Altria (MO) is a Dividend Aristocrat that has raised its dividend for 47 consecutive years and is expected to announce its next dividend hike in the next two months. As most of its shareholders hold the stock for its generous and reliable dividend, it is only natural that they look forward to the upcoming dividend hike. In this article, I will analyze what raise the shareholders should expect.
First of all, while Altria is a perfectly managed company, it is facing some secular headwinds. To be sure, the percent of US population that smokes is in a continuous decline. Moreover, an increasing number of US states has significantly raised the tax on cigarettes in order to reduce their budget deficits. For instance, California raised the tax on a pack of cigarette from $0.87 to $2.87 this... more
It's a scary world out there - except for defense contractors.
Amid tensions in the Middle East, terror attacks across Western Europe, and a manchild dictator running North Korea, nations around the world have stepped up defense spending. President Donald Trump's fragile ego and tactless approach to foreign policy only increases the chance of an international conflict.
Good news for Raytheon Co. (NYSE: RTN). The defense contractor provides a wide range of products and services, from cybersecurity to guided rockets. The company's best known piece of merchandise is the Tomahawk missile, used in every large U.S. air campaign since the First Gulf War.
America represents Raytheon's biggest customer by far. The company, though, continues to expand internationally.... more
Dividend growth investing is a pretty old strategy for investments. As it becomes more popular nowadays, we should remember that investors enjoyed for decades. Well, these investors may have called it in different names, but the methodology was the same. You buy a company with strong cash flow, which has a wide moat and plenty of growth prospects. Therefore, it will be able to grow its cash flow, and the dividends with them.
The most renowned dividend growth investor in the world today is Warren Buffet. A quick glance into his portfolio will show you exactly what I mean. The top holdings include companies like Coca-Cola (KO), Wells Fargo (WFC) and IBM (IBM). These three companies and many more in Buffet's portfolio are dividend growth stocks.
The strategy... more
As an income investor I’m always on the prowl for a 4%+ highly reliable dividend paying stocks with strong potential for dividend growth….something kind of hard to find today. PSA is currently sporting about a 3.76% current yield. What is the likelihood that PSA could become a 4%+ yielding stock if I buy at today’s price and it grows its dividend as it has in the past? Well, let’s take a look.
Trends in Cash Flows
The per share trend in revenue, cash flow from operations (CFFO) and common dividends paid has shown steady growth over the past 12 quarters, using rolling 4-quarter totals, while the dividend-to-CFFO payout ratio has grown from 87% to 91% over the recent 3 four-quarter periods. Note that "dividends" here are defined as all dividends,... more
The price on Tanger Outlets is almost right. People see it as a bargain, and I see their valid points, but this article will elucidate where the issues are and how I am playing it...defensively.
Everybody loves a bargain. At 40% off its recent high Tanger Outlets (SKT) certainly looks on the surface, like a bargain.
Additionally, with a 5.4% yield there is definitely juice there to make your mouth water.
The Business: Tanger owns and operates outlet centers in United States and Canada. Focusing on the bargain shopping experience, Tanger has been able to keep its occupancy high (>95%) since inception. Additionally it has paid a growing cash dividend and is part of the S&P high Yield Dividend Aristocrat Index. It's debt is... more
The yield curve consists of the interest rates on treasuries plotted against their respective maturities. Normally, the yields are greater the longer the term is because it means the investor's money is tied up for longer. As maturities lengthen, so do risks, which an investor is compensated for with the higher yield. A commonly used indicator is the spread between the 10 and 2 year treasury yields, which (the inversion of 10/2 year yields) has been a leading indicator of the last five recessions.
A high yield for the 10 year note signifies investors believe that there are more efficient investments out there. It is reflective of the inflation and long-term growth expectations.
10 Year Treasury Rate data by YChartsWhat this means is that the two rise and fall with the US... more
Mutual funds that seek to provide impressive returns by investing in below investment-grade bonds, also known as junk bonds, are generally known as high yield bond mutual funds. These funds are expected to provide higher returns than those investing in investment-grade securities. Moreover, the high yield feature of junk bonds makes them less vulnerable to interest rate fluctuations. Though junk bonds are considered riskier than investment-grade debt securities, mutual funds maintaining a well-diversified portfolio of such securities may reduce the level of risk.
Below we share with you four top-ranked high-yield bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the... more
High-yield is something I try to limit exposure to these days now that the Federal Reserve is steadily raising rates. While interbank rate hikes have yet to translate into much negative movement in ten-year bonds, I believe that now is a good time to limit exposure to high-yield for a few reasons: As bond rates rise, they will become increasingly competitive with fixed dividend paying stocks, and these leveraged yield businesses will be particularly affected by rising cost of debt.
That's a very broad stroke, however, and I continue to believe that high-yield stocks have a place in every income investor's portfolio, so long as exposure is limited and diversified. That's what I seek to do today: shine light on some sustainable high-yield names which could provide... more
Prices are coming down from this beast of a company. Are they worth a buy yet?
Annaly Capital Management (NLY) preferred share prices have come crashing down since my last call that they were overvalued. Even though all the preferred share from NLY are in the hold range, Apollo Commercial’s (ARI) preferred share ARI-A is a better option. If investors look at the preferred shares it will appear that ARI-A is trading at a materially larger premium.
Why buy ARI-A instead?
ARI-A goes ex-dividend late this month (06/28/2017) and the preferred shares of NLY went ex-dividend at the end of last month (in May). Therefore, ARI-A actually has a fairly large dividend embedded in it. We refer to this as dividend pregnancy impact. By my estimate the amount of the... more
It’s a TWOrap!
Investors holding onto the preferred share TWO-A from Two Harbors Investment Corp. (TWO) should be looking to capture their gains. The preferred share is great across almost every metric with the exception of them being very near the highest price they have seen. While TWO-A does look solid outside of the price, there are some superior alternatives.
Chimera Investment Corporation (CIM) has two good preferred shares right now, CIM-A and CIM-B. CIM-B is the better alternative, but only by a small margin. CIM-B and TWO-A both switch over to a floating rate of three month LIBOR plus a spread:
CIM-B will be 3-month LIBOR +5.791% beginning 3/30/2024.
TWO-A will be 3-month LIBOR plus 5.66% beginning 4/27/2027.
After the... more