Get Rich - Stay Rich - Investing for Monthly Income

Posts Tagged ‘HIGH YIELD DIVIDEND INVESTING’

$6.00 or 23% Special Dividend Announced

Generac Holdings Inc. announced that its board has declared a previously announced special dividend of $6 per share to be paid in June.  GNRC is trading at $26.00 so the $6.00 special dividend is a 23% yield.  Generac (GNRC) will use the remaining proceeds from the new term loans and cash on hand to fund a special cash dividend, which totals about $408 million, and for related refinancing fees.  The special dividend will be paid June 29 to shareholders of record June 20.

Booz Allen Hamilton Holding Corp (BAH) announced plans to pay a special cash dividend of $1.50 a share. With BAH trading at $15 per share, the special dividend is a 10% dividend yield.  This dividend is payable on June 29 to shareholders of record as of June 11.  In addition, BAH approved a quarterly dividend of 0.09 per share. The dividend is payable on June 29, 2012 to shareholders of record on June 11, 2012.

This 12% Dividend Yield is Still a Buy

Crexus Investment Corp. (CXS) operates as a specialty finance company in the United States. It acquires, manages, and finances commercial mortgage loans and commercial real estate debts, commercial mortgage-backed securities, and other commercial real estate-related assets.  The principal business objective is to provide attractive risk-adjusted returns to investors over the long-term, primarily through dividends and secondarily through capital appreciation.

CXS is trading at $11.21 and has a market cap of $865 million.  CXS raised their quarterly dividend from $0.30 to $0.35 in the 4th quarter, an increase of
16.7%.  CXS has a dividend yield of 12.49% that should remain solid in the near future.  CXS has increased its dividend for 8 straight quarters – from $0.07 in Q1 2010 to the current $0.35 in Q4 2011, a 400% increase within 2 years.

CXS reported fourth quarter core EPS of $0.49, $0.05 higher than the estimate. A larger than expected discount accretion accounted for the difference versus the estimate. GAAP EPS were $0.55 including $0.06 of gains from selling the Agency MBS portfolio.

Estimates: We are maintaining our 2012 and 2013 core EPS estimates and establishing a 2014 estimate at $1.35. Near-term visibility into earnings remains low given the volatility around discount accretion, but visibility should increase as the portfolio transition continues.

Investment activity: Crexus completed $143 million of investments during the fourth quarter including its first 2 triple net lease investments for a total
of $33 million. The company continues to make progress in transitioning the portfolio into longer duration higher yielding assets. We will look for management commentary on the call about the 2012 outlook for capital deployment given the sale of Agency portfolio and the current $200 million cash balance.

Revenues: Core net revenues totaled $41.4 million, 10% higher than the estimate.  For the fourth quarter discount accretion on the loan portfolio was $28.8 million versus $21.0 million expected and $30.9 million in the third quarter which accounted for most of the beat relative to estimates.

Valuation: Crexus is trading at a 6% discount to current book value and yielding 12.49%.

Reiterate Outperform: The transformation of the portfolio into higher yielding assets combined with the start of the triple net leasing investments increases our conviction that Crexus should trade at a premium to book value.  The current price to book is 0.94, buy CXS when it is below 1.0 and sell when it moves above 1.5.

Dividend Stocks with Bond-like Yields

While some wonder if dividend investing is a fad, the strategy probably has staying power. Bonds yield little, and short-term rates are near zero, leaving individuals with few places to find yield. Demographics favor income investing; millions of baby boomers retire each year, and they want income to supplement Social Security and minimize the drawdown of retirement assets.

Opportunities are limited in the bond market, with Treasuries topping out at 3% and high-quality 30-year municipals at only 3.5% after a sharp rally in recent months. These yields are near the lows of the past 50 years.  Companies with high and sustainable dividends are often valued more like bonds than stocks, partly because 4% and 5% dividend yields often are higher than the rates on many corporate bonds.

A 4% dividend seems to resonate with investors who are willing to pay premium prices for companies with high yields. Some of the strongest S&P 500 industry groups last year — utilities, consumer staples and drugs — had some of the index’s highest yields.  During 2011, high-dividend payers were the top-performing group in the S&P 500, with the top 50 yielders at the start of 2011 — all with 4%-plus yields — returning more than 8% (not including dividends), compared with a flat showing for the entire index, according to Birinyi Associates.

The companies on the list below, including Merck (MRK), Pfizer (PFE), Waste Management (WM) and American Electric Power (AEP), have sustainable dividends and reasonable price/earnings ratios.

Click to enlarge

 

Shop at Chanceslilyshop.com

Shop at Chanceslilyshop.com

Subscribe for FREE Trades

Subscribe for FREE Trades

* indicates required
/ ( mm / dd )
Archives