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4 Companies with Bullish Outlooks Increasing Dividends

As we roll through earnings season, more companies are increasing their dividends.  For income investors, the stocks listed below are rated bullish or better by their equity summary score.  These stocks are worth a look as candidates for a dividend growth portfolio.

CBS (CBS) is boosting its quarterly dividend by 20%, to 12 cents a share. The additional quarterly payout of two cents will cost the company roughly $51.9 million more a year.  The dividend is payable on October 1, 2012 to shareholders of record on September 10, 2012.  CBS also boosted its share repurchase program by 57% to $4.7 billion and added to its quarterly dividend, as it seeks to increase shareholder returns.

Bottom line: CBS has a dividend yield of 1.43%.  CBS has an equity summary score of 9.7 out of 10 for a VERY Bullish outlook.

Calumet Specialty Products Partners, L.P. (CMLT) announced an increase in its quarterly cash distribution to $0.59 per unit ($2.36per unit on an annualized basis) for the quarter ended June 30, 2012 on all of its outstanding limited partner units. This distribution represents an increase of 5.4%.  The distribution will be paid on August 14, 2012 to holders of record of such units at the close of business on August 3, 2012.

Bottom line: CLMT has a dividend yield of 9.41% and has increased dividends for 8 straight quarters.  CLMT has an equity summary score of 9.0 out of 10 for a Bullish outlook.

Baxter International (BAX) raised its quarterly divided by 34% and approved a new share repurchase program of up to $2 billion of the company’s stock as the health-care company looks to boost shareholder value.  The medical-products company raised its quarterly divided to 45 cents a share from 33.5 cents, a move that will cost an added $253 million a year.  Last week, the company reported second-quarter earnings rose 7.5%, although it said currency impacts weighed on its revenue growth.

Bottom line: BAX has a dividend yield of 3.02% with a 5-year average dividend growth of 21.85%.  BAX has an equity summary score of 7.8 out of 10 for a Bullish outlook.

Holly Energy Partners, L.P. (HEP) has declared a cash distribution of $0.91 per unit for the second quarter of 2012. For the prior quarter, $0.895 was distributed to unitholders.  Holly Energy has increased its distribution to unitholders every quarter since becoming a public partnership in July 2004. This marks the thirty-first consecutive quarterly increase. The distribution will be paid August 14, 2012, to unitholders of record August 7, 2012.

Bottom line: HEP has a dividend yield of 5.71% with a 5-year average dividend growth of 5.69%.  HEP has an equity summary score of 7.1 out of 10 for a Bullish outlook.

Bullish Stocks Increasing Dividends

Agrium Inc. (AGU) announced that it’ll pay a semi-annual dividend of 50 cents a share on July 12 to shareholders of record as of July 1. The payout is more than double its prior dividend of 22.5 cents a share. “The further increase in our dividend is an indication of the strength in our earnings outlook across both our retail and wholesale operations and how our growth strategy has continued to deliver results for the benefit of shareholders,” the company said.  AGU has a dividend yield of 1.26%.  AGU has an equity summary score of 7.6 out of 10 for a Bullish outlook.

Package-delivery company FedEx (FDX) announced a one-cent, or 7.7%, dividend increase that takes its quarterly payout to 14 cents a share and will cost the company about $12.6 million more a year.  FDX has a dividend yield of 0.64%.  AGU has an equity summary score of 8.0 out of 10 for a Bullish outlook.

Upscale apartment developer Post Properties Inc. (PPS) raised its quarterly dividend by 14%, as the real- estate investment trust looks to boost shareholder value.  The three-cent increase brings Post’s quarterly payout to 25 cents a share and will cost the REIT about $6.4 million more a year.  PPS has a dividend yield of 2.03%.  PPS has an equity summary score of 8.0 out of 10 for a Bullish outlook.

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.

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Best Performing High Yield Dividend Stocks in January 2012

The table below shows the best performing high yield dividend stocks for January 2012.  These are stocks with a dividend yield of 3% or higher and a summary equity score of very bullish (9.1 or greater on a 10 point scale).  These stocks are ranked by their price performance in the last 4 weeks, January 2012.   Here are some highlight notes from stocks making the top of the list.

Tessco Technologies (TESS) is highest with a dividend yield of 3.37% in the Electronic Equipment & Instruments industry .  TESS provides products and value-added services in the wireless communications industry.  The Company serves customers in the cellular telephone, personal communication system, paging, and mobile radio- dispatch markets.  TESSCO offers manufacturer brand name products, as well as its own products which are sold under the Wireless Solutions name.  In the past 52 weeks, shares of Tessco Technologies have traded between a low of $10.31 and a high of $17.25 and are now at $17.07, which is 66% above that low price.  Over the last five market days, the 200-day moving average (MA) has gone up 0.6% while the 50-day MA has advanced 1.2%.

Seagate Technology (STX) posted Dec-Q EPS of $1.28, vs. $0.31, beating our $1.02 estimate.  Sales rose 18% to $3.2B on a 24% increase in the average selling price  of hard disk drives due to the industry’s supply/demand imbalance. STX  signed long-term agreements with its major customers. As a result, we  believe hard disk prices will be more stable, but will remain at  slightly higher levels. We also project more cost synergy from the  acquisition of Samsung’s disk drive business. We raise our FY 12 (Jun.)  EPS estimate by $1.04 to $5.34, FY 13’s by $1.76 to $5.83, and our  target price by $8 to $32.

Shares of Cedar Fair (FUN) traded at a new 52-week high $26.31 on February 1 2012.  This new high was reached on approximately average trading volume as 214,000  shares traded hands, while the average 30-day volume is approximately 277,000  shares.  FUN has potential upside of 12.7% based on a current price of $26.18 and analysts’ consensus price target of $29.50.  Cedar Fair shares have support at the 50-day moving average (MA) of $22.82 and additional support at the 200-day MA of $20.44.  Cedar Fair, L.P. owns and operates amusement parks.  The Company’s parks operate under the Cedar Point, Knott’s Berry Farm, Dorney Park & Wildwater Kingdom, Valleyfair, and Worlds of Fun and Oceans of Fun names.  Cedar Fair’s parks are family-oriented theme parks that are located in various areas of the United States.

High yielding Real Estate Investment Trusts (REITs) such as Chimeria Investments (CIM) have performed well in the current economic climate. As reported in The Wall Street Journal, the MSCI U.S. REIT Index returned 8.7% in 2011, more than four times the return of the Standard & Poor’s 500-stock index. REITs are a popular play in the current economy due to their steady dividends. REITs can avoid corporate income tax, provided they invest in real estate-related assets and pay out at least 90 percent of their income in dividends to investors, rather than reinvesting in their business.

Citizens & Northern (CZNC) is one of today’s biggest movers, up 1.9% to $20.99 (January 24 2012).  The Dow is down 0.5% to 12,608 and the S&P is currently down 0.2% to 1,311.  In the past 52 weeks, shares of Citizens & Northern have traded between a low of $13.10 and a high of $21.00 and are now at $20.99, which is 60% above that low price.  Over the last five market days, the 200-day moving average (MA) has gone up 0.3% while the 50-day MA has advanced 1.3%.  Based on a current price of $20.99, Citizens & Northern is currently 16.6% above its average consensus analyst price target of $17.50.  The stock should find initial support at its 50-day moving average (MA) of $17.91 and further support at its 200-day MA of $16.20.  Citizens & Northern Corporation is a holding company for Citizens & Northern Bank and First State Bank.  The Banks provide a full range of banking services, including deposit and loan products for personal and commercial customers, and trust services and insurance products.  Citizens & Northern operates in north central Pennsylvania.

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