My High Dividend Stocks Blog
My High Dividend Stocks
This is my high dividend stocks site where I help site members find high dividend stocks with earning power and strong balance sheets.
My High Dividend Stocks
This is my high dividend stocks site where I help site members find high dividend stocks with earning power and strong balance sheets.
I’m looking for bull markets within the secular bear market. Precious metals and food commodities come to mind. There are no high dividend food stocks, but there are some food commodity ETFs and some food production companies. One of those companies is Adecoagro (AGRO). The bottom line is AGRO should not be purchased until they can prove they can earn profits. This company has good potential, so don’t stop reading yet. They produce crops that people will buy in boom times or bust. I think the bust will continue plus massive doses of price inflation.
Adecoagro S.A. is an agricultural company in South America, with operations in Argentina, Brazil and Uruguay. It is engaged in a range of businesses, including farming crops and other agricultural products, cattle and dairy operations, sugar, ethanol and energy production and land transformation. As of September 30, 2010, it owned a total of 287,884 hectares, consisted of 21 farms in Argentina, 15 farms in Brazil and two farms in Uruguay. As of September 30, 2010, it owned and operated several agro-industrial production facilities, including three rice processing facilities in Argentina, a dairy operation with approximately 4,500 milking cows in Argentina, two coffee processing plants in Brazil, seven grain and rice conditioning and storage plants in Argentina and two sugar and ethanol mills in Brazil with a sugarcane crushing capacity of 5.2 million tons. It is engaged in three businesses: farming business; sugar, ethanol and energy business, and land transformation business.
The socialist government of Argentina might pass a law restricting foreign ownership of agricultural lands. This doesn’t help AGRO attract foreign capital to buy new properties and businesses in Argentina. The CEO explained in the recent conference call that they are going to expand in Brazil and Uruguay where the governments are less hostile.
To hear the recent earnings conference call click on the 1Q11 Webcast button on this site http://ir.adecoagro.com/adecoagro/web/default_en.asp?idioma=1&conta=44
Adecoagro (AGRO)
Market price: $10.12
Shares: 108.87 million
Market capitalization: $1.101 billion
Dividend record: None. The company has never paid a dividend.
Earning power: Since 2007 AGRO has an average adjusted earning power of ($0.07) per share. The company has lost money the last three out of four years. I only like profitable companies. It will be interesting to see if AGRO can start producing profits in the next two years.
(Earnings adjusted for changes in capitalization. Adjusted EPS based on 108.87 million shares)
EPS Net inc. Adj. EPS Shares
2006
2007 $0.20 $29.170 M $0.27 144.105 M
2008 ($0.09) ($19.334 M) ($0.18) 204.279 M
2009 ($0.01) ($0.26 M) ($0.002) 228.05 M
2010 ($0.36) ($43.904 M) ($0.40) 121.667 M
Four year average adjusted earnings per share ($0.07)
Consider buying below $6.51 (less than the 2010 shareholder equity without the recent secondary equity offering)
Consider selling above $9.00 (the current book value per share including the money from the recent secondary offering)
Balance sheet: Up from its purchases of farmland
Book value per share: $9.00 (TTM and most of it from the recent secondary equity offering)
Price to book value ratio: 1.12 (good)
Current ratio: 2.89 (over 2.0 is good)
Quick ratio: 2.17 (over 1.0 is good)
Disclosure: I don’t own Adecoagro (AGRO) and I won’t until it is profitable without equity offerings. This one is going on my watch list at $5.00 per share
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Jim Rogers and others have been recommending agriculture as an investment.
That got me thinking about high dividend stocks in the agricultural sector. Guess what? There are none. But I did find ConAgra (CAG). The company has been in business for more than 90 years. It is a diversified player in the packaged food industry. The majority of its sales are derived from North America. Its portfolio includes such well-known brands as Act II, Banquet, Chef Boyardee, Healthy Choice, Orville Redenbacher's, Parkay, and Reddi-wip. Beyond grocery retailers, ConAgra also sells to restaurants and other food service establishments. With its Lamb Weston brand, the firm is the largest supplier of french fries in the U.S.
ConAgra is cheap at $23.19, but you will be able to buy it at a deep discount when the “double-dip recession” panics stock market investors. Wait for the bottom in the $12 - $15 per share range.
ConAgra (CAG)
Market price: $23.19
Shares: 410.80 M
Market capitalization: $9,526,452,000
Dividend record: ConAgra started paying a 3 cent quarterly dividend in 1987. The company grew its dividend from 1987 (34 cents) to 2006 (27.25 cents). Then they missed a quarter in April 2006 (2Q2006). They resumed paying a dividend in 3Q2006, but the dividend was cut to 18 cents quarterly. Since then they have paid a quarterly dividend to today's 23 cents quarterly dividend.
Dividend: $0.23 quarterly
Dividend yield: 3.9% ($0.23 dividend x 4/$23.19)
Recent EPS: $1.90
Dividend payout ratio: 48.4% ($0.92 annual dividend/$1.90 recent EPS)
ConAgra would be a 6% high dividend stock if its price dropped to $15.33 per share. CAG traded in this range as recent as April 2009.
Earning power: $2.05 EPS @ 410.8 million shares
(earnings adjusted for changes in capitalization. ConAgra has been buying back shares)
EPS Net inc. Adj EPS
2007 $1.51 $765 M $1.86
2008 $1.90 $931 M $2.27
2009 $2.15 $978 M $2.38
2010 $1.62 $726 M $1.77
2011 $1.88 $817 M $1.99
Five year average adjust earnings per share: $2.05
Consider buying below $24.65 (12 times avg. adjusted earnings)
Consider selling above $41.00 (20 times avg. adjusted earnings)
ConAgra is trading at 11.3 times average earnings this is value territory.
Balance sheet: Unexciting. Stagnant since 2007 (assets and liabilities have declined with equity remaining the same)
Book value per share: $10.83
Price to book value: 2.14 this is good ($23.19/$10.83)
Current ratio: 1.83 (over 2.0 is good)
Quick ratio: 0.86 (over 1.0 is good)
Disclosure: I don't own ConAgra (CAG)
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Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers, spoke Monday about the Standard & Poor's credit rating downgrade of US sovereign debt, saying the 'no news' event has nothing to do with the markets plunging and will not affect his investment strategy.
He also discussed the Federal Reserve monetary policy, arguing that further money printing, better known as QE3, will bring more inflation, social unrest and will lead to lost decades for the United States. He urged investors to be prepared as 'more problems are coming'.
The only thing that will work, he said, is to face reality by letting people that are bankrupt go bankrupt.
Speaking in an interview from Singapore with Rishaad Salamat on Bloomberg Television's "On the Move Asia" Monday, Rogers said: "Everyone has known that America is the biggest debtor nation in the world".
Standard & Poor's decision to cut the US's long-term debt rating is "not news, it's not even old news, it's just not news," Rogers said.
The US downgrade will not affect financial markets and has not caused the plunge in markets, he argued.
"Markets are coming down because America has problems, Europe has problems, China is trying to slow down...There's plenty of reasons for markets to come down, but it has nothing to do with S&P," Rogers told Rishaad Salamat.
Anyone who is investing on the downgrade, should not be investing at all, he said, adding that the world had known - about the US's problems - for a long-long time.
"The markets look ahead. No none who invests on the news makes any money. The markets are looking 6-12 months ahead and when you look 6-12 months ahead there are some bad things coming."
Where are markets heading now?
"Normally when you see panic like this it may be getting to building up towards a selling climax. If it gets to a selling climax, I will cover my shorts...because this kind of action usually leads to a reversal at some point," Rogers said.
What is he buying?
Talking about his investment strategy, Rogers, who predicted the start of the global commodities rally in 1999, reiterated he owned commodities, real assets, especially agriculture, gold and silver.
"If equities continue to fall, I will cover my shorts, perhaps all my shorts, and I will look for things to buy. And it looks as commodities are continuing to be beaten down, that's where I will put my money," the legendary investor said.
Gold and silver are going up too high too fast, he said, adding he hoped a correction will take place, "so that I can buy some more".
"Gold and silver, over the next few years, are going to go much higher, as will agricultural commodities," Rogers predicted.
"I hope this will protect me if things go bad," he told Bloomberg.
Gold for December delivery in New York advanced as much as 3.6% to a record US$1,774.80 an ounce today on concern the economic slowdown will worsen. The precious metal has surged 23% this year, heading for an 11th year of gains, as the global sovereign-debt crisis and a faltering economy boost demand for wealth protection.
Gold holdings had their biggest daily advance since May 2010 as of August 8.
Gold also advanced today to a premium over platinum for the first time since December 2008, as demand for a haven outweighed the appeal of platinum used mostly in catalytic converters.
August 10, 2011
Jim Rogers has taught finance at Columbia University's business school and is a media commentator worldwide. He is the author ofAdventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website.
Copyright © 2011 Business Intelligence Middle East
A New Recommendation For Purchasing Foreign Currencies to Guard Against the Dollar Decline
Jason Brizic
August 12, 2011
Back on May 20th, 2011 I wrote a Tip of the Week advocating the use of Everbank to buy foreign currencies. It was titled: How to Buy Foreign Currencies in the US to Guard Against a Dollar Decline. I subscribe to Gary North’s wonderful website (www.garynorth.com). I consider him a mentor in the areas of Austrian economics and entrepreneurship. He has just brought some new information to light regarding Everbank. You should find another company from which to purchase foreign currencies. There is a new recommendation at the end of his article.
* * * * * * * * * *
A Warning to All Everbank Clients
Southern Copper (SCCO) will go ex-dividend on Monday, but that is not the whole story. The stock price will drop after the dividend and it will likely keep going down.
Southern Copper Stock To Go Ex-dividend Monday (SCCO)
By TheStreet Wire 08/12/11 - 09:52 AM EDT
NEW YORK (TheStreet) -- The ex-dividend date for Southern Copper Corporation (NYSE:SCCO) is Monday, August 15, 2011. Owners of shares as of market close today will be eligible for a dividend of 62 cents per share. At a price of $31.41 as of 9:30 a.m. ET, the dividend yield is 8.5%.
The average volume for Southern Copper has been 3.5 million shares per day over the past 30 days. Southern Copper has a market cap of $24.7 billion and is part of the basic materials sector and metals & mining industry. Shares are down 36.8% year to date as of the close of trading on Thursday.
Southern Copper Corporation engages in mining, smelting, and refining mineral properties in Peru, Mexico, and Chile. The company has a P/E ratio of 12.4, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7.
* * * * * * *
Copper is an industrial metal that goes up in price during a global booms. When the global economy busts the copper price goes down. There was a bust in 2008 and then a false recovery 2009-2011. Investors are beginning to realize that the bust must continue in order to liquidate all the malinvestments made during the boom. Governments and central banks are hell bent on preventing the markets from liquidating those malinvestments quickly. They will continue to implement policies that forestall and jeopardize a real recovery. Southern Copper will suffer as a result.
If you buy, then know that you will be buying on the way down. I expect a dividend cut. This company will remain a high dividend stock after it cuts its dividend because the stock price will be falling with the copper commodity price. Copper peaked in January 2011 at $4.64 per pound. It is down to $4.05 now and grinding lower on the realization of a “global double-dip recession”. Don’t be fooled by Southern Copper’s 8+% dividend yield.
Consider buying below $23.04 and sell it above $38.40. The dividend is in jeopardy due to its dividend payout ratio exceeding 100%. Its balance sheet is stagnant.
Read my analysis of its fundamentals and technicals http://www.myhighdividendstocks.com/high-dividend-stocks/is-southern-copper-heading-north-or-south-from-34-74#more-515
Disclosure: I don’t own Southern Copper (SCCO)
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Total (TOT) is now a high dividend stock thanks to the recent worldwide stock market crash and oil’s price plunge. Total peaked back in May 2011 at $64.44. The stock has fallen 27.9% since May to $46.42 today. I wrote an article on June 23rd, 2011 on Total that had all my typical measurements of dividend record, earning power, and strength of balance sheet metrics. Here is a quick recap: today’s dividend yield is 6.9% and is relatively safe, it earned an average of $4.64 per share (adjusted) over the past five years making it a value below $55.68, and it has a good balance sheet.
Click here for the June 23rd article: http://www.myhighdividendstocks.com/stocks-that-pay-small-dividends/which-integrated-oil-majors-will-become-high-dividend-stocks
This stock is a buy for its combined high dividend, earning power, and strong balance sheet. But the fundamentals of oil are short term bearish. The global economy never really recovered since the Panic of 2008. Keynesian money printing and massive government deficits have only made things worse. When worldwide investors slowly realize that there is no recovery the price of oil will tank. Total will be dragged down by the drop in oil. The dividend yield will become bigger as its stock price declines. I think that Total could drop all the way back down to $36.82 like it did during the Panic of 2008 especially if oil drops to the $40-$50 range per barrel.
Link to this chart: http://stockcharts.com/h-sc/ui?s=TOT&p=W&b=5&g=0&id=p26097042894
Look at oil’s hammering. Oil’s fundamentals trump Total’s. Wait to buy until oil is done going down. Put Total (TOT) on your watchlist.
Disclosure: I don’t own Total (TOT) yet.
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Recently by Llewellyn H. Rockwell, Jr.: Ideas and the Culpability for Violence
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The trigger that apparently caused the market meltdown was the ever-so-slight suggestion from Standard & Poor's that the US government’s fiscal health might not be all that it is cracked up to be.
This was not a case of the little boy noting the emperor has no clothes. It is more like the little boy suggested that the emperor's clothes, while beautiful, might have been more carefully tailored to suit the imperial dignity. Hysteria followed, and the entire Obama cult called for the kid to be stoned.
Finally the emperor himself spoke in defense of his rainment. That’s when the market crashed.
But the downgrading of a government’s debt from AAA to AA+ can only have triggered a market avalanche if the truth is in fact much worse, and most everyone knows it.
S&P doesn’t have clean hands, of course. It holds a government monopoly, wants higher taxes, and rated crazed housing bonds AAA. But imagine, for just a moment, that US government debt were rated in the same way that municipal bonds or regular corporate debt are. Imagine that government bonds, like normal bonds, carried a default premium. Imagine, in other words, that the Federal Reserve were not in a position to pay everyone from welfare recipients to banksters with newly created money.
Under such actual market conditions, federal debt would not be rated as AA+. It would be worth even less than junk bonds. In fact, it wouldn’t even qualify for a market rating at all, because it would be utterly worthless and the institution that issued it would be in default and the whole rotten apparatus of the state would be seen to be bankrupt at its very core, in every sense.
We know this for one simple reason: There is no way that the government can fund its debt on taxes alone. There would be a revolution in this country in a heartbeat, and, probably, the entire American empire, domestic and foreign, would come crashing down, along with its banking and monetary systems.
If this actually happened, there would be no more "ongoing negotiations" about the budget and the debt. The cuts would be swift, extreme, gigantic. The federal government would have to behave like state governments, balancing the budget year to year. There would be no more plans for fake cuts in the planned increases, gradually phased in over ten years. The federal government would face actual market discipline. The S&P downgrade is only a slight taste of what would follow.
And let’s not just look at the downside. Hundreds of billions in resources would be freed from government control. The private sector would experience a huge infusion of energy. Interest rates would probably go through the roof, which means that people would actually be rewarded for saving, and saving is exactly what people would do as hundreds of banks went belly-up, large portions of the business sector had their credit lines cut, and merchants of death had to close their bloody doors.
There would be wailing and gnashing of teeth, but there would be no turning back. Within a few months, we would start seeing massive resource shifts and pockets of growth would return. New jobs would be available. New businesses would spring up. New financial firms would displace the old ones. Within a year or 18 months, we would be on a growth path, and this time it would be real and sustainable.
Of course this is not going to happen. Instead, the powers-that-be will continue their long game of "let’s pretend" as the economy sinks deeper and deeper, incomes fall, and the US gradually heads toward 3rd-world basket case status.
It’s not only the government that is bankrupt, of course. It’s the entire ideological apparatus that backs the state and its eternal expansion. The New York Times struggled for something to say about the obvious failure of the second stimulus. All they could come up with was: "shift every available resource toward jobs," "increased investment in infrastructure," more relief for homeowners, and another extension of unemployment benefits.
The only thing that this asinine editorial left out was the need to lower interest rates. And that’s because interest rates are already 0%, which has killed saving, terminated growth, and denied the public the fundamental freedom to sock away money in time deposits and let it earn something in exchange. The Federal Reserve is completely out of policy options, unless it is ready to embrace the Zimbabwe-Weimar solution.
Of course, the whole theory that the government can stimulate through control and robbery is wrong and counterproductive. It only ends up rewarding government and its friends while the rest of us suffer. If we ever get out of this depression, it will be because government is forced to stop this nonsense, and the economy really stimulated by taking a meat axe to the planning-spending-inflating apparatus.
This is the underlying reality that informed traders understand. The whole system is being propped up by the power to print, and that power alone. No matter how many miracles some people think that paper money can accomplish, there is an underlying realization that the whole system is a hoax.
But don’t take my word for it. Let S&P and many more competitive rating agencies go to town on US bonds and rate them as they would any bond in the private sector or even the public sector not backed by a printing press. Let reality speak, and let us listen.
August 10, 2011
Llewellyn H. Rockwell, Jr. [send him mail], former editorial assistant to Ludwig von Mises and congressional chief of staff to Ron Paul, is founder and chairman of the Mises Institute, executor for the estate of Murray N. Rothbard, and editor of LewRockwell.com. See his books.
Copyright © 2011 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
Link to original article: http://lewrockwell.com/rockwell/day-of-reckoning188.html
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I’m back after a few days of technical difficulties that cause the site to go down.
Since I’ve been gone the world’s stock markets have crashed, S&P downgraded the USA’s debt rating, and several high dividend stocks are approaching value territory.
I’m going to do a compare and contract piece on how high dividend stocks fared during the last couple of weeks in which the US markets have shed at least 20%. Do high dividend stocks offer better protection from price losses in addition to their dividends?
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As is usually the case, there is far more than meets the eye to the Labor Department’s report that the economy added 117,000 jobs last month and the unemployment rate fell to 9.1 percent.
Let’s start with the reality that fewer people actually were working in July than in June.
According to a Bureau of Labor Statistics breakdown, there were 139,296,000 people working in July, compared to 139,334,000 the month before, or a drop of 38,000.
But the job creation number was positive and the unemployment rate went down, right? So how does that work?
It’s a product of something the government calls “discouraged workers,” or those who were unemployed but not out looking for work during the reporting period.
This is where the numbers showed a really big spike—up from 982,000 to 1.119 million, a difference of 137,000 or a 14 percent increase. These folks are generally not included in the government’s various job measures.
So the drop in the unemployment rate is fairly illusory—stick all those people back in the workforce and you wipe out the job creation and the drop in unemployment.
For once, some of the government’s other tools of economic voodoo didn’t help the count.
The vaunted birth-death model, a byzantine approximation of business creation and failure, actually subtracted 18,000 from the total job creation after a five-month run where it added a total of 741,000 positions to the count.
And the so-called “real” unemployment rate, which adds in discouraged workers and others not counted as part of the headline unemployment rate, actually pulled back one notch to 16.1 percent.
But there’s plenty of bad news to go around otherwise.
The average duration of unemployment rose for the third straight month and is now at a record 40.4 weeks—about 10 months and now double where it was when President Obama took office in January 2009. The total number unemployed for more than half a year now stands at 6.18 million, 130 percent higher than when the president’s term began.
Among the nuggets of good news—the jobless rate for blacks slipped to 15.9 percent and for Latinos to 11.3 percent, both at four-month lows.
But how good or bad the unemployment picture really may not come into view until next month, because of distortions from seasonal adjustments.
Including teachers and others who experience seasonal unemployment, total joblessness actually rose 1.23 million.