Three Good Dividend Stocks
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I’m a big advocate of dividend stocks, because I like the consistent additional income they provide. I think the regular payments add a different dimension to stocks. Even if the value of the stock reduces significantly in the long term, you would hopefully have made up the loss (and more) thanks to dividend payments. So without further ado, let’s take a look at three companies that are fairly good dividend payers, and are also in different sectors, providing you a fairly diversified dividend portfolio for the coming year.
Coach (NYSE: COH) is a leading marketer of modern classic American accessories such as handbags, men's bags, women's and men's small leather goods, weekend and travel accessories, etc. On Dec. 4, the company announced that they have revised the payable date for the company's previously declared quarterly cash dividend of $0.30 per common share. The payout date is now on Dec. 27 for shareholders on books after the close on Dec. 7, meaning you’ve missed out on a chance to make some quick cash now.
The reason why now is a good time to pick up Coach is because it is the Christmas period. The sales during this period will definitely benefit the company, and shareholders will only see the benefits after the quarter is over. So you still have the opportunity to improve value in the short term. The company has been paying a dividend every quarter since 2009 and has upped its quarterly return to shareholders during each of their financial years. The company has recently converted a downtrend to an uptrend and has crossed key moving averages, which will mean that the company is more likely to see bullish runs as opposed to bearish ones.
Kinder Morgan Energy Partners (NYSE: KMP) is an energy storage and pipeline transportation company. The company’s Products Pipelines' section distributes diesel fuel, gasoline, natural gas liquids, and jet fuel to a range of markets with the help of its 8,400 miles of refined petroleum products pipelines.
The company distributed a majority of its cash generated to shareholders. The NYSE listed company pays an annual cash of $5.04 per unit to its shareholders, yielding 6.40%. The company predicts revenues of $5.4 billion for the coming year, which is an increase of about $900 million from the present year. It expects to declare cash distributions of $5.28 per unit for 2013: that’s a 6% increase over its 2012 budget target of $4.98 per unit, which it expects to meet.
The company’s fee-based pricing gives some sort of security from volatile prices. The net profit margin for the company, according to MSN Money, is about 23%. Furthermore, the company will reserve nearly $2.8 billion for investments in expansions, joint ventures, and smaller acquisitions. The stock may be overvalued at a P/E ratio of nearly 40, but we’re looking at the stock from the lens of a dividend investor, and not a value investor.
GameStop (NYSE: GME) is a multichannel video game retailer. It sells new and used video game hardware, physical and digital video game software, accessories, as well as personal computer (PC) entertainment software, and other merchandise.
The company last released its results on Nov. 15, reporting EPS of $0.38 on revenues of $1.77 million. Analysts expect good things from the company. Goldman Sachs reiterated a buy rating on the shares of the company last month. Cairn & Co upgraded their rating shares of GameStop from average to buy in a research note to investors. While the company is fairly new to the dividend game, the company has sound fundamentals, which includes debt at a very manageable level.
There are certain worry signs for the company, such as declining revenue and declining return on equity. However, the coming year is expected to see the launch of the Xbox 720 and the PS 4 towards the end of the year, which will be a strong catalyst for growth for GameStop.
I expect these companies to be fairly dividend friendly in the next year or two. However, before you settle on which company’s share to buy it is essential that you do your own research. GameStop might not particularly appeal to investors who are bearish on the entire gaming industry and its offspring, but I believe it will still perform thanks to the launch of the new consoles in the coming year.
ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool owns shares of Coach and GameStop. Motley Fool newsletter services recommend Coach and GameStop. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!