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MisterURL
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Joined: 03 Oct 2008
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 Posted: Mon Oct 06, 2008 10:00 am Post subject: Dividends |
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I am a Dividend Hog. I have spent quite a bit of time researching who has the best (largest) dividends and is not about to fail. PWI used to have the best. But then the Canadian government started talking about taxing them differently. I have KMP now. It is approximately $80,000 per year for a $1,000,000 investment.
That is good, but is there better? Does anyone know some good dividends or sectors I can look into. REIT's were OK, but shaky. Any suggestions?
Thanks.
[img]http://im.media.ft.com/content/images/f2021f38-3e0b-11e1-91ba-00144feabdc0.img[/img]
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rffrydr
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rffrydr
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rffrydr
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HenryTo
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Joined: 06 Aug 2004
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Location: Los Angeles, California
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| Posted: Fri May 15, 2009 6:17 pm Post subject: |
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Morningstar's latest weekly commentary on their "DividendInvestor" portfolio:
| Quote: | The Week in Dividends, 2009-05-15
M*_JoshP | 05-15-2009 | 03:41:31 | Post #2654489
On Monday, BB&T Corporation BBT--the bank I thought least likely to cut its dividend heading into this crisis--made official what the stock price had long discounted: It reduced its quarterly payment by 68%, to $0.15 a share. Since BB&T was DividendInvestor's largest holding, found in both the Builder and Harvest portfolios, the effect on our income was huge: 8% of the annualized income of the combined accounts, gone. The fact that I recognized the risk of this over the past few months and even accepted a cut as likely hasn't made it any easier to take.
Even so, I'm still holding the stock, and I plan to continue holding it in the Builder. BB&T did not cut its dividend as deeply is its peers have, and the stock continues to yield an above-average 2.8% at the new quarterly rate. The company describes the move as temporary, and I believe them--earnings may be down, and regulators may be making life dif ficult even for good banks, but I see no reason to believe that the long-run earning power of BB&T has been depleted by this crisis. If anything, it's been enhanced by the demise of so many unworthy and irrational competitors. I also believe BB&T was not over-paying at the old $0.47/share quarterly rate; if I'm right, and the earning power of this franchise remains intact, this represents a level I believe it can attain again in 2-4 years.
Granted, BB&T (following the lead of Wells Fargo WFC, US Bancorp USB and many other financial institutions) issued new common shares this week--86 million of them at the somewhat disappointing price of $20 apiece. Still, these funds, plus the "savings" of the dividend cut, will help the bank return the government's TARP investment sooner. Since that in turn would relieve the bank of the TARP's additional regulatory oversight and restrictions on future dividen d increases, I am not inclined to complain. After all, even though BB&T will have 15% more mouths (shares) to feed, an enlarged capital position positions the bank to make more loans at wider spreads, building profitability. I can't go so far as to say the whole TARP-dividend cut-capital raise sequence is a net plus, but at least there are positive countervailing factors.
At the same time, BB&T's position in the Harvest (like fellow deposit-taker TCF Financial TCB) is somewhat less tenable due to my requirement that each and every holding contribute large current income. The Builder is in a better position to wait out a rebound in dividends; speaking figuratively, the Harvest has bills to pay.
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All told, BB&T's cut brings the total number of dividend cuts for DividendInvestor to 10 so far in 2009 and 16 since inception. We've also had 13 dividend increases this year (running our cumulative total to 153), though these gai ns pale in comparison to the income lost to cuts. In every case where I thought a dividend was at risk, it's been cut--and those cuts have almost all been larger than I expected.
If there's any good news, it's that there aren't many dividends left to be cut. As I prepared the June issue of DividendInvestor this week, all of the "Dividend at Risk" icons disappeared from the Builder and Harvest portfolio tables. I certainly can't rule out another unexpected cut, but there are no more blindingly obvious candidates. I'm also encouraged by the fact that the market value of our holdings--even our dividend cutters--remains well above trough levels. This gives us some flexibility to recycle capital into higher-yielding opportunities if needed to generate immediate income: a strategy that is hardly without tradeoffs, and can be risky if counted upon too heavily, but a potentially valuable option nonetheless.
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The market pulled back this week, showing a bit of probably-overdue fatigue, and there's nothing necessarily nefarious about that. However, I am finding a bit of discouragement in the recent plunge in the yield of the S&P 500. Even as prices have recovered quite a bit from trough levels, dividend cutting has continued--and those are the two forces (higher prices and lower dividends) that drive yields down. Based on the most recent estimate from Standard & Poor's, the index probably yields no more than 2.5% at this point. Between World War II and the early 1990s, the S&P yielded between 3% and 6%: so even after all of the grief of the past decade, we're still outside the historic range for income's contribution to equity total returns.
When capital gains have been proven unreliable again and again--more unreliable, even, than the always-positive-at-any-level contribution of dividends--I expect more investors to demand a cash return on their equity holdings, not just the promise of growt h. Trouble is, many large and profitable companies still don't get it, from Cisco Systems CSCO (no dividend at all) to UnitedHealth Group UNH ($0.03/share annually) to IBM IBM (a mere 2%-ish yield despite billions and billions of buyback spending). My guess remains that either these companies will institute much more generous dividends in the years ahead, or risk losing their shareholders and seeing their market values suffer.
The good news is that we're already dodging this valuation-contraction threat by owning higher-yielding stocks already. I'm much more comfortable with stocks like Realty Incomes O, NSTAR NST and AmeriGas Partners APU and their 5%-9% yields than I could ever be with an IBM, where the stock price must rise for me to see a tangible reward.
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Of course, investing in high-yield stocks can rate certain risks that low- or no-paying c ompanies don't (that is, no dividend means no dividend to lose). Not least among these is that part or all of a big dividend can be yanked, not just under systemic stress, but for reasons that need not make much sense at all. This week, Frontier Communications FTR--a rural telecom operator that has been carrying a double-digit current yield for some time now--announced plans to acquire Verizon's VZ rural businesses. Didn't they think to check Verizon's references as a seller of assets? You can read more in analyst Michael Hodel's note below, but when Verizon sells off chunks of its business, you probably don't want to be the buyer. Whatever the merits of this particular deal, however, Frontier shareholders--who have been receiving $1.00/share in annual dividends--will be obliged to chip in on this deal through a 25% dividend cut.
I have never found Frontier or its peers attractive from a total-return standpoint, or a risk-reward standp oint for that matter, and stuff like this means I'm unlikely to change my mind anytime soon. It's not that big dividends are somehow bad--they're certainly better than leaving the cash inside of a business in secular decline--it's the secular decline itself that bothers me as households continue to yank their land lines. And if there's no growth, and junk bonds provide the same yields, why not buy the bond and benefit from a superior position in the capital structure? |
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HenryTo
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| Posted: Sat Mar 14, 2009 12:12 am Post subject: |
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Morningstar on the latest dividend cuts. They believe the latest round of dividend cuts is coming to an end. This is straight out of their "DividendInvestor" service:
| Quote: | The Week in Dividends, 2009-03-13
M*_JoshP | 03-13-2009 | 05:31:38 | Post #2635287
Last week I suggested that our current wave of dividend cutting across the U.S. stock market could be coming to an end--it seemed to be running out of fuel in the form of obviously vulnerable dividends. So, like anyone else in the investment business, I'm happy to seize upon the first data point that could confirm my thesis: While another half-dozen or so dividends were cut this week, there was only one of appreciable size--a $509 million (87%) annualized reduction by credit-card issuer Capital One COF. Though large, Capital One's move pales in comparison to the blockbuster cuts of preceding weeks.
I'd also like to think it was more than mere coincidence that the stock market went on to score its best rally since November--four straight up days and a 10.8% return for the week. The Builder and Harvest portfolios were up by almost identical percentages , with their financial holdings (especially banks) notching very large gains, while stakes in most other sectors--being generally more defensive than the financials--lagged behind.
Of course, a move like probably sets us up for another round of hand-wringing. Does this week's lurch to the upside mean the bottom is in, and a new bull market is at hand? Or is it just one of those bear-market rallies (even if an unusually strong one) that will eventually grind all optimists into the dust? As usual, I really don't know--though I would suggest that the first move off of a final, enduring bottom should look a lot like this one. In the meantime, however, I do have a plan. I plan … to avoid any and all financial television programs for the next 48 hours. |
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texfly101
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Joined: 22 Oct 2007
Posts: 118
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| Posted: Mon Oct 06, 2008 1:36 pm Post subject: Canadian Oil Royalty Stocks PVX |
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I can empathize with the situation...I just added to my PVX because it hit a price I haven't seen in years...the fact that my last buy was in the 10's doesn't bother me because I am buying for the 14% dividend rather than just for the appreciation. I know that there is the risk of the 2011 change in how the royalty trusts are taxed under Canadian law but I did my homework and have talked to their investor relations and they are not going to change strategy and convert to a corporation like others will and will still issue dividends after that tax change. For me, this is a perfect example of doing my homework and buying according to pre established entry and exit points. My entry point was reached so buy it is. My strategy of having a dividend producing stock that helps mitigate the risk of drop in share value has worked for me. I was actually looking for this drop in price as a buying opportunity. People here on this site convinced me that having a real investment strategy rather than a fear based strategy and being disciplined to execute it is what gives one the best chance to be successful. Buy low, sell high and make money in between...lots of people made money in the 30's in just such a time like this...just gotta buy the right stocks for the right reasons...dj
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rffrydr
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| Posted: Mon Oct 06, 2008 11:59 am Post subject: |
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Watch out for the UTEs. They're anything what they seem.
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lewie2004
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Joined: 03 Dec 2007
Posts: 154
Location: palm desert, ca
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| Posted: Mon Oct 06, 2008 10:13 am Post subject: |
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| I own oks which used to be northern borders. it is paying about 10% at this time. Don;t know about stock but i have owned it along time. Might be worth taking a look. I do own and have no plans to sell for full disclosure. |
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