Focus on Dividends

September 30, 2020

Despite Problems, Count on Kinder Morgan to Remain a Dividend Darling

An unyielding commitment to yield means that income seekers should hold KMI stock

Midstream energy player Kinder Morgan (NYSE:KMI) has a massive presence among North American natural gas pipeline operators. Because of the company’s size, there’s a safety factor that weighs in favor of long-term KMI stock holders.

Income seekers might view KMI stock as a fairly safe way to generate yield because of the stock’s generous dividend payouts.

On the other hand, the onset of the novel coronavirus created problems for the energy market.

Like other North American energy-sector firms, Kinder Morgan has been subject to the negative impact of Covid-19. In particular, reduced energy demand has weighed on the company as well as the KMI stock price.

With this in mind, prospective investors have every right to ask whether this energy infrastructure giant has been able to maintain its healthy dividend payouts. Plus, there’s the question of whether KMI stock will continue to offer a generous yield going forward. Let’s drill down and find out, shall we?

September 28, 2020

3 Big Dividend Stocks Yielding 7% — or More; Evercore Says ‘Buy

In the first half of 2020, many companies have cut back on their dividend payments, slashing or suspending them to conserve cash against the downturn. That trend appeared to reverse itself – or at least, to start to reverse itself – in August, when 13 companies announced dividend increases while only 2 announced cuts. Is this a signal that Q3 will show rebounding sentiment toward dividend and buyback policies? The recessionary pressure is easing; and dividends are a powerful attractor for cautious investors.

Looking at the current situation from Evercore ISI, market strategist Dennis DeBusschere believes the worse is over, saying, “[A] sharp drop in cash returns is unlikely [in 2h20.]” He believes that companies will continue, albeit slowly, to restore both dividends and buyback policies – but cautions that investors should not expect a return to pre-pandemic levels for until at least 2022.

“Though a recovery back to pre-pandemic levels is not likely for at least two years, the negative impact on high cash return names and income strategies should continue to stabilize through year end,” DeBusschere opined.

Following DeBusschere’s lead, Evercore’s stock analysts have been tagging high-yield dividend payers as likely prospects for investors looking to buy in. According to the TipRanks data, these are Buy-rated stocks, with at least a 7% dividend yield and upwards of 10% upside for the year ahead.

September 27, 2020

Honeywell: An Industrial Stock Pivoting to New Opportunities

A proxy for the coming Internet of Things and software used in industrial settings

Just a few weeks ago, on Aug. 31, Honeywell International Inc. (NYSE:HON) joined the ranks of the Dow Jones Industrial Average (DJI), the index that is supposed to reflect the broader market of all stocks traded in the United States.

It's a prestigious move, but one that doesn't necessarily mean much to the share price. Three-month price chart, the stock got an immediate boost after Aug. 31 and then promptly got back to normal.

Honeywell describes itself in its 10-K for 2019 as a diversified technology and manufacturing company that "invents and commercializes technologies that address some of the world's most critical challenges around energy, safety, security, air travel, productivity and global urbanization."

Further, it states it is committed to becoming one of the world's top software-industrial companies. To that end, it has undergone some transitional events. Since 2016 it has spun off three companies that are no longer considered a fit with the company's new direction.

It also has been investing in new growth. As management noted in the 10-K, "In 2019 we deployed capital of $7.8 billion, including capital expenditures, dividends, share repurchases, mergers and acquisitions, and venture investments."

The firm operates through four divisions:

Aerospace

Honeywell Building Technologies

Performance Materials and Technologies

Safety and Productivity Solutions

Using its innovative strengths, including $1.5 billion spent on research and development last year, it is developing new products that address Covid-19 problems, as well as the Internet of Things and other issues of the day.

September 24, 2020

15 Cheap Dividend Stocks Under $15

Many investors look at expensive stocks like Amazon.com (AMZN) or Google parent Alphabet (GOOGL), and they wonder why they should bother with an investment so pricey they can only buy one or two shares. Instead, they target cheap stocks they can buy for just $20, $15, $10 … or even less.

However, it's important to remember that one share worth $1,000 is really the same as 1,000 shares at $1 – it's just sliced up differently.

Still, it's undeniable that many investors simply aren't interested in shares that trade for hundreds or even thousands of dollars. That's particularly true for income-oriented investors, who see plenty of high-priced stocks like Amazon that don't even pay a penny in dividends.

If you're looking for cheap dividend stocks and frustrated by the lack of options, check out the following list of 15 picks under $15. All are cheap dividend stocks that offer 3% yields or better at current prices, and have a decent amount of potential despite their relatively low profiles.

September 23, 2020

Wall Street’s best performing analysts have a strong buy rating on these 6 dividend stocks

Dividend stocks are a critical part of an investor’s portfolio. They are also perfect for market volatility — because investors can reap returns even with choppy stock performance. However, knowing which dividend stocks to choose means taking note of both the company’s dividend yield and payout, as well as checking whether the stock itself represents a compelling investing opportunity. This is important because a healthy company is less likely to slash, or even suspend, its dividend payments.

One way to find quality dividend stocks is to see which stocks the analysts with the strongest stock picking skills are betting on.

TipRanks analyst forecasting service attempts to pinpoint Wall Street’s best-performing analysts. These are the analysts with the highest success rate and average return measured on a one-year basis — factoring in the number of ratings made by each analyst. This means you can pinpoint dividend stocks with the most bullish outlook, based on the latest recommendations from best-performing analysts.

Indeed, the dividend stocks covered below all score a ‘Strong Buy’ Street consensus based on ratings published over the last three months.

Here are the best-performing analysts’ six favorite dividend stocks right now:

September 22, 2020

5 High Yield Dividend Stocks Selling Below Their Tangible Book Value

These 5 dividend stocks have average upside of 79% along with 7.7% yields, or 40% annual total returns over 2 years

Today I wanted to highlight five high-yield dividend stocks that also have a very cheap price. They sell well below the company’s tangible book value per share. In addition, the companies have low price-earnings (P/E) multiples.

Selling below tangible book value means that the stock is below shareholders’ equity after deducting intangible assets. Typically these assets are things like the value of patents and written up technology assets. It also includes things like goodwill (overpayments of fair value from prior acquisitions), as well as deferred expenses or charges.

This means that the value left is only tangible assets like real estate, cash, securities, loans, etc. Values can be put on these kinds of assets more easily than intangibles. In addition, all liabilities are deducted to determine the net tangible book value.

Therefore, if the high-yield dividend stocks are selling well below these levels, you know you are getting a bargain. This is the original theory that Benjamin Graham taught in his books and popularized with The Intelligent Investor. That is the book that Warren Buffett used to start his career as an investor.

In addition, I have modeled out three ways of valuing each of these stocks. These three methods are based on the historical dividend yield of the stock, the historical P/E ratio and the historical price-to-tangible book value per share (TBVPS).

The five high-yield dividend stocks selling below their TBVPS are:

September 20, 2020

3 Big Dividend Stocks Yielding Over 8%; JMP Says ‘Buy’

From the end of March through the end of August, stocks had a tremendous runup to record high levels. The gains completely wiped out the losses from the mid-winter ‘coronavirus collapse,’ and it looked like we were in for a sustained run of good days. But all of that changed as September rang in. The market hit a bump, and has been undergoing a correction. The Nasdaq is down nearly 7%, and volatility has been high so far this month.

A new report from Canaccord's Tony Dwyer puts the situation into perspective by pointing out the major source of uncertainty: “In a true statement of the obvious,” he writes, “this is the most complicated election-year setup we could possibly have.” He goes on to note the four most important ‘unknown’ factors: how the voting will actually happen this year, and avoiding vote fraud; who will win the White House; if the Democrats will sweep the Federal level elections; and, if the loser will concede the contest without a dragged-out legal battle. These are points giving investors ulcers at night.

Dwyer balances all of that with the predictable factor: “Unlike the political backdrop, which is totally unpredictable, we know the Fed intends to keep rates at zero and to keep intervening when there are any signs of stress.” An active central bank will continue injecting liquidity into the system, which will be bullish for stocks. In Dwyer’s view, the only question is, what tools will the Fed use?

So, in a situation that recalls Donald Rumsfeld’s ‘unknown unknowns,’ many investors are gravitating toward defensive stocks, taking steps to ensure a steady income stream. And this brings them, quite naturally, to dividend stocks. These traditional defensive plays may not offer the high share appreciation that is so attractive in normal times, but their high-yielding dividends make up for that when things turn sideways.

With this in mind, analysts from JMP Securities have tapped three such defensive stocks, with dividend yields range from 8.5% to more than 12%. We’ve run the three through the TipRanks database to find out what makes them so compelling. Here are the results.

September 19, 2020

Why Pfizer Is Seriously Mispriced

Pfizer trades with a valuation well off of its 10-year average

Shares of Pfizer (NYSE:PFE) have declined almost 7% since I last looked at the company in depth. Despite this weakness, I believe that the company has strong prospects for growth. The stock continues to offer a dividend yield that is superior to its long-term average while trading with a very low price-earnings multiple.

This article will examine why I think Pfizer remains a strong buy for investors looking for exposure to the health care sector.

Quarterly highlights

Pfizer reported second quarter earnings results on July 28. The company's revenue fell 11% year-over-year to $11.8 billion, but managed to top Wall Street analysts' estimates by almost $250 million. Adjusted earnings per share decreased by 2 cents, or 2.5%, to 78 cents. Analysts had expected lower numbers, as EPS was 12 cents higher than estimated. Currency was a 2% headwind to revenue and lowered adjusted EPS by 3%.

Let's start with the bad. The company's Upjohn segment was down 31%. Upjohn houses Pfizer's off-patent branded and generic medicines and is expected to complete its merger with Mylan (MYL) in the fourth quarter of this year. Much of this decline was due to the loss of exclusivity for Lyrica in 2019. Removing this, Upjohn revenue were down 6%. Offsetting this decline was 17% growth in China, which saw strength in Lipitor and Norvasc.

Covid-19 is believed to have reduced revenue by approximately $500 million, or 4%, due to fewer wellness visits for pediatric and adult patients in the U.S. and lower demand for products in China. Partially offsetting this was higher demand in the U.S. for sterile injectable products and higher volumes of Prevnar 13 in international markets.

September 17, 2020

3 Stocks To Buy Now For Growth & Dividends To Counter Low Bond Yields

The Nasdaq jumped through afternoon trading Tuesday, as it tries to fight its way back after it tumbled 10% in just three sessions. Many of the tech names that helped drive the Nasdaq to new records appeared ready for a breather, from Tesla (TSLA - Free Report) to Apple (AAPL - Free Report), and the ultra-fast sell-off could help things look less volatile as we head into election uncertainty.

The pullback wasn’t a total move out of tech. Instead, the institutions took home some profits on positions. Meanwhile, valuation worries and speculation about a bubble popping carry less weight when taking into account the current interest rate environment.

Don’t fight the Fed might come off as cliché. But it’s one of the primary reasons that the market has soared from its coronavirus lows in March. The Fed lowered its target rate to between 0 and 25 basis points in March, with Fed data putting the rate at 9 basis points right now, down from 160 bps or 1.60% in February and 2.3% in September 2019. And the Fed’s recent policy shift has effectively pinned the Fed Funds rate near zero for the foreseeable future.

Yields are historically low, even though they are up off their recent lows. The yield on the 10-year U.S. Treasury sits at 0.67%, down from 1.90% a year ago and 1.50% in February. This has real consequences for investors and helps magnify the TINA effect—there is no alternative—as the impact of inflation pushes real yields into negative territory.

Two things, all else being equal, move stocks: earnings and interest rates. And with rates at these levels, stock prices are likely to continue to go up, as will valuations, because future earnings are worth more given the lower discount rate. It is also worth noting that the S&P 500’s earnings outlook is heading in the right direction.

On top of that, pressure continues to mount on Congress to pass another stimulus bill ahead of the election. With all of this in mind, investors might want to consider buying stocks that also provide income via dividends.

September 16, 2020

3 “Perfect 10” Dividend Stocks Yielding at Least 5%

Assessing where the markets will go can sometimes seem like more art than science, and an arcane art at that. But the data is out there to make sense of the stock movements.

The TipRanks Smart Score is a perfect example. Scanning through the whole of the database, and assembling the information for every stock according to 8 categories known to predict future share performance, the Smart Score combines those categories into a single score that allows investors to see at a glance how the stock is likely to move in the coming year.

That score is given on a scale from 1 to 10, with low scores indicating likely underperformance of the broader market, and higher scores indicating overperformance. A perfect score, a 10, is a rare gift for a stock. It doesn’t necessarily mean that every factor aligns perfectly – but it does indicate a potentially bright future for the stock in question.

Today, we’ve pulled up three ‘Perfect 10’ stocks, which are also fine defensive plays, with dividends yielding 5% or higher. At a time when volatility is returning to the markets, the combination of likely overperformance and a strong dividend return makes these stocks that investors should take notice of.

September 15, 2020

Is Philip Morris a Buy Following Another Dividend Increase?

Philip Morris gave investors another dividend increase, but is the stock a buy following a solid 3-month rally?

Philip Morris International (NYSE:PM) recently raised its dividend. This already high yielding stock has now given shareholders a dividend increase for more than a decade following its spinoff from Altria Group Inc. (NYSE:MO). Including when it was part of Altria, the dividend growth streak expands to more than five decades.

Does this increase and the income the stock provides make Philip Morris a buy, even following a 15% gain over the last three months? In this article, we will examine the company's most recent quarter, dividend and valuation to determine the answer.

Quarterly highlights

Philip Morris reported its second quarter earnings results on July 21. Revenue declined 13.6% year-over-year to $6.7 billion, but this wasn't as bad as feared as results were $110 million better than what was expected by Wall Street analysts. Earnings per share decreased 17 cents, or 11.6%, to $1.29, which was 19 ahead of consensus predictions. Currency, as usual, was a headwind during the quarter. Revenue was lower by 9.5% and EPS dropped 7.5% on a currency neutral basis.

Covid-19 had a significant impact on results as consumers were out and about less during the quarter. Less disposable income in many regions also played a role in the decline. This was especially pronounced in urban areas around the world, where Philip Morris has a higher market share.

Volumes for cigarette and heated tobacco declined 14.5%. Cigarette shipments were down 17.6%. The company's market share fell 10 basis points to 28%, but much of this was related to continued weakness in Indonesia and duty free cigarettes.

September 14, 2020

10 Safe Hyper-Growth Blue-Chips For A Rich Retirement

Tech stocks have fallen into a correction that prudent investors new was inevitable. The most popular market darlings of recent months are now falling hard and fast.

While the S&P 500 and many tech giants remain extremely overvalued, blue-chips fitting any goal are always reasonably to attractively priced.

Today AMZN, OLED, TCEHY, ANTM, CSL, LCII, NSP, PBCT, LHX, and AVGO represent the 10 safest hyper-growth blue-chips retirees can trust.

AMZN and TCEHY are my highest conviction ideas, for reasons I explain in their deeper look videos.

These 10 hyper-growth blue-chips collectively yield 2.6%, are 14% undervalued, have long-term analyst growth forecasts of 19% CAGR and risk-adjusted expected returns of 17% CAGR, 5X that of the S&P 500. In a video I show exactly how to construct a sleep well at night retirement portfolio based on various risk profiles, that can withstand anything the pandemic, economy, or stock market can likely thow at us in the future.

Tech stocks have been on fire this year, helping to lead the Nasdaq to an epic bear market recovery rally.

Of course, it's hard to miss that tech stocks, which make up about 60% of the Nasdaq and drove a remarkable 75% gain in just over five months, have become out of favor lately.

September 12, 2020

4 High-Quality Bargains in an Uncertain Market

These undervalued wide-moat stocks earn low uncertainty ratings.

Stock investors have experienced quite the roller-coaster ride during the past week or so. Technology stocks took it on the chin. Tesla (TSLA) plummeted. And the Nasdaq sank 10% in just three trading days, putting it in correction territory.

Buckle up, investors: Market uncertainty will likely persist in the coming weeks, thanks to the pandemic, economic downturn, and upcoming election.

Given the uncertainty in the market, we went looking for stocks that we felt relatively certain about--they're high-quality and we expect them to remain so, we have high confidence in our fair value estimates of these names, and they're undervalued.

Specifically we screened for the following:

Wide moats: Firms with wide Morningstar Economic Moat Ratings have unmatched advantages that should allow them to fend off their competitors and outearn their costs of capital for the next 20 years. By their very natures, wide-moat companies are reliable in terms of their businesses--think of them as "steady Eddies."

Stable or positive moat trends: To qualify, a company needs to be maintaining or growing its competitive advantages, not facing impossible-to-overcome headwinds that may ultimately threaten its moat.

Low uncertainty: Such companies enjoy sales predictability, modest operating and financial leverage, and limited exposure to contingent events. As a result of these factors, we can more confidently estimate the future cash flows of these companies and therefore have high confidence in our fair value estimates.

Lastly, we focused only on those names trading in 4- and 5-star range, ensuring that there's a significant margin of safety.

Four stocks made the cut as of this writing. Here's a little bit from our analysts about each business.