Saturday, October 1, 2011
Dividend stocks should be a part of everybody’s long-term stock portfolio. Let’s take a look into the tobacco industry, an industry that I have analyzed by the best yielding dividend stocks a few months ago. The industry is shadowed by negative volume growth and law suits. A positive is the strong cash flow which tobacco stocks generate. In addition, they pay huge dividends and have a very stable business. The industry has a total market capitalization of $235 billion, the average P/E ratio is 14.3, P/B ratio 4.1 and the average dividend yield amounts to 4.4 percent.
I screened stocks from the industry with a dividend yield more than 3.5 percent and a 3-Year Dividend Growth of more than five percent. Below are four major dividend paying players from the tobacco industry that met these criteria:
Here are my four most promising results:
1. Philip Morris (PM) has a market capitalization of $121.1 billion, generates revenues in an amount of $71.5 billion and a net income of $7.9 billion. It follows P/E ratio is 15.8 and forward price to earnings ratio 13.2, Price/Sales 1.7 and Price/Book ratio 33.2. Dividend Yield: 3.7 percent. Years of Consecutive Dividend Increasing: 2 Years. 3-Year Dividend Growth: 11.6 percent. The company paid dividends since 2008. The expected EPS growth for next year amounts to 9.2 and 11.6 percent for the upcoming 5 years. The beta ratio is 0.83.
2. Lorillard (LO) has a market capitalization of $15.3 billion, generates revenues in an amount of $6.3 billion and a net income of $1.1 billion. It follows P/E ratio is 15.1 and forward price to earnings ratio 12.9, Price/Sales 2.4 and Price/Book ratio is not calculable due to a negative book value per share of 5.97. Dividend Yield: 4.7 percent. Years of Consecutive Dividend Increasing: 6 Years. 3-Year Dividend Growth: 12.1 percent. The company paid dividends since 2008. The expected EPS growth for next year amounts to 10.3 and 9.5 percent for the upcoming 5 years. The beta ratio is 0.43.
3. Reynolds American (RAI) has a market capitalization of $22.1 billion, generates revenues in an amount of $8.6 billion and a net income of $1.4 billion. It follows P/E ratio is 16.5 and forward price to earnings ratio 13.4, Price/Sales 2.6 and Price/Book ratio 3.3. Dividend Yield: 5.6 percent. Years of Consecutive Dividend Increasing: 6 Years. 3-Year Dividend Growth: 5.7 percent. The company paid dividends since 2004. The expected EPS growth for next year amounts to 6.8 and 8.0 percent for the upcoming 5 years. The beta ratio is 0.63.
3. Altria (MO) has a market capitalization of $55.9 billion, generates revenues in an amount of $23.9 billion and a net income of $3.4 billion. It follows P/E ratio is 16.4 and forward price to earnings ratio 12.4, Price/Sales 2.3 and Price/Book ratio 12.1. Dividend Yield: 6.1 percent. Years of Consecutive Dividend Increasing: 45 Years. 3-Year Dividend Growth: 9.4 percent. The company paid dividends since 1928. The expected EPS growth for next year amounts to 6.9 and 6.4 percent for the upcoming 5 years. The beta ratio is 0.46.
Also take a look at my screening results of the eight best yielding tobacco stocks. The average price to earnings ratio amounts to 16.0 while the average dividend yield amounts to 5.6 percent. Price to book ratio is 9.6 and price to sales ratio 1.8.
The 30-year mortgage rate is near 4%, the lowest level in 40 years of records, according to Freddie Mac. Despite such cheap financing -- and a smorgasbord of government perks to lure homebuyers -- the bargains have only gotten better: The S&P/Case-Shiller Home Price Index has fallen by nearly a third over five years.
But as investments go, single-family houses aren't ideal. They typically pull in less rent and generate more expense per square foot than multifamily or commercial property, say professional real estate investors.
The good news is that deals have gotten better in managed property portfolios, too. Real-estate investment trusts, or REITs, mostly buy property, and they avoid paying taxes on their income so long as they pay the bulk of it out to shareholders as dividends. Investors buy REITs as they would regular stocks.
REITs have taken a pummeling recently: As of Thursday, the MSCI U.S. REIT Index had declined 19% from its July 22 peak -- worse than the 14% drop for the Standard & Poor's 500-stock index.
That's an opportunity, says Kevin Beddell, manager of the JPMorgan U.S. Real Estate fund (SUSIX). "It's a Goldilocks situation, with low interest rates but also strong demand and tight supply," he says, "and we've had a nice correction, so now prices are attractive, too."
REIT investing can be tricky, however, because the portfolios can specialize in a vast array of real estate properties, from hotels to corporate data centers.
One way for investors to evaluate different portfolios is to compare lease periods for the properties they hold. When leases are short, cash flow changes more quickly in response to economic conditions, for better or worse. When leases are long, the investments are usually steadier.
That puts hotel REITs at one extreme of the universe, because their "leases," or room bookings, often cover only a night or two, and health-care facilities near the other end, because their leases often last 10 or 15 years, according to Mr. Beddell. In between are multifamily housing (typical lease: one year), industrial warehouses (three to five years) and shopping malls (seven to 10 years, longer for department stores).
As with any investment, the most popular parts of the market aren't necessarily where the best opportunities are to be found. Office space in the central business districts of New York City, San Francisco and Washington, D.C., is in strong demand, but many REITs focused on such properties have dividend yields of only 2% to 3%.
Mr. Bedell prefers high-quality suburban office property, which offers more income for the price. "It's not quite as prized as property in city centers," he says. "But the discounts in the suburbs are overdone right now."
Among Mr. Beddell's favorite REITs is Mack-Cali Realty (CLI: 26.75, -0.44, -1.62%), based in Edison, N.J., which has diversified property on the eastern seaboard and offers a dividend yield of 6.4%. It's a stable portfolio and the company is able to borrow at attractive rates, he says.
Another is Corporate Office Properties Trust (OFC: 21.78, -0.65, -2.90%), based in Columbia, Md., whose shares have lost 28% since the end of June, perhaps because of the portfolio's focus on government tenants, especially in the defense field. Investors fear defense spending cuts, but the REIT is focused on information technology tenants that are better protected than weapons makers from cuts, according to Mr. Beddell. The dividend yield is 7%.
Multifamily housing is also well positioned, says Haendel St. Juste, an analyst with Keefe, Bruyette & Woods. With the single-family market having tanked, there's "huge negative sentiment" toward buying a home, he says. Each 1% drop in the homeownership rate brings more than a million new renters, he estimates, and supply hasn't kept pace. What's more, the population of 20- to 34-year-olds, a key renting demographic, is swelling, says Mr. St. Juste.
Mr. St. Juste recommends shares of AvalonBay Communities (AVB: 114.05, -4.35, -3.67%) and Equity Residential (EQR: 51.87, -1.72, -3.21%), which focus on pricey coastal areas like New York, D.C. and Seattle, rather than "sun belt markets, where the jobs don't offer a lot of pricing power for landlords." (Also read, 'ETFs for Operation Twist.')
Health care REITs could offer opportunities as well. Worries about Medicare cuts hurting tenants have turned investors off, but there are two reasons why shares might perform better than expected. First, REIT managers usually require that tenants earn much more than they need to cover their rent, so lower profits wouldn't necessarily change the cash flow on the real estate. Second, property owners are in a good position to help healthcare operators reduce costs -- for example, by combining more operations into a given space.
Mr. Beddell points to HCP and Ventas as good buys. Both have diverse portfolios that include labs, office space, assisted living facilities and more. HCP has the higher yield, at over 5%.
Of course, for investors who don't yet own homes, and who live in markets where prices have plunged, a house purchase might be a better deal than a REIT. The U.S. homeownership rate recently hit a 13-year low. Americans seem newly skeptical of the notion that homeownership is always a great investment -- which is as good a sign as any that it's once again a pretty good one.
Aside from the poor audio quality, Hulbert has some very good insight into the comparisons of this market/economic condition to what we are seeing these days.
Shameless data mining is what Hulbert says is what is masking the realities.
Skip to about 2 minutes in to hear the interview with the technological blip taken care of.
from King World News:
With continued turmoil in global markets, today King World News interviewed internationally followed Martin Armstrong, Founder and Former Head of Princeton Economics International, Ltd.. Armstrong’s firm rose to be perhaps the largest multinational corporate advisor in the world and by the 1997 Asian Currency Crisis, Armstrong was invited by China and he flew to Beijing to advise the Central Bank. Many people don’t realize that Congress went to Martin Armstrong for help as the fires were burning during the financial collapse of 2008.
When asked what Congress wanted, Armstrong replied, Read More @ KingWorldNews.com
This is a very disconcerting sign, and warns us that it might be prudent to watch copper for a while longer prior to entering the long side. In fact, lack of any buying activity might be telling us that copper still has some unfinished business on the downside.
If that proves to be the case, where could it go? A sustained break below 3.0700 will point nearby copper to 2.9800-2.9200 thereafter.
from Wikipedia : Web Bot, or the Web Bot Project, refers to an Internet bot software program that is claimed to be able to predict future events by tracking keywords entered on the Internet. It was created in 1997, originally to predict stock market trends. The creator of the Web Bot Project, Clif High, along with his associate George Ure, who call themselves "The Time Monks", keep the technology and algorithms largely secret and sell the predictions via the website halfpasthuman.com. Clif High has a patent on computer-assisted reading technology which allows reading from computer screens at up to 2000 words per minute. Reaching into other areas of hidden potential within language use by humans, he has been developing a system of software internet agents (like search engines use) and other proprietary processing methods to predict future events. The software project, begun in 1997, captures near-real-time changes in language patterns within internet discussions. Then, employing radical linguistic techniques of his own devising, he develops a model which anticipates future events with some seeming accuracy. The processing has, at its core, a method of assigning emotional values to complex content and time carry-values to predict changes in future behavior based on how people are using language now. Since June 2001 when the work projected a major 'tipping point', that is a 'life-changing event' with aspects of 'military and accident' that would forever change the way we live to occur inside 90 days, the web bot project has continued to give archetype descriptors of future events such as the anthrax attack in Washington, the crash of American 587, the Columbia disaster, the Northeast Power outage, the Banda Aceh earthquake and most recently the flooding of the Red River. As a continuing project, reports are offered from the extracted archetype information at his web site, www.halfpasthuman.com. Webbot predictions predictions about the economy, and U.S. and world events for the summer of 2010 and beyond . Here are some of the highlights of what they see coming: * No warfare between Israel and Iran, at least not until November. * Six very large earthquakes are yet to come during the rest of 2010. * A major tipping point will occur between November 8th – 11th, 2010, followed by a 2-3 month release period. This tipping point appears to be US-centric, and could be a dramatic world-changing event like 9-11 that will have rippling after-effects. The collapse of the dollar might occur in November. * From July 8th, 2010 onward, civil unrest will take place, possibly driven by food prices skyrocketing, and the devaluation of the dollar. * A second depression, triggered by mass layoffs, bankruptcies, and the popping of the "derivatives bubble," will see people moving out of cities. * After March 2011, the revolution wave will settle down into a period of reformation. * A "data gap" has been found between early 2012 running through May 2013. One explanation is that "our civilization gets knocked back to a pre-electronic state," such as brought about by devastating solar activity. * A new benign form of capitalism will emerge during 2017-2020.
The platinum price has suffered significant price declines in recent weeks, along with all other precious metals – the price going as low as $1,535 per ounce this morning. Investors remain fearful about the outlook for the global economy – sentiment which weighs heavily on industrial metals such as platinum and palladium.
While platinum futures for October delivery were trading at $1,918 per ounce on the New York Comex at the end of August, the platinum price has fallen as low as $1,535 per ounce in the last two weeks. Although gold has also suffered severe pullbacks in recent weeks – which amounted to almost $400 per troy ounce – the industrial character of platinum, palladium and silver is stymming bullish developments in these markets. In addition, platinum and palladium demand is mainly due to end users in the global automotive industry. Both precious metals are used in the construction of catalysts, resulting in enormous demand fluctuations and a link to the cyclical development of the world economy. Platinum – similarly to silver – was in heavy demand from the jewellery industry in recent years, at a time that it was becoming increasingly popular among capital market investors. However, investment demand for platinum, palladium and silver has fallen recently in line with falling industrial demand.
Market observers report that the physical demand for platinum will pick up again in the wake of the precious metal's rapid price decline. Indian traders have used the fall in the gold price to stock up their inventories before the start of the upcoming festival season. Industrial end users have also increased their platinum purchases – contributing to a temporary price stabilisation at current levels. However, demand remains depressed in comparison with other periods after a fall in the platinum price. For this reason it will be very difficult to forecast whether the decline in the platinum sector has come to an end, or whether the downward trend will continue after a temporary technical rally.
Fears among investors about an escalation of the global debt crisis and the specter of another worldwide recession have resulted in gold trading at its highest premium over platinum for two decades. Gold has recently been 3% more expansive than platinum, while an ounce of gold has averaged at around 40% cheaper than one ounce of platinum since 1987, as Bloomberg data show.
This is mainly because 58% of platinum´s demand comes from the industrial sector, which is expected to be under severe pressure again in the event of a new global recession. In addition, investors in the gold sector are currently holding investments of $121.5 billion in the form of exchange-traded funds, roughly 53 times more than investments in platinum. Since the expectation prevails that the premium of gold over platinum will still be expanding in the future, and owing to the influence of industrial demand, those interested in platinum should remain cautious.
Via Sean Corrigan of Diapason Commodities
Here we show the divergence in sigmas from the mean of the stable, well-behaved, 43-year distribution laid out between 1952-1974 of the sectoral share of total domestic US holdings of money (currency + demand depos) which took place over the last wild, decade and a half of bubble and bust and outrageously suppressed interest rates...
...apart from the sheer scale of the disruptions involved since 'Irrational Exuberance', note the underlying message that, given that they hold a higher fraction of the stuff than has traditionally been the case, if you want to 'mobilize' the money in existence now, it is the willingness to do so of Non-financial BUSINESSES (both corporate and non-corporate) you need to encourage, a finding which further supports our oft-expressed contention that it is not the level of interest rates or currency parities, but the extreme degree of regime uncertainty which is the enervating factor and that this last is as much to blame for the current, sub-par recovery as it was in the FDR/Morgenthau/Eccles 1930s - and for similar reasons relating to the stultifying effect of an excess of overactive, arbitrary political intervention amid a patently incomplete liquidation of the mistakes of the prior Boom!!!
Prophets Of Doom: 12 Shocking Quotes From Insiders About The Horrific Economic Crisis That Is Almost Here
A lot of people in politics and in the financial world know what is about to happen. Once in a while they will even be quite candid about it with the media.
As I have written about previously, Europe is on the verge of a financial collapse. If things go really badly, things could totally fall apart in a few weeks. But more likely it will be a few more months until the juggling act ends.
Right now, the banking system in Europe is coming apart at the seams. Because the global financial system is so interconnected today, when major European banks start to fail it is going to have a cascading effect across the United States and Asia as well.
The financial crisis of 2008 plunged us into the deepest recession since the Great Depression.
The next financial crisis could potentially hit the world even harder.
The following are 12 shocking quotes from insiders that are warning about the horrific economic crisis that is almost here....
#1 George Soros: "Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation."
#2 PIMCO CEO Mohammed El-Erian: "These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy."
#3 Attila Szalay-Berzeviczy, global head of securities services at UniCredit SpA (Italy's largest bank): "The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits."
#4 Stefan Homburg, the head of Germany's Institute for Public Finance: "The euro is nearing its ugly end. A collapse of monetary union now appears unavoidable."
#5 EU Parliament Member Nigel Farage: "I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine."
#6 Carl Weinberg, the chief economist at High Frequency Economics: "At this point, our base case is that Greece will default within weeks."
#7 Goldman Sachs strategist Alan Brazil: "Solving a debt problem with more debt has not solved the underlying problem. In the US, Treasury debt growth financed the US consumer but has not had enough of an impact on job growth. Can the US continue to depreciate the world’s base currency?"
#8 International Labour Organization director general Juan Somavia recently stated that total unemployment could "increase by some 20m to a total of 40m in G20 countries" by the end of 2012.
#9 Deutsche Bank CEO Josef Ackerman: "It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels."
#10 Alastair Newton, a strategist for Nomura Securities in London: "We believe that we are just about to enter a critical period for the eurozone and that the threat of some sort of break-up between now and year-end is greater than it has been at any time since the start of the crisis"
#11 Ann Barnhardt, head of Barnhardt Capital Management, Inc.: "It's over. There is no coming back from this. The only thing that can happen is a total and complete collapse of EVERYTHING we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly, sadly mistaken."
#12 Lakshman Achuthan of ECRI: "When I call a recession...that means that process is starting to feed on itself, which means that you can yell and scream and you can write a big check, but it's not going to stop."
In my opinion, the epicenter of the "next wave" of the financial collapse is going to be in Europe. But that does not mean that the United States is going to be okay. The reality is that the United States never recovered from the last recession and there are already a lot of signs that we are getting ready to enter another major recession. A major financial collapse in Europe would just accelerate our plunge into a new economic crisis.
If you want to read something that will really freak you out, you should check out what Dr. Philippa Malmgren is saying. Dr. Philippa Malmgren is the President and founder of Principalis Asset Management. She is also a former member of the Bush economic team. You can find her bio right here.
Malmgren is claiming that Germany is seriously considering bringing back the Deutschmark. In fact, she claims that Germany is very busy printing new currency up. In a list of things that we could see happen over the next few months, she included the following....
"The Germans announce they are re-introducing the Deutschmark. They have already ordered the new currency and asked that the printers hurry up."
This is quite a claim for someone to be making. You would think that someone that used to work in the White House would not make such a claim unless it was based on something solid.
If Germany did decide to leave the euro, you would see an implosion of the euro that would be truly historic.
But as I have written about previously, it should not surprise anyone that the end of the euro is being talked about because the euro simply does not work.
The only way that the euro would have had a chance of working is if all of the governments using the euro would have kept debt levels very low.
Unfortunately, the financial systems of the western world are designed to push governments into high levels of debt.
The truth is that the euro was doomed from the very beginning.
Now we are approaching a day of reckoning. We have been living in the greatest debt bubble in the history of the world, but the bubble is ending. There are several ways that the powers that be could handle this, but all of them will lead to greater financial instability.
In the end, we will see that the debt-fueled prosperity that the western world has been enjoying for decades was just an illusion.
Debt is a very cruel master. It will almost always bring more pain and suffering than you anticipated.
It is easy to get into debt, but it can be very difficult to get out of debt.
There is no way that the western world can unwind this debt spiral easily.
The only way that another massive economic crisis can be put off for even a little while would be for the powers that be to "kick the can down the road" a little farther by creating even more debt.
But in the end, you can never solve a debt problem with more debt.
The next several years are going to be an incredibly clear illustration of why debt is bad.
When the dominoes start to fall, we are going to witness a financial avalanche which is going to destroy the finances of millions of people.
You might want to try to get out of the way while you still can.