3 Dividends Over 5% With One Surprise Entry
Nihar is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I was going over the futility of all investments in the grand scheme of things, and thought about how dividends would justify holding onto a position despite turmoil. I have been reading too much history, and was thinking about Justinian re-conquering some of the old Roman provinces. I think of Rome dreaming of rejoining the Roman Empire. If they were anything like us some people thought it was time to take a risk and try and make some money. Sadly it was not to be, but I am projecting my own values. Those people might not have appreciated "reconquest."
I was looking at it in the terms of our unpreparedness for cataclysms. The stock market has been on quite a high lately. The question is will it continue making new highs or will it make portfolios that are long look like a scene inspired by Ozymandias. High dividends from strong and stable companies are a great choice. When the market collapses the share price might collapse, but you will have reaped the rewards of dividends.
1. A Large Intermodal Container Company
I am already a fan of Cai International in the intermodal container industry, but TAL International Group (NYSE: TAL) is a far larger company with a dividend yield of 5.7%. You can go around finding even higher yields, but TAL has the benefit of not being a partnership, which can have some sticky tax issues depending on the account you use. I have been through that problem before, and while it's not that big a deal I would rather just avoid the headache.
Some good news on TAL is that it just beat on earnings for its most recent quarter, but revenue growth did not beat. TAL might still be able to grow revenue as global shipping increases. People looking for fantastic growth from the company, might be expecting too much this early. While you are waiting, TAL has some money to give you. I do not want to continue blathering on about these companies, because I am not writing a book. For now, a taste will have to do.
2. A Very Large Wireless Carrier
When it comes to AT&T (NYSE: T), I have suggested that I would wait on it right now. I still hold that belief, but with a dividend that is also over 5% it presents a serious wound to my plan of sitting on my hands. That dividend is serious money, and AT&T is not a horrible company. Everyone has a cell phone at this point and companies are just picking off customers from one another. Customers range from extremely flaky to extremely loyal, but there is not too much to differentiate the different carriers. Sprint at least has its unlimited data, even if it is a bit slower in busy areas.
Verizon and AT&T are not that different, at least in the region I dwell. Most problems people have are subjective and you will find numerous contradictions between people's testimonies. This kind of personal analysis might not mesh well with the fancy facade that the finance industry cloaks itself in sometimes, but I have a dislike of that veneer anyway. Having gone to law school, I am familiar with the superficial gloss used to convey trustworthiness and intelligence despite what comes out of one's mouth. The Fool tends to be different.
The options market sees some upside coming up for AT&T, but some others are not so sure. The indecision that I see in the information flow is echoed in my own instincts. I just don't know right now. AT&T is expanding LTE around the country, but that might just keep customers. What is going to make new customers and drive revenues? Growth is not as important when you are in a great market position as long as you can hold it. A company can't make all the money or they get accused of being a monopoly. Since I do not see glaring weakness in AT&T the dividend makes the case for going long, while I work out something for the next 10 years. Earn while being indecisive.
3. A Chain of Movie Theaters
Regal Entertainment Group (NYSE: RGC) surprised me with its 5.5% dividend. I would not think a chain of movie theaters would have a dividend that high. Expansion options are probably limited considering the other theater chains. There's not a lot of brand loyalty among theaters. You go to the local one or the one most convenient for you. You might have a favorite, but that is mutable depending on who is going with you to see the movie. Loyalty programs help a bit, but no one I know has them and we do love our movies.
Regal beat on earnings on both the top and bottom line. That is a really good indicator of a strong company. It is not just belt tightening that may have consequences down the line. The company has straight revenue growth, and expenses at least did not burgeon drastically. The company has almost $2 billion in debt and cash is only at around $100 million. Clearly the dividend means the company is emptying its coffers regularly and using debt to finance expansion. Revenue growth will probably come from interesting events and concessions, especially stemming from events. A nearby AMC always has special movie nights with classics or Rifftrax events. It is a great way to get people in the seats for movies that are not brand new.
Dividends let you get some of your money now or fatten your position with money the company gives you. Getting something for your risk is not a bad trade off, while it might not save you from the worst of the worst it might soften the blow. Hopefully, none of us end up with just enough to get a plaque made that says "Look on my works, ye Mighty, and despair!"
TheArchivist has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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!