Dividends Value » HCBK

11 Higher-Quality, High-Yield Dividend Stocks *

D4L — Wed, 01 Dec 2010 07:30:44 +0000

A successful dividend growth investor must start young enough to allow time for dividend growth to occur. What happens when a person waits too late in life to start investing and they need immediate income? Many times the person will invest in high-yield, high-risk stocks and lose their savings. If income is needed immediately and you want to mitigate the risk (to a degree), there are some things that can be done, such as…

Start With a High-Quality List of Stocks

If you are looking for a higher-quality dividend growth stock, you have to go where they can be found. For me this is my Stock Ideas page. It consists of:

S&P 500 Dividend Aristocrats: is designed to measure the performance of S&P 500 index constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. These stocks are the best of the best – the blue blood stocks.

Broad Dividend Achievers: is comprised of select US companies with at least ten consecutive years of increasing regular dividends. US companies must be listed on the NYSE, AMEX or NASDAQ. US Companies must have a minimum average daily cash volume of US$500,000 per day for the November and December prior to each Annual Reconstitution Date.

U.S. Dividend Champions: includes companies that had paid higher dividends for at least 25 consecutive years. The list includes some smaller companies not found on the other lists. This list is maintained by The Drip Investing Resource Center and is available on their website in an Excel spreadsheet.

Look For Sustainability

High-yield isn’t free. There is usually a reason one stock’s yield is higher than another and it is normally tied to risk. With all things being equal, the income investor would always select the higher yield stock, but all things are not equal. It is our job to identify what is driving a stocks yield up and determine if we are willing to accept the additional risk. When making this decision some of the things I consider are free cash flow, debt level, business model, among others.

Higher-Yielding Stocks To Consider

Putting it all together, I have identified 11 stocks that yield at least 5% and have grown their dividends for at least 5 years. They are:

Leggett & Platt, Inc. (LEG) makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as diversified products for non-furnishings markets.
- 5.16% Yield
- 36.76% Debt To Total Capital
- 57.89% FCF Payout
- 38 Years of Dividend Growth

Urstadt Biddle Properties (UBA) is a real estate investment trust that acquires, owns and manages commercial real estate properties primarily in the northeastern United States.
- 5.17% Yield
- 30.87% Debt To Total Capital
- 58.27% FCF Payout
- 16 Years of Dividend Growth

Hudson City Bancorp Inc. (HCBK) operates over 100 branches in the New York metropolitan area. It caters to high median household income counties and focuses on jumbo mortgage loan funding, largely through time deposits.
- 5.26% Yield
- 72.57% Debt To Total Capital
- 52.23% FCF Payout
- 10 Years of Dividend Growth

Cincinnati Financial Corp. (CINF) markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.
- 5.31% Yield
- 15.05% Debt To Total Capital
- 46.87% FCF Payout
- 50 Years of Dividend Growth

PP&L Corporation (PPL) is a holding company for PPL Utilities and a utility in the U.K.
- 5.53% Yield
- 37.55% Debt To Total Capital
- 99.92% FCF Payout
- 9 Years of Dividend Growth

National Retail Properties, Inc. (NNN) invests in high-quality, freestanding retail properties subject to long-term net leases with major retail tenants.
- 5.74% Yield
- 1.92% Debt To Total Capital
- 82.18% FCF Payout
- 19 Years of Dividend Growth

Verizon Communications Inc. (VZ) offers wireline, wireless and broadband services primarily in the northeastern United States. It acquired MCI Inc in 2006 and has since sold or spun off non-core assets. Alltel was acquired in early 2009.
- 5.94% Yield
- 38.59% Debt To Total Capital
- 31.49% FCF Payout
- 6 Years of Dividend Growth

AT&T Inc. (T) provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). AT&T Corp. was acquired in late 2005 and BellSouth in late 2006.
- 6.02% Yield
- 41.67% Debt To Total Capital
- 61.14% FCF Payout
- 27 Years of Dividend Growth

Suburban Propane Partners LP (SPH) markets propane gas and other refined fuels to residential, commercial, industrial, and agricultural customers.
- 6.08% Yield
- 43.49% Debt To Total Capital
- 88.83% FCF Payout
- 11 Years of Dividend Growth

Kinder Morgan Energy Partners LP (KMP) is one of the largest pipeline master limited partnerships (MLPs) in the U.S.
- 6.14% Yield
- 63.92% Debt To Total Capital
- 76.11% FCF Payout
- 14 Years of Dividend Growth

CenturyLink, Inc. (CTL) acquired larger telecom peer Embarq in a stock deal in July 2009. Combined, the company provides voice service to 6.7 million customers and Internet service to 2.4 million customers in rural towns as well as larger cities such as Las Vegas.
- 6.74% Yield
- 44.56% Debt To Total Capital
- 75.39% FCF Payout
- 37 Years of Dividend Growth

As note earlier, yield comes with a cost. Each of the above stocks carries some level of additional risk higher than the average Aristocrat, Achiever or Champion. Ideally, we will start building our income portfolios years before we need the income, but if that is not possible, diversifying and focusing on higher quality stocks should help reduce our overall portfolio risk.

Full Disclosure: Long LEG, NNN, CTL, T, CINF. See a list of all my income holdings here.

(Photo Credit)

The 2010 Dividend Stock Ideas List *

D4L — Wed, 24 Feb 2010 11:30:53 +0000

Last year I introduced the Stock Ideas list and it has proven to be immensely popular. The list consists of Dividend Aristocrats, US Broad Dividend Achievers and U.S. Dividend Champions. Duplications in the above lists are eliminated and stocks are crossed out when I learn that they have either cut their dividend or fail to raise it. Here are some highlights on this year’s changes:

Dividend Aristocrats: Companies in the S&P 500 that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. As the name denotes, these are the best of the best – the blue blood stocks, including names like:

US Broad Dividend Achievers: Is comprised of companies incorporated in the United States or its territories, trade on the NYSE, NASDAQ or AMEX, and have increased their annual regular dividend payments for the last ten or more consecutive years. Notable names on this list include:

The U.S. Dividend Champions: Is maintained by Dave Fish of MoneyPaper. The list is updated monthly and located at the The Drip Investing Resource Center. Like the Dividend Aristocrats above the Dividend Champions list looks for companies that have increased their dividend for at least 25 consecutive years. However, since S&P 500 membership is not a requirement, the list is larger than the Dividend Aristocrats list and also includes small-cap companies.

- Bowl America (BWL.A) | Yield: 4.50%
- Conn. Water Service (CTWS) | Yield: 4.00%
- Weyco Group Inc. (WEYS) | Yield: 2.70%

Needless to say, last year saw many companies fall off the list. Overall the number of constituents fell to 218 stocks in 2010 from 319 in 2009. What made last year so unusual were the number of big-name companies that no longer qualified for inclusion on the list, some that had paid increasing dividends for decades, including:

- American International Group, Inc. (AIG)
– Bank of America Corporation (BAC)
– General Electric Co. (GE)
- The Home Depot, Inc. (HD)
- Johnson Controls Inc. (JCI)
- Pfizer Inc. (PFE)
- US Bancorp (USB)

The news wasn’t all bad. Partially offsetting the 133 companies that fell off the list were 32 new companies joining the Dividend Stock Ideas List. For the most part, these aren’t household names, not yet at least, but here are some names we will likely be seeing in the future:

- Arrow Financial Corporation (AROW) | Yield: 3.90%
- Energy Transfer Partners L.P. (ETP) | Yield: 7.80%
- Federated Investors, Inc. (FII) | Yield: 3.70%
- Getty Realty Corp. (GTY) | Yield: 8.50%
- Hudson City Bancorp, Inc. (HCBK) | Yield: 4.60%
- Investors Real Estate Trust (IRET) | Yield: 7.80%
- NSTAR (NST) | Yield: 4.60%
- Northeast Utilities (NU) | Yield: 3.80%
- Plains All American Pipeline LP (PAA) | Yield: 6.80%
- Suburban Propane Partners LP (SPH) | Yield: 7.30%

You can see the entire Dividend Stock Idea List here. Remember, not every stock listed here is a great dividend investment, but virtually all great dividend investments are on this list.

Full Disclosure: Long CLX, KO, EMR, JNJ, MCD, PG, WMT, CVX, NUE. See a list of all my income holdings here.

(Photo Credit)

Johnson & Johnson (JNJ) Increases Dividend For 47th Consecutive Year *

D4L — Fri, 24 Apr 2009 10:30:35 +0000

Thursday, Johnson & Johnson (JNJ) declared a 6.5% increase in its quarterly dividend rate, from $0.46/share to $0.49/share (yield: 3.6%). This follows last week’s 10% increase from the other blue-chip ampersand company Proctor & Gamble (PG). JNJ’s CEO William C. Weldon stated, “Given our strong financial position, confidence in the future of Johnson & Johnson, and in recognition of our solid results in 2008, the Board has voted to increase the dividend for the 47th consecutive year.” JNJ is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. The Company has more than 250 operating companies within three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. (Analysis)

Below are several other companies joining JNJ and PG in rewarding their shareholders with higher cash dividends:

Southern Company (SO) raises annual dividend by 4.2% to $1.75/share, Yield: 5.94%
Coach (COH) initiates $0.30/share annual dividend, Yield: 1.32%
Hudson City Bancorp (HCBK) bumps its quarterly dividend to $0.15/share, Yield: 4.93%
J. M. Smucker (SJM) boosts dividend 9.3% to $0.35/share, Yield: 3.65%

Just when it looked like the financials had got all the bad news aired, Morgan Stanley (MS) jumped in and filled the void. On Wednesday MS reduced its quarterly dividend to $0.05/share and decided to the change the company’s fiscal year end to December. The Board of Directors declared a $0.016667 dividend per common share covering the period from December 1, 2008 through December 31, 2008. The total dividend of $0.066667 per common share covering the four month period from December 1, 2008 to March 31, 2009 is payable on May 15, 2009 to shareholders of record on April 30, 2009.

It is always good to see the dividend raisers exert themselves. Hopefully this trend will continue as the fearful & fragile make way for the confident & capable. As a dividend investor, I look forward to the coming weeks. For more companies with a long string of consecutive dividend increases, see this list.

Full Disclosure: Long JNJ, PG. See a list of all my income holding here.

(Photo: Steve Woods)

Big Banks, Little Dividends: More Bad News For Large Banks *

D4L — Fri, 23 Jan 2009 11:30:34 +0000

Big banks continue to struggle and rely on TARP funds to prop them up. Last week Bank of America (BAC) reported a net loss of $0.48 per share for the fourth quarter, well below the consensus of an $0.08 profit. Merrill Lynch’s preliminary results indicate a fourth quarter loss of $15 billion due to the turmoil in the capital markets. The U.S. government agreed to provide BAC an additional $20 billion to assist in the Merrill acquisition. In addition, the government has agreed to provide BAC protection against certain losses on $118 billion in selected capital markets.

The TARP money comes with strings. One of which is a reduction of common dividends. BAC declared a first-quarter dividend of $.01 per share. The company’s previous two dividends were $0.32 and $0.64 per share. Not to be out done, Citigroup (C) declared a quarterly dividend on the company’s common stock of $0.01 per share. Its last two dividends were $0.16 and $0.32 per share.

Tuesday, concern spread to Wells Fargo (WFC) after analysts at Friedman Billings Ramsey said Wells Fargo will likely cut its dividend in the first half of the year because the bank needs to conserve cash. That resulted in a 20% drop in its share price. Then yesterday, SunTrust Banks, Inc. (STI) reported a fourth quarter loss of $1.08 per share and reduced its quarterly dividend from $0.54 to $0.10 per share.

While the big banks are taking government funds and slashing dividends, here are some smaller banks standing strong by raising dividends:

Bar Harbor Bankshares (BHB) raises dividend by 4% (Yield: 4.68)
Hudson City Bancorp (HCBK) increases qtr. dividend to $0.14/share (Yield: 4.68)
Comm Bancorp (CCBP) boosts qtr. dividend from $0.27 to $0.28/share (Yield: 2.86)
Westamerica Bancorp (WABC) Boosts Qtr. Dividend $0.01 to $0.36/share (Yield: 3.36%)

Today’s market has been challenging to even the most seasoned investors. Dividend stocks provide an opportunity for long-term growth and income if we follow a few simple rules.

Disclosure: No position in the aforementioned securities.

(Photo: Steve Woods)