One fund is paying a tempting 11% yield. Another offers 8%. Which one should you reach for?
To answer that, you need to ask the right question.
Dividend safety is far more important to total returns than yield size. My colleague, Elliott Gue, touched on this a few weeks ago.
Consider how chasing two of the S&P 500's highest yielders, which carried dangerously unsecure dividends not too long ago, would have impacted your returns.
Frontier Communications (NYSE: FTR) carried a yield over 18% before it chopped its quarterly dividend by 60% in February 2012 (from 25 cents a share to 10 cents). Its share price plummeted more than 26% over the three months following the reduction announcement.
Top Rising Stocks To Buy Right Now: PPL Corporation(PPL)
PPL Corporation, an energy and utility holding company, generates and sells electricity; and delivers natural gas to approximately 5.3 million utility customers primarily in the northeastern and northwestern U.S. The company operates in four segments: Kentucky Regulated, International Regulated, Pennsylvania Regulated, and Supply. The Kentucky Regulated segment engages in the generation, transmission, distribution, and sale of electricity; and the distribution and sale of natural gas to approximately 1.3 million customers in Kentucky, Virginia, and Tennessee. The International Regulated segment owns and operates electricity distribution businesses in the United Kingdom that deliver electricity to 7.7 million customers. The Pennsylvania Regulated segment delivers electricity to approximately 1.4 million customers in eastern and central Pennsylvania. The Supply segment owns and operates power plants to generate electricity using coal, uranium, natural gas, oil, and water res ources; markets and trades electricity and other purchased power to wholesale and retail markets; and acquires and develops domestic generation projects. It controls or owns a portfolio of generation assets of approximately 11,000 megawatts in Montana and Pennsylvania. As of December 31, 2010, the company?s distribution system included 649 substations with a capacity of 25 million kVA, 28,838 circuit miles of overhead lines, and 24,131 cable miles of underground conductors in the United Kingdom. It also operated 377 substations with a capacity of 31 million kVA, 33,122 circuit miles of overhead lines, and 7,368 cable miles of underground conductors in Pennsylvania. The company was founded in 1920 and is headquartered in Allentown, Pennsylvania.
Advisors' Opinion:- [By Justin Loiseau]
Hedging is common practice for any energy company, but Q1 earnings reports have already proven that this financial tactic can only absorb so much of increasingly volatile energy prices. Exelon (NYSE: EXC ) took a one-time $235 million hit this quarter as a result of natural gas hedges gone wild, while PPL's (NYSE: PPL ) bad bet helped knock around 20% off its first quarter EPS.
- [By Dan Caplinger]
Some companies even make their regular dividend payments by raising capital, either from debt offerings or by selling new shares. Utilities PPL (NYSE: PPL ) and Southern� (NYSE: SO ) have used this strategy for years, as capital-intensive operations often make it necessary for utilities to find sources of cash elsewhere in order to give investors the dividends they've come to rely on.
- [By Richard Stavros]
Among those companies that are winding down their spending programs, NextEra Energy Inc (NYSE: NEE) accounts for almost 30 percent of the projected $10 billion decline in annual spending from 2013 to 2015. Other larger-cap companies with projected 2015 budgets that are below their 2013 levels include: CenterPoint Energy Inc (NYSE: CNP), Dominion Resources Inc (NYSE: D), PPL Corp (NYSE: PPL), Public Service Enterprise Group Inc (NYSE: PEG), and Southern Company (NYSE: SO).
Hot Dividend Companies To Buy Right Now: Johnson & Johnson(JNJ)
Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The Consumer segment provides products used in baby care, skin care, oral care, wound care, and women?s health care fields, as well as nutritional, over-the-counter pharmaceutical products, and wellness and prevention platforms under the brands of JOHNSON?S, AVEENO, CLEAN & CLEAR, JOHNSON?S Adult, NEUTROGENA, RoC, LUBRIDERM, DABAO, LISTERINE, REACH, BAND-AID, CAREFREE, STAYFREE, SPLENDA, TYLENOL, SUDAFED, ZYRTEC, MOTRIN IB, and PEPCID AC. The Pharmaceutical segment offers products in various therapeutic areas, such as anti-infective, antipsychotic, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, and virology. Its principal products include REMICADE for the treatment of immune me diated inflammatory diseases; STELARA for the treatment of moderate to severe plaque psoriasis; SIMPONI, a treatment for adults with moderate to severe rheumatoid arthritis, psoriatic arthritis, and ankylosing spondylitis; VELCADE for the treatment of multiple myeloma; PREZISTA and INTELENCE for treating HIV/AIDS patients; NUCYNTA for moderate to severe acute pain; INVEGA SUSTENNAtm for the acute and maintenance treatment of schizophrenia in adults; RISPERDAL CONSTA for the management of bipolar I disorder and schizophrenia; and PROCRIT to stimulate red blood cell production. The Medical Devices and Diagnostics segment primarily offers circulatory disease management products; orthopaedic joint reconstruction, spinal care, and sports medicine products; surgical care, aesthetics, and women?s health products; blood glucose monitoring and insulin delivery products; professional diagnostic products; and disposable contact lenses. The company was founded in 1886 and is based in Ne w Brunswick, New Jersey.
Advisors' Opinion:- [By Travis Hoium]
Dow component Johnson & Johnson (NYSE: JNJ ) reported results that were well ahead of estimates, but the stock is flat as I write. The company said adjusted earnings rose 14% to $1.48, which was $0.09 ahead of estimates, while revenue rose 8.5% to $17.88 billion. Medical companies have struggled against the cost pressures on the industry, so it was especially encouraging that Johnson & Johnson's pharmaceutical business saw 12% growth to lead the company. The medical industry is volatile right now, but Johnson & Johnson is big and diverse enough to navigate these waters, just as it did during the second quarter.��
Hot Dividend Companies To Buy Right Now: FirstEnergy Corporation(FE)
Firstenergy Corp. operates as a diversified energy company. The company, through its subsidiaries and affiliates, involves in the generation, transmission, and distribution of electricity, as well as energy management and other energy-related services. It serves approximately 6 million customers within 67,000 square miles through 10 utility operating companies in Ohio, Pennsylvania, New Jersey, West Virginia and Maryland. The company was founded in 1996 and is headquartered in Akron, Ohio.
Advisors' Opinion:- [By Jake L'Ecuyer]
Top decliners in the sector American Electric Power Co (NYSE: AEP), down 2.5 percent, and FirstEnergy (NYSE: FE), off 2.5 percent.
Top Headline
On Sunday, AT&T (NYSE: T) announced its plans to buy DirecTV (NASDAQ: DTV) for $48.5 billion, or $95 per share in a combination of stock and cash. The offer price of $95 per DirecTV share represents a 10 percent premium to closing price of $86.18 on Friday. The deal has a total value of $67.1 billion, including DirecTV's net debt. - [By Justin Loiseau]
FirstEnergy (NYSE: FE ) is a nuclear runner-up, with four reactors producing nearly one-third of the utility's total energy. But unlike Exelon, FirstEnergy generates around two-thirds of its electricity from coal, with small slices of natural gas, oil, and renewables.
Hot Dividend Companies To Buy Right Now: Consolidated Edison Company of New York Inc. (ED)
Consolidated Edison, Inc., through its subsidiaries, provides electric, gas, and steam utility services in the United States. It provides electric service to approximately 3.3 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, as well as provides steam service to office buildings and apartment houses in parts of Manhattan. The company also provides electric service to approximately 0.3 million customers in southeastern New York and in adjacent areas of northern New Jersey, and northeastern Pennsylvania; and gas service to approximately 0.1 million customers in southeastern New York and adjacent areas of northeastern Pennsylvania. In addition, Consolidated Edison involves in the sale and related hedging of electricity to wholesale and retail customers; operation of generating plants; participation in other infrastructure projects; and provision of energy-efficiency services, including the design and installation of lighting retrofits, high-efficiency heating, ventilating and air conditioning equipment, and other energy saving technologies to government and commercial customers. It serves residential, industrial, and large commercial customers. The company was founded in 1884 and is based in New York, New York.
Advisors' Opinion:- [By Dividends4Life]
Consolidated Edison Inc. (ED) is an electric and gas utility holding company that serves parts of New York, New Jersey and Pennsylvania. The company has paid a cash dividend to shareholders every year since 1885 and has increased its dividend payments for 40 consecutive years. Yield: 3.2%
- [By GURUFOCUS]
Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:
1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number
SYY is trading at a premium to all four valuations above. The stock is trading at a 37.5% premium to its calculated fair value of $26.26. SYY did not earn any Stars in this section.
Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:
1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%
SYY earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. SYY earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1970 and has increased its dividend payments for 43 consecutive years.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
1. NPV MMA Diff.
2. Years to > MMA
The NPV MMA Diff. of the $282 is below the $500 target I look for in a stock that has increased dividends as long as SYY has. If SYY grows its dividend at 3.6% per year, it will take 3 years to equal a MMA yielding an estimated 20-year average rate of 3.41%. SYY earned a check for the Key Metric 'Years to >MMA' since its 3 years is le - [By Justin Loiseau]
Investors might invest in a good company with solid returns -- but is it the place where their hard-earned profits are best spent? Let's compare big dividend-dealing utilities FirstEnergy (NYSE: FE ) and Consolidated Edison (NYSE: ED ) , to see where we should stash our cash.
- [By Maxx Chatsko]
Consolidated Edison (NYSE: ED ) has exploited that volatility in New York City -- its primary market that also hosts the nation's largest spark spreads year round -- to increase its profit margin 22.4% since 2009. Low natural gas prices have been arguably more important than efficiency upgrades, but that advantage may be unraveling. ��
Hot Dividend Companies To Buy Right Now: Wisconsin Energy Corporation (WEC)
Wisconsin Energy Corporation engages in the generation, distribution, and sale of electric energy and steam. The company also involves in the purchase, distribution, and sale of natural gas to retail customers, as well as in the transportation of customer-owned natural gas in Wisconsin. It generates electricity from coal, natural gas, wind, and hydro sources. The company offers its services under ?We Energies? name. It serves approximately 1,120,200 electric customers in Wisconsin and the Upper Peninsula of Michigan; approximately 1,064,500 gas customers in Wisconsin; and approximately 460 steam customers in metropolitan Milwaukee, Wisconsin. In addition, the company invests and develops in real estate properties, including business parks and other commercial real estate projects primarily in southeastern Wisconsin. It provides electric utility service to industries, such as mining, paper, foundry, food products, and machinery production, as well as to retail chains. The c ompany was founded in 1981 and is based in Milwaukee, Wisconsin.
Advisors' Opinion:- [By Larry Smith]
Wisconsin Energy (WEC) - Wisconsin Energy is the largest electric and gas company in Wisconsin with 1.1 million electric customers and 1 million gas customers. Wisconsin Energy also owns a 26% interest in American Transmission Company, a multistate, transmission only utility. WEC has been named the most reliable utility in the Midwest seven out of the last 10 years and has very high customer satisfaction. I owned WEC briefly and would be willing to own it again at a price under $38.00.
Hot Dividend Companies To Buy Right Now: Smith & Nephew SNATS Inc.(SNN)
Smith & Nephew plc develops, manufactures, markets, and sells medical devices in the orthopaedics, endoscopy, and advanced wound management sectors worldwide. The company operates in three segments: Orthopaedics, Endoscopy, and Advanced Wound Management. The Orthopaedics segment offers reconstruction implants, including hip, knee, and shoulder joints, as well as ancillary products, such as bone cement and mixing systems used in cemented reconstruction joint surgery. This segment also provides trauma fixation products consisting of internal and external devices, and other products, including shoulder fixation and orthobiological materials used in the stabilization of fractures and deformity correction procedures; and clinical therapies products comprising bone growth stimulation, joint fluid therapies, and outpatient spine products. The Endoscopy segment develops and commercializes minimally invasive surgery techniques, educational programs, and value-added services for sur geons to treat and repair soft tissue and articulating joints. It offers specialized devices and fixation systems to repair damaged tissues; fluid management equipment for surgical access; digital cameras, digital image capture, scopes, light sources, and monitors to assist with visualisation; radiofrequency wands, electromechanical and mechanical blades, and hand instruments for resecting damaged tissues. The Advanced Wound Management segment provides initial wound bed preparation and full wound closure products. This segment?s products are targeted at chronic wounds associated with the older population, such as pressure sores and venous leg ulcers; and products for the treatment of wounds, including burns and invasive surgery. The company serves medical and surgical service providers. Smith & Nephew plc was founded in 1856 and is headquartered in London, the United Kingdom.
Advisors' Opinion:- [By Kevin Godbold]
So this series aims to identify appealing FTSE 100 investment opportunities and today I'm looking at�Smith & Nephew� (LSE: SN ) (NYSE: SNN ) , the medical devices company.
- [By Jake L'Ecuyer]
Top Headline
Smith & Nephew PLC (NYSE: SNN) announced its plans to buy ArthroCare (NASDAQ: ARTC) for $1.7 billion in cash. Smith & Nephew will pay $48.25 per share in cash to acquire ArthroCare, representing a 6.3% premium to ArthroCare's closing price on January 31. - [By Dan Carroll]
British device maker Smith & Nephew (NYSE: SNN ) is the latest company�to join the emerging markets push. The company announced it agreed to buy Indian trauma device maker Adler Mediequip, which -- along with the buyout of a Brazilian�distribution partner -- totaled around $70 million. What does this mean for your investment and the medical device industry's emerging markets momentum?
Hot Dividend Companies To Buy Right Now: M&T Bank Corporation (MTB)
M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. It offers business loans and leases; business credit cards; deposit products, such as demand, savings, and time accounts; and financial services, including cash management, payroll and direct deposit, merchant credit card, and letters of credit. The company also provides residential real estate loans; multifamily commercial real estate loans; commercial real estate loans; one-to-four family residential mortgage loans; investment and trading securities; short-term and long-term borrowed funds; brokered certificates of deposit and interest rate swap agreements related thereto; and branch deposits. In addition, it offers foreign exchange, as well as asset management services. Further, the company provides consumer loans, and commercial loans and leases; cred it life, and accident and health reinsurance; and securities brokerage, investment advisory, and insurance agency services. As of December 31, 2009, it had 738 banking offices in New York State, Pennsylvania, Maryland, Delaware, New Jersey, Virginia, West Virginia, and the District of Columbia; a commercial banking office in Ontario, Canada; and an office in George Town, Cayman Islands. The company was founded in 1969 and is headquartered in Buffalo, New York.
Advisors' Opinion:- [By Amanda Alix]
Too little, too late?
Whether the new regulations have arrived in time to prevent a bust in the commercial sector similar to the one seen with home mortgages remains to be seen. Some banks, at least, are recognizing the risks and staying away. As M&T Bank (NYSE: MTB ) vice chair Mike Pinto tells the Financial Times, "Every 10 years or so, banks make some horrible mistake, and it usually starts with easy money." Hopefully, this time, such a calamity will be avoided. - [By Jon C. Ogg]
M&T Bank Corp. (NYSE: MTB) was downgraded to Neutral from Outperform by Credit Suisse.
MannKind Corp. (NASDAQ: MNKD) was downgraded to Underperform from Neutral and the price target was slashed to $5 from $8 (versus $6.30 close) at BofA/Merrill Lynch; shares are trading down 6% or so.
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