. And after their recent sell-off, many individual utility stocks are back to more normal valuations, though they're by no means "cheap" yet.
Should you buy some? They're still one of the safest income sources around, no doubt, and the current yields have moved up nicely. For longer-term investors, however, you can surely find more attractive stocks that are much more deeply-discounted at the moment.
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The Energy ETFs probably haven't bottomed yet, but looking at XLE, it now has a yield of 8.8% (!) This ETF holds the big names (see below).
Where the bottom will be for this sector is unclear, but it's hard to not be enticed by the 8.8% yield. This could be something to gradually build up a position in over time as a long term 'contrarian value' play. It may be a long time waiting for a rebound, but the possibility also exists for a full blown Saudi-Iran war that could devastate Saudi production. They were very close to that scenario last September -
Exxon Mobil - XOM - 22%
Chevron - CVX - 21%
Kinder Morgan - KMI - 5%
EOG Resources - EOG - 5%
ConocoPhillips - COP - 4%
Schlumberger - SLB - 4%
Marathon - MPC - 4%
Phillips 66 - PSX - 4%
Occidental - OXY - 4%
ONEOK - OKE - 3%
This ETF Yields 10% and Cuts You a Check Every Month:
https://dailyinvestingadvice.com/this-etf-yields-10-and-cuts-you-a-check-each-month/
>>> 10 Monthly Dividend Stocks to Buy to Pay the Bills
If you want dependable income, look no further than monthly dividend stocks
Investor Place
By Charles Sizemore, Principal of Sizemore Capital
Jun 21, 2019
https://investorplace.com/2019/06/monthly-dividend-stocks-to-buy-o-stag-ltc/
Editor’s note: This story was previously published in May 2019 It has since been updated and republished.
I like making money in the stock market, but I love dividends. You see, the problem with capital gains is that to actually enjoy them, you have to sell your shares. The beauty of dividend stocks is that you get to enjoy the fruits of your investment without having to actually sell anything. Think of it as milking a cow rather than killing it for meat. Which sounds like the better long-term plan to you?
Even most dividend stocks are imperfect, as dividends are usually paid quarterly. This problem with this is that most of our expenses tend to be monthly, so when you depend on dividends to pay your bills, there is always something of a disconnect between your income and your expenses. This can make budgeting something of a challenge.
Thankfully, monthly dividend stocks do exist, and there are actually quite a few of them out there.
We’re going to look at 10 solid monthly dividend stocks to buy. Many of these names are popular among income investors, but others will almost definitely be new to you. Importantly, all have a long history of taking care of their shareholders with consistent monthly dividend checks.
Monthly Dividend Stocks: Realty Income (O)
Dividend Yield: 3.71%
Type: Commercial REIT
Realty Income Corp (NYSE:O) styles itself as “the Monthly Dividend Company,” and frankly, this conservative retail real estate investment trust (REIT) deserves the title of king of the monthly dividend stocks. Realty Income has paid its investors like clockwork for 585 consecutive months and even raised its dividend for 86 consecutive quarters.
A stock is always going to be considered more risky than a bond, but Realty Income is about as close to a bond as you can realistically get in the stock market. Its cash flows are backed by long-term leases to high-quality tenants. Its properties are generally high-traffic retail sites that are mostly recession proof and “Amazon.com proof.”
Think of your local convenience store or pharmacy. Chances are decent that Realty Income owns it.
In the interests of full disclosure, I own some shares of Realty Income that I bought nearly a decade ago and that I never intend to sell. I’ve been reinvesting my dividends, slowly building up my share count. One of these days, I’ll flip the switch and start taking those dividends in cash. But for now, I’m enjoying watching the number of shares that I own increase with every passing month.
Stag Industrial (STAG)
Dividend Yield: 4.53%
Type: Industrial REIT
Stag Industrial (NYSE:STAG) is a small-cap REIT that I have had in my portfolio for several years, but it’s a REIT that most investors have never heard of. “STAG” stands for “single tenant acquisition group,” and that pretty well sums up its business model. STAG acquires single-tenant properties in the industrial and light manufacturing space. A warehouse or small factory would be a typical property for the REIT.
STAG has enjoyed explosive growth since it went public in 2011. And unlike a glitzy hotel or office building, STAG’s gritty industrial properties don’t require a lot in terms of maintenance and upkeep.
At current prices, STAG yields a little below 5%, which is a respectable yield for a REIT these days.
If you don’t need the dividend for current living expenses, instruct your broker to reinvest the dividends. A few years from now, you’ll have a much larger share count … and a much larger monthly dividend.
LTC Properties (LTC)
Dividend Yield: 4.82%
Type: Healthcare REIT
Among monthly dividend stocks, few have better demographic prospects than health and senior-living REIT LTC Properties Inc (NYSE:LTC).
In case you couldn’t immediately figure out what LTC does, take a good look at its stock ticker symbol. “LTC” is short for “long-term care,” and that’s exactly what its tenants provide. Substantially the entire 200-plus-property portfolio is invested in skilled nursing and assisted-living facilities spanning 30 states.
Health and senior living aren’t exactly the most exciting markets, but they have stable and growing demand due to the aging of the baby boomers. Over 10,000 boomers turn 65 every single day, and this generation will need more and more health services with each passing day. So, demographic trends are definitely on LTC’s side.
LTC sports a dividend yield approaching 5%. And while that’s not mouthwateringly high, it’s not bad considering the low yields available in the bond market.
LTC is far from exciting, in fact, it’s pretty boring. But boring is just fine in a portfolio of monthly dividend stocks.
EPR Properties (EPR)
Dividend Yield: 5.72%
Type: Commercial REIT
This list is getting a little heavy in REITs, but I’d like to add one more to our list of monthly dividend stocks — alternative retail REIT EPR Properties (NYSE:EPR). As with LTC and STAG, EPR’s name is an acronym that stands for “Entertainment Properties.”
EPR specializes in quirky, nontraditional assets, including properties like golf driving ranges, movie theaters, water parks, ski parks and private schools. But it is this quirkiness is that makes EPR so attractive.
Think about it. You have to have specialized knowledge to successfully invest in these sorts of properties, and very few managers have it. This gives EPR a competitive advantage and allows it to grab higher yields than it would normally find in more traditional properties.
But at the same time, the strangeness of the portfolio also tends to be a turn-off to a lot of money managers accustomed to analyzing apartment or office REITs. This has a way of depressing the share price and giving us an attractive entry point.
In addition to its high yield, EPR has value as a portfolio diversifier. The prices of driving ranges or movie theaters are not tightly correlated to those of apartments or office buildings.
Vereit Series F Preferred Stock (VER-PF)
Dividend Yield: 6.7%
Type: REIT Preferred Stock
I’m going to go a slightly different direction here. I’m going to recommend another REIT … sort of. In addition to their regular common stock, REITs often fund their expansion projects with debt and with preferred stock. If you are unfamiliar with the asset class, preferred stock is something of a hybrid between a common stock and a bond.
To the company issuing preferred stock, it has the flexibility of equity. If you miss a dividend payment, your investors might get angry, but there isn’t much they can do about it. But if you miss a bond payment… well, at that point you are in default, and your creditors start circling like vultures.
But while preferreds look like equity to the issuer, they look a lot more like bonds to the investors. Investors receive a fixed dividend and rarely get much in the way of capital gains.
This brings me to the Vereit Series F Preferred Stock (NYSE:VER-PF). Vereit (NYSE:VER) is a triple-net retail REIT that’s fairly similar to Realty Income. But I’m not recommending the common stock today, but rather the preferred. VEREIT’s preferreds pay an attractive yield, paid monthly.
You’re not likely to get much in the way of capital gains here, but you’re definitely getting a consistent monthly income stream. And if you’re in or near retirement, that’s exactly what you need.
Main Street Capital (MAIN)
Main Street Capital Corporation (NYSE:MAIN)
Dividend Yield: 5.99%
Type: Business Development Company
You’ve probably had your fill of REITs by now, so let’s jump into a different asset class that includes monthly dividend stocks: business development companies (BDCs).
The best thing that ever happened to BDCs was the collapse of the banking sector in 2008. This created a vacuum that BDCs were more than happy to fill. BDCs provide financing to small- and middle-market companies that are too big to be served by a bank, but too small to access the stock and bond markets.
BDCs are a lot like REITs in that both have special tax advantages. Neither BDCs nor REITs are required to pay federal income taxes so long as they pay out the bulk of their earnings as dividends. So, both sectors pay above-market dividends, making both very attractive to retired investors.
With that as background, let’s take a look at Main Street Capital Corporation (NYSE:MAIN), one of the best-run BDCs in this space. MAIN makes both equity and debt investments in the companies in its portfolio, and most of its investments are in the fast-growing Sunbelt region of the country.
At current prices, MAIN pays a regular dividend in the 6% neighborhood. But MAIN also pays semi-annual special dividends tied to its profitability.
Prospect Capital (PSEC)
Dividend Yield: 10.96%
Type: Business Development Company
Let’s throw in one more monthly-dividend-paying BDC, Prospect Capital Corporation (NASDAQ:PSEC). Rather than pay a lower regular dividend that is topped up with periodic special dividends, Prospect pays out substantially all of its earnings in its regular monthly dividend.
This has gotten the company into trouble in the past, as the company has had to cut its dividend. So while Prospect’s 10.96% yield is enticing, this is a slightly riskier BDC than Main Street.
All the same, PSEC is an interesting buy at today’s prices. I’m also impressed by the fact that company insiders own 13.4% of its stock.
High levels of insider ownership or buying by no means guarantee that a stock will perform well. But it definitely incentivizes management to work in the best interests of the shareholders, as a large piece of their net worth depends on their success.
Eaton Vance Limited Duration Income Fund (EVV)
Dividend Yield: 6.59%
Type: Closed-End Fund
I’m not nearly as concerned about rising bond yields as a lot of investors are. I see inflation staying relatively muted, and it’s hard for me to see inflation really roaring to life. All else being equal, low inflation should mean low bond yields for a lot longer.
But let’s say I’m wrong. It’s never a bad idea to hedge your bets with some exposure to floating-rate securities. And that’s where the Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) comes into play.
EVV is a closed-end fund that owns a diverse basket of income investments with only modest interest rate risk. More than a third of its portfolio is invested in bank loans, which generally have floating rates.
So if rates rise, so should the interest income that EVV receives from its bank loan investments. The rest of the portfolio is invested primarily in short-duration bonds and asset-backed securities.
At current prices you’re not likely to get rich quick in EVV, but if you’re looking for a reliable monthly dividend with the potential for modest capital gains, then this is a solid choice.
Cohen & Steers REIT and Preferred Income Fund, Inc. (RNP)
Dividend Yield: 6.83%
Type: Closed-End Fund
I’ve had a lot to say about REITs in this article, which makes sense. REITs are some of the most consistent income producers out there, and the REIT sector is fertile ground for monthly dividend stocks.
Well, I’m going to give you a slight variation on a theme here with the Cohen & Steers REIT and Preferred Income Fund (NYSE:RNP), a closed-end fund that trades in REITs and preferred stock.
RNP’s portfolio is split between REITs and preferred stock. The preferred stock allocation gives it a little more interest rate risk than the other stocks in this list, but I’m OK with that. We’re more than compensated for that risk with the dividend.
UBS ETRACS Monthly Pay 2x Leveraged Mortgage REIT ETN (MORL)
Dividend Yield: 23.15%
Type: Mortgage REIT ETN
I’ve spent a good part of this article writing about REITs. Well, for my last recommendation, I’m going to recommend their close cousin, mortgage REITs.
Whereas equity REITs own real property like buildings or land, mortgage REITs own mortgages and mortgage derivatives. In a nutshell, mortgage REITs borrow money at short-term rates and then invest it in higher-yielding mortgage securities, making money on the spread.
For the past several years, most of the mortgage REIT sector has been trading at a discount to book value. That’s unusual for this sector, however, as it tends to trade at a pretty substantial premium. Investors are generally willing to pay up for the high yields.
I’m going to recommend you take advantage of that pricing by buying the UBS ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (NYSEARCA:MORL), a leveraged exchange-traded note that gives you double the price movement and double the yield of the mortgage REIT sector. MORL pays its dividend monthly, and it yields around 25%.
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>>> 3 Monthly Dividend Stocks to Buy Today
by Aaron Levitt
InvestorPlace
June 21, 2019
https://finance.yahoo.com/news/3-monthly-dividend-stocks-buy-185123145.html
Retirement: It’s all about one thing and that’s income … replacing a steady paycheck with your savings. With that, dividend stocks have plenty of appeal for retirees. Not only can you score higher yields than bonds, but you have the ability to grow those payouts over time as well. However, dividend stocks do have one major drawback.
Their payment schedules.
Most dividend stocks pay on a quarterly or even semi-annual basis. And while that may not seem like a problem, for many retirees used to a monthly or bi-weekly paycheck balancing cash flows can be a hard pill to swallow. After all, your mortgage, cable bill and car payments are due each month. To that end, getting a monthly dividend could be the answer to budgeting issues.
Luckily, there are plenty of dividend stocks that do happen to payout monthly. Here are three of the best.
Main Street Capital Corp (MAIN)
Dividend Yield: 5.89%
Most investors have never heard of businesses development companies (BDCs). That’s a shame because they can be some of the biggest yielding stocks around. BDCs are set up as pass-through entities much like real estate investment trusts, and similarly must pay out at least 90% of their earnings as dividends. How they earn that income is by loaning cash to mid-sized firms — companies too big to ask the local bank for a loan, but not big enough to launch a significant bond offering — at competitive rates. The best way to really think of them is like public-private equity firms.
And when it comes to BDCs, Main Street Capital (NASDAQ:MAIN) could be one of the best.
MAIN has provided capital to more than 200 private companies and thanks to its underwriting and deal standards, it has been very successful at turning a big profit on those loans. Just for the first quarter of this year, MAIN has already seen its investment income rise by 10% year-over-year. Those sorts of gains have allowed the firm to become a great dividend stock since its IPO in 2007. The BDC has managed to grow its payout by 127% since then.
Today, you can score a great recurring monthly dividend with a current yield of 5.89%. The best part is that MAIN’s management likes to reward shareholders further with extra supplemental dividends. This allows the BDC to use excess capital if a great deal can be had or for dividends. Adding those extra payouts in, and investors are looking at closer to 7.2% yield.
BDCs like MAIN provide a much-needed service to many firms. And thanks to its underwriting skill and focus on quality firms, MAIN has quickly become one heck of a dividend stock.
Shaw Communications (SJR)
Dividend Yield: 4.5%
One sector that can be a fertile hunting ground for dividend stocks, and is also known for its stability, is the telecommunications industry. Top stocks like AT&T (NYSE:T) and Verizon (NYSE:VZ) are in plenty of income portfolios. The reason is easy to see. Predictable fixed costs and demand allow telcos to pay out reliably healthy dividends. The problem is T and VZ aren’t monthly dividend stocks.
But Canada’s Shaw Communications (NYSE:SJR) is.
Shaw remains one of Canada’s largest telecoms and offers the usual bundle of services, including cable, internet and wireless phone services. It has been doing this for decades just like T and VZ here at home. And SJR has also tackled the problem of cord cutting head on. The telecom has been able to successfully convert customers to faster internet service to overcome lower cable subscriptions. This has helped boost revenues. At the same time, SJR has been one of the first movers in Canada for new 5G networks. That will give it a heads-up in bringing faster mobile internet, IoT and other applications to the nation.
As Shaw moves forward in these areas, investors can sit back and collect a hefty monthly yield. Currently, SJR pays 4.5%. Now, that dividend will fluctuate based on changes to the U.S./Canadian dollar. However, given Shaw’s stability and potential growth, it’s a small price to pay for a great dividend stock.
LTC Properties (LTC)
Dividend Yield: 4.89%
Honing in on so-called mega-trends is a great way to find dividend stocks that will stand the test of time. For monthly-dividend payer LTC Properties (NYSE:LTC) that mega-trend is the “Graying of America.”
Thanks to advances in medicine, lifespans are only increasing and longevity is almost assured at this point. LTC is uniquely positioned to take advantage of this fact. The firm invests in the senior housing and assisted living facility sectors of the healthcare property market. Currently, the firm owns/invests in roughly 200 properties that are right in the sweet spot for the nation’s aging baby boomers. Demand for these facilities continues to grow as more seniors need aid to get along.
The key is that LTC doesn’t operate the facilities or even own the buildings in many cases. What it does is provide financing for owner/operators to construct and renovate their properties or it buys properties from owners in a sale-leaseback transaction. It’s basically a mortgage lender that collects a monthly rent check. This position in the sector allows it to avoid some of the profitability issues that can result in senior living and assisted living facilities.
It also allows for some safety and steady profits on its end. Year-over-year, LTC saw a gain in FFO for the first quarter of 2019. Steady FFO gains have allowed it to raise its dividend over 46% since 2008. Currently, LTC yields 4.89%.
All in all, LTC is in the right area at the right time. And that makes it a great monthly dividend stock to own.
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Dividend ETFs -
>>> How Do ETF Dividends Work?
BY TROY SEGAL
Feb 21, 2019
https://www.investopedia.com/articles/investing/120415/how-dividendpaying-etfs-work.asp
Although exchange-traded funds (ETFs) are primarily associated with index-tracking and growth investing, there are many that offer income by owning dividend-paying stocks. When they do, they collect the regular dividend payments and then distribute them to the ETF shareholders. These dividends can be distributed in two ways, at the discretion of the fund's management: cash paid to the investors or reinvestments into the ETFs’ underlying investments.
The Timing of ETF Dividend Payments
Similar to an individual company's stock, an ETF sets an ex-dividend date, a record date, and a payment date. These dates determine who receives the dividend and when the dividend gets paid. The timing of these dividend payments are on a different schedule than those of the underlying stocks and vary depending on the ETF.
For example, the ex-dividend date for the popular SPDR S&P 500 ETF (SPY) is the third Friday of the final month of a fiscal quarter (March, June, September, and December). If that day happens to not be a business day, then the ex-dividend date falls on the prior business day. The record date comes two days prior to the ex-dividend date. At the end of each quarter, the SPDR S&P 500 ETF distributes the dividends.
Each ETF sets the timing for its dividend dates. These dates are listed in the fund's prospectus, which is publicly available to all investors. Just as like any company's shares, the price of an ETF often rises before the ex-dividend date—reflecting a flurry of buying activity—and falls afterward, as investors who own the fund before the ex-dividend date receive the dividend, and those buying afterward do not.
Dividends Paid in Cash
The SPDR S&P 500 ETF pays out dividends in cash. According to the fund’s prospectus, the SPDR S&P 500 ETF puts all dividends it receives from its underlying stock holdings into a non-interest-bearing account until it comes time to make a payout. At the end of the fiscal quarter, when dividends are due to be paid, the SPDR S&P 500 ETF pulls the dividends from the non-interest-bearing account and distributes them proportionally to the investors.
Some other ETFs may temporarily reinvest the dividends from the underlying stocks into the holdings of the fund until it comes time to make a cash dividend payment. Naturally, this creates a small amount of leverage in the fund, which can slightly improve its performance during bull markets and slightly harm its performance during bear markets.
Dividends Reinvested
ETF managers also may have the option of reinvesting their investors' dividends into the ETF rather than distributing them as cash. The payout to the shareholders can also be accomplished through reinvestment in the ETF’s underlying index on their behalf. Essentially it comes out to the same: If an ETF shareholder receives a 2% dividend reinvestment from an ETF, he may turn and sell those shares if he'd rather have the cash.
Sometimes these reinvestments can be seen as a benefit, as it does not cost the investor a trade fee to purchase the additional shares through the dividend reinvestment. However, each shareholder’s annual dividends are taxable in the year they are received, even if they are received via dividend reinvestment.
Taxes on Dividends in ETFs
ETFs are often viewed as a favorable alternative to mutual funds in terms of their ability to control the amount and timing of income tax to the investor. However, this is primarily due to how and when the taxable capital gains are captured in ETFs. It is important to understand that owning dividend-producing ETFs does not defer the income tax created by the dividends paid by an ETF during a tax year. The dividends that an ETF pays are taxable to the investor in essentially the same way as the dividends paid by a mutual fund are.
Examples of Dividend-Paying ETFs
Here are five highly popular dividend-orientated ETFs.
SPDR S&P Dividend ETF
The SPDR S&P Dividend ETF (SDY) is the most extreme and exclusive of the dividend ETFs. It tracks the S&P High-Yield Dividend Aristocrats Index, which only includes those companies from the S&P Composite 1500 with at least 20 consecutive years of increasing dividends. Due to the long history of reliably paying these dividends, these companies are often considered to be less risky for investors seeking total return.
Vanguard Dividend Appreciation ETF
The Vanguard Dividend Appreciation ETF (VIG) tracks the NASDAQ U.S. Dividend Achievers Select Index, a market capitalization-weighted grouping of companies that have increased dividends for a minimum of 10 consecutive years. Its assets are invested domestically, and the portfolio includes many legendary rich-paying companies, such as Microsoft Corp. (MSFT) and Johnson & Johnson (JNJ).
iShares Select Dividend ETF
The iShares Select Dividend ETF (DVY) is the largest ETF to track a dividend-weighted index. Similar to VIG, this ETF is completely domestic, but it focuses on smaller companies. Roughly one-third of the 100 stocks in DVY's portfolio belongs to utility companies. Other major sectors represented include financials, cyclicals, non-cyclicals, and industrial stocks.
iShares Core High Dividend ETF
BlackRock's iShares Core High Dividend ETF (HDV) is younger and uses a smaller portfolio than the company's other notable high-yield option, DVY. This ETF tracks a Morningstar-constructed index of 75 U.S. stocks that are screened by dividend sustainability and earnings potential, which are two hallmarks of the Benjamin Graham and Warren Buffett school of fundamental analysis. In fact, Morningstar's sustainability ratings are driven by Buffett's concept of an "economic moat," around which a business insulates itself from rivals.
Vanguard High Dividend Yield ETF
The Vanguard High Dividend Yield ETF (VYM) is characteristically low-cost and simple, similar to most other Vanguard offerings. It tracks the FTSE High Dividend Yield Index effectively and demonstrates outstanding tradability for all investor demographics. One particular quirk of the weighting method for VYM is its focus on future dividend forecasts (most high-dividend funds select stocks based on dividend history instead). This gives VYM a stronger technology tilt than most of its competitors.
Other Income-Oriented ETFs
In addition to these five funds, there are dividend-focused ETFs that employ different strategies to increase dividend yield. ETFs such as the iShares S&P U.S. Preferred Stock Index Fund (PFF) track a basket of preferred stocks from U.S. companies. The dividend yields on preferred stock ETFs should be substantially more than those of traditional common stock ETFs because preferred stocks behave more like bonds than equities and do not benefit from the appreciation of the company's stock price in the same manner.
Real estate investment trust ETFs such as the Vanguard REIT ETF (VNQ) track publicly traded equity real estate investment trusts (REITs). Due to the nature of REITs, the dividend yields tend to be higher than those of common stock ETFs.
There are also international equity ETFs, such as the Wisdom Tree Emerging Markets Equity Income Fund (DEM) or the First Trust DJ Global Dividend Index Fund (FGD), which track higher-than-normal dividend-paying companies domiciled outside of the United States.
The Bottom Line
Although ETFs are often known for tracking broad indexes, such as the S&P 500 or the Russell 2000, there are also many ETFs available that focus on dividend-paying stocks. Historically, dividends have accounted for somewhere near 40% of the total returns of the stock market, and a strong dividend payout history is one of the oldest and surest signs of corporate profitability.
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>>> Inexpensive, High-Dividend ETFs to Buy
Todd Shriber
InvestorPlace
March 13, 2019
https://finance.yahoo.com/news/7-inexpensive-high-dividend-etfs-190946673.html
Editor’s note: This story was previously published in September 2018. It has since been updated and republished.
The universe of exchange-traded funds (ETFs) is awash in low-fee products, and the space is growing as issuers reduce their fees to lure investors.
Income-seeking investors do not have to pay up to access high-dividend ETFs. In fact, numerous high-dividend ETFs can be inexpensive, which is an important point for income investors looking to keep more of those dividends and a higher share of their invested capital. High-dividend ETFs are often embraced by long-term investors and over the long-term, lower fees can mean better outcomes for investors.
Over the past several years, data confirm that when it comes to adding new assets, the best ETFs are usually those with annual fees of 0.20% or less. Plenty of high-dividend ETFs fit into that category, making it a cost-effective method for thrifty investors to access broad baskets of dividend stocks.
Here are some high-dividend ETFs, with very low fees, for income-minded investors to consider.
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iShares Core High Dividend ETF (HDV)
Expense Ratio: 0.08%, or $8 annually per $10,000 investment
Many high dividend ETFs weight components by yield, a strategy that has some drawbacks. Those disadvantages include vulnerability to rising interest rates and the potential for exposure to financially challenged companies that may have trouble maintaining and growing dividends.
The iShares Core High Dividend ETF (NYSEARCA:HDV) has a 12-month dividend yield of 3.03%, which is well above the S&P 500 and 10-year Treasuries. However, this high-dividend ETF follows the Morningstar Dividend Yield Focus Index, which screens companies for financial health, giving the fund a quality look.
With an annual fee of just 0.08%, HDV is one of the cheaper high dividend ETFs on the market today. That low fee coupled with its sector allocations make HDV ideal for conservative investors. The healthcare, consumer staples, telecom and utilities sectors, four of HDV’s top five sector weights, can all be considered defensive groups.
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SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
Expense Ratio: 0.08%
The SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD) is one of the least expensive dividend ETFs on the market, high dividend or otherwise. The ETF tracks the S&P 500 High Dividend Index, the high-dividend offshoot of the traditional S&P 500.
SPYD’s yield requirement gives this high-dividend ETF a focused roster of just 80 stocks, but the 12-month dividend yield of 4.65% makes this high-dividend ETF appealing for income investors relative to standard broad market funds.
SPYD relies heavily on high income sectors that have shown historical vulnerability to rising interest rates — a trait to keep in mind in the current market environment. The real estate and utilities sectors combine for almost 35% of this high dividend ETF’s weight.
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Vanguard High Dividend Yield ETF (VYM)
Expense Ratio: 0.06%
Home to $22.72 billion in total net assets, the Vanguard High Dividend Yield ETF (NYSEARCA:VYM) is one of the largest dividend ETFs of any variety. It is not unreasonable to believe that VYM’s name frames the fund as a high-dividend ETF, but a yield of 3.44% is not alarmingly high.
More importantly, VYM is not overly dependent on rate-sensitive sectors. This high-dividend ETF features no real estate exposure and the bond-esque telecom and utilities sectors combine for just 12.80% of VYM’s weight.
A quarter of the fund’s holdings hail from the industrial and healthcare sectors. Financials, a sector that has been a major driver of S&P 500 dividend growth over the past year, is this high dividend ETF’s largest sector exposure at 15.3%.
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JPMorgan U.S. Dividend ETF (JDIV)
Expense Ratio: 0.12%
The JPMorgan U.S. Dividend ETF (NYSEARCA:JDIV) is one of the youngest funds on this list, having debuted in late 2017, but it fits the bill as a cost-effective, high-dividend ETF. JDIV “utilizes a rules-based approach that adjusts sector weights based on volatility and yield and selects the highest yielding stocks,” according to the issuer.
With a 12-month yield of 4.07%, JDIV has high-dividend ETF credentials. JDIV’s annual fee of 0.12% is quite low.
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>>> Kraft Heinz Sinks Near Record Low on $15.4 Billion Writedown
By Craig Giammona
February 21, 2019
https://www.bloomberg.com/news/articles/2019-02-21/kraft-heinz-slumps-on-sec-subpoena-15-4-billion-in-writedowns?srnd=premium
Oscar Mayer, Kraft trademarks have lost value as tastes change
Buffett-backed giant still looking for a transformative deal
Kraft Heinz Co. recorded a $15.4 billion non-cash charge to write down assets including some of its most well-known brands, a striking acknowledgment that changing consumer tastes have destroyed the value of some of the company’s most iconic products.
The packaged food giant’s charge to reduce the goodwill value of the Kraft and Oscar Mayer trademarks and other assets, coupled with disappointing fourth-quarter earnings and an accounting subpoena from securities regulators, sent the shares tumbling toward what would be a record low if the declines hold in trading Friday.
The charges resulted in a net loss of $12.6 billion, or $10.34 a share. Kraft Heinz shares plummeted as much as 18 percent as of 6:30 p.m. in New York.
Kraft Heinz sinks in after market trading on slew of bad news
Formed in a 2015 merger orchestrated by Warren Buffett’s Berkshire Hathaway Inc. and the private equity firm 3G Capital, Kraft Heinz’s portfolio plays mainly in the center of the grocery store, an area hit hard by secular shifts in eating and shopping habits, and the one at greatest risk of being disrupted by Amazon.com Inc.
The company has tried to spruce up a tired suite of brands -- from organic Capri Sun to natural Oscar Mayer hot dogs. But the bigger question in the mind of investors has been management’s ability to pull off the large, transformative deals that shareholders crave.
Kraft Heinz tried to purchase Unilever in 2017 in a move that would have allowed management to do what it does best: slash overhead costs. But Unilever rebuffed the $143 billion deal, and Kraft Heinz shares have since lost about half their value as investors wait for the next big move.
On Thursday, the company’s fourth-quarter earnings missed even the lowest analyst estimate. It also flagged to investors in its quarterly results a subpoena it received last year from the U.S. Securities and Exchange Commission related to its procurement practices. Kraft Heinz said that as a result of an investigation with the help of an outside lawyer, it recorded a $25 million “increase to costs of products sold.”
Kraft Heinz fourth-quarter adjusted EPS falls short of lowest analyst estimate
Berkshire Hathaway’s investment declined from a valuation of about $15.7 billion to $12.9 billion as the stock plunged to $39.66 at 6:15 p.m. in New York. Thursday’s announcement marks the second time this year that a Berkshire holding has disclosed unfavorable news after the markets closed, hurting its stock. Apple Inc. trimmed its revenue outlook in January, which pummeled shareholders. That stock has since recovered.
Kraft Heinz will cut its quarterly dividend to 40 cents a share from 62.5 cents, helping it pay down debt more quickly and adjust to its smaller size after selling some businesses. The company had been paying out dividends at the highest ratio to earnings of its U.S. packaged-food peers.
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>>> PG&E Shows Utility Stocks Aren’t Boring Anymore
Industry disruptions may be changing investors’ ideas of the risks.
Bloomberg
January 28, 2019
https://www.bloomberg.com/news/articles/2019-01-28/pg-e-shows-utility-stocks-aren-t-boring-anymore?srnd=premium
It wasn’t so long ago that investors saw utilities as safe, boring, and modestly profitable. With dependable revenue from monthly electric bills and regular dividends, they were a favorite among penny-saving retirees and portfolio managers wanting to hedge against volatility in the broader market.
That was then. Things first began to change with the deregulation of the 1990s, but global warming and rooftop solar panels have also been steadily chipping away at the notion that the sector is a safe haven. And now there’s PG&E Corp. California’s largest utility owner plans to file for Chapter 11 as early as Jan. 29 in the face of as much as $30 billion in potential liabilities from wildfires that killed more than 100 people in 2017 and 2018.
“It has absolutely become more complicated to invest in utilities,” says Jan Vrins, head of the energy practice at Navigant Consulting Inc. “The energy transformation is accelerating.” For a start, utilities are having to figure out how to navigate the rise of renewable energy sources. Utilities that invested heavily in giant nuclear and coal plants have found themselves saddled with mounting costs from generating facilities that are struggling to compete against cheap natural gas and wind and solar farms that have seen costs plunge. A wrong bet by a utility can be its undoing. Scana Corp., South Carolina’s largest utility, spent nine years working to expand a nuclear plant before pulling the plug in 2017, when projected costs ballooned to more than $20 billion. Its shares plummeted, and it was acquired by Dominion Energy Inc. this year.
And utilities that embraced solar and wind energy early have benefited, says Jay Rhame, chief executive officer at Reaves Asset Management, which has $2.8 billion under management. Look no further than NextEra Energy Inc., the largest U.S. provider of renewable energy. Its shares have doubled in value since 2014. “A lot of utilities are now trying to get into renewables after seeing NextEra’s success,” says Rhame.
The traditional utility business model is also facing competition from some of its own customers, who are generating their own power by putting solar panels on their roofs. Total U.S. residential power installed is forecast to reach 20 gigawatts next year, according to Bloomberg NEF, more than triple the amount at the end of 2015. (For comparison, a typical nuclear reactor has about 1 gigawatt of capacity.) That, along with energy-efficiency improvements and smarter homes, has sapped many utilities of a traditional source of growth: delivering more power.
Global warming is literally changing the landscape for utilities, with hotter summers making wildfires more common. And in states such as California, where strict liability laws mean power companies can be held responsible for fire damages, that means much more financial risk. PG&E has explicitly blamed its downfall on climate change after the state’s bone-dry hillsides were ravaged by fires in 2017 and 2018. Investigators have cited the company’s equipment as the ignition source of 17 blazes in 2017, though it was cleared last week in that year’s most deadly blaze. PG&E equipment remains under investigation for the 2018 Camp Fire, which killed 86 people.
Still, there’s a climate upside for some utilities. A warmer-than-normal summer last year led to increased air conditioner use, boosting earnings at companies that include Duke Energy Corp., FirstEnergy Corp., and American Electric Power Co. Stronger, more destructive hurricanes have led some power providers to increase spending on transmission lines and grid-hardening technology. Regulators give them a guaranteed return on such investments. It’s a back-to-basics strategy that many investors applaud.
“Infrastructure investment is the key theme here,’’ says Tim Winter, associate portfolio manager for the Gabelli Utilities Fund. “Utilities in general, they are as safe if not safer than they’ve ever been.” Low natural gas prices have helped keep fuel costs down, allowing utilities to avoid hitting customers with big rate increases. Winter sees the sector posting average annual earnings growth of 5 percent to 6 percent through 2021, compared with the 3 percent to 4 percent utilities have typically earned in the past.
The safest utility investments are those that own only own poles and wires, not power plants, says Michael Weinstein, a utility analyst at Credit Suisse Group AG. In the 1990s, regulators in some states made generating power and delivering it to customers into separate businesses. Companies that had long enjoyed monopolies now had to compete for revenue. Many utilities got burned in the process, making them seem risky for traditional investors. Weinstein says companies that have stuck to running the power grids still benefit from predictable returns. “A lot of investors want the pure-play utility,” he says. “The less complicated the better.”
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>>> These Stocks Have Paid Dividends for Over 100 Years in a Row -- Are Any Worth Buying?
There are a dozen U.S. stocks that have paid dividends since 1901 or earlier.
Matthew Frankel
Jan 31, 2017
https://www.fool.com/retirement/2017/01/31/these-stocks-have-paid-dividends-for-over-100-year.aspx
As of early 2017, there are 2,408 stocks listed on the Nasdaq or New York Stock Exchange that pay dividend yields of 1% or higher. Many of these have only paid dividends for a short time, and others have had a sporadic history, cutting their dividends when times get tough. So a 100-consecutive-year history of paying dividends is quite an accomplishment -- achieved by an exclusive list of companies. Here are the longest-running U.S. dividend stocks, and how you should use this information.
The "century club"
What are the longest-running dividend stocks in the market? Well, if we're talking about U.S. companies, here's a list of those that have paid dividends for at least 100 consecutive years.
Company
Stock Symbol
Dividend Yield
Dividends Paid Since:
York Water Company
YORW
1.7%
1815
Stanley Black & Decker
SWK
1.9%
1877
ExxonMobil
XOM
3.5%
1882
Eli Lilly
LLY
2.8%
1885
Consolidated Edison
ED
3.8%
1885
UGI
UGI
2.1%
1885
Johnson Controls
JCI
2.3%
1887
Procter & Gamble
PG
3.1%
1891
Colgate-Palmolive
CL
2.3%
1898
General Mills
GIS
3.1%
1898
PPG Industries
PPG
1.6%
1899
Church & Dwight
CHD
1.6%
1901
In addition to the stocks in this table, it's worth mentioning that there are some non-U.S. companies that have also paid dividends for more than a century. For example, Canadian banks Bank of Montreal, Bank of Nova Scotia, and Toronto-Dominion Bank have all paid dividends for more than 160 years.
Which are the best buys now?
Is a 100-plus-year history of paying dividends impressive? Absolutely. However, this fact alone doesn't necessarily make these stocks good investments. Other factors to consider are each company's history of dividend growth, whether the business itself has growth potential in the future, and the current valuation of each stock. Having said that, there are a couple on the list that I'd consider good long-term investments right now.
Procter & Gamble (NYSE:PG) is one of my favorite stocks on the list. Not only has the company paid a dividend for 126 years, but it has also raised its payout for 60 years in a row, a trend that I see continuing well into the future. Procter & Gamble has a few key competitive advantages that make for a great long-term, low-risk investment. For one thing, the company has one of the most diverse and recognizable portfolio of brand names, which includes Crest, Dawn, Febreze, Gillette, Old Spice, Pampers, and Tide, just to name a few. Strong brands give the company pricing power over rivals, and combined with its massive size, its size gives it a further advantage of efficiency.
Although it's been a tough few years for the oil and gas industry, ExxonMobil (NYSE:XOM) is another great long-term buy on this list. The world's largest publicly owned integrated oil company, ExxonMobil has one of the strongest balance sheets in the industry, and one of the highest credit ratings of any company or government entity in the world. This gives the company virtually unlimited access to low-cost capital, a key advantage in a challenging industry environment, and should put it in a great position to capitalize as oil prices recover. ExxonMobil's strength has allowed it to raise its dividend for 34 years in a row, even while the price of oil has been low and many rivals have been forced to slash their payouts.
Finally, for the sake of being complete, I should mention that the Canadian banks I referenced are some of my favorite companies in the financial sector. In fact, Toronto-Dominion Bank (NYSE:TD) is one of the largest holdings in my own retirement account, and you can read a discussion about it here.
The bottom line on these 100-year dividend stocks
As I mentioned, paying dividends for more than a century, without fail, is certainly a noteworthy achievement. However, it's not the only factor dividend investors should consider. There are many other metrics that should be looked at before investing in any dividend stock, so be sure to do your homework before adding any of these to your portfolio.
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>>> Safer Dividend Picks From Barron's 10 For 2019, And Kiplinger's 12 Forever Stocks
Seeking Alpha
12-28-18
by Fredrik Arnold
https://seekingalpha.com/article/4230525-safer-dividend-picks-barrons-10-2019-kiplingers-12-forever-stocks
Six of these ten top 'safer' Barron's/Kiplinger stocks were from Barron's, three were Kiplinger, and one was listed in both.
The following probable profit-generating trades were identified by estimated dividend returns from $1,000 invested in each highest yielding stock. The dividend along with aggregate one-year analyst median target prices, as reported by YCharts, created the 2018-2019 data. Ten probable profit-generating trades projected to December 21, 2019, were:
Amazon.com Inc. was projected to net $558.11 based on no dividends just the median of target prices from forty-five analysts, less broker fees. The Beta number showed this estimate subject to volatility 70% more than the market as a whole.
Apple Inc. (AAPL) was projected to net $471.59 based on dividends plus a median target upside estimated from forty-four analysts, less broker fees. The Beta number showed this estimate subject to volatility 20% over the market as a whole.
Bank of America Corporation (BAC) was projected to net $466.25 based on a median target price estimate from twenty-nine analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 27% over the market as a whole.
Delta Air Lines Inc. (DAL) netted $413.66 per the median of twenty-one analysts estimates plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 7% over the market as a whole.
Altria Group Inc. (MO) was projected to net $375.21 based on dividends plus a mean target price estimate from eighteen analysts, less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Chevron Corp. (CVX) netted $366.84 based on a median target price estimate from twenty-five analysts plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 13% more than the market as a whole.
Caterpillar Inc. (CAT) was projected to net $363.70 based on the median of target price estimates from twenty-seven analysts plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 61% over the market as a whole.
Alphabet Inc. was projected to net $346.15 based on a median of target price estimates from forty-five brokers plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 6% over the market as a whole.
BlackRock Inc. (BLK) was projected to net $327.96 based on dividends plus a median target estimate from sixteen brokers, less broker fees. The Beta number showed this estimate subject to volatility 56% more than the market as a whole.
JPMorgan Chase & Co (JPM) was projected to net $324.82 based on a median of target price estimates from twenty-nine brokers plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 10% more than the market as a whole.
The average net gain in dividend and price was estimated at 40.14% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to volatility 33% more than the market as a whole.
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>>> GE slashes 119-year old dividend to a penny
By Matt Egan
CNN Business
October 30, 2018
https://www.cnn.com/2018/10/30/investing/ge-dividend-cut-earnings-culp/index.html
New York (CNN Business)General Electric is under such financial stress that new CEO Larry Culp is slashing the troubled conglomerate's 119-year-old dividend to just a penny a share.
GE revealed on Tuesday worse-than-expected results and a $22 billion accounting writedown for its beleaguered power division. Culp plans to split up the power division to accelerate a turnaround.
In a bid to fix GE's debt-riddled balance sheet, Culp announced the company will cut its quarterly dividend from 12 cents a share starting in 2019. By paying just a token dividend, GE (GE) will save about $3.9 billion of cash per year.
Analysts had been anticipating a potential dividend cut, though not one of this magnitude.
It's an especially painful move for a company that long viewed its stable dividend as a source of pride. But years of bad decisions forced GE to halve its dividend last November for just the second time since the Great Depression. The dividend cuts deal a blow to the many GE retirees and mom-and-pop shareholders who long relied on the cherished payouts.
"We are on the right path to create a more focused portfolio and strengthen our balance sheet," Culp said in a statement.
Culp, who was suddenly named CEO on October 1, promised to move "with speed to improve our financial position."
Dividend cuts are very rare these days, because the US economy is booming. Most companies, flush with cash from tax cuts, are ramping up their dividends. At least 291 S&P 500 companies have hiked their dividend so far this year, according to Howard Silverblatt of S&P Dow Jones Indices. Just two S&P 500 companies had cut their dividend as of early October, Silverblatt said.
GE's power division remains the biggest source of trouble at the company. Revenue tumbled 33% last quarter due to "continued market and execution challenges." GE Power swung to a loss of $631 million, compared with a profit of $464 million the year before.
GE Power, which makes turbines for power plants, has been caught badly off guard by the shift away from coal and gas in favor of renewable energy. Under former CEO Jeff Immelt, GE doubled down on fossil fuels by spending $9.5 billion in 2015 to acquire Alstom's power business. The deal turned out to be a disaster, underscored by the $22 billion goodwill impairment charge recorded last quarter.
GE said on Tuesday it will reorganize the power business by creating two units, one focused on natural gas and the other holding the steam, nuclear and other assets. And Culp, who was known for running a tight ship at Danaher, plans to "consolidate" GE Power's headquarters structure.
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>>> Why Allete (ALE) is a Great Dividend Stock Right Now
Zacks Equity Research
October 11, 2018
https://finance.yahoo.com/news/why-allete-ale-great-dividend-131501393.html
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Allete in Focus
Headquartered in Duluth, Allete (ALE) is a Utilities stock that has seen a price change of 4.09% so far this year. The power company owner is paying out a dividend of $0.56 per share at the moment, with a dividend yield of 2.89% compared to the Utility - Electric Power industry's yield of 3.24% and the S&P 500's yield of 1.88%.
Looking at dividend growth, the company's current annualized dividend of $2.24 is up 4.7% from last year. Over the last 5 years, Allete has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.26%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Allete's payout ratio is 69%, which means it paid out 69% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for ALE for this fiscal year. The Zacks Consensus Estimate for 2018 is $3.35 per share, with earnings expected to increase 5.02% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that ALE is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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>>> Why Paychex (PAYX) is a Top Dividend Stock for Your Portfolio
Zacks Equity Research
October 5, 2018
https://finance.yahoo.com/news/why-paychex-payx-top-dividend-131501965.html
Top Ranked Income Stocks to Buy for October 5th
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Paychex in Focus
Headquartered in Rochester, Paychex (PAYX) is a Business Services stock that has seen a price change of 6.33% so far this year. Currently paying a dividend of $0.56 per share, the company has a dividend yield of 3.09%. In comparison, the Outsourcing industry's yield is 0.98%, while the S&P 500's yield is 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.24 is up 8.7% from last year. Over the last 5 years, Paychex has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.80%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Paychex's current payout ratio is 91%, meaning it paid out 91% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PAYX for this fiscal year. The Zacks Consensus Estimate for 2018 is $2.85 per share, representing a year-over-year earnings growth rate of 11.76%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PAYX presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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>>> Why Realty Income Corp. (O) is a Great Dividend Stock Right Now
Zacks Equity Research
October 5, 2018
https://finance.yahoo.com/news/why-realty-income-corp-o-131501911.html
Why Realty Income Corp. (O) is a Great Dividend Stock Right Now
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Realty Income Corp. (O) have what it takes? Let's find out.
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Realty Income Corp. In Focus
Realty Income Corp. (O) is headquartered in San Diego, and is in the Finance sector. The stock has seen a price change of -0.84% since the start of the year. The real estate investment trust is paying out a dividend of $0.66 per share at the moment, with a dividend yield of 4.68% compared to the REIT and Equity Trust - Retail industry's yield of 5.07% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.65 is up 4.5% from last year. Over the last 5 years, Realty Income Corp. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.70%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Realty Income Corp.'s current payout ratio is 85%, meaning it paid out 85% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, O expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $3.18 per share, with earnings expected to increase 3.92% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, O presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Dominion Energy - >>> Are You Looking for a High-Growth Dividend Stock? Dominion Energy (D) Could Be a Great Choice
Zacks Equity Research
October 5, 2018
https://finance.yahoo.com/news/looking-high-growth-dividend-stock-131501011.html
Are You Looking for a High-Growth Dividend Stock? Dominion Energy (D) Could Be a Great Choice
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Dominion Energy (D) have what it takes? Let's find out.
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Dominion Energy in Focus
Based in Richmond, Dominion Energy (D) is in the Utilities sector, and so far this year, shares have seen a price change of -12.79%. The energy company is currently shelling out a dividend of $0.83 per share, with a dividend yield of 4.72%. This compares to the Utility - Electric Power industry's yield of 3.3% and the S&P 500's yield of 1.81%.
Looking at dividend growth, the company's current annualized dividend of $3.34 is up 10% from last year. In the past five-year period, Dominion Energy has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.44%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Dominion Energy's current payout ratio is 85%, meaning it paid out 85% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, D expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $4.13 per share, representing a year-over-year earnings growth rate of 14.72%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that D is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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>>> Utilities New Jersey Resources, South Jersey Industries Hold Merger Talks
Rising revenue has fueled takeover interest in natural-gas producers
By Dana Mattioli and Dana Cimilluca
April 4, 2017
https://www.wsj.com/articles/utilities-new-jersey-resources-south-jersey-industries-hold-merger-talks-1491322741
New Jersey Resources Corp. NJR -0.33% is considering a combination with South Jersey Industries Inc., SJI 0.15% a deal that would bring together two natural-gas utilities in the state, according to people familiar with the matter.
Details of the talks couldn’t be learned and it is possible that there won’t be a deal. As of Tuesday morning, New Jersey Resources had a market value of $3.4 billion. South Jersey Industries was valued at $2.8 billion.
New Jersey Resources, based in Wall, N.J., provides natural gas and other services to homes and businesses from the Gulf Coast to Canada, according to its website. It is the parent company of New Jersey Natural Gas, which serves more than 486,000 customers in Monmouth, Ocean, Middlesex, Morris and Burlington counties. New Jersey Resources also operates a 6,700 mile natural-gas transportation and distribution network serving almost 500,000 customers, according to the website.
South Jersey Industries, based in Folsom, N.J., traces its roots back more than 100 years to two Atlantic City gas companies. It provides natural gas to about 377,000 customers in the southern part of the state, according to the company’s website.
Rising revenue has fueled takeover interest in natural-gas producers and there has been a flurry of deal making over the past year. In January, Canada’s AltaGas Ltd. agreed to buy WGL Holdings Inc., Washington, D.C.’s natural-gas utility. NextEra Energy Inc. has agreed to buy bankrupt Energy Future Holdings Corp.’s Oncor electricity-transmission unit, one of the largest such businesses in the country, but Texas regulators have moved to block the deal.
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>>> Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most-interconnected data centers. In 52 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies. <<<
https://finance.yahoo.com/quote/EQIX/profile?p=EQIX
Equinix EQIX, -0.62% runs data centers in the U.S., Japan and Europe, providing cloud services to more than 9,800 companies.
>>> AT&T’s Huge Debt Load Isn’t Sinking Shareholders—Yet
By Alexandra Scaggs
Barrons
Aug. 22, 2018
https://www.barrons.com/articles/at-ts-huge-debt-load-isnt-sinking-shareholdersyet-1534963585?mod=yahoobarrons&ru=yahoo&yptr=yahoo
Wells Fargo thinks AT&T (T) is serious about reducing its debt—and that its shareholders could pay the price.
Analyst Jennifer Fritzsche downgraded AT&T’s shares to Market Perform from Outperform on Wednesday, in part because its status as the most-indebted nonfinancial U.S. company could force it to play nice with bondholders at shareholders’ expense.
She also expressed concern about the profitability of its entertainment group, which includes DirecTV, and a slowdown in growth in the part of its business that provides companies with advanced communications services. Shares were down 1.4% at $32.93 at 1:08 p.m..
AT&T certainly has a lot of debt to pay off—more than $180 billion, some $82 billion of which is a result of its acquisition of Time Warner. That means it needs to pay down or refinance $9 billion to $12 billion every year from 2019 to 2024.
Fritzsche and Wells Fargo’s credit analysts believe that means the company must deliver on its previously stated goal to cut leverage to 2.5 times earnings before interest, taxes, depreciation, and amortization (Ebitda) by the end of 2019. Wells Fargo estimates that will require about $30 billion of debt reduction.
“The pendulum has currently shifted in favor of bond holders given the fact one of AT&T leading priorities for cash is debt reduction,” the analysts wrote. “We believe AT&T has to meet its aggressive delevering goal in order to remain in the good graces of bond holders and to preserve future access to debt capital.”
The risk, in Fritzsche’s view, is that the company could give cash to bondholders when it should be investing in programming, capital improvements, and the race to 5G.
We have our doubts about that. Netflix’s (NFLX) second quarter shows that higher spending does not always lead to better results. The platform spends five times more on programming than HBO does, but as of the end of 2017, HBO had 142 million subscribers, while Netflix had 118 million. (Netflix forecasts its subscriber count will reach 135 million during the third quarter.)
Second, AT&T doesn’t seem to have much trouble getting people to buy their bonds, no matter how much debt they have. Last week, its sale of a $3.75 billion five-year floating-rate note, likely the largest in a decade, was met with strong demand, according to Bloomberg. Investment-grade bond managers may want to stay on AT&T’s good side. New bonds are usually issued at a discount to secondary-market prices, so buying into deals can provide a needed boost to returns as rising rates hurt the entire sector’s performance.
And there’s still the question of whether AT&T will actually follow through on its debt-reduction plans. Company treasurers have a patchy history of reducing leverage after deals, even when they say reducing debt burdens is a priority. That’s because shareholders prefer that the companies they own raise financing with debt, rather than diluting their stakes.
There are plenty of examples of companies that have not fulfilled promises to reduce leverage. Five years ago, when Verizon Communications (VZ) announced its megadeal to acquire Vodafone Group’s (VOD) minority stake in Verizon Wireless, the company said it expected to reduce debt and regain its single-A credit rating in “somewhere between four and five years.”
For that, Verizon would need to reduce its net debt to two times Ebitda. Today Verizon’s net debt is 2.4 times Ebitda, according to Bloomberg, essentially unchanged from 2014, the year the deal closed. AT&T’s net debt load is larger, at 3.6 times Ebitda.
The main risk this debt poses to company investors—shareholders and bondholders alike—is that the company’s credit rating gets downgraded below investment grade. Moody’s and S&P Global Ratings currently rate the debt two levels above junk.
For bond investors, a so-called fallen angel with more than $180 billion of debt outstanding would hurt the high-yield bond market as a whole. And shareholders are essentially the last line of defense against such a downgrade: The easiest source of cash in a pinch would be to cut its 50-cent dividend, which it has raised for 34 consecutive years.
Fritzsche and her colleagues do not think the dividend is at risk, however.
“We note no part of this call is our concern about dividend sustainability–we continue to view this as secure,” they wrote.
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>>> ATT showdown with DOJ over Time Warner finally gets a decision today
Washington Post
6-12-18
https://www.msn.com/en-us/money/companies/%E2%80%98everything%E2%80%99s-on-the-line%E2%80%99-atandt%E2%80%99s-showdown-with-doj-over-time-warner-finally-gets-a-decision-today/ar-AAyxvG1?OCID=ansmsnnews11
A federal judge is expected to rule Tuesday on whether to block AT&T's $85 billion Time Warner merger, in what has become America's most closely watched antitrust trial in decades.
The opinion by Judge Richard Leon could determine AT&T's future in digital entertainment as the company seeks to go toe-to-toe with tech titans such as Facebook, Google and Netflix. But the stakes are equally high for the Justice Department, which has not litigated a case of this kind since the Nixon administration. A court victory for the government, analysts say, could symbolize the beginning of a tough new era in antitrust enforcement. But an AT&T win could give pause to regulators — and perhaps deter them from blocking mergers in the future that might otherwise be deemed anticompetitive.
Though the Justice Department has sought to tamp down concerns about the AT&T case being a bellwether, analysts widely anticipate more deals to be announced in the event of an AT&T court victory, particularly mergers involving corporations that primarily operate in different industries. These types of so-called "vertical" deals are becoming more popular. In recent months, Verizon has purchased the digital media companies AOL and Yahoo. Amazon.com expanded its grocery business by buying Whole Foods. (Amazon chief executive Jeffrey P. Bezos also owns The Washington Post.) Comcast, meanwhile, is gearing up to fight Disney for control over 21st Century Fox.
"Everything's on the line now for the Department of Justice," said Gene Kimmelman, a former DOJ antitrust official who now leads the consumer advocacy group Public Knowledge. "They either come out as enormous victors … or they’ll face an avalanche of new transactions if they lose this case."
Analysts predict a wide range of possible outcomes in the trial. Leon could determine the merger poses a competitive threat and block the deal outright, siding with the Justice Department. He could rule for AT&T and approve the entire acquisition without conditions, making it possible for the deal to close by June 18. Or he could strike a middle ground, imposing his own changes to the deal or asking the two sides to help him tweak it.
No matter how he rules, the full implications will take time to digest — and will likely hold implications for a string of other mergers and acquisitions on the horizon. Leon has previously said to expect at least a 200-page written opinion.
The lengthy decision reflects the grueling six-week legal assault that government lawyers mounted against AT&T and Time Warner this spring in a dim, windowless Washington courtroom. Both AT&T and the Justice Department declined to comment for this story.
The merged firm, prosecutors argued, would anticompetitively unite AT&T's massive distribution infrastructure — its cellular and wired broadband networks — with Time Warner's premium content including HBO, Warner Bros. and Turner Broadcasting, whose assets include the cable channels CNN, TBS and TNT.
AT&T executives defended the merger in court as a major strategic shift for the telecom giant, one that could prove as significant as the company's decision more than a decade ago to enter the market for broadband and mobile data. In reinventing itself for an age of streaming media, AT&T aspires to deliver more television content over Internet connections to mobile and digital devices. With the viewing data it gathers from smart TVs, computers, tablets and smartphones, AT&T plans to build a targeted advertising empire resembling that of the Web's biggest ad giants.
That effort could be aided by another major milestone this week: The official repeal on Monday of the federal government's net neutrality rules. The rules, targeted for elimination by the Federal Communications Commission in a vote last year, had banned providers like AT&T or Verizon from prioritizing their own content over that of other websites. And they had laid the foundation for more stringent — though now also repealed — privacy regulations governing ISPs' handling of customer data.
Winning the antitrust case could allow AT&T to capitalize on that deregulation, analysts say.
"Consumer groups are worried that the court will give AT&T powerful new content, and that the FCC will let them monetize it in anticompetitive ways," said Paul Gallant, an industry analyst at Cowen & Co. "But investors are more sanguine. They like the hedge of AT&T owning content."
Antitrust attorneys litigating the Time Warner case relied on complex economic models and testimony from AT&T's competitors to outline a nightmare scenario in which AT&T could allegedly use its newfound control over Turner Broadcasting to unfairly benefit DirecTV, AT&T's own subscription television service.
Turner's control over live sports, news and other desirable programming would encourage AT&T to seek more money for that content when licensing it to competing TV services, the Justice Department argued. Those higher prices would allegedly be passed along to consumers to the tune of hundreds of millions of dollars per year. Meanwhile, the attorneys said, DirecTV would reap rewards by luring away any customers dissatisfied with the price hikes at other cable companies.
"AT&T would not want Time Warner content distributed in ways that increase competitive pressure on DirecTV," the government wrote in its closing brief to the court.
Attorneys for AT&T and Time Warner lashed out at the government's antitrust claims, calling them "preposterous." Thanks to new targeted advertising revenue, AT&T argued, the deal would lead to price decreases for TV viewers, not increases. And to highlight its good faith in content negotiations, AT&T pointed to 1,000 letters it sent to rival TV services last year committing to an arbitration process after the merger, in the event those competitors felt they were being overcharged for Time Warner content. Opponents of the deal said the arbitration offer was insufficient, though in his questioning in court, Leon expressed significant interest in it.
AT&T's legal team sought to dismantle the Justice Department's economic analysis of the deal, poking holes in research done by the agency's star witness, a University of California economist named Carl Shapiro. Shapiro's analysis failed to consider enough real-world examples of programming disputes, AT&T argued, instead drawing on surveys and long-term projections to arrive at the conclusion that consumers will be harmed by the merger.
Hanging over the trial was also the political shadow of President Trump, who has publicly and repeatedly criticized the merger as concentrating too much power "in the hands of too few." Arguing that it was being unfairly singled out for punishment, AT&T briefly demanded that the Justice Department hand over White House communications logs that could prove whether Trump inappropriately directed the agency to block AT&T's merger. But Leon denied that request, focusing narrowly instead on the core antitrust arguments in the case.
Wall Street will be looking for clues in the AT&T decision as to whether the government is likely to challenge those deals.
"At the simplest level, the market will draw a conclusion as to whether this administration is laissez faire or interventionist when it comes to big deals," he said.
<<<
Summary List -
High Dividend Stock ETFs
******************************************
i-Shares - Core High Dividend ETF (HDV) --------------------------------------------- 3.76%
i-Shares - Select Dividend ETF (DVY ---------------------------------------------------- 3.24%
iShares - US Preferred Stock (PFF) ------------------------------------------------------ 5.36%
SPDR - High Dividend ETF - (SPYD) ----------------------------------------------------- 3.89%
Vanguard - High Dividend ETF - (VYM) ------------------------------------------------- 2.94%
REITS - ETFs
**********************
Fidelity - MSCI Real Estate Index (FREL) ------------------------------------------------ 4.52%
iShares - Cohen and Steers REIT (ICF) --------------------------------------------------- 3.27%
iShares - REIT (IYR) ----------------------------------------------------------------------------- 3.26%
Vanguard - REIT (VNQ) ----------------------------------------------------------------- 3.70%
TELECOM ETFs
*************************
Vanguard Telecom Services ETF (VOX) ------------------------------------------ 3.56%
UTILITIES - ETFS
*************************
SPDR Utilities ETF (XLU) ----------------------------------------------------------------------- 3.04%
Vanguard Utilities ETF (VPU) ----------------------------------------------------------------- 2.97%
___________________________________________________________________
Vanguard High Dividend ETF (VYM) - Exp - 0.08%, Assets - 28 Bil
******************************************************
Microsoft -------------- 6%
J+J --------------------- 4%
Exxon Mobil ---------- 4%
JP Morgan Chase -- 4%
Wells Fargo ---------- 3%
ATT -------------------- 3%
Proctor + Gamble -- 2%
Chevron -------------- 2%
Pfizer ------------------ 2%
GE --------------------- 2%
iShares Core High Dividend ETF (HDV) - Exp - 0.10%, Assets - 6 Bil
***********************************************************
Exxon Mobil ----------- 9%
ATT --------------------- 7%
Verizon ----------------- 6%
Chevron ---------------- 6%
Pfizer -------------------- 5%
Wells Fargo ------------ 5%
Proctor + Gamble ---- 4%
Intel ---------------------- 4%
Cisco -------------------- 4%
Phillip Morris ----------- 4%
SPDR High Dividend ETF (SPYD) - EXP - 0.12%, Assets - 192 mil
**************************************************
Gap ---------------------------------- 1.6%
AbbVie ------------------------------ 1.4%
CF Industries ---------------------- 1.4%
Kohl's -------------------------------- 1.4%
Valero Energy --------------------- 1.4%
Lyondell Bassell Industries ---- 1.4%
Verizon ----------------------------- 1.4%
Chevron ---------------------------- 1.4%
CME Group ------------------------ 1.4%
General Motors ------------------- 1.4%
___________________________________________________________
CONSUMER
******************
Clorox (CLX) - Cleaning, household products (11 Bil) --------------------------------------- 3.33%
Colgate Palmolive (CL) - Personal and home care products (60 Bil) ------------------- 2.53%
Kimberly Clark (KMB) - Paper based personal care products (40 Bil) ------------------ 4.00%
Proctor & Gamble (PG) - Personal care and cleaning products (228 Bil) -------------- 3.95%
CONSUMER - FOOD / BEVERAGE
*******************************************
Anheuser Busch (BUD) - Beer (169 Bil, Netherlands, Consumer) ----------------------- 4.83%
B & G Foods (BGS) - Packaged food, household products (2.9 Bil, Consumer) ------ 8.07%
Coca Cola (KO) - Beverages (178 Bil, Consumer) -------------------------------------------- 3.63%
Flowers Foods (FLO) - Packaged bakery products (4.1 Bil, Consumer) ---------------- 3.05%
General Mills (GIS) - Packaged foods (32 Bil) ------------------------------------------------- 4.43%
Kellogg (K) - Cereal, convenience foods (23 Bil) ---------------------------------------------- 3.58%
Kraft Heinz (KHC) - Packaged food, beverages (Bil) ----------------------------------------- 4.43%
McDonalds (MCD) - Fast food restaurants (93 Bil) -------------------------------------------- 2.56%
Nestle (NSRGY) - Food products, (Switzerland) (242 Bil) ----------------------------------- 3.30%
PepsiCo (PEP) - Beverages, snack foods (148 Bil) ------------------------------------------- 3.16%
Unilever (UL) - Food, beverages, pers care + cleaning products, UK-Dutch (123 Bil)-3.26%
CONSUMER - TOBACCO
******************************************
Altria (MO) - Tobacco products (137 Bil, Consumer) ----------------------------------------- 5.04%
British American Tobacco (BTI) - Tobacco products (113 Bil, UK, Consumer) ------ 5.20%
Philip Morris (PM) - Tobacco products (147 Bil, Consumer) ------------------------------- 5.21%
Schweitzer Mauduit Intl (SWM) - Specialty paper for tobacco products (1.4 Bil) ----- 4.18%
Vector Group (VGR) - Tobacco products (2.9 Bil, Consumer) ----------------------------- 8.22%
CONSUMER - MISC
********************************
Crown Crafts (CRWS) - Products for infants and toddlers (80 mil) ------------------------ 5.48%
Leggett & Platt (LEG) - Diverse furnishings, fixtures, materials (6 Bil) ------------------- 3.39%
_______________________________________________________________________
ENERGY
*************
Chevron (CVX) - Oil, gas, chemicals, mining, power generation (218 Bil, Energy) --- 3.65%
Enbridge (ENB) - Oil and gas pipelines (40 Bil, Canada, Energy) ------------------------ 7.15%
Exxon Mobil (XOM) - Oil, gas, petrochemicals (356 Bil, Energy) ------------------------- 3.91%
Oneok (OKE) - Natural gas utility and production (12 Bil, Utilities) ------------------------ 5.39%
Pembina (PBA) - Oil and gas pipelines (12 Bil) (Canada) ----------------------------------- 5.32%
TransCanada (TRP) - Oil and gas pipelines (Canada) -------------------------------------- 5.09%
Vermillion Energy (VET) - Oil and gas (5 Bil) (Canada) ------------------------------------ 6.20%
ENERGY - PIPELINES
**********************************
Enbridge (ENB) - Oil and gas pipelines (40 Bil, Canada) ----------------------------------- 7.11%
Kinder Morgan (KMI) - Oil and gas pipelines (88 Bil) ---------------------------------------- 5.02%
Pembina (PBA) - Oil and gas pipelines (12 Bil) (Canada) ---------------------------------- 5.25%
TransCanada (TRP) - Oil and gas pipelines (Canada) -------------------------------------- 5.09%
Williams Companies (WMB) - Oil and gas pipelines (34 Bil) ------------------------------ 5.32%
ENERGY LPs - PIPELINES
**********************************
Energy Transfer Equity LP (ETE) - Oil and gas pipelines ------------------------- 7.86%
Enterprise Products Partners LP (EPD) - Oil and gas pipelines (61 Bil) -------------- 6.46%
EQM Midstream Partners LP (EQM) - Oil and gas pipelines (5 Bil) --------------------- 6.73%
Magellan Midstream Partners LP (MMP) - Oil and gas pipelines (18 Bil) ------------- 5.55%
Summit Midstream Partners LP (SMLP) Nat gas gathering,compress (2 Bil) ------- 15.28%
Western Gas Partners LP (WES) - Nat gas pipelines, processing (9 Bil) -------------- 8.09%
_______________________________________________________________________
FINANCIAL - INSURANCE
*****************************************
Chubb (CB) - Insurance -------------------------------------------------------------------------------- 2.09%
Erie Indemnity (ERIE) - Insurance (4 Bil) --------------------------------------------------------- 2.81%
Everett Re (RE) - Insurance (7.8 Bil) --------------------------------------------------------------- 2.14%
Maiden Holdings (MHLD) - Insurance (1.0 Bil) (Bermuda) ----------------------------------- 7.67%
Travelers (TRV) - Insurance (32 Bil) ---------------------------------------------------------------- 2.19%
FINANCIAL - BANKING
************************************
Bar Harbor Bankshares (BHB) - Regional bank (215 mil) ------------------------------------- 2.49%
_______________________________________________________________________
HEALTHCARE
*******************
Abbott Labs (ABT) - Diverse healthcare products (66 Bil) ------------------------------------- 1.94%
Johnson & Johnson (JNJ) - Diverse healthcare related products (285 Bil) --------------- 2.66%
Owens & Minor (OMI) - Distributor of medical and surgical supplies (2 Bil) --------------- 6.94%
Quest Diagnostics (DGX) - Diagnostic testing services (9.7 Bil) ----------------------------- 2.10%
HEATHCARE - DRUGS
******************************
AbbVie (ABBV) - (96 Bil) - Research unit from Abbott Labs ( Bil) ------------------------- 4.22%
AstraZeneca (AZN) - Pharmaceuticals (70 Bil) ------------------------------------------------ 5.42%
Bristol Myers Squibb (BMY) - Parmaceuticals (104 Bil) ------------------------------------ 3.12%
GlaxoSmithKline (GSK) - Pharmaceuticals (97 Bil) ------------------------------------------ 6.45%
Merck (MRK) - Pharmaceuticals ( Bil) ------------------------------------------------------------ 3.20%
Novartis (NVS) - Pharmaceuticals ( Bil) --------------------------------------------------------- 3.82%
Pfizer (PFE) - Pharmaceuticals ( Bil) ------------------------------------------------------------- 3.68%
_______________________________________________________________________
INDUSTRIALS
*******************
Air Products + Chemicals (APD) ----------------------------------------------------------------- 2.70%
Dover (DOV) - Industrial products and equipment (12 Bil) ---------------------------------- 2.03%
DowDupont (DWDP) - Chemicals (67 Bil) ------------------------------------------------------ 2.42%
Fastenal (FAST) - Industrial and construction supply distributor (13 Bil) --------------- 3.02%
General Electric (GE) - Diverse conglomerate (270 Bil) ------------------------------------ 3.26%
Lyondell Basell (LYB)-Chemicals, polymers, gasoline components(39 Bil)(Dutch) - 3.78%
Praxair (PX) - Industrial gases (38 Bil) ----------------------------------------------------------- 2.25%
RPM International (RPM) - Coatings, sealants, building materials (6 Bil) -------------- 2.65%
United Technologies (UTX) - Diverse conglomerate (97 Bil) ------------------------------ 2.30%
______________________________________________________________________
REITS - HEALTHCARE -
CareTrust (CTRE) - Healthcare facilities REIT ------------------------------------------------- 6.36%
HCP Inc (HCP) - Healthcare facilities REIT (14 Bil) ------------------------------------------- 6.64%
LTC Properties (LTC) - Healthcare facilities REIT (1.8 Bil, Healthcare) ----------------- 6.51%
National Health Investors (NHI) - Healthcare facilities REIT (3 Bil, Healthcare) ----- 6.03%
Omega Healthcare (OHI) - Healthcare facilities REIT (6 Bil) ------------------------------ 10.34%
Quality Care Properties - (QCP) Healthcare facilities REIT, HCP spin off (1.5 Bil) -
Universal Health Realty Income (UHT) - Healthcare facilities REIT -------------------- 4.48%
Welltower (HCN) - Heathcare related properties REIT (24 Bil) ---------------------------- 6.82%
Ventas (VTR) - Healthcare facilities REIT (22 Bil) --------------------------------------------- 6.67%
REITS - STORAGE -
Cube Smart (CUBE) - Self storage facilities (4.5 Bil) ------------------------------------------- 4.31%
Extra Space Storage (EXR) -Self storage facilities REIT (8 Bil) ---------------------------- 3.60%
Life Storage (LSI) - Self-storage properties REIT, Sovran (3.8 Bil) ------------------------ 4.62%
Public Storage (PSA) - Self storage facilities REIT (33 Bil) ---------------------------------- 4.13%
REITS - DATA CENTERS -
CorSite Realty COR) - Data centers REIT (1 Bil) ---------------------------------------------- 3.76%
CyrusOne (CONE) - Data center REIT ----------------------------------------------------------- 3.59%
Digital Retail Trust (DLR) - Data center REIT -------------------------------------------------- 3.98%
Equinix (EQIX) - Data center REIT ---------------------------------------------------------------- 2.23%
REITS - RESIDENTIAL -
American Campus Communities (ACC) - Student housing REIT (5 Bil) ---------------- 4.65%
Equity Lifestyle Properties (ELS) - Residential REIT (5 Bil) -------------------------------- 2.51%
Essex Property Trust (ESS) - Residential REIT (14 Bil) -------------------------------------- 3.13%
REITS - PRISONS -
CoreCivic (CXW) - Private prisons REIT (Corrections Corp) (3.3 Bil) -------------------- 8.57%
GEO Corp (GEO) - Private prisons REIT (3 Bil) ------------------------------------------------ 8.70%
REITS - MISC -
American Tower (AMT) - Wireless + broadcast communic tower REIT (29 Bil) ------- 2.19%
Four Corners Property Trust (FCPT) - Restaurant REIT ----------------------------------- 4.93%
Store Capital (STOR) - Diversified REIT (4.6 Bil) --------------------------------------------- 5.05%
Weyerhaeuser (WY) - REIT, timberlands, wood prods, cellulose, real est (23 Bil) ---- 3.54%
REITS - RETAIL
********************
Realty Income (O) - Retail / commercial REIT (15 Bil) -------------------------------------- 5.32%
National Retail Properties (NNN) - Retail REIT (7 Bil) -------------------------------------- 5.06%
Retail Opportunity Investments Corp (ROIC) - Retail REIT (1.7 Bil) ------------------- 4.72%
Simon Property Group (SPG) - Retail REIT (61 Bil) ----------------------------------------- 5.28%
REITS - ETFs
**********************
iShares REIT (IYR) ------------------------------------------------------------------------------------- 3.33%
SPDR REIT (RWR) ------------------------------------------------------------------------------------- 2.46%
Vanguard REIT (VNQ) ------------------------------------------------------------------------ 3.80%
________________________________________________________________________
RETAIL - STORES
******************************
Wal-Mart (WMT) - Discount department stores (269 Bil) ------------------------------------- 2.39%
________________________________________________________________________
SERVICES
******************
Accenture (ACN) - Business management services, Ireland (50 Bil) -------------------- 1.78%
Automatic Data Processing (ADP) - Business outsourcing solutions (42 Bil) -------- 2.39%
United Parcel Service (UPS) - Package delivery services (86 Bil) ----------------------- 3.37%
Waste Management (WM) - Waste services (25 Bil) ----------------------------------------- 2.29%
________________________________________________________________________
TECHNOLOGY
********************
Cisco Systems (CSCO) - Routers --------------------------------------------------------------- 3.05%
Intel (INTC) - Semiconductors --------------------------------------------------------------------- 2.35%
Microsoft (MSFT) - Software ---------------------------------------------------------------------- 1.84%
Qualcom (QCOM) - Semiconductors, telecom------------------------------------------------- 5.01%
________________________________________________________________________
TELECOM
**************
ATT (T) - Telecom (254 Bil, Telecom) ------------------------------------------------------------- 5.74%
Crown Castle Intl (CCI) - Wireless towers (31 Bil) -------------------------------------------- 4.00%
Verizon (VZ) - Communications, information, entertainment (215 Bil, Telecom) ----- 4.74%
iShares Global Telecom ETF (IXP) -------------------------------------------------------------- 3.55%
Vanguard Telecom Services ETF (VOX) ------------------------------------------------------- 3.57%
___________________________________________________________
UTILITIES - WATER
********************************
American States Water (AWR) - Water utility ( Bil) -------------------------------------------- 1.84%
American Water Works (AWK) - Water utility (9 Bil) ------------------------------------------- 2.16%
Aqua America (WTR) - Water utility ( Bil) --------------------------------------------------------- 2.37%
Connecticut Water Service (CTWS) - Water utility (420 mil) ------------------------------- 1.76%
UTILITIES - NATURAL GAS
************************************
Atmos Energy (ATO) - Natural gas utility (6 Bil) -------------------------------------------------- 2.28%
Dominion Resorces (D) - Natural gas and electric utility (42 Bil) ---------------------------- 5.16%
DTE Energy (DTE) - Natural gas and electric utility (14 Bil) ----------------------------------- 3.41%
Eversource Energy (ES) - Natural gas and electric utility (16 Bil) --------------------------- 3.42%
Spire (SR) - Natural gas utility (Laclede Group) (2 Bil) ------------------------------------------ 3.18%
New Jersey Resources (NJR) - Natural gas utility (3 Bil) -------------------------------------- 2.65%
South Jersey Industries (SJI) - Natural gas utility (2 Bil) -------------------------------------- 3.70%
Vectren (VVC) - Natural gas utility (3.7 Bil) --------------------------------------------------------- 2.57%
WGL Holdings (WGL) - Natural gas utility (3 Bil) --------------------------------------------------2.42%
UTILITIES - ELECTRIC
******************************
CMS Energy (CMS) - Electric utility (9 Bil) --------------------------------------------------------- 3.12%
Consolidated Edison (ED) - Electric utility (17 Bil) ---------------------------------------------- 3.65%
Goldfield (GV) - Electricity transmission infrastructure (67 mil) ------------------------------- 0%
IDA Corp (IDA) - Electric utility, hydroelectric, natural gas (3.1 Bil) -------------------------- 2.58%
MGE Energy (MGEE) - Diversified utility, electricity, natural gas (1.5 Bil) ------------------ 2.23%
NextEra Energy (NEE) - Electric utility, conventional, wind, solar (45 Bil) ----------------- 2.76%
NI Source (NI) - Diversified utility ( Bil) -------------------------------------------------------------- 3.27%
PG&E (PCG) - Electric utility, natural gas pipelines (24 Bil) ------------------------------------ 0%
Scana Corp (SCG) - Electric utility (8 Bil) ----------------------------------------------------------- 6.82%
Southern Company (SO) - Electric utility (40 Bil) ------------------------------------------------ 5.21%
SPDR ETF (XLU) ------------------------------------------------------------------------------------------ 3.06%
Wisconsin Energy (WEC) - Diversified utility (11 Bil) ------------------------------------------- 3.53%
Xcel Energy (XEL) - Electric utility, diverse (17 Bil) ---------------------------------------------- 3.33%
Note - Higher rates are great for savers and retirees looking for yield, but we're close to seeing an inversion of the yield curve, which historically can precede a recession. The Fed's chief aim is to continue normalizing rates and reducing their bloated balance sheet so they'll have the ammo required to deal with future financial crises or recessions.
But as Jim Rickards points out, such aggressive tightening combined with QT could send the US into the recession the Fed is trying to avoid. So to counteract the tightening they are encouraging Congress to crank up higher deficit spending plus the tax cuts as a counterbalance. Interesting experiment, we'll see if it works.
>>> Treasury 10-Year Yield Hits 3% for First Time Since 2014
Bloomberg
April 24, 2018
https://finance.yahoo.com/news/treasury-10-yield-hits-3-135116747.html
The 10-year U.S. Treasury yield rose above 3 percent for the first time since January 2014, snapping out of a months-long trading range amid an onslaught of supply and a Federal Reserve intent on boosting interest rates.
“It’s a big psychological level that has held for quite some time and is a level that global investors are focusing on for direction,” Justin Lederer, an interest-rate strategist at Cantor Fitzgerald, said before the level was breached. “Once the dust settles, do we hold above that level and continue to head higher in rates, or does the market hold in?”
Investors including Jeffrey Gundlach at DoubleLine Capital and Scott Minerd at Guggenheim Partners havehighlightedthe 3 percent 10-year yield as a critical level for the bond market. It only exceeded it briefly in 2013 and January 2014, toward the end of the bond-market wipeout known as the “taper tantrum.”
The yield rose as high as 2.95 percent in February, before retreating into a range for the past two months. But the prospect of a deluge of new government debt has weighed on the $14.9 trillion Treasuries market. It climbed as high as 3.0014 percent on Tuesday.
The U.S. budget deficit will surpass $1 trillion by 2020, two years sooner than previously estimated, the Congressional Budget Office said this month. At the same time, the Fed is trimming its balance sheet, meaning the amount of net new debt ispoised to surgein the years ahead. Treasury hasaskedprimary dealers to give forecasts for America’s borrowing needs over the coming three fiscal years, ahead of the next quarterly refunding on May 2.
Yields were already heading higher at the start of 2018 amid Fed rate hikes, and policy makers have shown no signs of slowing their tightening even withU.S. stock marketsfluctuating in recent months.
The increase in longer-term Treasury yields interrupts arelentless flatteningof the U.S. yield curve seen in recent months. Central bankers expressed concern this month that the curve was headed toward inversion, a phenomenon that has historically served as a harbinger of recession.
Fed officials’ most recent forecasts are for two additional rate increases in 2018. Traders are pricing in slightly more than that.
<<<
>>> 10 Safe Dividend Stocks for the Second Quarter
These stocks have been paying their shareholders for a long time
https://investorplace.com/2018/04/10-safe-dividend-stocks-for-the-second-quarter/
By Brian Bollinger
Simply Safe Dividends
With the U.S. stock market fresh off its first quarterly loss since 2015, many conservative investors are in need of dividend stock ideas that can provide safe income and preserve their capital over the long term.
Using Dividend Safety Scores, a system created by Simply Safe Dividends to help investors avoid dividend cuts in their portfolios, we identified 10 high-quality dividend stocks from traditionally defensive sectors like telecom, healthcare and consumer staples.
These stocks have an impeccable record of paying continuous dividends over the years given their durable business models, strong cash flows and disciplined approach to capital allocation.
Many of these companies are also in Simply Safe Dividends’ list of the best high dividend stocks here and trade at yields above their five-year averages, providing an attractive combination of current income and growth.
Let’s take a look at 10 of the best safe dividend stocks for the second quarter.
AT&T (T)
Sector: Telecom Services
Industry: Integrated Telecommunication Services
Dividend Yield: 5.6%
5-Year Average Yield: 5.2%
AT&T Inc. (NYSE:T) is a global leader in telecommunications, media and technology. The company provides wireless and wireline communications services, including data, broadband and voice, digital video services, telecommunications equipment and other services.
AT&T has a huge customer base consisting of 157 million wireless subscribers, over 12 million internet subscribers and around 25 million video customers.
Few companies can compete with AT&T’s massive scale, which allows it to invest heavily in the quality and coverage of its cable, wireless, and satellite networks. In fact, AT&T is planning to deploy the next generation 5G wireless technology in 12 U.S. markets by late 2018.
Should AT&T’s acquisition of Time Warner be completed, the deal has potential to create value for shareholders and customers by combining its strong distribution capabilities with Time Warner’s large content portfolio.
While this deal will increase AT&T’s debt burden, Simply Safe Dividends estimates that the combined company’s free cash flow payout ratio will sit around 70% to 80%, which is sustainable for a cash cow with recession-resistant services like AT&T. Investors can read the firm’s in-depth dividend stock analysis on AT&T here.
AT&T has recorded 34 consecutive years of quarterly dividend growth and last raised its payout by 2% in late 2017. An improving balance sheet and moderately growing demand for faster delivery of video and data services should enable the company to continue raising its dividend at a low single-digit pace.
Pfizer (PFE)
Sector: Healthcare
Industry: Pharmaceuticals
Dividend Yield: 3.8%
5-Year Average Yield: 3.5%
Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical giant engaged in the development and manufacture of healthcare products. It is one of the largest global pharmaceuticals companies, with 2017 revenues exceeding $52 billion.
Founded in 1849, Pfizer has come a long way to become a leading healthcare company, with manufacturing sites in 63 locations and sales in 125 countries. The company has a wide portfolio of medicines, vaccines and consumer healthcare products and is known for popular drugs like Prevnar and Viagra, among others.
The company’s business can be divided into two distinct business segments — Pfizer Innovative Health (focusing on six therapeutic areas like oncology) which accounted for 60% of 2017 revenues and Pfizer Essential Health (legacy drugs that have lost patent protection) comprising the remaining 40%.
A relatively recession-proof business model, diversified portfolio of R&D intensive products, and global scale create a competitive moat around the company.
Pfizer is also benefiting from U.S. tax reform, which has driven the firm to repatriate most of its cash held overseas and aggressively return cash to shareholders.
The company last raised its dividend by 6.3% in December 2017, and mid-single-digit growth is likely to continue. In fact, management expects 11% earnings growth in 2018, and rising global demand for healthcare should continue to serve as a long-term tailwind.
Income investors can read Simply Safe Dividends’ comprehensive analysis on Pfizer’s business here.
Procter & Gamble (PG)
Sector: Consumer Staples
Industry: Household Products
Dividend Yield: 3.5%
5-Year Average Yield: 3.1%
Procter & Gamble Co (NYSE:PG) is a leading global consumer goods company. With more than 180 years of existence, the company is today an international household name, selling products in more than 175 countries.
Accounting for 32% of total sales in 2017, fabric and home care is Procter & Gamble’s biggest segment, followed by baby, feminine and family care (28%), beauty (18%), grooming (11%) and health (11%) segments.
By geography, North America is P&G’s largest market (45% of sales) while developing economies account for 35% of its total sales.
A diverse portfolio of iconic brands (Ariel, Bounty, Braun, Olay, Pantene etc.), strong consumer loyalty, and a global sales network have made P&G one of strongest consumer goods companies in the world.
In recent years the company has restructured its brand portfolio (from 170 in 2013 to 65 today) to focus more on stronger product lines with faster growth and greater profitability. The company also has targeted to save $10 billion in operating costs between fiscal year 2017 and 2021.
Despite its modest growth profile, Procter & Gamble has an impeccable record of paying consecutive dividends over the last 127 years. It last raised its dividend by 3% in 2017, marking it the 61st consecutive dividend increase and reinforcing its status as a dividend king (see all the dividend kings here).
The company is targeting up to $70 billion in capital returns through fiscal 2019 and 5% to 7% in core earnings per share growth. This should enable the company to comfortably continue its dividend growth streak.
United Parcel Services (UPS)
Sector: Industrials
Industry: Air Freight and Logistics
Dividend Yield: 3.4%
5-Year Average Yield: 2.9%
United Parcel Service, Inc. (NYSE:UPS) is a holding in Warren Buffett’s dividend portfolio here and is the world’s largest package delivery and logistics company. It is also a premier provider of global supply chain management solutions.
The company operates through three segments: U.S. Domestic Package (62% of 2017 revenue), International Package (20%) and Supply Chain & Freight (18%).
UPS has a balanced presence globally delivering 20 million packages and documents each day in more than 220 countries. The US is its largest market with 79% of sales while Europe is the largest among international markets (21%).
The company has an extensive global logistics and distribution system consisting of 2,500 worldwide operating facilities, 119,000 vehicles and over 500 aircraft. Upstarts and smaller rivals cannot afford to invest in such a transportation network, and they lack UPS’s package volumes which help the company achieve meaningful cost efficiencies.
Thanks to its advantages, UPS has been paying generous cash dividends for the last 50 years. The company’s recent payout boost in late 2017 represented a 10% increase over the prior year, and analysts expect 2018 adjusted diluted earnings per share to grow by 20% thanks largely to tax reform.
Given the continued surge in global online shopping trends and long-term growth in global trade, the company should be able to continue increasing its dividend comfortably in the high single to low double-digit range.
Verizon Communications (VZ)
Sector: Telecom Services
Industry: Integrated Telecommunication Services
Dividend Yield: 4.9%
5-Year Average Yield: 4.5%
Verizon Communications Inc (NYSE:VZ) is the biggest provider of wireless service in the U.S. with 116.3 million retail customers and enjoys a duopoly position with AT&T, Sprint Corp (NYSE:S) and T-Mobile US Inc (NASDAQ:TMUS).
The company has the largest 4G LTE network (with 97.9 million retail postpaid connections) and is available to over 98% of the U.S. population. Although wireless operations generate over 80% of the company’s cash flow, Verizon’s superior fiber-optic technology also enables high speed broadband internet and has been ranked No.1 for internet speed ten years in a row by PC Magazine.
Customers prefer Verizon for its highly reliable wireless services, which are made possible by substantial investments in its network each year. The company also owns highly valuable and scarce telecom spectrum licenses, which form a strong entry barrier for new entrants.
Verizon is also leading the 5G wireless technology development over the last few years to reinforce its strong position, and it has plans to launch 5G wireless residential broadband services in three to five U.S. markets this year.
With tax reform freeing up several billion dollars more of cash flow this year, and management’s plans to cut $10 billion in costs by 2022, Verizon’s dividend remains on solid ground.
Verizon recorded its 11th consecutive dividend increase in 2017 with a 2.2% raise, and low-single-digit growth is likely to continue in the years ahead as the company trims its cost base and benefits from growing demand for high speed data and internet.
Coca-Cola (KO)
Sector: Consumer Staples
Industry: Soft Drinks
Dividend Yield: 3.5%
5-Year Average Yield: 3.2%
The Coca-Cola Co (NYSE:KO) is one of the largest beverage companies in the world, manufacturing and distributing more than 500 non-alcoholic drink brands. It owns four of the world’s top five sparkling soft drink brands — Coca-Cola, Diet Coke, Fanta and Sprite.
Coca-Cola’s activities can be grouped into five operating segments — Europe, Middle East and Africa (21% of 2017 revenues); Latin America (11%); North America (24%); Asia Pacific (14%); and Bottling Investments (30%).
Coca-Cola owns the world’s largest distribution system that enables seamless sales to 27 million customer outlets in more than 200 international markets. This distribution network serves as a major advantage as the company evolves its product mix.
As a result of increased customer health awareness, the company is focusing on constructing a healthier portfolio by introducing products like Coca-Cola zero sugar.
The Coca-Cola Company is a dividend aristocrat (see all the aristocrats here) that has increased dividends in each of the last 56 years and last raised its payout by 5%. The company has a target of a 75% payout ratio and 7% to 9% earnings growth over the long term.
Given its industry leading position, strong brands, and huge international presence, Coca-Cola should be able to continue delivering mid-single-digit dividend growth in future.
Merck (MRK)
Sector: Healthcare
Industry: Pharmaceuticals
Dividend Yield: 3.6%
5-Year Average Yield: 3.1%
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company with a rich operating history exceeding 120 years. The company provides a host of prescription medicines, vaccines, biologic therapies and animal health products.
Geographically, the U.S. is its largest market with 43% of 2017 revenues, followed by EMEA, Asia Pacific, Japan, Latin America and others.
Merck’s core product categories include drugs for diabetes and cancer as well as vaccines and hospital acute care. A few of Merck’s best-selling products are Januvia (industry leading diabetic drug), Keytruda (cancer drug), Zetia and Remicade. The company’s 12 main drugs accounted for 53% of total sales in 2017.
The company spends heavily on R&D (18% of sales in 2017) to continuously rebuild its drug pipeline and deliver innovative health solutions. As a result, Merck is in a solid position to benefit from the growing demand for oncology treatments. The company has also been restructuring its business to cut long-term costs.
Merck has a rich history of paying uninterrupted dividends for nearly three decades and has increased dividends for seven years in a row. Its last dividend was raised by 2%, which is in line with its 10-year annual dividend growth rate.
Given the company’s disciplined capital allocation and reasonable payout ratio below 50%, Merck is poised to continue growing its payout in the future.
Altria (MO)
Sector: Consumer Staples
Industry: Tobacco
Dividend Yield: 4.4%
5-Year Average Yield: 4.0%
Altria Group Inc (NYSE:MO) is the undisputed market leader in the U.S. tobacco industry. The company has exclusive rights to sell cigarettes under a handful of leading brands including Marlboro, Virginia Slims, Parliament and Benson & Hedges. Altria also sells cigars, chewing tobacco and wine.
Marlboro has been the leading U.S. cigarette brand for over 40 years, and Copenhagen and Skoal account for more than 50% of the smokeless products category. Cigarette brands tend to have a high degree of stickiness, with customers having a very low preference to switch to other brands and a greater tolerance to pay higher prices given the addictive nature of tobacco.
With a long history of manufacturing cigarettes dating back 180 years, Altria has built a dominant market position over the years, resulting in a steady and growing stream of cash flow that has funded solid dividend growth.
In fact, Altria’s latest dividend raise earlier this year was 6%, representing its 52nd dividend increase in the past 49 years. Altria has a target dividend payout ratio of 80% with annual earnings growth of 7% to 9% expected over the long term. This should allow the company to keep growing dividends at a mid to high single-digit clip going forward.
AbbVie (ABBV)
Sector: Healthcare
Industry: Biotechnology
Dividend Yield: 4.2%
5-Year Average Yield: 3.5%
AbbVie Inc (NYSE:ABBV) is a research-driven global healthcare company, focusing on developing and delivering drugs in therapeutic areas like immunology, oncology, neuroscience, virology and general medicine. The company generates over 60% of its revenue (and an even greater share of profits) from its arthritis drug Humira.
Humira’s revenue stream in the U.S. is expected to be largely protected from competition through 2022 thanks to a number of patents owned by AbbVie. Meanwhile, AbbVie’s R&D expertise has helped the company develop a strong late-stage pipeline of promising medicines across several therapeutic areas which could potentially be converted into successful products in the near future.
The company recently experienced a setback as Rova-T, a lung cancer drug that was a key part of AbbVie’s plans to diversify its future profits, experienced achieved disappointing trial results, suggesting its overall impact on the company’s future results would be somewhat muted.
However, the company remains a cash cow with a handful of growth drivers and a reasonable payout ratio near 50%. Management continues cranking up the dividend, most recently announcing a 35% boost earlier this year.
New product launches and increasing demand for medicines both from developed and developing economies should help AbbVie grow its dividends at a solid rate going forward, but investors considering the stock do need to have a stomach for volatility given AbbVie’s drug concentration.
Cisco (CSCO)
Sector: Information Technology
Industry: Communications Equipment
Dividend Yield: 3.2%
5-Year Average Yield: 3.2%
Cisco Systems, Inc. (NASDAQ:CSCO) is a leading global technology company inventing new technologies and products that have been powering the internet for more than three decades.
Product sales account for approximately 75% of total sales while services comprise the remainder of the business. Switching and routing are the most prominent product categories followed by collaboration, data center, wireless, security and service provider video.
The company’s service revenue is composed of software, subscriptions, and technical support offered across its different segments. Cisco’s customers are highly diversified and include businesses of all sizes, public institutions, governments and service providers.
Cisco has a large worldwide sales and marketing network with field offices in 95 countries, strong R&D capabilities, and a massive patent portfolio. Market leadership, breadth of portfolio, global scale and customer loyalty are its key competitive advantages. Investors can read in-depth analysis of Cisco’s business here.
Cisco is also shifting its business towards a software and subscriptions model which will lead to a higher visibility of its cash flows. Currently, recurring revenue accounts for 33% of total sales, and more than half of software revenue is subscription based revenue.
Cisco recently increased its dividend by 14% and has targeted to return at least half of its free cash flow to shareholders annually. The company’s solid cash flow and sub-50% payout ratio should allow for continued dividend growth in the years ahead.
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>>> Is the REIT bloodbath finally a buying opportunity?
By Andrea Riquier
Apr 2, 2018
Malls are a ‘distressed’ play for some investors, while jumping on the housing shortage attracts others
Buying opportunity or value trap?
https://www.marketwatch.com/story/is-the-reit-bloodbath-finally-a-buying-opportunity-2018-03-28?siteid=bigcharts&dist=bigcharts
In December MarketWatch took a balanced view on investing in real estate investment trusts. REITs may be “cheap enough to warrant another look,” we wrote then.
The pro-REIT camp liked the macro fundamentals underpinning the investment — not to mention their cheap relative valuations — believing that those factors outweighed concerns about rising interest rates, investor disinterest and the Amazon AMZN, +1.33% effect that’s been clearing out the traditional shopping malls that anchor many of these funds.
Since then REITs have gotten even cheaper, and are now luring some analysts who’d shied away before.
The Vanguard Real Estate ETF VNQ, +1.05% is down about 9% for the year to date, worse than the 2% decline for the S&P 500 SPX, +1.16% . Shares of the PowerShares KBW Premium Yield ETF, meanwhile, have lost more than 12% so far in 2018.
REITs have been beaten down enough that Rick Daskin, an investor who in December told MarketWatch he was staying away, is now interested. Back then, Daskin, who serves as president of RSD Advisors, and subadvises Cumberland Advisors on MLP strategy, thought interest-rate risk was just too strong to make REITs, which depend on borrowing, attractive.
Now, he said, “relative to bonds and other things it looks to me like they present some opportunity. Retail REITs have gotten absolutely destroyed, and some are at a level where they’re near-distressed. And they may be superior to bonds because you’re scraping up more yield. The risk-reward might be coming more into focus.”
Within the retail sector, Daskin said, he’d concentrate on class “A” malls, those with higher foot traffic than lower-rated properties and with strong tenants.
“I don’t think you want to play at the bottom of the barrel,” he said.
A mall REIT that fits that description and is popular among analysts surveyed by FactSet is Simon Property Group, Inc. SPG, +1.33% , which has a mean overweight rating and a price target about 19% higher than current trading levels.
Another area he’d consider is health care, which is less sensitive to the economic cycle.
But as with so many considerations surrounding REITs, the specific details seem to trump the logic of the fundamentals.
Sabra Health Care REIT, Inc. SBRA, +2.23% , down about 7.5% for the year to date, has an overweight rating among FactSet analysts and a target price of $20.60, nearly 20% higher than current trading levels. Sabra has strong geographic diversification across the U.S., and properties in senior living, skilled nursing and specialty hospitals. It also boasts a dividend yield of 10.3%.
Still, in a recent note, Raymond James analysts wrote that Sabra’s “discounted valuation” was “attractive,” but that they were still “staying on the sidelines.”
“Skilled nursing facilities continue to face challenging fundamentals (decreasing lengths of stay, pressure on reimbursement rates, increasing regulatory pressures, difficult labor market),” they added. “While the ‘aging of America’ and massive demographic shift will eventually overcome these headwinds, we have yet to see an inflection in skilled nursing occupancies that would warrant a more favorable outlook for the stock.”
In contrast, Michael Underhill, chief investment officer at Pewaukee, Wis.-based Capital Innovations, LLC was bullish on REITs in December. While Underhill still believes most investors could benefit from some exposure to real estate in the form of REITs, he advocates being “surgical” about which to pick.
Underhill likes single-family rental REITS as a housing call. “We’ve got a housing shortage and you don’t have enough product and that’s holding back the buyers,” he said. “The single-family rental space in the mid-market to lower mid-market will be interesting because those types of buyers don’t have a significant amount of wealth put aside to purchase. The consumer will be renting rather than buying out of necessity.”
Read: We’re still building the wrong kind of homes for renters
Invitation Homes INVH, +0.31% is the leader in the single-family rental space, with about 82,000 homes of the roughly 200,000 held by institutional investors. The stock has a buy rating among FactSet analysts and a target price of $25.86, 14% higher than its Wednesday trading levels.
Outside of housing, Underhill isn’t buying the retail thesis. “We’re not buyers at these levels,” he told MarketWatch. “They could be a value trap. I don’t feel comfortable going into a sector that’s seeing a once-in-a-generation transition. Conversely, health care, that’s not a value trap, that’s growth on sale.”
Still, just as Daskin thought bonds were a better buy over REITs back in December, some analysts echo that idea now.
“In the near term, interest-rate rises may continue the trend of investors transitioning assets from premium income, higher risk products (like REITs) toward safer income-producing assets (bonds). Therefore, we are not adding to our REIT allocations at this time,” Jeremy Bryan, portfolio manager at Gradient Investments, told MarketWatch.
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>>> American Tower Corporation (ATC) is a holding company. The Company operates as a real estate investment trust (REIT), which owns, operates and develops multitenant communications real estate. ATC's segments include U.S. property, Asia property, EMEA property, Latin America property, Services and Other. Its primary business is property operations, which include the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities, and tenants in various other industries. Its U.S. property segment includes operations in the United States. Its Asia property segment includes operations in India. The EMEA property segment includes operations in Germany, Ghana, Nigeria, South Africa and Uganda. The Latin America property segment includes operations in Brazil, Chile, Colombia, Costa Rica, Mexico and Peru. Its services segment offers tower-related services in the United States. <<<
>>> Verizon Communications Inc. Stock is a Dividend Investor’s Dream
There's a bull case for why Verizon is primed for growth
Nov 1, 2017
By Chris MacDonald
https://investorplace.com/2017/11/verizon-communications-inc-stock-is-a-dividend-investors-dream/#.WgfAV8KWzht
Verizon Communications Inc. (NYSE:VZ) is a difficult company for many long-term investors to own due to the tectonic plates of the wireless and telecommunications industry that remain in a constantly shifting state. VZ stock is down more than 10% going into the final two months of the year.
A series of price wars has ensued between VZ and its largest competitors in a bid to stave off what would has become an all-out assault on traditional television, cable, and FiOS video providers. This past quarter, VZ lost 18,000 FiOS customers, 5% more than analyst estimates for the segment.
With margin erosion and long-term headwinds prevailing for many of the core businesses operated by VZ, it can be difficult to put a bull case together for the company.
Investors have begun to flee VZ stock in favor of companies with perceived advantages in their sectors, largely ignoring many of the key growth initiatives which stand to create a new VZ more in line with what consumers are looking for and where consumers are spending their money.
In this article, I’m going to discuss a few of the factors I believe will set VZ apart from its competitors, and why VZ remains very attractively valued when considering the company’s dividend and future cash flow generating abilities.
Where’s the Long-Term Value in Verizon
VZ’s core product offerings have done well of late, and despite dropping more than 10% since Jan. 1, VZ has posted a solid rally since late summer when the company dipped below $43 per share on news that subscriber growth outpaced analyst expectations and was among the best of its peers. During the company’s fiscal third quarter, more than 600,000 wireless customers were added to VZ’s platform, a number which was boosted (at least temporarily) by all-you-can-use unlimited data plans introduced earlier this year.
Besides spurring higher-than-expected top- and bottom-line performances for the previous quarter, what is particularly notable is that this increase is likely to result in some investors giving VZ more rope as the company rolls out new initiatives linked to its recent acquisitions of Yahoo! Inc. and AOL, Inc. (which have now been rolled into Oath). The goal will be for VZ to grow its online advertising business to challenge rivals Alphabet Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB) in this high-margin space, an attractive opportunity which deserves to be fairly valued.
VZ will also continue its search for a partner in its bid to launch an online television service, a project which has been delayed several times already and may continue to be postponed. With the devil in the details in rolling out a massive project like this, I anticipate many investors will sleep better knowing VZ’s management team is taking its time in rolling this out to avoid a failure which may be catastrophic for the organization. This will be the major “make-or-break” project for VZ in the upcoming quarters.
VZ Still a Best-of-the-Dow
In terms of fundamentals, VZ remains one of the best companies currently in the Dow Jones Industrial Average. It is hard to miss VZ stock’s massive dividend of nearly 5%, a dividend which has grown as the stock’s value has declined in the last 10 months.
In terms of valuation, VZ remains cheaply valued at approximately 10x operating cash flow. While the company does carry a large debt load, as is commonplace in the industry, its recent acquisitions have not served its liquidity ratios well, and management will need to continue to monitor the company’s debt load accordingly.
With top-line numbers continuing to improve and the company’s gross and net margins remaining very robust, it is important to note that the majority of analysts believe Verizon remains in a solid position to take advantage of future capital intensive opportunities at its current state.
Bottom Line on VZ Stock
Verizon is a company with excellent potential for growth in a mature industry with relatively simple cash flows to value looking forward. With analyst estimates for growth somewhat muted, and perhaps not encompassing many of the growth initiatives underway, I expect room for increased valuation multiple expansion as market sentiment for VZ stock becomes increasingly more bullish.
A strong balance sheet supports a management team with a proven track record (three decades’ worth) of returning value to shareholders in the form of a robust and growing dividend. Long-term income-focused investors should consider picking up shares of VZ on any dips moving forward as the company continues its transition toward utilizing its asset base more effectively.
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>>> Philip Morris hopes smokeless is the new smoking
By Saabira Chaudhuri
Nov 6, 2017
https://www.marketwatch.com/story/philip-morris-hopes-smokeless-is-the-new-smoking-2017-11-06?siteid=bigcharts&dist=bigcharts
‘Heat not burn’ products have become an obsession for the company’s CEO
Bloomberg
Philip Morris International is hoping smokers will prefer IQOS, which heats tobacco, instead of existing e-cigarette options that heat a nicotine-laced liquid but contain no tobacco.
Cigarette maker Philip Morris International Inc. PM, +0.55% is betting big on smokeless products with a device called IQOS that heats but doesn’t burn tobacco.
The number of cigarettes big companies sell is declining and, with regulations continuing to tighten, the companies are focused on future-proofing their business, investing in e-cigarettes and “heat not burn” products that they say are less harmful than traditional cigarettes. Philip Morris has joined with Altria Group Inc. MO, +0.79% to apply for Food and Drug Administration approval to market IQOS in the U.S. as a less risky alternative to cigarettes.
Philip Morris, spun off from Altria in 2008, sells cigarettes only outside the U.S.; Altria sells cigarettes only in the U.S. If Philip Morris’s IQOS wins FDA approval, it will be sold in the U.S. by Altria in a licensing agreement with Philip Morris, which will receive royalties from U.S. sales.
Making IQOS—pronounced eye-koss—a success has become an obsession for the company’s chief executive, André Calantzopoulos.
A tobacco industry lifer and former smoker, Calantzopoulos is a walking advertisement for his new product, puffing away on the cigarette-shaped device through the day. He’s counting on lower taxes and looser marketing restrictions than those levied on traditional cigarettes to push smokers to switch to these new, higher-margin products.
He’s also betting many smokers will prefer IQOS, which heats tobacco, to existing e-cigarette options that heat a nicotine-laced liquid but contain no tobacco, making for an experience that’s less like traditional smoking.
Philip Morris has poured money into clinical trials that have shown IQOS is safer than smoking. The company maintains that combustion, rather than the tobacco or nicotine in cigarettes, is what’s harmful. Critics say more long-term studies and independent research are needed to evaluate IQOS’s health effects.
The company in January relaunched its website, stripping away prominent mentions of big moneymakers like Marlboro and Benson & Hedges cigarettes and touting its decision to “develop, market, and sell smoke-free alternatives, and switch our adult smokers to these alternatives, as quickly as possible around the world.” In September, Philip Morris pledged $1 billion to create a foundation to encourage people to switch to smoke-free alternatives.
Critics note the company is still aggressively selling traditional cigarettes while challenging display bans and rules in some places that require plain packaging with graphic health warnings.
“I don’t see any sign at all they’re backing off the very aggressive effort to sell as many traditional Marlboros to as many people as they can,” says Matthew Myers, head of the Campaign for Tobacco-Free Kids.
In an interview with The Wall Street Journal, Calantzopoulos discussed how Philip Morris sees the future of smoking and why he thinks IQOS is the key to the company’s success. Edited excerpts follow.
Filling a gap
WSJ: With e-cigarettes already available in so many markets, why do we need IQOS?
Calantzopoulos: The problem we had with electronic cigarettes since the beginning of development was the satisfaction of the smoker. Because the taste is dramatically different and, at the initial stages, the nicotine pharmacokinetics were very slow. You could not get the satisfaction. It’s not so easy to crack this code.
The taste satisfaction is very important. The closest you are to this, the more chances you have to switch people. It’s very nice to have a zero-risk product, but if nobody uses it, you don’t have any reduction in public health risk.
Which markets are likely to be the biggest ones for these new, alternative products?
Calantzopoulos: When you look at the potential of these products you need to understand what is the readiness of smokers to switch. That relates to public-health concerns, social pressure, concern for people around you and many other more subtle things. You cannot say that Indonesia is at the same level of readiness as the U.K, Western Europe or the U.S.
The potential is in every market, because eventually I think people will switch to these products as they become available. There are two unmet needs in smokers: something that is much better for my health and something that bothers others much less or doesn’t bother them. These are things cigarettes can’t resolve. These new products are developed to address these needs.
What’s more profitable for you, IQOS or traditional cigarettes?
Calantzopoulos: Today it’s IQOS because of the lower taxes.
You say you don’t want to encourage new cigarette smokers. If that’s true, will you have a business in 40 years? What’s the long-term plan?
Calantzopoulos: First, I don’t think it’s 40 years we’re talking about here. It’s much longer. Second, we only have, if you include China, a 15.4% share of the world [cigarette market outside the U.S.] With [alternatives to traditional cigarettes] we have seen we can grow our market share even if the market reduces. Plus we’ve started introducing accessories for the product.
At over $100 for the starter kit, IQOS isn’t cheap. Can you explain your pricing strategy?
Calantzopoulos: Innovation, in the minds of people, cannot be something extremely cheap. If you are an average person and you hear that something that is much better than cigarettes comes to the market at the cheapest possible price, you’ll not trust it. This is the reason we didn’t initially manufacture in China, because you need to create that credibility.
Over time you need to make the products available and affordable to different categories of people.
The big shift
You redesigned your website recently to describe yourself as “committed to a smoke-free future” even though most of your business is still in traditional cigarettes. Why?
Calantzopoulos: We developed the website because we needed to make clear to our own stakeholders and employees here that this is the direction of the company.
This is not an easy thing, because we are entering into a territory that is very unknown. It’s not your traditional competitors.
Our industry has been a fairly linear and predictable industry. You know what’s going to happen every year. You know from time to time you are going to have a tax increase, you are going to have regulatory restriction, but, as it applies to everybody, I think we are doing very well.
But now you move to a model that from linear can become exponential for a period of time. It’s much more technology-driven, much more digital-driven. Competitors other than our traditional competitors can come in, whether legitimate or fly-by-night ones, and you have to anticipate all those things. We are the first ones to be in the category, so we anticipated quite a lot. We are learning every day. The whole organization has to gear up to this new reality and these new competitive rules around it.
There are still many regions of the world where you’re actively trying to grow revenues in your traditional cigarette business. How do you reconcile those actions with your mission statement of switching adult smokers to alternatives as quickly as possible?
Calantzopoulos: Shifting the company to these products doesn’t mean that I will give market share to my competitors free of charge. In the markets where we are not present with IQOS yet or the other reduced-risk products, you still need to defend your share of the market.
They still represent the bulk of our income, and so far they have financed the billions of dollars we have put behind these new products. But once we go national in a market, and absent capacity constraints, then you shift your resources and your focus to these new products.
But isn’t there an inherent contradiction here? Your new efforts are being funded by your traditional cigarette business, so it’s important that you keep that going.
Calantzopoulos: Take a market like Indonesia as an example. If I just take my foot off the pedal completely, nothing is going to happen to the total market except that I lose share.
The logic says you don’t do this until you go with IQOS.
We are focusing the organization much more on the new business. We will have very few new traditional product introductions, and as markets switch to IQOS we would remove resources [from the old business] completely.
Next year IQOS becomes profitable, so even the financing from these traditional businesses isn’t necessary anymore, because it becomes fully self-sustaining.
What should the regulatory environment look like for cigarettes and these new products?
Calantzopoulos: It’s pretty clear that we will need measures to accelerate the conversion to new products. Governments can either make measures even worse for cigarettes or do something different on these [new] products to show consumers they are different. I think they should do both.
I think over time the fiscal environment on cigarettes will become different, and the regulatory environment has to differentiate the products. If that is at the expense of cigarettes, so be it—it’s not a problem for me. But we need some logical forum where we don’t talk ideology but rather we talk about what can really accelerate the conversion. If you do display bans everywhere in the world on cigarettes but you can display IQOS, that’s a differentiating measure for me. Then I’m more than willing to accept these measures because they are really conducive to make people switch.
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>>> CEO says AT&T ‘prepared to litigate’ over Time Warner acquisition
By Drew FitzGerald and Brent Kendall
Nov 9, 2017
https://www.marketwatch.com/story/ceo-says-att-prepared-to-litigate-over-time-warner-acquisition-2017-11-09
Justice Department reportedly seeks major divesture
AT&T Inc.’s T, +0.65% chief executive said Thursday he is prepared to go to court to defend the telecom giant’s proposed takeover of Time Warner Inc. TWX, +4.08% if settlement discussions with antitrust regulators fail.
“We are prepared to litigate now” if the companies can’t reach a negotiated settlement with the Justice Department, AT&T CEO Randall Stephenson said at an industry conference Thursday.
Stephenson said the company would continue to pursue a settlement but was prepared to litigate if it determined that the conditions of such a deal were worse than the outcome of a courtroom fight.
After a long antitrust review, the Justice Department recently raised the prospect that the telecom giant would have to divest either the Turner television unit or the satellite DirecTV business, said people familiar with the matter.
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Store Capital REIT - >>> What Is Warren Buffett’s Top Dividend Stock?
Matthew Frankel
The Motley Fool
October 22, 2017
https://finance.yahoo.com/news/warren-buffett-top-dividend-stock-120700551.html
Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) has a portfolio of dozens of common stocks, many of which were hand-picked by CEO Warren Buffett himself. Buffett is a big fan of reliable dividends, so as you may expect, many of the stocks in the portfolio are dividend payers.
However, some have high dividend yields, some pay Berkshire more money overall than others, and some have excellent track records of dividends. Berkshire's "top dividend stock" depends on how you define that term.
In terms of dividend yield, the top dividend stock in the portfolio is real estate investment trust (REIT) Store Capital (NYSE: STOR). On the other hand, the stock that pays Berkshire the most money each quarter is Kraft Heinz (NASDAQ: KHC). Finally, the Buffett stock with the longest track record of dividend increases is Coca-Cola (NYSE: KO).
Buffett's highest-yielding stock is a new addition to the portfolio
The highest-yielding stock in Berkshire's portfolio is also one of its newest investments. Real estate investment trust Store Capital pays a 4.8% dividend yield based on the current share price, and is the only REIT currently in Berkshire's portfolio.
Store Capital is a net-lease REIT specializing in single-tenant retail and entertainment properties. If you're not familiar, a "net lease" is a form of commercial lease where the tenant agrees to cover property taxes, insurance, and maintenance expenses -- pretty much all of the variable costs of property ownership. In addition, net leases typically have long initial terms -- 15 years or so -- which minimizes turnover risk.
In other words, all Store Capital has to do is put a tenant in place and enjoy years of predictable, growing income with minimal risk. This is a business model that has "Buffett" written all over it.
Berkshire's largest stock investment
Kraft Heinz is Berkshire Hathaway's single largest common stock investment. In fact, it's so big as a percentage of Kraft Heinz's outstanding shares (nearly 27%), Berkshire has to account for it differently than the rest of its stocks because of the amount of control it has over the company. In fact, Berkshire invested in Kraft Heinz along with 3G Capital, and the combined investment resulted in a majority stake. So it makes sense that it's also Berkshire's largest dividend payer.
Berkshire's Kraft Heinz stake generates $814 million per year in dividend income for the company. The merger between Kraft Foods and Heinz created many cost advantages and also created a massive portfolio of well-known brand names. In addition to its two flagship brands, Kraft Heinz also owns the Oscar Mayer, Maxwell House, and Lunchables brands, just to name a few.
Buffett is a big fan (and customer) of Coca-Cola
Technically speaking, Procter & Gamble is the Buffett stock with the longest streak of dividend increases. However, Berkshire has mostly exited its position in the company, and the remaining $29 million stake is quite negligible in a $183 billion stock portfolio.
As far as Berkshire stocks that make up a significant portion of the portfolio, few even come close to Coca-Cola's 54-year streak of annual dividend increases. With 400 million shares that represent a 9.4% stake in the beverage giant, Coca-Cola is one of Berkshire's largest stock investments, and one that Buffett has been a fan of for many years.
It's easy to see some of the Buffett-like qualities that Coca-Cola has. For one thing, it has one of the most valuable brands in the world that gives the company pricing power over rivals. According to Interbrand's 2017 rankings, Coca-Cola is the fourth most-valuable brand name in the world, worth nearly $70 billion.
In addition, Coca-Cola has an amazing distribution network that results in cost advantages, and Buffett is a firm believer in the company's products. In fact, he has said that about one-fourth of his daily calories come from Coca-Cola soft drinks.
Finally, Coca-Cola is a business that essentially runs itself at this point, something Buffett loves in long-term investments. Buffett has famously said that a "ham sandwich" could run Coca-Cola -- meaning that no matter who is in the CEO chair, the company should perform just fine.
Why Buffett loves dividends so much
Warren Buffett's portfolio has many dividend stocks, and he loves reliable dividend stocks for the same reasons most investors do -- they generate a consistent stream of income that can be used for whatever Berkshire needs the capital for at the time. Dividends can be reinvested to maximize the power of compound returns, or they can be used for income to cover expenses.
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>>> Orchids wins big contract
Higher-end work will put new client among tissue maker’s top five
by Geert De Lombaerde
09-01-17
http://www.nashvillepost.com/business/area-stocks/article/20974369/orchids-wins-big-contract
Executives with Orchids Paper Products say they have landed a big new customer that will help their new South Carolina plant ramp up operations.
In a filing with regulators, Orchids leaders don’t identify their new client, which is in a new distribution channel and has asked Orchids to make ultra-premium products starting late this year. But they expect that, once fully up and running next spring, the relationship will be one of their five largest and will — combined with some other recently won business — push Orchids’ revenue run rate to between $220 million and $240 million. Last year, the company’s sales totaled $164 million, with Dollar General and Family Dollar accounting for more than half of that number.
“We are extremely pleased to have qualified ultra-premium products on our new tissue machine,” President and CEO Jeff Schoen said in a statement. “We are also pleased to have added a new customer in a new distribution channel that we believe will help Orchids diversify its business and will move Orchids rapidly toward meeting its long-term goals.”
Brentwood-based Orchids spent $150 million on its new factory in Barnwell, South Carolina, and started operations there earlier this year. Through the first six months of this year, the company posted a net loss of $2.9 million on sales of nearly $74 million.
Shares of Orchids (Ticker: TIS) rose more than 3 percent Thursday to $10.20. They are, however, still down nearly 30 percent over the past three months. <<<
>>> Retail Meltdown Demolishes Mall Investors
by Wolf Richter
May 9, 2017
http://wolfstreet.com/2017/05/09/retail-meltdown-demolishes-mall-reit-investors/
Even the biggest.
The closure of thousands of retail chain stores last year and this year, with many more to come – from big anchor tenants such as Macy’s to smaller stores such as Payless Shoes – and the bankruptcies and debt restructurings ricocheting through the industry are having an impact on retail malls. And mall investors – that may include your retirement account – are getting crushed.
The commercial real estate industry has been claiming that these shuttered retail spaces are being converted into restaurants or fitness centers or smaller shops or whatever. And zombie malls are leasing out their parking lots to car dealers to store their excess new vehicle inventory, and that everything is going to be fine.
But investors in publicly traded Real Estate Investment Trusts that were for years among the stars in the S&P 500 are voting with their feet.
It’s not that these REITs are doing all that badly on an operational basis. They’re hanging in there. But many of the announced store closings and bankruptcies haven’t worked their way through the pipeline.
Shares of these REITs all peaked together at the very end of July 2016 and have since then plunged in unison.
Kimco Realty Corp (KIM) says it’s “one of North America’s largest publicly traded owners and operators of open-air shopping centers,” with “interests” in 517 shopping centers with 84 million square feet of retail space in 34 states and Puerto Rico. Shares fell 2.6% to $19.42 on Monday and 13% over the past month. They’re down 40% from the peak of $32.23 at the end of July 2016:
Macerich (MAC), with 54 million square feet of retail space at 48 regional shopping centers, calls itself “one of the country’s leading owners, operators and developers of major retail real estate.” It disclosed that revenues in Q1 fell 3.5% year-over-year, and that mall portfolio occupancy edged down to 94.3%, from 95.1% a year earlier.
It’s starting to feel the pain, but it’s not the end of the world. But its shares dropped 2.5% on Monday and 8.3% over the past month. They’re down 36% from the peak at the end of July, 2016:
Simon Property Group (SPG), “the world largest publicly traded real estate company,” as it says, fell 1% to $162.84 on Monday and 7% over the past month. It’s down 29% since the peak at the end of July. And this despite a massive share buyback program, that included buying back 870,692 shares in Q1:
GGP, formerly General Growth Properties, is also trying to use share buybacks to prop up its share price. In Q1, it bought back 2.57 million shares for $59.6 million. Nevertheless, shares fell 12% over the past month to $22.19 as of Monday and are down 30% from the peak at the end of July:
Federal Realty Investment Trust (FRT) has 98 malls with a total of 23 million square feet of retail space in “major coastal markets.” It also has over 1,800 apartments. So you gotta get creative during tough times. In its Q1 earnings report, it said:
March 28, 2017 – Federal Realty announced its exclusive partnership with Freight Farms, a Boston-based company that retrofits shipping containers with vertical farming technology capable of growing acres’ worth of produce in a fraction of the space of traditional farms. The partnership empowers anyone to use this technology while repurposing Federal Realty’s unused parking spaces as a place to locally and sustainably produce food that benefits the shopping centers’ tenants, customers, and community.
Its shares fell 1.8% on Monday and 3% over the past month. They’re down 24% from the peak at the end of July 2016:
Regency Centers Corp (REG), with 429 shopping centers totaling 57.2 million square feet of retail space, focuses on “grocery-anchored retail centers located in the most attractive U.S. markets.” Its shares fell 1.9% to $61.49 on Monday and 8% over the past month. They’re down 28% from the peak at the end of July:
This is how the brick-and-mortar pain is translating into pain for mall-REIT investors. But why have share prices gotten crushed when, operationally, the REITs are still hanging in there and are paying fat dividends? That can best be answered by a look at the meteoric rise of those shares over the years leading up to July 2016.
Some of the share prices more than doubled over those years, as part of the commercial property bubble that got so huge that the Fed keeps publicly fretting about it, naming it as one of the reasons for raising interest rates, precisely to tamp down on the valuations. The Fed is worried that an implosion of these inflated commercial property values can take down the banks.
Mall REITs were part of this inflated commercial property universe, and they soared with it. That entire universe is now peaking. But separately, mall REITs are also caught up in the relentless brick-and-mortar retail meltdown, as online shopping is taking over. This is a structural shift that will continue to progress. Mall owners are already trying to find a way to “repurpose” their malls. But this isn’t going to be smooth.
As so many times, Private Equity firms are in the thick of it. Read… I’m in Awe of How Fast Brick-and-Mortar Retail is Melting Down
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>>> Johnson & Johnson -
http://www.kiplinger.com/slideshow/investing/T018-S015-5-safe-dividend-stocks-to-buy-for-retirement/index.html?rid=SYN-yahoo&rpageid=16183&yptr=yahoo
Dividend yield: 2.8%
Johnson & Johnson (JNJ) is one of my personal favorites among retirement-focused dividend stocks, and full disclosure: I own it myself.
JNJ straddles two critical sector of the economy in healthcare and pharmaceuticals. Both in and of themselves also intersect, which brings us to the key point behind JNJ’s longevity, strength, and investment selling point: its Consumer, Pharmaceutical and Medical Devices divisions.
Pharmaceuticals and Medical combine to make up just more than 80% of total revenues, so clearly, healthcare is the biggest driver of JNJ. But having essentially 20% exposure to consumer products buffers Johnson & Johnson from significant economic or sector downturns, including a recent turndown in the medical sector.
A key to JNJ’s longevity, and that of any pharm stock of course, is its pipeline of future medicines and drugs. Here, the company has several late-stage trial drugs, which includes additional indications for already-approved myleoma treatment Imbruvica and heart treatment Xarelto.
Johnson & Johnson’s biggest claim to dividend fame, of course, is its standing as a Dividend Aristocrat, having raised its payout for 54 consecutive years, including a 6.7% bump in 2016.
Free cash flow has been steadily on the rise, including just less than $16 billion in FCF in 2015. Meanwhile, Johnson & Johnson just used $30 billion in cash to buy up Switzerland-based Actelion Ltd, a maker of products for pulmonary arterial hypertension … which means it still has a decent war chest of about $10 billion remaining.
JNJ trades about the same as the broader S&P 500, and offers long-term stability and income. This is a good time to strike.
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>>> PepsiCo -
http://www.kiplinger.com/slideshow/investing/T018-S015-5-safe-dividend-stocks-to-buy-for-retirement/index.html?rid=SYN-yahoo&rpageid=16183&yptr=yahoo
Dividend yield: 2.9%
If President Trump’s policies do indeed break the economy wide open for growth, consumer products giant PepsiCo, Inc. (PEP) is among the dividend stocks that will be on the front lines of prosperity.
PepsiCo management’s decision to expand its branding footprint well beyond it eponymous “Pepsi” soda lineup over the years has helped smooth over difficult times for the industry. In fact, Pepsi is more than beverages, also boasting a massive snack line that has taken some of the sting out of the weakening popularity of sugary beverages.
Buried within each of PepsiCo’s six divisions are brand names that will stand the long-game test of time: Aquafina water, Gatorade sports drinks, Tropicana and Ocean Spray juice products, Aunt Jemima pancakes, Cap’n Crunch cereal, Cheetos, Cracker Jack, Diet Pepsi, and Diet Sierra Mist are among the standouts.
PepsiCo isn’t afraid to spend, either — PEP poured out $4 billion on advertising and $700 million on R&D in 2015 — so its brands should continue to saturate both the markets and consumers’ brains with each commercial or product promotion.
PepsiCo isn’t among the highest-yielding dividend stocks for retirement. Instead, it’s a dual play on both price appreciation and dividend growth.
Indeed, PepsiCo’s 2016 dividend hike to 75 cents per share (quarterly) was its 44th consecutive annual raise. Free cash flow was just under $8 billion last year, plus Pepsi has about $15 billion in cash and short-term investments, so financially, PEP is bulletproof. Better still, PepsiCo’s dividend payout ratio of 63% leaves way more room for dividend hikes than The Coca-Cola Co.’s (KO) 83% payout.
While PepsiCo isn’t terribly cheap, at 20 times forward earnings, it’s still a hair less expensive than KO, and PEP offers much better earnings growth prospects (6% vs. 2% over the next five years) to boot.
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>>> Consolidated Edison -
http://www.kiplinger.com/slideshow/investing/T018-S015-5-safe-dividend-stocks-to-buy-for-retirement/index.html?rid=SYN-yahoo&rpageid=16183&yptr=yahoo
Dividend yield: 3.8%
Well, if nothing else, Consolidated Edison, Inc. (ED) gets my mom’s stamp of approval: She has owned the dividend stock in her retirement portfolio since 1980.
ConEd primarily serves New York City and most of its northern suburbs, and has been around since 1832. Today it delivers gas, electric and steam service (think radiators) to more than 10 million customers, generating nearly $13 billion in revenue for 2016.
New York and its suburbs continue to grow in population, housing starts are up, NYC is still home to a multitude of corporate headquarters locations, and tourists still flock to the Big Apple in droves. But ConEd isn’t simply resting on what the New York area has to offer.
To start, ConEd is working to find ways to produce cleaner energy that costs less for it to produce, like a customer-centric program in Brooklyn and Queens that’s helping to provide customers with incentives to lower costs instead of needing to build a $1 billion substation. ConEd is also building out an Advanced Metering Infrastructure program — a smart meter technology that will help identify local power generation problems and possible power outages more quickly for customers, allowing ConEd to administer services more quickly.
What ConEd lacks in size — for comparison, Duke Energy Corp. (DUK) runs at about $23b per year — it makes up for in steady net income of just over $1 billion per year over the past few years, and grown profits for the past three years. Steadier still is ED’s operating cash flow of over $3 billion — a tidy sum considering its $12 billion in revenue.
ED’s payout ratio is nearly 65%, but for a utility company, that’s not terribly high. Southern Co. (SO) and Duke Energy clock in above 80%. So ConEd has a bit more room to improve its dividends. Indeed, Consolidated Edison has increased earnings for 42 consecutive years, including a 3% hike recently to 69 cents
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>>> Collectors Universe Inc. provides third-party authentication, grading, and related services for rare and high-value collectibles consisting of coins, trading cards, sports memorabilia, and autographs. The company operates through three segments: Coins; Trading Cards and Autographs; and Other High-End Collectibles. It offers independent coin authentication and grading services under the Professional Coin Grading Service brand; independent sports and trading cards authentication and grading service under the Professional Sports Authenticator brand; and independent authentication and grading service for vintage autographs and memorabilia under the PSA/DNA Authentication brand. The company also operates certified coin exchange, a subscription-based business-to-business Internet bid-ask market Website, certifiedcoinexchange.com that includes approximately 100,000 bid and ask prices for certified coins; and collectors corner, a business-to-consumer Website, collectorscorner.com, which consists of approximately 108,000 collectibles for sale. In addition, it publishes magazines that provide market prices and information for certain collectibles and high-value assets, which are accessible on its Websites; and authoritative price guides, rarity reports, and other collectibles data to provide collectors with information. Further, the company sells advertising and click-through commissions on its Collectors.com Website, as well as in the magazines; and manages and operates collectibles trade shows and conventions. Collectors Universe Inc. was founded in 1986 and is headquartered in Santa Ana, California. <<<
>>> Sovran Self Storage Acquires LifeStorage for $1.3 Billion
Sovran Will Rebrand Itself from 'Uncle Bob's' to 'Life Storage'
By Mark Heschmeyer
July 18, 2016
http://www.costar.com/News/Article/Sovran-Self-Storage-Acquires-LifeStorage-for-$13-Billion/183464
Sovran Self Storage Inc. completed its acquisition of LifeStorage LP, a privately-owned self-storage operator, for $1.3 billion.
Following its acquisition, Buffalo, NY-based Sovran Self Storage plans to rebrand its 563 storage facilities it currently operates as Uncle Bob’s to Life Storage. The REIT also plans to change its corporate name from Sovran Self Storage to Life Storage Inc. and its ticker symbol on the New York Stock Exchange from SSS to LSI.
"The LifeStorage properties are a tremendous addition to our portfolio,” said Sovran CEO David Rogers. "We’ve added 84 Class A stores to our portfolio, 55 of which are in some of our already established key markets. We’ve also gained a presence in two new markets: Las Vegas and Sacramento, CA.”
The newly acquired facilities add 25 properties in Chicago, 19 in several Texas markets, including eight in Austin and five in Dallas, and three each in Orlando and Los Angeles. The acquisition also gives the firm entry into Las Vegas with 17 facilities, and Northern California with 10 facilities, where the company said it plans to pursue the acquisition of additional properties.
The REIT now operates approximately 650 self-storage facilities in 29 states.
The deal highlights the active investor interest the self-storage sector has received recently. This spring, Toronto-based Brookfield Asset Management Inc. and its institutional partners acquired Orlando-based Simply Self Storage for about $830 million. Simply Self Storage has over 15 million square feet of storage space with over 192 operating facilities.
Crow Holdings Capital-Real Estate, a Dallas-based asset manager of private equity real estate funds, this month announced it plans to expand its investment activities in the self-storage property sector. As of April 1, 2016, CHC had acquired or provided joint venture development equity for 14 self-storage facilities, representing 9,780 units and nearly 1.1 million net rentable square feet across the U.S.
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>>> 6 Dividend ETFs of 2016 with Over 3% Yield & 20% Returns
Sanghamitra Saha
Zacks
December 22, 2016
http://finance.yahoo.com/news/6-dividend-etfs-2016-over-163804528.html
Dividend investing is among the investing themes that are on a tear this year amid piles of uncertainty. Wall Street saw the worst start ever to a year in 2016 on the Chinese market crash and recovered modestly thereafter.
However, risk-off sentiments still prevailed with constant global growth issues especially deflationary fears in Japan and the Euro zone, ambiguity over the Fed rate hike momentum, Brexit in June, oil price volatility and uncertainty over the next U.S. president.
As a result, high risk securities were on the edge in the initial phase of this year, except for some occasional relief rallies. For obvious reasons, the drive to safety has given a boost to demand for U.S. treasuries this year, and took the benchmark 10-year U.S. Treasury bond yields to record lows in July (read: Global Treasury Yields Dive: Play These Sector ETFs).
No wonder, such a low dividend yield would spur investors to rush to dividend destinations. Also, the wave of easy money polices across the developed world, and negative interest rates in a number of economies including the Euro zone and Japan brightened the appeal for dividend investing.
Agreed, things turned around from November with Trump’s election win and the consequent initiation of an astounding stock market rally. Hopes of fiscal reflation in the Trump presidency pushed up bond yields rapidly (read: Top and Flop ETFs of November).
Putting some more energy into the rally, oil prices recovered to an over $50-level from $30 a barrel in February thanks to an OPEC output cut deal. The Fed also executed the sole rate hike of 2016 in mid-December, taking the benchmark 10-year U.S. Treasury yield to 2.55% on December 21 and marring the flair for dividend investing on average (read: Is the Dividend ETF Bull Run Over?).
But still this segment has been in the winners club from a year-to-date look with products like ProShares Russell 2000 Dividend Growers SMDV gaining about 31% so far this year (as of December 21, 2016) against 10.7% returns offered by SPDR S&P 500 ETF SPY.
Inside Dividend ETF Winners with at least 3% Yield & 20% Returns
We thus highlight a few ETFs with over 3% yield and at least 20% year-to-date returns. Take a look at the list. These funds can make you rich even in 2017 if Trump’s administration doesn’t match the expectations of the market, OPEC deal fails to stand up or Fed’s policy tightening goes back to the sluggish mode all over again.
PowerShares Russell 2000 Pure Value ETF PXSV – Up 33.9%
The fund looks to track stocks with strong value features that are within the Russell 2000 Index. It charges 39 bps in fees and yields 3.16% annually (as of December 21, 2016). Financials (38.6%) and Energy (17.8%) are the top two sectors of the fund. No stock accounts for more than 1.60% of the fund.
PowerShares High Yield Equity Dividend Achievers Portfolio PEY – Up 27.9%
This ETF tracks the NASDAQ US Dividend Achievers 50 Index, focusing on 50 stocks for exposure. Securities are selected for this fund based on their dividend yield, and their consistency in hiking dividends. The fund yields about 3.12% annually (read: 4 High Dividend ETFs Under $20).
Oppenheimer Ultra Dividend Revenue ETF (RDIV) – Up 26.1%
The product is made up of 60 securities with the highest average quarterly dividend yield over the past 12 months, which are then reweighted according to the revenues of the company. The fund is heavy on utilities with about 22.2% focus while consumer cyclical (18.8%), communications (16.7%) and consumer non-cyclical (10.8%) round out the top four spots. The Zacks #2 ETF yields 3.17% annually (as of December 21, 2016).
AdvisorShares Athena High Dividend ETF DIVI – Up 21.5%
This actively managed ETF is heavy on North America (74%) followed by Latin America (10%) and Europe (6%). No stock accounts for more than 3.42% of the fund. It yields about 3.27% annually and charges 99 bps in fees.
SPDR S&P 500 High Dividend ETF (SPYD) – Up 20.6%
This fund charges 12 bps in fees and looks to track the S&P 500 High Dividend Index. The fund yields about 5.24% annually and does not put more than 1.78% in any stock. It yields about 5.24% annually.
PowerShares KBW Premium Yield Equity REIT Portfolio KBWY – Up 20.6%
The underlying index of the fund follows a dividend yield weighted methodology that looks to track the performance of about 24 to 40 small- and mid-cap equity REITs in the U.S. It yields about 6.71% and charges 35 bps in fees (read: Top Sector ETFs of Summer).
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>>> CMS Energy Corporation (NYSE:CMS) increased its quarterly dividend by 7%, raising its payment from 31 cents per share to 33.25 cents. Shareholders of record as of Feb. 3 will receive dividends from the electric and gas utility company on Feb. 28. CMS shares will be ex-dividend on Feb. 1.
CMS Dividend Yield: 3.2%
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http://investorplace.com/2017/01/dividend-stocks-o-cvs-realty-income-corp-cvs-health-corp/#.WINyzMIzXhs
>>> Consolidated Edison, Inc. (NYSE:ED) increased its quarterly dividend by 3% to 69 cents per share from 67 cents. Shareholders of record as of Feb. 15 will receive dividends from the electric and gas utility on March 15. The company’s shares will go ex-dividend on Feb. 13.
ED Dividend Yield: 3.8%
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http://investorplace.com/2017/01/dividend-stocks-o-cvs-realty-income-corp-cvs-health-corp/#.WINyzMIzXhs
>>> 9 Dividend Stocks Increasing Payouts — O CVS SHLX ED PSXP ZTS VNO CMS EQM
http://investorplace.com/2017/01/dividend-stocks-o-cvs-realty-income-corp-cvs-health-corp/#.WINyzMIzXhs
O and CVS were among the notable dividend stocks raising their payouts last week
By Simply Safe Dividends
Jan 21, 2017
After a blistering rise immediately following the election in November, the S&P 500 Index has remained range-bound for more than a month. Investors were awaiting President Donald Trump’s inauguration and a slew of earnings reports coming up later in January. Despite the market’s stagnation, a number of companies continued paying higher dividends to shareholders.
9 Dividend Stocks Increasing Payouts — O CVS SHLX ED PSXP ZTS VNO CMS EQMNine notable dividend stocks raised their payouts over the last week, including two real estate investment trusts, three energy services providers, two healthcare businesses and two utility companies.
Here are nine dividend stocks increasing payouts.
Realty Income Corp (NYSE:O) increased its monthly dividend by 4%, raising its payment to 21.05 cents per share from 20.25 cents. The retail-focused real estate investment trust will pay shareholders of record as of Feb. 1 on Feb. 15. The stock’s shares trade ex-dividend on Jan. 30.
O Dividend Yield: 4.2%
CVS Health Corp (NYSE:CVS) raised its quarterly dividend up from 42.5 cents per share to 50 cents, representing an 18% increase. The pharmacy benefit manager and retail chain will pay out its higher dividends to shareholders of record as of Jan. 24 on Feb. 2. CVS shares traded ex-dividend on Jan. 20.
CVS Dividend Yield: 2.4%
Shell Midstream Partners LP (NYSE:SHLX) raised its quarterly dividend by 5%, increasing it from 26.375 cents per share to 27.7 cents. The operator of crude oil pipeline systems will pay its higher dividend to shareholders of record as of Jan. 31 on Feb. 14. SHLX shares will trade ex-dividend on Jan. 27.
SHLX Dividend Yield: 3.6%
Consolidated Edison, Inc. (NYSE:ED) increased its quarterly dividend by 3% to 69 cents per share from 67 cents. Shareholders of record as of Feb. 15 will receive dividends from the electric and gas utility on March 15. The company’s shares will go ex-dividend on Feb. 13.
ED Dividend Yield: 3.8%
Phillips 66 Partners LP (NYSE:PSXP) announced a 5% increase to its quarterly dividend, raising it from 53.1 cents per share to 55.8 cents. Dividends will be paid from the provider of midstream energy services on Feb. 13 to shareholders of record as of Jan. 31. PSXP shares become ex-dividend on Jan. 27.
PSXP Dividend Yield: 4.3%
Zoetis Inc (NYSE:ZTS) rewarded shareholders with an 11% raise to its quarterly dividend, increasing it by a penny from 9.5 cents per share to 10.5 cents. Shareholders of record as of Jan. 20 will receive their higher dividends on March 1 from the manufacturer of veterinary drugs. ZTS shares went ex-dividend on Jan. 18.
ZTS Dividend Yield: 0.8%
Vornado Realty Trust (NYSE:VNO) moved its quarterly dividend higher by eight cents, increasing it by 13% from 63 cents per share to 71 cents. The office and residential real estate investment trust will pay its higher dividend to shareholders of record as of Jan. 30 on Feb. 15. VNO shares trade ex-dividend on Jan. 26.
VNO Dividend Yield: 2.7%
CMS Energy Corporation (NYSE:CMS) increased its quarterly dividend by 7%, raising its payment from 31 cents per share to 33.25 cents. Shareholders of record as of Feb. 3 will receive dividends from the electric and gas utility company on Feb. 28. CMS shares will be ex-dividend on Feb. 1.
CMS Dividend Yield: 3.2%
EQT Midstream Partners LP (NYSE:EQM) grew its quarterly dividend from 81.5 cents per share to 85 cents, representing a raise of 4%. The midstream energy services provider will pay its higher dividends to shareholders of record as of Feb. 3 on Feb. 14. EQM shares should trade ex-dividend on Feb. 1.
EQM Dividend Yield: 4.3%
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'Simply Safe Dividends' - link -
http://investorplace.com/author/simplysafedividends/#.WINyasIzXhs
Public Storage - >>> 10 Dividend Growth Stocks That Simply Print Money
http://www.kiplinger.com/slideshow/investing/T018-S015-10-dividend-growth-stocks-that-simply-print-money/index.html?rid=SYN-yahoo&rpageid=16086
Public Storage
Symbol: PSA
Dividend yield: 3.7%
FCF margin: 58.2%
5-year annual dividend growth: 15%
Public Storage is America’s largest storage unit REIT. It was founded in 1972, and now owns more than 2,500 properties in 38 states and seven European countries, serving over 1 million customers.
The great thing about this REIT, though, is that despite its enormous size, (which makes for very consistent cash flow to protect the fast growing dividend), there is plenty of growth runway ahead of it. That’s because the U.S. storage industry is incredibly fragmented, with Public Storage owning just 6% of the total market share in America.
That doesn’t stop management from turning its competitive advantages — namely its commanding lead in fast-growing markets such as the West Coast, Texas and Florida into a massive free cash flow machine.
This is courtesy of the month-to-month nature of the contracts PSA signs with customers, which allow it to consistently raise rents, and maximize margins and returns on shareholder capital.
Better yet, with a low 72.8% AFFO payout ratio, this is one of the most secure dividends in all of REIT-dom. PSA is well-situated to continue growing dividends at high single digits to low double digits for years to come.
And with an ultra-low beta of 0.45, indicating that this stock is 55% less volatile than the market in general, Public Storage offers dividend lovers one of the best risk-adjusted total return potentials of any dividend growth stock in America
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Teva - >>> 10 Dividend Growth Stocks That Simply Print Money
http://www.kiplinger.com/slideshow/investing/T018-S015-10-dividend-growth-stocks-that-simply-print-money/index.html?rid=SYN-yahoo&rpageid=16086
Teva Pharmaceutical
Symbol: TEVA
Dividend yield: 4%
FCF margin: 22.7%
5-year annual dividend growth: 8%
Teva Pharmaceutical Industries Ltd is one of the world’s largest generic drug makers. Its fully integrated production capabilities make it one of the few generics makers that can replicate complex molecules and even biosimilars — one of the most promising sectors in the pharma industry.
Better yet, some short-term troubles — including a slower-than-anticipated integration of Allergan’s (AGN) generic drug division Actavis, which Teva recently bought for $40.5 billion — has resulted in lowered guidance and the market overreacting by selling off Teva’s shares to the tune of 45% in the past year.
This has created an appealing long-term buying opportunity.
Synergies from Actavis are expected to amount to $1.4 billion. Plus, Teva should achieve another $2 billion in ongoing cost cutting efforts set to boost the company’s already high FCF margin.
That should spell great news for dividend lovers, who already enjoy a generous and highly secure dividend. Better yet, with a low FCF payout ratio of just 31.2%, Teva has plenty of room to continue growing its payout at a solid clip as it continues its efforts to expand its market share in both developed and emerging markets.
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Philip Morris - >>> 10 Dividend Growth Stocks That Simply Print Money
http://www.kiplinger.com/slideshow/investing/T018-S015-10-dividend-growth-stocks-that-simply-print-money/index.html?rid=SYN-yahoo&rpageid=16086
Philip Morris International
Symbol: PM
Dividend yield: 4.6%
FCF margin: 25.8%
5-year annual dividend growth: 8%
Philip Morris International Inc. holds all the international rights to sell dominant cigarette brands such as Marlboro, and this gives it a wide moat with plenty of pricing power to offset the gradual declines in cigarette volumes over time.
In fact, in the past year, PM was able to increase the price of its products by a very impressive 5%, resulting in constant currency EPS growth of 18%.
Better yet, Philip Morris is finding great success in its smokeless tobacco product, iQOS, in which tobacco is heated but not burned. That should provide PM with solid continued long-term growth potential as global consumers migrate away from cigarettes and towards electronic alternatives.
And with massive economies of scale, and ongoing cost cutting efforts Philip Morris International should be able to maintain its exceptional margins, including operating margins in the low to mid-40% range.
Combined with a low-capital-intensive business model, PM generates exceptional FCF per share that makes the current generous dividend not just highly secure, but likely to keep growing steadily in the years to come.
Philip Morris’ high yield makes it a favorite holding for investors living off dividends in retirement.
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Name | Symbol | % Assets |
---|---|---|
Johnson & Johnson | JNJ | 3.75% |
Procter & Gamble Co | PG | 3.47% |
JPMorgan Chase & Co | JPM | 3.08% |
Verizon Communications Inc | VZ | 2.45% |
Pfizer Inc | PFE | 2.05% |
Walmart Inc | WMT | 2.01% |
AT&T Inc | T | 2.00% |
Comcast Corp Class A | CMCSA | 1.99% |
Merck & Co Inc | MRK | 1.97% |
Intel Corp | INTC | 1.95% |
Name | Symbol | % Assets |
---|---|---|
Qualcomm Inc | QCOM | 4.38% |
BlackRock Inc | BLK | 4.33% |
Texas Instruments Inc | TXN | 4.19% |
United Parcel Service Inc Class B | UPS | 3.98% |
Pfizer Inc | PFE | 3.97% |
PepsiCo Inc | PEP | 3.93% |
3M Co | MMM | 3.90% |
Coca-Cola Co | KO | 3.87% |
Verizon Communications Inc | VZ | 3.84% |
International Business Machines Corp | IBM | 3.69% |
Name | Symbol | % Assets |
---|---|---|
AT&T Inc | T | 9.13% |
Exxon Mobil Corp | XOM | 8.47% |
Johnson & Johnson | JNJ | 6.53% |
Verizon Communications Inc | VZ | 6.47% |
Chevron Corp | CVX | 5.60% |
Pfizer Inc | PFE | 5.55% |
Coca-Cola Co | KO | 4.07% |
PepsiCo Inc | PEP | 3.70% |
Cisco Systems Inc | CSCO | 3.66% |
Merck & Co Inc | MRK | 3.66% |
Name | Symbol | % Assets |
---|---|---|
Apple Inc | AAPL | 6.18% |
Microsoft Corp | MSFT | 5.23% |
Procter & Gamble Co | PG | 3.60% |
PepsiCo Inc | PEP | 2.65% |
JPMorgan Chase & Co | JPM | 2.34% |
Philip Morris International Inc | PM | 2.18% |
Williams Companies Inc | WMB | 2.12% |
Chevron Corp | CVX | 1.96% |
Linde PLC | LIN.L | 1.92% |
Altria Group Inc | MO | 1.87% |
Name | Symbol | % Assets |
---|---|---|
Enbridge Inc | ENB.TO | 8.89% |
Kinder Morgan Inc Class P | KMI | 8.59% |
TC Energy Corp | TRP.TO | 8.48% |
Williams Companies Inc | WMB | 8.00% |
ONEOK Inc | OKE | 6.89% |
Cheniere Energy Inc | LNG | 6.46% |
Targa Resources Corp | TRGP | 4.99% |
Antero Midstream Corp | AM | 4.63% |
Energy Transfer LP | ET | 4.54% |
Equitrans Midstream Corp | ETRN | 4.48% |
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