Stocks: Searching for Accelerating Profits
This week's BusinessWeek S&P screen uncovers six top-ranked names expected to post rising earnings in 2008, and even higher growth in 2009.

They looked for stocks that were forecast to have positive earnings growth in 2008 and an even greater rate of profit increase in 2009.

Then they wanted to make sure that the stocks were attractive based on fundamentals. So they scanned that list for those issues ranked 4 STARS (buy) or 5 STARS (hold) by S&P equity analysts. Stocks with those rankings are expected to outperform the broader market over the next 12 months and rise in price on an absolute basis.

Six stocks made the cut, four of which pay dividends. Interestingly, most of them were non-U.S. companies with listed American Depositary Shares:

Company Ticker S&P STARS Rank Dividend Yield
Aon Corp. AOC 4 1.2%
Banco Bilbao Vizcaya BBV 4 4.8%
Banco Santander STD 5 4.6%
Desarrolladora Homex HXM 5 No Dividend
Huaneng Power International HNP 5 5.1%
Shanda Interactive Entertainment SNDA 5 No Dividend

The Div Guy owns shares of STD at the time of this post.

In the June issue of SmartMoney, they have the 2008 Annual Broker Survey.

SmartMoney used a combination of outside research as well as it's own to come up with the online ratings. They looked at opening accounts, finding information on websites, evaluating website research offerings and trading tools as well as customer service via phone and email.

The rankings and commissions are also based on a customer that trades 20 times a year with $50,00 in a brokerage account.

Here is a listing of the top 16 firms and category ratings.

Discount Brokers
1. E*Trade
2. Fidelity
3. TradeKing
4. TD Ameritrade
5. Charles Schwab
6. Firstrade
7. OptionsXpress
8. Muriel Siebert
9. Scottrade
10. WellsTrade
11. Interactive Brokers
12. Banc of America
13. WallStreet*E
14. Zecco Trading
15. SogoTrade
16. ShareBuilder

Commission & Fees
Best: Interactive Brokers
Worst: WellsTrade

Research
Best: TD Ameritrade
Worst: Zecco and SogoTrade

Trading Tools
Best: E*Trade and TD Ameritrade
Worst: ShareBuilder

Mutual Fund and Investment Products
Best: Charles Schwab
Worst: SogoTrade

Banking Services
Best: E*Trade
Worst: ShareBuilder

Customer Service
Best: TradeKing
Worst: Zecco

My favorite broker Zecco did get mentioned in the category of Commission & Fees saying Zecco offers 10 free equity trades each month for investors with $2,500 in cash or equities. Zecco was also worst in Research and Customer Service. I don't understand how they can't be the best in Commission & Fees with the lowest cost.

I still use my account at Scottrade to use the S&P research and stock screening capabilities.
Interactive Brokers was named best in Commission & Fees.

I looked at the Interactive Brokers website and had trouble making heads or tails out it. This has to be the most unfriendly website I have seen in some time.

Who is your favorite online broker and why?

I have been looking for a transportation stock to add to my portfolio. I currently own Diana Shipping (DSX) but this is more of a play on the growing need for commodities in China and India.

I found an interesting article on Smart Money called Five Transportation Stocks Ready to Roll. Here are some highlights.

Burlington Northern Santa Fe (BNI)
In the battle of trucks versus trains, the rails increasingly have the advantage. With trains three times as fuel efficient as trucks, more shippers have turned to railroads to move their goods. Seemingly insatiable demand for commodities is also keeping train cars brimming with grain and coal, offsetting the slump in autos and home building.

Burlington Northern shares are up nearly fourfold since 2003, but Craig Hodges, comanager of the Hodges Fund, says the rail-revival story is still in its early stages. He thinks that at 17 times 2008 expected earnings, the stock is still attractive, given prospects for 13 to 15 percent profit growth for the foreseeable future.

J.B. Hunt (JBHT)
The U.S. trucking business is under siege; total freight shipped is down, and fuel costs are up — way up. The stocks of most trucking firms have jackknifed over the past year as investors have shied away from the industry. But J.B. Hunt Transport Services keeps rolling along, with its shares recently trading just barely below their all-time high.

Still, UBS transportation analyst Rick Paterson says J.B. Hunt is one of the best-run truckers, and its truck-to-rail business will keep profit from sinking too low. And if recent history is any guide, trucking stocks could jump at the first hint of an economic recovery.

United Parcel Service (UPS)
The Atlanta-based company figures that it moves about 6 percent of U.S. gross domestic product. With UPS shares trading at about 17 times 2008 earnings — near five-year lows — bargain hunters might consider hopping aboard. The stock's 2.5 percent dividend yield should help allay any motion sickness along the way.

Expeditors Int'l (EXPD)
Seattle-based Expeditors International of Washington is one of the leaders in global logistics, managing cargo in 61 countries. But the best part of Expeditors' business model, analysts say, is that the firm owns very few assets. So in dicey economic times, it doesn't have planes, trains or trucks standing idly by. T. Rowe Price logistics analyst Joe Fath says Expeditors has a strong business model and will do well as long as global trade continues to increase.

DryShips (DRYS)
DryShips Chief Executive George Economou says his company is like a taxi service, shuttling commodities such as iron ore and fertilizer around the world. A U.S. recession or even a drop in commodity prices isn't going to hurt DryShips' business much, Economou tells SmartMoney.

"If you are investing in DryShips, you are a gambler betting on jockey Mr. Economou," says Buckingham, of the Al Frank fund.

I like BNI the best out of all the stocks in the article and Warren Buffett has recently increased his holdings in the stock. I will do some more research on BNI and keep an eye on the stock price.

Disclosure: The Div Guy does not own any of the stocks in this article at the time of this post.

Here is a great video with some ideas on US and International Dividend Stocks. I plan on looking further into Mobile Telesystems (MBT) and Taiwan Semiconductor (TSM).

Betting on Dividends
Surviving the downturn with dividends, with Dan Genter, RNC Genter Capital Management; Jill Evans, Alpine Dynamic Dividend Fund on CNBC.
CNBC Video

Disclosure: The Div Guy does not own MBT or TSM at the time of this post.

On April 30th, I wrote about a buyout offer on my shares of Wrigley (WWY) from Mars. In that same post I wrote about purchasing shares of Calpine (CPN) which was one of my first non-dividend stocks I have purchased in several years.

My reasons for purchasing the Calpine:

1. Low cost producer of energy
2. One of the greenest producers of energy
3. Young age of power plants
4. The raising cost of building new power plants
5. I think the stock will start to pay a dividend over the next few years.

Well today Calpine (CPN) was offered a buyout from NRG Energy (NRG). NRG offered 0.534 share of its stock for each Calpine share and based on NRG's trading price on Thursday, the offer values Calpine at $21.76 per share.

I think this deal will happen for a price closer to $24 than the current offer of $21.76 and here's why. The hedge fund Harbinger Capital Partners, which owns more than 24 percent of Calpine's shares, said the offer represents a good starting point and that Calpine's board should immediately negotiate with NRG over terms.

I bought the stock on April 28th for $20.25 a share and after a couple of weeks I now have a gain of over 11% on the stock. I am hoping for a couple more dollars a share after further discussions between Calpine and NRG.

I also purchased more shares of Royal Bank of Scotland (RBS) today after yesterday's big drop.

Disclosure: The Div Guy owns shares of WWY, CPN and RBS at the time of this post.

I have been watching RBS for several months now and had to purchase some shares after it dropped below $6 a shares for a new 52 week low. The 52 week high for the stock is $11.50. The past few years the bank has been on a buying spree and has grown very quickly and now is having some pains with integration into the RBS system. I also think it hurt them as well buy paying too much for their most recent purchase of ABN AMRO.

The stock has dropped over 10% the past few days because of rights offering, write downs at the bank and Warren Buffet not bidding for it's insurance arm that is being sold.

S&P gives RBS a 4 Star (Buy) rating with a 12 month target price of $9 a share. Reuters research gives the stock an Outperform rating. If the stock only reaches $6.60, on the next 12 months that is still a 10% increase. The current yield for the stock is around 7% but this could easily change. Foreign banks are very quick to change dividend payouts depending on company profits or the lack on them. So I could definitely see the dividend being lower next year.

I see this stock as being undervalued compared to it's long term prospects. Once the company blends the different banks together and starts creating operating efficiencies, management comes up with a long term plan for the bank this stock should start to turn around. I believe this company can right itself over the next year and this should be a $8 stock in the next two years. At that time when profits increase you will see the dividend being increased once again.

I now have quite a few banks in my portfolio that also includes Barclays (BCS), Bank of America (BAC), Deutsche Bank (DB), Banco Santander SA (STD), U.S. Bancorp (USB) as well as Royal Bank of Scotland (RBS). But my bank stocks only make up about 9.2% of my entire dividend stock account.

What can I say, I'm a sucker for cheap stocks. Happy hunting.

Disclosure: The Div Guy owns shares of RBS, BCS, BAC, DB, STD, USB at the time of this post.

Insider buying can be a very good indicator of the long term prospects of a company. I remember reading in March that GE CEO Jeffrey Immelt bought over $5M in GE stock.

Beth Piskora of BusinessWeek has done a Standard & Poor screen of highly rated stocks with insider buying over the last six months.

Stocks: The Inside Track

For this week's screen, they looked at those issues with the highest insider-buying rank as measured by a proprietary Standard & Poor's method. This tool indicates insider sentiment by showing whether directors, officers, and key employees were buying or selling the company's stock during the most recent six months.

They also screened for those stocks ranked 4 STARS (buy) or 5 STARS (strong buy) by S&P equity analysts, indicating they are expected to outperform the S&P 500-stock index on a total return basis over the next 12 months and rise in price on an absolute basis.

Seven stocks made the cut:

Company Ticker
Allied Waste AW
Assured Guaranty AGO
Chesapeake Energy CHK
Home Depot HD
Oneok Partners OKS
Philip Morris International PM
Sempra Energy SRE

Also I read a very good stock analysis of a stock I own American Capital Strategies (ACAS) by Dividend Growth Investor. Take a look and see what you think.

The Div Guy owns shares of OKE (OKE owns part of OKS) and ACAS at the time of this post.

Diana Shipping (DSX) declared a cash dividend on its common stock of $0.85 per share up from $0.60 last quarter. The dividend is a 41% increase over the past quarter and will be paid on June 5th to shareholders of record as of May 28th. DSX, a Marshall Islands company is a global shipping company specializing in transporting dry bulk cargoes, including commodities such as iron ore, coal, grain and other materials along worldwide shipping routes.

I started purchasing shares of DSX in 2006 at around $16 a share. I liked the stock because of the increased needs of raw materials of China and India and high dividend yield of around 8%. This stock is very volatile and should not be bought by conservative dividend investors. In the last six months, the stock has gone up over $45 a share and come back down to the mid $20's and back over $35 today. This stock has done well for me but I am sure many people bought the stock high and sold when it dropped quickly after hitting $45.

I will continue to ride the high seas with DSX. I just need to find a way to get to their next annual meeting in Athens.

Here is my review of the stock from 7/15/07. Diana Shipping (DSX): Has the Ship Left Port?

I just found a great video that explains how dividend stocks can beat inflation over time as well as 5 good solid dividend stocks. This is must see for anyone thinking of investing in Dividend Stocks for the first time. The video is a little over 6 minutes long.

Here is the video link: 5 Dividend-Payers to Beat Inflation

If you don't have time to listen, the stocks Morningstar DividendInvestor editor Josh Peters recommends are US Bancorp (USB), Abbott Laboratories (ABT), General Electric (GE), NSTAR (NST), Magellan Midstream Holdings (MGG). See if there are any that would make a good addition to your portfolio.

The Div Guy owns shares of USB and GE at the time of this post.

PepsiCo Announces Dividend Increase

13% Rise in Dividend is PepsiCo's 36th Consecutive Increase

PURCHASE, N.Y., May 7 /PRNewswire-FirstCall/ -- The Board of Directors of PepsiCo today declared an increase in the annual dividend, from the current $1.50 to $1.70 per share on PepsiCo common stock. The quarterly dividend of $0.425 is payable June 30, 2008, to shareholders of record on June 6, 2008.

"We are pleased to reward shareholders with our thirty-sixth annual dividend increase, continuing our track record of strong performance," said PepsiCo Chairman and CEO Indra Nooyi. "The dividend reflects our continued commitment to maximize the value of our shareholders' investment and our confidence in the future growth of our business."

PepsiCo (NYSE: PEP) is one of the world's largest food and beverage companies, with 2007 annual revenues of more than $39 billion. The company employs approximately 185,000 people worldwide, and its products are sold in approximately 200 countries. Its principal businesses include: Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The PepsiCo portfolio includes 18 brands that generate $1 billion or more each in annual retail sales. PepsiCo's commitment to sustainable growth, defined as Performance with Purpose, is focused on generating healthy financial returns while giving back to communities the company serves. This includes meeting consumer needs for a spectrum of convenient foods and beverages, reducing the company's impact on the environment through water, energy and packaging initiatives, and supporting its employees through a diverse and inclusive culture that recruits and retains world-class talent. As a member of the Dow Jones Sustainability World Index (DJSI World) and the Dow Jones Sustainability North America Index (DJSI North America), PepsiCo is a recognized leader in sustainability. For more information, please visit http://www.pepsico.com/.

SOURCE PepsiCo

The Div Guy owns shares of PEP at the time of this post.

I created my own Friday stock screen using Scottrade's Stock Screener. I wanted to take a look at very high quality companies with high dividend yields. For today's stock screen, I looked at companies that received Standard & Poor's top 5 Star rating and had a dividend yield of 6% or higher. I came up with five companies that made the cut.

These are some companies that you may want to further research and see if one is right for your portfolio.

Company Ticker
Allied Irish Bank AIB
Banco Santander STD
Citizens Communications CZN
Kinder Morgan Energy Partners KMP
Lloyds TSB Group LYG

The Div Guy owns shares of STD and KMP at the time of this post.

I started reading Jeremy Siegel's "The Future for Investors" last night. The book's main advice is for stock investors to focus less on growth stocks and S&P 500 index mutual funds and to look for tried and true stocks that pay high dividends. Siegel writes that reinvested dividends are the true source of good long term stock returns.

I will have to write a review when I have finished the book. His stock selection approach has been very similar to what I have used with my own portfolio.

It seems everywhere I turn I am finding more and more articles, books and blogs on dividend investing. I think I must be on to something.

I just came across a very interesting March article by Margaret Price of The Christian Science Monitor.

Dividend investors at a crossroads
"Stocks of dividend-paying companies … tend to be a port in the storm," says Ed Clissold, senior global analyst at Ned Davis Research in Venice, Fla. "When capital appreciation is weak or negative, investors still get the advantage of total return boosted by dividends."

And when investors take dividend payouts, they can get a useful income stream – money to pay bills or even to buy stock in another company.

As baby boomers age, many experts see more of them gravitating to dividend payers for retirement income. In order for retirees to make their assets last through their lifetimes, they "should only tap 4 to 5 percent of their investable assets per year" for living expenses, notes Greg Donaldson, whose firm, Donaldson Capital Management in Evansville, Ind., specializes in managing portfolios of stocks of dividend-paying firms. "If people invest in common stocks that yield 4 percent to 5 percent, they may never have to dig into their principal."

Moreover, this year's performances of the dividend-paying group have been encouraging. For instance, in January, the 387 dividend payers in the S&P 500 stock index posted an average 4.1 percent drop in total return – beating the 113 nondividend payers in the index by almost two percentage points.

For those shopping for such stocks, there's no shortage of companies to choose from. To help find and research them, Mr. Donaldson cites such websites as www.dividendachievers.com and www.dividendinvestor.com. In addition, Standard & Poor's provides information on S&P 500 dividends at www.marketattributes.standardandpoors.com.

Indeed, as one source of individual shares, the S&P 500 index "is loaded with dividend payers," says Howard Silverblatt, S&P's senior index analyst. Fully 77.6 percent of companies in the S&P 500 index pay cash dividends – versus 38.8 percent of non-S&P 500 companies, he reports.

For his part, Donaldson likes companies "with a long history of raising their dividend every year." He cites five stellar examples: Colgate-Palmolive, Procter & Gamble, Coca-Cola, Vectren, and Progress Energy. These companies, Donaldson says, not only have raised their dividend annually for at least the past 20 years, but also have a stock whose price has bested the market over the past turbulent six months.

But for those investors seeking dividend-paying companies, there's also a widely agreed-upon cautionary rule of thumb: Don't pick companies with sky-high dividend yields, say in the 14 to 15 percent range. In that case, such yields can signal that a company is in financial trouble – and that its dividend-payout level may not be sustainable.

The Div Guy owns shares of Proctor & Gamble at the time of this post.

The Wall Street Journal has an article by Larry Light that talks about a recent study of dividend stocks by Ned Davis Research.

Look for Firms That Raise Dividends
By Larry Light

Companies that consistently raise their dividends return the most to investors over the long pull.So says a recent report from Ned Davis Research. Amid a topsy-turvy market, this is an insight that can prove helpful in picking stocks.

Since 1972, members of the Standard and Poor's 500-stock index that consistently increased their payouts, or started making them, rewarded shareholders with a yearly average 10.4% total return (stock-price appreciation plus dividends). Those that didn't boost dividends clocked 8.2%. Most of the difference came from superior stock performance.

The 2.2 percentage-point gap might not look like much, but the extra return, compounded over 36 years, produces a substantially richer result. Invest $100 with dividend-raisers back in 1972, and it grows to $3,547 today, according to the Venice, Fla., research firm's calculations. That same $100 with nonraisers only produces $1,745.

"A board that raises dividends, year in, year out, shows it is confident that the company's outlook is strong," says Rick Helm, manager of Cohen & Steers Dividend Value, a mutual fund that specializes in dividend-increasing stocks. What's more, expanding dividends are a reward that attracts investors, and for quality-of-earnings buffs, cash is hard to fake.

How do investors find stocks that continuously juice payouts? S&P lists 40 or so companies that have increased dividends every year for at least 25 years, a group it calls its Dividend Growth U.S. Basket. They include well-known companies like Intel Corp. and Procter & Gamble Co. but also smaller companies like insurer Torchmark Corp. and construction-materials outfit Vulcan Materials Co. Researcher Mergent Inc.'s Broad Dividend Achievers roster shows 321 that have boosted dividends for 10 years or more without a break. Both are available on their Web sites.

Investors should take a deeper look to ensure historical dividend-raisers can keep it up, says Cohen & Steers' Mr. Helms. He wants to see that free cash flow (cash from operations, with depreciation and amortization added back and capital spending subtracted) can amply cover the payouts.

Another way to capture dividend-raisers is to buy Mr. Helm's fund or ones like it, such as Dividend Growth Trust Rising Dividend and Sit Dividend Growth.

The Div Guy owns shares of Procter & Gamble at the time of this post.

BusinessWeek has a S&P stock screen of 4 and 5 star innovative companies most of which are dividend stocks.

Stocks: 11 Innovation Plays
S&P looks for stocks in BW's Most Innovative Companies list that carry its highest investment rankings. Among them: Apple, GE, and Toyota

According to BusinessWeek, the answer is Apple. The Cupertino (Calif.) technology giant topped BusinessWeek's list of the 25 most innovative companies, published in its Apr. 28 issue.

BusinessWeek arrived at its 2008 list through an electronic survey, conducted by Boston Consulting Group, of executives in the 2,500 largest global corporations by market value. BW also added three financial measures. For 2008, votes cast in the BusinessWeek-BCG survey got an 80% weighting, while three-year revenue and margin growth each got 5% and stock returns were weighted 10%.

S&P went over the list of the top 25 companies to find the ones that had high scores under one of its own key measures: S&P STARS (STock Appreciation Ranking System). We looked for outfits that carried rankings of 4 STARS (buy) or 5 STARS (strong buy), suggesting S&P equity analysts expect them to outperform the S&P 500 index over the next 12 months on a total return basis and rise in price on an absolute basis. (S&P and BusinessWeek are both units of The McGraw-Hill Companies (MHP).)

Company Ticker
Apple AAPL
Boeing BA
Disney DIS
General Electric GE
Goldman Sachs GS
Hewlett-Packard HPQ
International Business Machines IBM
Microsoft MSFT
Nokia NOK
Procter & Gamble PG
Toyota Motor TM

The Div Guy owns shares of GE and PG at the time of this post.

April 30, 2008 01:38 PM
Exxon Mobil Corporation Declares Second Quarter Dividend

IRVING, Texas----The Board of Directors of Exxon Mobil Corporation (XOM) today declared a cash dividend of 40 cents per share on the Common Stock, payable on June 10, 2008, to shareholders of record of Common Stock at the close of business on May 13, 2008.

This second quarter dividend compares with 35 cents per share paid in the first quarter of 2008.
Through its dividends, the corporation has shared its success with its shareholders for more than 100 years and has increased its annual dividend payment to shareholders for 26 consecutive years.

The Div Guy owns shares XOM at the time of this post.

As of the end of April our Net Worth increased to $816,284 from $791,102 for the month which is an increase of 3.18%.

The breakout is as follows:

Retirement Accounts $396,389
Taxable Accounts $122,530
Cash $49,697
Home $205,000
Cars $15,500
Personal Property $3,000
Kids 529 Accounts $24,168

Here is the summary for the month:

Our Net worth increased in April after a five month decline. I once again made additional purchases of bank, financial and REIT stocks this month. Our dividend stocks and retirement accounts both increased for the month. You can click on my Net Worth graph on the right to see the changes in each category from the previous month. I continued funding our Roth IRA's this month. I am keeping a high level of cash that I will use to fully fund our Roth IRAs for 2008 and 2009. I also have a savings account to fund the replacement of my wife's car in four years. Again, we have no debt at this time.

Dividend Income increased to $8,642 from $8,460 for the month. This months increase from additional stock purchases as well as a couple of dividend increases. Next month should be a great month for dividends because I will be making several dividend stock purchases and have four stocks increasing their dividends in May. The dividends are reinvested but I am keeping track of the amount of income I could receive.