Five High-Yielders Going Ex-Dividend in January
Karin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I’ve been analyzing and writing about dividend companies for over six months. Recently I developed a complete ratings system, through which I assign scores to a company based on seven separate criteria, which I have chosen to represent the metrics that I believe indicate superior dividend-paying potential, as well as possible gains in share-price.
I have begun introducing my own Dividend Portfolio, based on this ratings system. So far I have selected four companies. I continue to examine dozens of companies every week.
The companies on this list are not the ones that are going to form the foundation of my dividend portfolio. They have not been paying and raising dividends for 10 years or more, which is the minimum that I am permitting for the 10 base stocks in my model portfolio. However, these are stocks that are paying great dividends, and which may merit a spot as part of the higher-risk, higher-reward section of my portfolio once I have the base in place.
I examined over 100 stocks that are going ex-dividend in January, and found five stocks that are yielding more than 3% and that have increased by more than 13.4% (the current 52-week return of the SPY ETF) in the past twelve months.
I examined each company’s yield, total 52-week return, where it is trading relative to its 52-week high and low, and its recent dividend-paying history, in order to project its ability to continue.
I present these five companies, in order of yield, from highest to lowest:
American Realty Capital Trust (NASDAQ: ARCT) is a real estate investment trust (REIT) which is involved primarily in acquiring and leasing single-tenant commercial properties in the United States and Puerto Rico.
ARCT is currently trading at $11.50 per share and yields 6.2%. It is trading at 9% less than its 52-week high of $12.74 (I include this information because some investors prefer to buy a stock on a pull-back from its high). The share price is up 15.6% since it began trading in March, 2012.
American Realty pays dividends monthly, and as a REIT it is legally obligated to pay out 90% of its income yearly. The current FY analyst earnings estimate is $0.79 per share. In 2012 the company raised its dividends twice and paid out a total of $0.485 per share. The forward-looking annual dividend is $0.71 cents, or 90% of the earnings estimate.
American Realty goes ex-dividend on Jan. 4 and will pay a dividend of $0.059 per share on Jan. 15.
Realty Income Corp. (NYSE: O) is also a REIT, specializing in commercial retail operations. The company leases its properties primarily to national and regional chain store operators. This company is already a very popular one with dividend investors because of its generous yield and its long history of paying and raising dividends.
O is currently trading at $40 per share and yields 4.5%. It is trading at 9% less than its 52-week high of $44.22. The share price has appreciated by 14.5% over the past twelve months. Realty Income has been paying and raising distributions consistently for 18 years. It pays monthly, and it raised its distribution four times in 2012 for a total increase of 4.3%.
The company has not yet announced its ex-dividend date or distribution for January, but it will be around Jan. 31, with an expected payment date of Feb. 15.
Royal Bank of Canada (NYSE: RY) is a financial services company providing personal and commercial banking, wealth management, investment and other financial services worldwide.
RY is currently trading at $60 per share and yields 4.0%. It is trading at 3% less than its 52-week high of $61.54, and the share price is up by 20.5% over the past twelve months.
Royal Bank has been paying dividends since 1870. The dividend was frozen from 2008-2010, during the fiscal crisis, but began increasing again in 2011, and it was raised twice in 2012. Its 5-year Dividend Growth Rate (DGR) average is 4.7%, and its payout ratio is a sustainable 50%.
The stock goes ex-dividend on Jan. 22 and will pay a dividend of $0.60 on Feb. 22.
Harsco Corp. (NYSE: HSC) is a manufacturing and services company that provides products for a variety of industries, including metals miners and producers, infrastructure companies, railway companies and industrial plants.
HSC is currently trading around $23 per share and yields 3.6%. It is trading at 6% less than its 52-week high of $24.48, and the share price is up by 15.1% over the past twelve months.
Harsco has been paying $0.205 per quarter for 13 quarters, and has been paying dividends since 1939. The payout ratio, however, is high at 70%, and Q4 earnings (to be announced Jan. 21) are projected to be lower than Q3. Overall FY 2012 earnings are projected to come in 12% less than for FY 2011.
The stock goes ex-dividend on Jan. 11 and will pay a dividend of $0.205 on Feb. 15.
Waddell & Reed Financial (NYSE: WDR) is a financial services company that provides investment advisory and management services to individually managed and institutional accounts and to mutual funds in the United States.
WDR is currently trading at $35 per share and yields 3.2%. It is trading at 3% less than its 52-week high of $35.77, and the share price is up by 41.6% over the past twelve months.
Waddell & Reed’s dividend-paying history is a bit inconsistent. The company has not paid out every quarter since 2008, although it did pay consistently before that. However, the dividend has been increasing fairly well. In fact, its 5-year dividend growth rate (DGR) average is 10.5%, and its payout ratio is an extremely sustainable 36%. The dividend was increased by 12% for the upcoming 1Q 2013 distribution.
The stock goes ex-dividend on Jan. 9 and will pay a dividend of $0.28 on Feb. 22.
At this point I am not prepared to add any high-risk but high-reward companies to my dividend portfolio since I am not yet finished building the base. If I were to have my foundation in place already, though, I would consider American Realty, Realty Income, and Waddell and Reed. These three companies represent what I feel is a fair risk-reward basis in terms of a dividend-paying company. They may merit a small position in your portfolio.
khern0203 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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!