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Category: Dividend Stock (Page 2 of 3)

The Allure of Dividend Stocks

When I first started investing, I was never really was interested in dividend stocks.  I wanted appreciation.  I wanted to find the next Google (GOOG), Apple (APPL), Microsoft (MSFT), that next stock that will leap 1000% in appreciation retuns.  The further I have gone into stock investing the more I understood that its rare to find these good stocks.  I also know for retirement accounts which do not get hit with capital gain taxes when you sell that they are perfect for dividend stocks.

If I have a choice to a brokerage account or retirement account, you always want to invest the dividend stocks into the retirement account.  You get the interest without any of the taxes involved.  If I had bought the dividend stock in my normal after-tax brokerage account, I would have to pay taxes on the interest.  Therefore, I rather load up my retirement accounts with dividend stocks that will pay for the long-term.  This means I am looking for dividend stocks that have continued to raise their dividend year-after-year and they have a long-term track record of stock rising.  It doesn’t matter that it appreciates only a little at a time because I am getting the nice dividends.

In the past year, I have advocated oil stocks like Chevron (CVX).  It pays a nice dividend but it also has appreciated rapidly since my recommendations.  The price makes it more tough to recommend such a stock since that means the dividend percentage is lower when you purchase at the price currently at $113 which gives it a 3.87% dividend.  This isn’t bad but I also think the price is a little high.

I rather look at stocks that are weak now and undervalued.  With the Fed planning to meet in the middle of December, there is a high chance that they will raise interest rates.  This means strong dividend stocks will most likely get sold off.  I am setting my radar on Omega Healthcare Investors (OHI) which pays over 8% dividend.  I am also looking at New Senior Investment Group (SNR) which pays over 10% dividend.  I have discussed them in the past article and I think they will be nice long-term holds that will continue to pay the dividend and hopefully raise it long term.

What’s to buy these days? Dividend Healthcare REIT?

With the stock market reaching new highs, its tough finding good deals.  I haven’t bought anything recently but I still hold stocks that I bought cheap and continue with buy and hold.  For those that are looking to invest money on the sideline, I would recommend you stick with dividend stocks for your retirement funds since you are not paying any tax on that.

HCP, a healthcare REIT,  currently yields over a 6% dividend that has a stock price that has remained fairly steady for half a decade.  Even though the stock price didn’t move much, you had a nice dividend that is much better than a savings account getting less than 1%.  This stock has underperformed in analysts books and it even went as low as $26 earlier this year.

HCP is planning to spinoff part of its real estate portfolio into another REIT.  Shareholders of HCP will get shares in the new spinoff that will consist of senior housing and post-acute real estate.  HCP will become a stronger more stable REIT after the spinoff since the new REIT SpinCo is considered more risky.

The baby boomers are reaching senior age.  The percentage of senior population is expected to rapidly increase in the following years.  With the advances in healthcare, you can expect people to be living longer which means more demand for senior housing.  This should help HCP in the long-term.

In the short term, HCP has had bad management and it has poorly used shareholder capital.  The SpinCo REIT will get rid of its bad assets.  Many investors thing that HCP might be worth looking into investing after the spinoff which is another play on the stock pick.

I personally think that the spinoff would help both companies.  The SpinCo REIT would be more interesting to investors with a stronger aptitude for risk and gains.  It would also mean a cash infusion to HCP.  I do expect that HCP’s stock price will eventually start moving up again which would mean you would continue to get the dividend and a nice appreciation on the stock price.

Chevron for Future Growth

Chevron is a major oil & gas play that has seen bad times in a couple recent quarters.  It has a yearly high of $112.20.  It has dropped more than 20% since that high and even reached lows at $69.58.  For the long-term investor, expect this stock to eventually reach the highs and surpass it.  In the recent times, you can even get a nice dividend of almost 5%.

It’s not possible to get that dividend in your savings account.  You can expect this stock to only to continue to move up as the economy improves globally.  Oil is still the main resource used for energy and it will only to continue to be used more in the future.  You can be patient with this stock and I actually would just hold on to it.  I have no reason to sell when I get a nice dividend and fundamentally sound stock like Chevron.

Wal-Mart is a Bargain Right Now!!

How did I miss this stock?  We get so busy looking at our portfolio that we miss these opportunities.  Well, it just so happens that I was viewing the tweets on StockTwits and someone mentioned that Facebook (FB) has taken a higher market value than Wal-Mart (WMT).  They put the stock chart side-by-side and my surprise was seeing that Wal-Mart has dropped rapidly the past 3 months.

Ok, so yes, Facebook (FB) has higher marketshare and it definitely can keep moving up higher.  However, we need to have some conservative stocks that will also continue to do well for the long-term.  Wal-Mart is the answer to the conservation stock picker that wants to get long-term growth, appreciation, and a steady winner.

Why Wal-Mart?

Fundamentals are really good for Wal-Mart.  It currently trades at a PE of 14.7.  Compare that to its competitors Target that is running at a PE of 20.5 and you have a winner of a stock that is under-valued, under-appreciated, and you know it won’t last forever.  You also get to collect a nice 2.7% dividend for owning WMT.

Can it go down further?

Of course the stock can go down further, no one holds a crystal ball.  However, I’m sure big companies like Berkshire Hathaway know what they are doing when almost 5% of their portfolio is invested in Wal-Mart.

Oil Stocks and Plan B

There has been a lot of discussion over the investing of oil stocks.  I, for one, believe there is great potential in oil stocks but there is a ongoing concern that oil prices will be low for a long time and this means that most investors don’t want to touch oil stocks.  Of course, most of these comments are coming from stock traders.  They want to get in and out when the market news comes out.  Personally, I don’t have the time nor the discipline to keep up with all the market hoopla (trends), up and down action of the day, and look at these stocks minute after minute.

As an investor, there is great potential in oil stocks.  First, you get a nice dividend.  BP is giving a dividend at 5.80% and COP is giving a dividend of 4.30%.  This means while you wait for the stock to appreciate you collect a nice premium.  I don’t know about you but oil is necessary and it will be necessary for a long time.  These two companies also follow a strategy called Plan B.  This means that they are strategizing their portfolio in the belief that oil prices will not rise soon.  Of course, this is a more conservative strategy than the other oil companies but its safer, less risky, and you are still collecting a nice dividend.

I recommend taking a look at both BP and COP as I own them and I will hold them for the long term!

Procter & Gamble – The Slow and Steady Earner

You are in it for the long-run, you are tired of trading the markets but you still want to make the stock returns with it.  Procter & Gamble is a nice old-age company that continues to perform and you get to collect a dividend at the same time.  They have had some recent mishaps and they are priced to go up in value.  The stock has hovered around the high $60s for quite a bit of time.  It yields around a 3.3% dividend and it isn’t shaken too much by the market.  There is plenty of reason to see this stock move up in the future.

You also get the added benefit of following Bill Ackman.  He is on the board and suggesting that the company buy of some of their own stock to bring up the value.  These are all good things for the stock investor.

Buy it, forget it, and look back at retirement with a winner!

Hugoton Royalty Trust, a Dividend Play on Natural Gas

Hugoton Royalty Trust, HGT, looks like it is ready to break out. Plus in addition to that, you get a nice dividend of over 8%. The dividend changes depending on the market fluctuations. This stock is a play on natural gas. It has been going up since a huge downturn last year.

Why be bullish?

This company was started by XTO Energy. They spun it off and own a bunch of shares in this company: “It holds a 80% net profits interests in certain natural gas producing working interest properties of XTO Energy Inc.” This trust is always producing profit and giving the money back to the shareholders. When the price of natural gas goes up, they can give more dividends. They also use the money to look for more opportunities in drilling and producing more natural gas.

Recently inventories of natural gas has been going down. This is in part to the prices of oil moving up and just natural gas being at very low prices because of the high supply of inventories that have been built up. The price will continue to increase as natural gas producers slow down. The recent statistics on home sales increasing also gave a more positive outlook that natural gas demand will increase. OPEC is also cutting back on oil production which will furthur the demand for natural gas as a substitute.

Technically HGT hit a triple top at $18.60. It’s at $19.50 currently and it did not drop with the stock market the past couple days! The volume looks good and it appears it’s time for it to move up to new territory. Before this recession, the last time it hit these highs were in 2003. It continued to rise to $40 as commodities increased during the decade. I think this stock has reached a bottom. For those seeking stocks that are defensive and want to make a play on inflation, I’d definitely suggest this stock.

Stocks to Look at for 7/6/09-7/12/09

Sorry for not posting for a while, I’ve been out-of-the-country and on my own stock research sabattical researching short-term trading and swing trading.  Now we can get down to business and make more money than just doing value investing.  I’m not to fond of big drops in the market.  If we want to make cash, we ogtta be able to swing our trades no matter what the scenario.

The past week we bottomed out at the market at 9200.  The only next point of resistance is at 10,500.  We have a lot of bull to go and the stocks that I am posting below all have an advantage to gain for the next couple weeks.

ETFC, E-trade, is a online broker company and mortgage financing company.  They trade at $1.55 but ran up to $1.92 last week before hitting a low of $1.50.  A lot of institutional investors have been trading this stock.  Citadel investment put out a press release stating they will not be selling their shares of stock.  They are the largest holder with 120 million shares!  Goldman Sachs bought over $38 million and Barclays bought over $60 million worth of shares.  There has been recent buying by Vanguard, IShares, Equity Advisors, and other mutual funds.  Companies like Vanguard continually buy more shares through 401k programs.  I see this company as a very safe trade at these levels.  There is also a ton of shorts in this stock.  I definitely see it breaking $2 just by the short-covering alone.  Great stock to get in now!

CMO, Capstead Mortgage Corporation, is a mortgage REIT that invests in residential and commercial properties.  It makes money by investing in mortgage loans.  The last quarter is gave a whopping .58 dividend.  This comes out to a yield of 17.34%.  The company makes money by profitting off the spread on interest rates.  Since the United States is at all time lows on interest rates it is making tons of cash right now.  Just last week the interest rate for short-term loans went down furthur this will add to its profitability.  The only way this company will lose is if the interest rates go up; however, this only happens when the FED wants to slow the growth of the country.  We have the highest unemployment rates for the past 27 years and tons of mortgages that will be going into foreclosure for at least the next year.  I highly doubt interest rates will be rising anytime soon.  Technically, the daily stoichastics are at the lowest its been for the past few weeks.  The risk is low right now.  Buy now at $13.35 and hold it long-term for at least a year.  Easy dividends and easy cash.  Nothing to lose.

FSLR, First Solar, has low stoichastics.  It has already started a move up from hitting a low of $112.  It currently trades at $121.47 and I see it moving up to $145-150 range.  After that depending on market conditions it can either move up or drop.  This is a very easy trade right now with the current bullish market conditions and solars at all-time lows.  If you want to play with more leverage, JASO, JA Solar Holdings, moves up a lot more.  I don’t know what the long-term trend for solars will be but for the short-term they both look like fine plays.

BSTK is a penny stock with a lot of potential.  This stock currently increased 100% from .12 and it was at a low of .05.  I see it moving it .50 cents before it hits strong resistance.  Another great short-term play!

Good luck!

Canadian Sands + Dividend = $$

As the market continues to plummet and things continue to worsen, dividend stocks will allow you to continue to win.  They work for long-term investors.  People that can wait it out a few years.  As they wait, they get rewarded.  I have a couple stocks I like currently that are pretty safe and if you have money to invest it will make you pretty rich in a few years.

HTE, Harvest Energy Trust, is a open-ended investment trust in Canada.  Their primary investments are in oil-related industries including shale-mining, oil refining, and drilling.  They also do invest heavily in petroleum and natural gas.  Right now, with crude oil hitting highs of $70, their stock price of $6.21 looks like a real bargain.  This gives you a dividend of 8.40%.  As with all stocks, make sure you do your due diligence!  I mention DD because HTE will get taxed in 2011 by the Canadian government and this will lower the dividend.  I do believe buying at this time will continually yield a pretty good dividend.  As oil prices go back up, you will see this stock price go up and you will happily be enjoying a nice dividend no matter what happens in the future.  I do believe oil prices will rebound, and I also believe this will rebound sooner than later.

PWE, Penn West Energy, is another open-ended investment trust in Canada.  They are paying off a yield of 11.40%. This one is also at a very low price.  I think both will be a good way to make money long-term and if you are willing to wait it out, you will be handsomely rewarded as oil gets back to its normal $80+.  Oil could become the next major currency.  Think about it, US dollar going down, what does everyone still use in the world?  Even with hybrid cars we still rely on that black gold.

If you have some money in your bank, put some of it in these two stocks.  Why not collect a fatty dividend!  When the market finally moves up, you will continually be rewarded and when the time comes when you need to sell, you can surely bet the price of these stocks will be more than it is right now!

Dividends are the Way to Richness Part II

Smirnoff, Jonnie Walker, Guiness, Baileys, Captain Morgan, Cuervo, have you heard of any of these liquors?  All of these are owned by Diageo, stock ticker DEO, and they continue to sell even during our current depression.  An article from Smart Money states that “Diageo’s balance sheet, paradoxically, can become stronger the longer some of its products sit in the warehouse. That’s because while the products of most companies lose value the longer they remain unsold, more than a quarter of Diageo’s revenues come from some form of whiskey, which often commands higher prices as it gets older.”  How many companies do you know have inventory that makes more money the longer it sits?  This company can sell during good times and bad because everyone around the world drinks.  The president is even shifting advertising to the more ‘moderately’ priced alcohol because of the economic slowdown.  Sounds like they have all corners covered.

With a dividend yield of 6.10% at the current price of $52.08, this looks to be a great  bargain.  Even if the prices drop furthur and the economy goes down, you will get a much better yield from this then the bank.  You might as well drink some of those woes away while waiting also, and you can with the dividend.  Maybe your drink is some delicious Bailey’s on the rocks, or you like to mix it up with Bailey’s and Guiness, whatever your preference, you will be living up to drinks that continue to sell in bars, liquor stores, markets, etc.

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