7 Good Running Companies That May Pay A Dividend For The First Time

Dividends are great but not all companies pay a dividend. Why? Well, there are many reasons, some might put all free cash-flow into the business in order to boost growth or they are buying back own shares and increases your stake in the company.

Those activities make only sense whey they have a stable running and continuous growing business like McDonalds or Coca Cola.

The second reason why a corporate pays no dividend is because they do not earn money and make losses. That's a really bad issue and I can tell you that it doesn't make sense to put money into a loss-generating machine.

Back to the topic of this article, today I like to introduce 7 stocks with a forward-orientated business that did not pay dividends buy may do it in the near future. It's always great to see what kind of stocks may appear on your dividend radar before others might see it.

Don't look to critical at the P/E valuation. The Enterprise Value gives a more fair view of the stocks. Most of them sit on tons of cash. I've written also a good article about stocks with the biggest cash accounts abroad. GE was on the first place there.

If you like more ideas about Dividend Champions with zero debt, you should check out this article: Dividend Champions With Zero Debt And Promising Payout Growth.

These are the results....

5 High-Quality European Dividend Payers

When I read all these articles about investing strategies and look at the moves from big gurus, I see Europe as a dominant investing target.

As you might know, the ECB plans to embark on a bond-buying stimulus program totaling upwards of $1 trillion that will run through September 2016. 

Improving growth prospects and upcoming stimulus efforts should investors consider European stocks; more specifically, we want to focus on high-quality, dividend-paying stocks that conservative investors may want to gain exposure to in an effort to geographically diversify their portfolios.

Buying abroad make sense in some way. I've published some interesting articles around this topic in the past.

Below are five fundamentally-sound sound European dividend stocks that can help beef up your portfolio’s overall yield:

10 Dividend Stocks With The Biggest Off-Shore Cash Accounts

Federal Banks flooding the markets with cheap money and cash generating companies hoarding money oversea. These should be USD 2.1 Trillion overseas to avoid taxes.

Microsoft Corp., Apple Inc., Google Inc. and five other tech firms now account for more than a fifth of the $2.10 trillion in profits that U.S. companies are holding overseas.

What happens with the money? It's not clear. Obama plans to tax them. Others like to spend money by mergers and acquisitions off the boarder. A different option is to pay dividends and start share buybacks.

You may also like: 3 Dow Jones Stocks With Shareholder Yields Over 10%

If you are looking for companies who sit on tons of cash and don't know what to do with it, you can screen the attached list. I hope it gives you a great overview about the stocks with solid cash mountains, especially those with more than $20 billion or more.

Below are also the top 10 results introduced with more fundamental data.

These are the 10 top dividend paying results...

4 Dividend Income Stocks For Long-Term Orientated Investors

Conservative investors should be looking for predictability and stability above all else.

While you should also be mindful of valuation and try not to purchase income at overzealous market pricing, if the payout/yield at which you are purchasing is acceptable and sustainable, that should be a priority as well.

Below are four stock ideas for conservative investors with a long investment horizon. I'm a big believer in long-term value creation. Only over a long period of time, companies can unlock values, grow and finally create the maximun of return for investors and stakeholders.

The 5 Highest Yield Dividend Aristocrats

This is a guest post by Ben Reynolds with Sure Dividend. Sure Dividend uses The 8 Rules of Dividend Investing to identify and rank high quality dividend stocks suitable for long-term investors.

The Dividend Aristocrats Index has outperformed the S&P 500 by 2.76 percentage points a year over the last decade, according to S&P. Simply put, the Dividend Aristocrats Index is an excellent place to look for high quality dividend stocks. 

This is because a company must increase its dividend payments for 25+ consecutive years to be eligible for inclusion in the exclusive Dividend Aristocrats Index. A business must have a strong competitive advantage to raise its dividend payments for 25+ consecutive years.

Of course, not all stocks in the Dividend Aristocrats Index are the same.  Some have better growth prospects and higher dividend yields than others.  This article takes a look at the 5 highest yielding stocks in the exclusive Dividend Aristocrats Index.

#5 – Cincinnati Financial (CINF)

Cincinnati Financial has a dividend yield of 3.5%. The company has paid increasing dividends for an amazing 55 consecutive years. Cincinnati Financial is a property and casualty insurer with an $8.6 billion market cap.

The company operates in 5 main segments:

·         Commercial Insurance

·         Personal Insurance

·         Excess & Surplus Insurance

·         Life Insurance

·         Investment operations

The insurance industry is highly competitive.  Cincinnati Financial has taken an underwriting loss on the sum of its insurance operations each year since 2008. The company has managed to raise its dividend payments year after year thanks to the investment income it earns on the insurance float the company invests.

Cincinnati Financial invests differently than most insurers. The company invests more of its float in blue chip stocks than most insurers. This helps the company realize higher earnings during bull markets, and lower earnings during bear markets. 

The strategy of losing money on underwriting to make it back in investments has not worked well for Cincinnati Financial over the last decade. The company has seen week revenue-per-share growth of under 2% a year.  Despite its high dividend yield and long history of dividend increases, Cincinnati Financial does not have solid growth prospects moving forward.

#4 – Chevron (CVX)

Chevron has a 4.1% dividend yield. The company has paid increasing dividends for 27 consecutive years. Chevron has a market cap of $197 billion, making it the 4^th largest publicly traded oil corporation in the world. 

The company’s stock has fallen 16.5% over the last 6 months due to the precipitous fall in oil prices. The decline in Chevron’s stock price gives investors an opportunity to pick up this high quality shareholder friendly business for cheap. Chevron is currently trading at a price-to-earnings ratio of just 10.3.  Additionally, the company has not traded for a dividend yield over 4% since the depths of the last bear market in 2009.

Some investors worry that Chevron is at risk of cutting its dividend due to low oil prices. The company’s dividend appears safe, however. Chevron currently has a payout ratio of just 41%. Additionally, the company has very little debt. Chevron has over $7 per share in cash and currently pays $4.28 per share per year in dividends. The company is expected to generate about $4.50 in earnings per share this year by analysts. Despite low oil prices, Chevron is still expected to generate enough cash to more than cover its dividend payments.

#3 – Consolidated Edison (ED)

Consolidated Edison has a 4.2% dividend yield and has increased its dividend payments for 40 consecutive years. The company provides electricity to over 3 million people in New York state, and gas to over 1 million people in New York state. 

Consolidated Edison is a utility, and has an exceptionally low stock price standard deviation. In fact, it has the second lowest stock price standard deviation in the Dividend Aristocrats Index, behind only Johnson & Johnson.

As a utility, Consolidated Edison is a slow grower. The company has actually seen its revenue per share decline by about 1.5% a year over the last decade. This slow decline is not a good sign for long-term investors.  Earnings-per-share and dividends-per-share have shown modest growth, but the company is relatively stagnant. Consolidated Edison is a good choice for income oriented investors who cannot stand stock price volatility but require little growth. 

#2 – HCP, Inc. (HCP)

HCP currently has a 5.4% dividend yield and has increased its dividend payments for 30 consecutive years.  HCP is the third largest publicly traded health care REIT; the company has a market cap of over $19 billion.

HCP specializes in senior housing and post acute care facilities. The company has grown its dividends per share at about 3.3% a year over the last decade.  If HCP can continue to grow at 3.3% a year, investors will see total returns of 8.7% a year from both growth and dividend income. 

I believe it is very likely that HCP continues to grow by at least its historical 10 year growth rate (if not faster).  Demand for the company’s senior housing facilities will pick up as ever-greater numbers of baby boomers retire and reach old age.  This combined with longer life expectancies will increase the need for HCP’s senior housing facilities, which will drive the company’s growth.

#1 – AT&T (T)

The highest yielding Dividend Aristocrat is AT&T. AT&T currently has a 5.5% dividend yield.  The company has increased its dividend payments for 31 consecutive years. AT&T is the 2^nd largest telecommunications company in the U.S.; AT&T has a market cap of more than $176 billion.

AT&T has managed to grow at about 4% a year over the last decade. The company has transitioned from a traditional telephone company (long ago) to becoming one of the two most dominant wireless carriers in the U.S.

AT&T may very well grow faster over the next several years than it has over the last decade. The company is acquiring DirecTV. The DirecTV acquisition could spur growth for the company as DirecTV has a strong presence in Latin America which AT&T could leverage. Additionally, AT&T stands to benefit from the trend of using ever greater amounts of wireless data. Smart phone data usage is quickly growing.  As data usage grows, so does the demand and necessity of AT&T’s services.

Final Thoughts

Of the 5 highest yielding Dividend Aristocrats, only Chevron and AT&T rank highly using The 8 Rules of Dividend Investing. Both AT&T and Chevron have low price-to-earnings ratios, high dividend yields, and solid-if-unspectacular growth prospects.