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This High Yield Stock Just Increased Distributions by 5%

Calumet Specialty Products Partners, L.P. (CLMT) announced an increase in its quarterly cash distribution to $0.62 per unit ($2.48 per unit on an annualized basis) for the quarter ended September 30, 2012 on all of its outstanding limited partner units.  The distribution will be paid on November 14, 2012 to holders of record of such units at the close of business on November 2, 2012.

This distribution represents an increase of 5.1% over the quarterly distribution of $0.59 per unit ($2.36 per unit on an annualized basis) paid in August 2012 for the second quarter of 2012 and a 24.0% increase over the third quarter of 2011.

Calumet has a current dividend yield of 7.88% based on today’s stock price.  Calumet has an equity summary score of 8.8 out of 10 for a BULLISH outlook.

Calumet Specialty Products Partners, L.P. produces and sells specialty hydrocarbon products in North America. It operates in two segments, Specialty Products and Fuel Products.

Energy Sector Outlook – Best Energy Stocks

S&P Capital IQ equity analysts have a positive fundamental outlook on the influential Integrated Oil & Gas sub-industry, as well as most of the sector’s other smaller sub-industry groups. We believe that oil prices will decline slightly from current levels, averaging $91.96/bbl. in 2012 and $89.51 in 2013 as global economic growth slows.

The Capital IQ consensus sees Energy sector EPS rising 11.2% in 2013 versus an 11.9% gain estimated for the S&P 500. According to Capital IQ, the sector’s recent valuation of 12.3X consensus estimated 2012 EPS is below the 500’s P/E of 14.0X, as oil price volatility keeps investors from assigning the sector too high a valuation, in our view. The sector’s P/E-to-projected five-year EPS growth rate (PEG) ratio of 2.1X is above the broader market’s 1.2X. This sector’s marketweighted S&P STARS average of 4.5 (out of 5.0) is above the S&P 500’s average of 3.8.

The S&P GICS Energy Index sector has advanced right up to key trendline resistance off the April 2011 highs, and therefore, we believe there could be a pullback in the near term. In addition, prices have rallied into the beginning of a heavy layer of overhead supply that runs from 540 to 570, and we think this resistance may also keep a ceiling on prices in the short term.

Both WTI and Brent are either at or very near large areas of overhead supply so we think oil prices could pause or correct. In addition, the COT (Commitment of Traders) data is showing high levels of bullishness for crude oil from large speculators (“dumb money”) and high levels of bearishness from commercial hedgers (“smart money”). Relative strength versus the 500 has bounced nicely since June, but the RS line remains in a downtrend off the April 2011 top.

The stocks listed below are all Bullish and priced below their fair value.

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DK Delek US   Holdings Inc.
MPC Marathon Petroleum Corp
TSO Tesoro Corporation
CVX Chevron Corporation
STO Statoil ASA
HFC HollyFrontier   Corporation
VLO Valero Energy   Corporation
SXL Sunoco Logistics   Partners L.P.
LGCY Legacy Reserves Lp
CLMT Calumet Specialty   Products

2 Dividend Stocks with Growing Payouts

While dividend yields continue to be depressed due to rising prices in known income stocks, there are some stocks flying under the radar with good dividend prospects.  These stocks are frequently overlooked by income investors who are looking at the widely held blue-chip stock selections.  These companies continue to focus on growing their business in their core areas year after year.  Investors should take a look at these 2 companies that are producing excellent income growth and increasing dividends.

Calumet Specialty Products Partners (CLMT) is a master limited partnership and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feed stocks into customized lubricating oils, solvents, waxes and asphalt used in consumer, industrial and automotive products. Calumet also produces fuel products including gasoline, diesel and jet fuel.

Calumet is growing sales through business acquisitions including the recent agreement to acquire Royal Purple, Inc., a manufacturer of lubricants for automotive and industrial applications, for a total consideration of $335 million and an agreement to acquire Montana Refining Company, Inc. for aggregate consideration of $120 million.  Calumet is projected to have an earnings growth rate of 29% over the next 3-5 years.  Yet, Calumet is currently trading at a PE of 8.27 compared to the industry average of 13.

For the six months ended June 30, 2012, Calumet reported net income of $117.6 million compared to a net loss of $3.5 million for the same period in 2011.  We see specialty products sales increasing 13% to 14% in 2012, based on improving demand and contributions from recent acquisitions. We believe the partnership will benefit from the continued strength in the drilling fluid market, reflecting higher shale production.

On July 20, 2012, the Company declared a quarterly cash distribution of $0.59 per unit on all outstanding units or $35.9 million for the second quarter of 2012. This quarterly distribution represents an increase of 5.4% over the first quarter of 2011 and a 19.2% increase from the second quarter of 2011.

Calumet has a dividend yield of 9.1% and has increased its dividend 31% over the last 3 years.  Calumet has a 12-month price target of $30, a 15% increase from the current trading price.

Healthcare Services Group, Inc. (HCSG) provides housekeeping, laundry, linen, facility maintenance, and dietary services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States.  Healthcare Services Group, with a market cap of $1.43 billion, continues to grow revenues and income while increasing dividends each quarter.

Healthcare Services Group reported that revenues for the three months ended June 30, 2012 increased over 26% to$267,108,000 compared to the same 2011 period.  Net income for the three months ended June 30, 2012 increased 15% to $11,320,000 or $0.17 per share, compared to the 2011 second quarter.  Healthcare Services Group is projected to increase EPS 21% next year.

Healthcare Services Group increased its quarterly cash dividend to $0.16375 per common share. This represents the 37th consecutive regular quarterly cash dividend payment, as well as the 36th consecutive increase since the Company’s initiation of regular quarterly cash dividend payments in 2003.  Healthcare Services Group has a current dividend yield of 3.11% with a 5-year average dividend growth rate of 18%.

Healthcare Services Group has a 12-month price target of $24 based on projected EPS.  Healthcare Services Group has an equity summary score of 7.7 out of 10 for a Bullish outlook.

Quality Stocks with High Yield Dividends

With so investors seeking high yield, it’s important for income investors to find dependable high yield dividend payers that they can count on.  With projections for a slower growth economy amid historically low  interest rates, it’s now more important than ever to find these solid dividend paying companies as there are fewer places to turn to for high yielding investments without taking on unwelcomed risk.  By screening for stocks with market beating yields, double digit growth rates, above median increasing cash flows and a strong balance sheet, this screen seeks to do just that by finding those companies that could turn into long-term core holdings for an income producing portfolio.  And with a Zacks Recommendation of a Buy or at least a Hold, these stocks have the potential to become total return winners as well.

Dividend paying stocks can help you build out a well diversified portfolio.  And if projections for a slower growth economy come true, the investment vehicles with ‘something extra’, i.e., solid and dependable dividends, will become even more highly sought after as investors seek out the best total returns while keeping a watchful eye on risk.

This list is filled with high yield stocks, many above 10%, that are ranked buy or hold by Zachs Investment Research.  Some of the popular names include: FUN that is being recommenmded by Jim Cramer; FSC & MAIN that are monthly dividend payers, CXS & PMT that offer mortgage REIT yields; and several energy stocks for continuing dividends.  The table belows displays the list of high yield dividend stocks.

high yield dividend stock with high quality ratings

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