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Posts Tagged ‘expected share buybacks along with dividend yields’

Ameriprise offers a Total Yield Stock Play with a Growing Dividend

While income investors constantly seek out stocks with growing dividend yields, they can also benefit from share buybacks.  The share buybacks present an opportunity for investors to get capital gains in addition to current income.  Currently, 80% of S&P 500 companies are buying back shares. Combine this with dividend yield and you can get a total yield of greater than 10% in 2014.  We are presenting a series of stocks worth a look.

Ameriprise Financial (NYSE: AMP) has a projected share buyback yield of 14% and a current dividend yield of 1.95%.  This provides investor a potential for a total yield of 15.95%.  The stock has an equity summary score of 7.9 out of 10 for a BULLISH outlook.  The stock has a 12 month price target of $104.

Ameriprise has a one-year dividend growth of 48%.  The dividend has grown from $0.35 in Q3 2012 to the current $0.52 in Q3 2013.  The 5-year average annual dividend growth rate is 25%.  AMP has a current dividend payout ratio of 36%.

Second-quarter 2013 net operating revenues were up 9%, year to year, on a 14% increase in management and advice fees and a 4% decline in net investment income.  Assets under management and administration of $703 billion were up 7% from a year earlier, helped by market appreciation.  We expect at least modest single digit annual revenue growth in 2013 and 2014, on a sustained pickup in asset inflows.  We think the Annuities segment will continue to be under pressure from the low interest rate environment in the near term, and that Annuities and Protection segment revenues will be relatively stable over the next two years, holding back the company’s overall revenue growth rate.

Balancing fund underperformance and outflows, particularly in International equities, slower-than-expected margin improvement, and AMP’s commitment to return capital to shareholders, we believe the shares are appropriately valued. We have a positive view of AMP’s focus on the growing market of affluent households.  We believe AMP is well positioned for long-term growth due to its shift toward the less capital-intensive and higher growth potential businesses of retirement planning advice and asset management, as well as a more international focus. Also, further economies of scale should be realized as integration of Columbia Management was nearly completed in 2012.

Best Income Stocks for 2013 – Validus Holdings (VR)

Validus Holdings, Ltd. (NYSE: VR) is a provider of reinsurance and insurance, conducting its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. (“Validus Re”) and Talbot Holdings Ltd. (“Talbot”).  Validus Holdings is a great total income play with a a 13.9% payoff and an increase in EPS of 85% in 2013.

Validus Holdings made the Goldman Sachs “Best Income Stocks” list for 2013.  In a recent note, Goldman Sachs Group Inc. pointed out a number of stocks that could provide some easy money for investors by virtue of what the Wall Street bank calls a “social contract” — a combination of earnings appreciation due to expected share buybacks along with dividend yields.  It could be easy money, provided shares remain stable or rise, for investors looking for as close to a guarantee as equities can offer.

Validus Holdings is projected to have a 10.6% earnings accretion and a 3.3% dividend yield, for a total combined 13.9% payoff. Based in Hamilton, Bermuda, the reinsurer is trading in the mid-$30 range and has a Goldman price target of $44.

Validus has an equity summary score of 8.4 out of 10 for a Bullish outlook.  First Call Analyst consensus have a BUY recommendation with a 2.0 rating.

Validus Holdings recently announced that it has completed its acquisition of Flagstone Reinsurance Holdings, strengthening Validus’ leading property catastrophe reinsurance and short-tail specialty insurance platform.  Due to the acquisition, EPS for 2013 are projected to increase 85% to $4.83 from $2.60 in 2012; and by 8.3% to $5.23 in 2014.

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Validus Holdings, Ltd. reported net income available to Validus of $207.3 million, or $2.11 per diluted common share for the three months ended September 30, 2012, compared to $56.5 million, or $0.54 per diluted common share, for the three months ended September 30, 2011.  Net income available to Validus for the nine months ended September 30, 2012 was $499.2 million, or $4.88 per diluted common share compared to net (loss) attributable to Validus of$(6.0) million, or $(0.12) per diluted common share for the nine months ended September 30, 2011.

Net investment income for the three months ended September 30, 2012 was $25.5 millioncompared to $27.7 million for the three months ended September 30, 2011, a decrease of $2.3 million, or 8.1%. Net investment income for the nine months ended September 30, 2012 was$79.1 million compared to $84.2 million for the nine months ended September 30, 2011, a decrease of $5.1 million or 6.0%.

The Company has an annualized return on average equity of 18.9% and annualized net operating return on average equity of 16.4%.

Validus said that it expects to record a net negative financial impact from Hurricane Sandy, net of reinstatement premiums and reinsurance, retrocessional and other recoveries in the amount of $333.1 million. This amount is apportioned between VR’s operating segments as$256.2 million to the Validus Re segment and $76.9 million to the Talbot segment.

Validus Holdings recently announced that it has completed its acquisition of Flagstone Reinsurance Holdings, strengthening Validus’ leading property catastrophe reinsurance and short-tail specialty insurance platform.

Validus Holdings announced that its Board of Directors has declared a quarterly dividend of$0.25 per common share and $0.25 per common share equivalent for which each outstanding warrant is exercisable.  Validus has a dividend yield of 2.84%.

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