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.

First Look at 9% High Dividend Stock Vector Group LTD (VGR). Stop Smoking and Stop Buying VGR.

Today I take a look at tobacco company Vector Group LTD (VGR).  I’d never heard of Vector before running a high dividend stock screen recently.  They are a 9% high dividend stock, but is their dividend safe?  No.  How is the stock priced relative to earning power?  Speculatively priced.  What about their balance sheet?  It is awful.  Read on to see how bad the numbers are for this company.  There is a reason the company’s stock price has only increased 0.32% in 10 years while price inflation has eroded over 30% of the dollars purchasing power in the same time.

Vector Group LTD (VGR)

Price: $17.72 (last week)

Shares: 79.57 million

Market capitalization: $1.41 billion

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Preferred stock: None.

Bonds: $1.7 billion outstanding.  Nothing is due soon, but Vector has other debt troubles (see balance sheet below).

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What does the company do?  Vector Group manufactures cigarettes through subsidiaries. Its Liggett Group subsidiary produces cigarettes under discount brands and private labels. The company also produces cigarettes in Russia. Recently, Vector Group has launched QUEST, which it claims is a genetically engineered nicotine-free cigarette.

DIVIDEND RECORD: Vector Group is a steady dividend payer and grower, but the money company is paying out more than it earns.

Dividend: $0.40

Dividend yield: 9%  ($1.20 annual dividend / $17.72 share price)

Dividend payout: 129%  ($1.20 / $0.93 recent EPS) –OR- 164% ($1.20 / $0.73 average adjusted earning power)

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EARNING POWER: $0.73 per share @ 79.57 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

12/2007

$0.93

$74 M

74 M

$0.93

12/2008

$0.69

$61 M

82 M

$0.77

12/2009

$0.31

$25 M

77 M

$0.31

12/2010

$0.68

$54 M

78 M

$0.68

12/2011

$0.93

$75 M

79 M

$0.94

Five year average adjusted earnings per share is $0.73

Consider contrarian buying below $5.84 (8 times average adjusted EPS)

Consider value buying below $8.76 (12 times average adjusted EPS)

Consider speculative selling above $14.60 (20 times average adjusted EPS)

Vector Group LTD (VGR) is currently trading at 24 times average adjusted EPS.  This is stock is speculatively priced.

BALANCE SHEET – Hideous!!  Negative equity!

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Most of the damage to the balance sheet has been due to an increase of short-term debts and other long-term liabilities.

Fiscal year ends in December. $USD in millions except per share data.

2007-12

2008-12

2009-12

2010-12

2011-12

Current liabilities

Short-term debt

21

97

22

52

135

Accounts payable

7

6

4

9

10

Deferred income taxes

24

93

17

37

36

Taxes payable

12

44

30

25

Accrued liabilities

34

69

46

40

42

Other current liabilities

24

19

15

59

68

Total current liabilities

109

296

149

227

315

Non-current liabilities

Long-term debt

277

Deferred taxes liabilities

142

49

45

52

61

Accrued liabilities

2

Pensions and other benefits

35

34

39

46

Other long-term liabilities

156

304

512

678

593

Total non-current liabilities

575

388

591

769

702

Total liabilities

684

684

740

996

1017

Book value per share: ($1.12)  Vector Group has a negative book value per share.  This means stay away at any price.  There are much better stocks to buy.

Price to book value ratio: Not applicable because of the negative book value (under 1.0 is good)

Current ratio: 1.61 latest quarter (over 2.0 is good)

Quick ratio: 1.00 latest quarter (over 1.0 is good)

Debt to equity ratio: Not applicable because they have no equity. (lower is better)

Percentage of total assets in plant, property, and equipment: 6.1% (the higher the better)  Other assets include: Current assets 54.94%, Intangibles 11.59%, and Long Term Assets 27.32%

CONCLUSION – Vector Group LTD is a 9% high dividend stock, but I don’t trust their ability to payout the dividend in the future.  They are going to have to issue more shares or debt to finance the dividend.  The stock is speculatively priced at 24 time average adjusted earning power.  The balance sheet is horrifying.  They have negative equity and no plan to fix the situation.  I wouldn’t buy this stock until its balance sheet is repaired.  Stay away from Vector Group LTD.  It is headed for a cliff when the worldwide recession reappears.  This appears to be a poorly run company.

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DISCLOSURE – I don’t own Vector Group LTD (VGR)

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Don't Overpay for Apple (AAPL) Despite the New Dividend.

Today I take a first look at Apple (AAPL) since they finally decided to pay a dividend to the owners of the company.  You’ll learn how small the dividend yield will be, how speculative the current share price is, and how all the claims of massive cash stockpiles is not so true.  Read on to find out.

Apple (AAPL)

Price: $608.60

Shares: 932.37 million

Market capitalization: $567.44 billion

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Preferred stock: none

Bonds: none

DIVIDEND RECORD:  Apple has never paid a dividend in 17 years, but they recently announced that they would begin paying a quarterly dividend of $2.65 per share (http://www.bloomberg.com/news/2012-03-19/apple-to-pay-dividend-buy-back-stock-to-return-some-of-its-cash.html) beginning in the period starting July 1st, 2012.  Will they become a dividend grower?  Who knows; they have no track record.  However, the dividend will not be threatened by any debt, preferred stock, or bonds.

Dividend: $2.65 quarterly starting in 2Q 2012

Dividend yield: 1.7% ($10.60 annual dividend / $608.60 share price)

Dividend payout: 30% ($10.60 dividend / $35.11 recent EPS) -0R- 85% ($10.60 dividend / $12.39 average adjusted earning power)

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EARNING POWER: $12.39 per share @ 932.37 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

9/2007

$3.93

$3,496 M

889 M

$3.75

9/2008

$6.78

$6,119 M

902 M

$6.56

9/2009

$9.08

$8,235 M

907 M

$8.83

9/2010

$15.15

$14,013 M

925 M

$15.03

9/2011

$27.68

$25,922 M

937 M

$27.80

Five year average adjusted earnings per share is $12.39

Consider contrarian buying below $99.12 (8 times average adjusted EPS)

Consider value buying below $148.68 (12 times average adjusted EPS)

Consider speculative selling above $247.80 (20 times average adjusted EPS)

Apple (AAPL) is currently trading at 49 times average adjusted EPS.  This is stock’s price is highly speculative.

BALANCE SHEET – The chart of the balance sheet is beautiful, but the price to book value ratio shows you how overvalued Apple is at the present time.  Investors have forgotten that Apple traded at $82 - $85 a share between November 2008 and March 2009.  You can buy Apple near its book value if you are patient.  Their current ratio is not impressive despite all the pundit talk of Apple having so much cash.

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Book value per share: $81.80 as of September 2011

Price to book value ratio: 7.44 (under 1.0 is good)  You are paying a massive premium to book value for every Apple share at today’s prices.  Remember that is only as good as its last product.  Not every product is going to be a homerun.  When it eventually disappoints the share price is going to crash as the hedge funds retreat.

Current ratio: 1.58 latest quarter (over 2.0 is good)  I thought with all that talk of Apple being loaded with cash that they would have blow the current ratio away.   That simply isn’t the case.  They have $54.771 billion in current assets and $34.607 billion in current liabilities.

Quick ratio: 1.35 latest quarter (over 1.0 is good)  There is the cash showing through.

Debt to equity ratio: 0 (lower is better)  They are long term debt free.  Outstanding.

Percentage of total assets in plant, property, and equipment: 5.64% (the higher the better)  Not a lot of plant and equipment.  Here are where their assets are relative to total assets: Other long term investments 51.72%, current assets 39.49%, and intangibles 3.15%.

CONCLUSION – Apple will be a small dividend payer yielding about 1.7% at today’s stock price.  It will be interesting to see if they become a strong dividend grower over time.  The dividend will be safe at the onset.  Payout ratios are not a problem.  In my opinion the stock price is highly speculative at 49 times average adjusted earning power of $12.39 per share.  Apple’s share price has taken a beating in the past.  In late 2007 the share price peaked at $199.  By March 2009 the stock price had fallen to $85.  Don’t make the mistake to believe that Apple is crashproof.  There is a worldwide recession coming and Apple will take another beating.  I think the dividend it to entice hedge funds from pulling out of the stock with the recession hits.  Apple’s balance sheet is not as strong as I thought.  The price to book value is ridiculous right now and their current ratio is unimpressive.  However, they are in much better shape than most companies.  I recommend you sell it  if you own it now.  I think Apple is a safe buy below $148; otherwise, you’re playing a speculative game of the greater fool theory.  Don’t get trampled by the hedge funds when they exit their positions in Apple.  The dividend yield will be much higher below $148, you won’t be paying through the nose for earnings, and you’ll pay a much smaller premium to book value.

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DISCLOSURE – I don’t own Apple (AAPL).

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Apple dividend

There is news that Apple will begin paying a $2.65 per share quarterly
dividend (http://news.investors.com/article/604927/201203201524/apple-shares-retreat-fr....
That is great news, but I like high dividend stocks. Apple would
become a 6% high dividend stock if it pays its proposed dividend and
its stock price drops to $176.66. Unfortunately for current Apple
investors that would be nearly a 71% price decline from today's
closing price of $605.88 per share. Right now you are laughing at me.
How preposterous!! Ahhh, but you forget that Apple was selling for
$176 in mid-September of 2009. Apple is not market-proof. I will
write a "First Look" article on Apple soon where we can discover their
average earning power together.

There is another way for Apple to become a high dividend stock. They
could pay out 80% of the recent earnings of $35.11 per share in the
form of a dividend. A $7.02 quarterly dividend payment would bring
the yield up to 6%. I'm very confident that Apple will not do this.

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sheets.

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A First Look at Ship Finance International (SFL). Floating or Sinking?

Today I take a look at diversified ship operator, Ship Finance International (SFL).  They are a high dividend stock yielding 8.8% at present.  But is the dividend safe?  Are they a steady dividend grower?  Is the stock over or under priced?  Is their balance sheet strong?  Read on to find out.

Ship Finance International (SFL)

Price: $13.74

Shares: 79.12 million

Market capitalization: $1.09 billion

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What do they do – Ship Finance International leases a fleet of 57 crude oil tankers exclusively to a company called Frontline Shipping Limited. Ship Finance purchased the oil tankers from Frontline Ltd., the parent company of Frontline Shipping. Ship Finance also provides administrative and maintenance services for the vessels through a partnership with Frontline Management Ltd., another subsidiary of Frontline Ltd.

Preferred stock: none.

Bonds: $1.7 billion outstanding

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DIVIDEND RECORD: Spotty.  They have a pattern of growth and cuts.  In 2007 the dividend was $0.55 quarterly.  In 4Q2008 it grew to $0.60.  Then they cut it in half in 2009.  It grew from $0.30 to $0.39 in 2009 to 2011.  This quarter it was cut to $0.30 again.

Dividend: $0.30 quarterly

Dividend yield: 8.8% ($1.20 annual dividend / $13.74 share price)

Dividend payout: 57% ($1.20 / $2.09 recent EPS) –OR- 55% using average adjusted earning power ($1.20 / $2.16)

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EARNING POWER: $2.16 @ $79.12 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

2006

$2.48

$181 M

73 M

$2.29

2007

$2.30

$168 M

73 M

$2.12

2008

$2.50

$182 M

73 M

$2.30

2009

$2.59

$193 M

74 M

$2.44

2010

$2.09

$166 M

79 M

$2.10

2011 (est)

$1.56

$133.45 M

79.12 M

$1.68

2011 earnings quarter by quarter

EPS

Net income

Shares

Adjusted EPS

2011 Q1

$0.40

$32.1 M

79.12 M

$0.405

2011 Q2

$0.40

$41.47 M

79.12 M

$0.524

2011 Q3

$0.35

$27.45 M

79.12 M

$0.346

2011 Q4 (est)

$0.41

$32.43 M

79.12 M

$0.409

2011 Total (est)

$1.56

$133.45 M

79.12 M

$1.68

Six year average adjusted earnings per share is $2.16

Ship Finance International (SFL) is currently trading at 6.36 times average adjusted EPS.  This is stock is in contrarian territory.

Consider contrarian buying below $17.28 (8 times average adjusted EPS)

Consider value buying below $25.92 (12 times average adjusted EPS)

Consider speculative selling above $43.20 (20 times average adjusted EPS)

BALANCE SHEET – You would be paying a 30% premium to book value at today’s share price.  The company is strapped for cash and current assets.  Too much debt for my liking.

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Book value per share: $10.61

Price to book value ratio: 1.3 (under 1.0 is good)

Current ratio: 1.0 latest quarter (over 2.0 is good)

Quick ratio: 0.49 latest quarter (over 1.0 is good)

Debt to equity ratio: 2.2 (lower is better)

Percentage of total assets in plant, property, and equipment: 4% (the higher the better)

CONCLUSION – Ship Finance International is a high dividend stock yielding 8.8% despite the recent dividend cut.  The amount of the dividend has been irregular, but it has paid 31 quarters of consecutive dividends.  The company’s share price has been pummeled into contrarian territory at only 6.36 times average adjusted earnings.  I like this company below book value of $10.61.  It has traded below book value as recently as December 2011.  The rest of the balance sheet is weak.  It has very little current assets relative to current liabilities (current ratio).  I’d like to see them pay down their long term debts with their free cash flow.  The return of the worldwide recession will drive SFL’s stock price down again.  You’ll have your chance to buy it below $10.61.

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DISCLOSURE – I don’t own Ship Finance International (SFL).

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First Look at 12% Dividend Yielder Capital Product Partners (CPLP)

Its back to the high dividend stocks that I’ve never examined before.  Today I take a look at oil tanker company Capital Product Partners (CPLP).  I’ll bet your wondering if their 12% dividend yield safe?  Read on the find out.

Capital Product Partners (CPLP)

Price: $7.59

Shares: 70.79 million

Market capitalization: $537.28 million

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What they do – Based in Piraeus, Greece, Capital Product Partners owns and leases small to medium-sized ships for the transportation of refined oil products. These rental contracts are typically long-term and range from three to 10 years. The company outsources vessel management to parent company Capital Maritime. Spun out from Capital Maritime in 2007, ownership in Capital Product Partners represents a limited-partnership stake.

Capital Product Partners LP. is an international tanker company. The Company is engaged the seaborne transportation services of crude oil and refined petroleum products, edible oils and soft chemicals, by chartering its vessels under medium to long-term time and bareboat charters. Its fleet consisted of 27 modern high specification vessels with an average age of approximately 4.0 years as of January 31, 2012, including two very large crude carrier tankers, four Suezmax crude oil tankers, 18 modern MR tankers. As of December 31, 2011, it charter 24 of our 27 vessels under medium to long-term time and bareboat charters to charterers, such as BP Shipping Limited, Petroleo Brasileiro S.A., Cosco Bulk Carrier Co. Ltd., Capital Maritime and subsidiaries of Overseas Shipholding Group Inc. On June 9, 2011, the Company acquired Patroklos Marine Corp.

Preferred stock: This company has a small amount of preferred stock.  In 2010, they paid $359K out of $17,936K (about 2%) in preferred dividends.  In 2011, they paid $1,742K out of $87,120K (about 1.9%) in preferred dividends.  The preferred does not threaten the common stock dividend at this time.

Bonds: no bonds.

DIVIDEND RECORD: CPLPs grew its dividend from $0.36 quarterly in 2007 to $0.41 in 2010 Q1.  Boom! Then they cut the dividend in almost half and it been there ever since.

Dividend: $0.23 quarterly

Dividend yield: 12.12%  ($0.92 annual dividend / $7.59 share price)

Dividend payout: 51.6% using 2011 reported unadjusted earnings of $1.78 –OR- 153% using average adjusted earning power of $0.60 per share

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EARNING POWER: $0.60 per share @ 70.79 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income

Shares

Adjusted EPS

2007

$0.95

$27.8 M

22.3 M

$0.39

2008

$1.54

$50.7 M

24.2 M

$0.72

2009

$1.15

$29.2 M

24.8 M

$0.41

2010

$0.54

$17.5 M

32.4 M

$0.25

2011

$1.78

$85.4 M

47.1 M

$1.21

Six year average adjusted earnings per share is $0.60

Consider contrarian buying below $4.80 (8 times average adjusted EPS)

Consider value buying below $7.20 (12 times average adjusted EPS)

Capital Product Partners (CPLP) is currently trading at 12.65 times average adjusted EPS.  This is stock is priced for investment.

Consider speculative selling above $12.00 (20 times average adjusted EPS)

BALANCE SHEET – Nice equity growth.  The company doesn’t have much in the way of current assets to cover current liabilities.  Great price to book value ratio.

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Book value per share: $7.30

Price to book value ratio: 1.03 (under 1.0 is good)

Current ratio: 1.05 latest quarter (over 2.0 is good)

Quick ratio: 0.94 latest quarter (over 1.0 is good)

Debt to equity ratio: 1.18 (lower is better)

Percentage of total assets in plant, property, and equipment: 89.78% (the higher the better)

CONCLUSION - Capital Product Partners (CPLP) is a high dividend stock yielding over 12%.  However, I’m a little troubled by the high dividend payout ratio using the average adjusted earning power.  You need to really dig into the annual reports and quarterly reports to determine if its earning power will grow enough to protect the current dividend.  Remember that CPLP cut its dividend almost in half in 2010.  I’m always leery of dividend cutters.   It is priced for investment at barely over 12 times average adjusted earning power and the stock was contrarian cheap as recently as August 2010.  The only ding on the balance sheet is the low current ratio.  The return of the worldwide recession will drop CPLPs price.  You will have another opportunity to buy this stock between $7.20 to $4.80.  Wait for it.  Read the annuals and quarterly reports while you are waiting.  I haven’t read them yet, but I will: http://www.capitalpplp.com/sec.cfm

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http://stockcharts.com/c-sc/sc?s=CPLP&p=W&b=5&g=0&i=p59203526393&r=2148

DISCLOSURE – I don’t own Capital Product Partners (CPLP).

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First Look at Plains All American Pipelines (PAA).

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  Today I take a look at Plains All American Pipeline (PAA).  This is the last of fifteen articles examining some of the dividend stock recommendations of Seeking Alpha contributor Insider Monkey.  Most of these stocks have dividend yields of 4% - 5%, so I think that they need to be looked at because they could become high dividend stocks when the stock market pulls back from another worldwide recession.  I want to see which of his 15 are potential high dividend stocks with earning power and strong balance sheets.  Plains has a high dividend payout ratio, it is speculatively priced, and its balance sheet is blah.  To see how I arrived at those conclusions and what a good value price to buy at read on.

Plains All American Pipeline (PAA)

Price: $79.99

Shares: 155.57 million

Market capitalization: $12.44 billion

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What does the company do to please customers - Plains All American Pipeline, L.P. (PAA) is engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas (LPG) and other natural gas-related petroleum products. It is also engaged in the acquisition, development and operation of natural gas storage facilities. It has three segments: Transportation, Facilities, and Supply and Logistics. PAA’s operations are conducted through, and its operating assets are owned by, PAA’s subsidiaries. On December 23, 2010, PAA acquired Nexen Holdings U.S.A. Inc. On February 9, 2011, the Company, through its subsidiary PAA Natural Gas Storage, L.P., acquired 100% interest in SG Resources Mississippi, LLC. In July 2011, Gavilon, LLC acquired refined products rack marketing business from the Company. In December 2011, it acquired South Texas crude oil and condensate gathering system and a Canadian trucking operation. In December 2011, it acquired Yorktown Terminal and Jal Pipeline.

Morningstar’s Take - Plains All American Pipeline LP built itself into one of the most successful master limited partnerships by focusing on one thing: supplying the Midwest with crude oil to run its refineries. Plains is expanding its geographic and product focus to include the entire United States and extend the model that has worked so well for crude oil to refined products, natural gas liquids, liquefied petroleum gas, and natural gas.

Preferred stock: I’m not sure how many shares, but there has been preferred stocks since 2009 that receives about a quarter of net income.  For example, in 2011 Net income was $966 million dollars before a $236 million dollar preferred dividend.  That is 24.4%.  This is a threat to the common dividend.

Bonds: $250 million outstanding.  This isn’t a threat to the common dividend.

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DIVIDEND RECORD: Wow!  PAA is an amazing dividend grower.  It paid $0.19 quarterly in 1999.  Thirteen years later it is paying $1.02 quarterly.  That is a 437% increase in 13 years, or 33% straight line dividend growth per annum.

Dividend: $1.02 quarterly

Dividend yield: 5.1% ($4.08 annual dividend / $79.99 share price)

Dividend payout: 83% using recent Google Finance EPS of $4.93 –OR- 145% using average adjusted earning power of $2.82.  This company almost always paid out more than it earned in the past 10 years.  It makes up the difference by constantly offering new shares each year.

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EARNING POWER: $2.82 @ 155.57 million shares

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created.  In PAA’s case they are steadily adding shares)

EPS

Net income

Shares

Adjusted EPS

2007

$2.52

$365 M

114 M

$2.35

2008

$2.64

$325 M

121 M

$2.09

2009

$3.32

$443 M

131 M

$2.85

2010

$2.40

$330 M

138 M

$2.12

2011

$4.88

$730 M

155.57 M

$4.69

Five year average adjusted earnings per share is $2.82.

Consider contrarian buying below $22.56 (8 times average adjusted EPS)

Consider value buying below $33.84 (12 times average adjusted EPS)

Consider speculative selling above $56.40 (20 times average adjusted EPS)

Plains All American Pipeline (PAA) is currently trading at 28.4 times average adjusted EPS.  This is stock is speculatively priced.

BALANCE SHEET – Blah balance sheet.

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Book value per share: $35.03

Price to book value ratio: 2.28 (under 1.0 is good)  This is way too high for my liking.  Wait for a big price drop.

Current ratio: 0.96 latest quarter (over 2.0 is good) This company is a little short of current assets to cover this year’s liabilities.  I’m guessing they will offer more shares to make up the difference.

Quick ratio: 0.005 latest quarter (over 1.0 is good)  This company is cash starved.

Debt to equity ratio: 0.96 (lower is better)  This is not great, but not too bad either.

Percentage of total assets in plant, property, and equipment: 50.32% (the higher the better).  PAA has 21% of assets in receivables, 12% in intangibles, and 9% in long term assets.

CONCLUSION - The best time to buy PAA in recent years was in late 2008.  It was a value investment back then.  Plains All American Pipelines is an amazing dividend payer and grower, but I’m concerned that the preferred stock and capital expenditures are going to threaten the dividend growth in the future.  The company is speculatively priced at this time at over 28 times average adjusted earnings.  Wise investors should have scaled out of it when it reached $56.40 back in October 2011.  Keep selling portions and rising your stops is the key to scaling out.  The balance sheet is weak when you look at the price to book value ratio and the current ratio and quick ratios.   The company is going to have to issue more debt or stock to finance its current operations.  You can safely ignore this stock until it drops back to the $35.00 to $22.00 dollar range.

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DISCLOSURE – I don’t own Plains All American Pipelines (PAA).

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First Look at Bristol-Myers Squibb (BMY).

Today I take a look at pharmaceutical company Bristol-Myers Squibb (BMY). This is the fourteenth article out of fifteen covering the stocks that Seeking Alpha contributor Insider Monkey recommended a few weeks ago.  Most of the stocks on his list were yielding between 4% to 5%, so they are potential 6% high dividend stocks when the market slides due to a second worldwide recession.  I’m trying to find the ones with high dividends, earning power, and strong balance sheets.  Bristol-Myers Squibb looks promising in the $22.66 - $18.00 price range.  Their price to book value ratio would still be a little high, but BMY definitely has demonstrated stable earning power, high dividends plus growth, and a strong balance sheet.  Read on to see how I came to that conclusion.

Bristol-Myers Squibb (BMY)

Price: $32.59 on Monday March 5th, 2012

Shares: 1.69 billion

Market capitalization: $55.02 billion

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Preferred stock: none

Bonds: none

What do they do to satisfy customers - Bristol-Myers Squibb discovers, develops, and markets pharmaceuticals for various indications, such as cardiovascular and infectious diseases, cancer, and psychiatric disorders. Unlike some of its more diversified peers, Bristol has exited several nonpharmaceutical businesses to focus on branded drugs.  Plavix is their biggest revenue product.  Plavix is a heart attack prevention drug.

Morningstar’s take - Adept at partnerships, Bristol-Myers Squibb has built a strong portfolio of drugs and a robust pipeline. While the company faces major patent losses beginning in 2012, we expect Bristol's next generation of drugs will fill the patent holes over the next decade. Further, by selling off business lines unrelated to its core pharmaceutical strategy, the company has been building a war chest of cash to make acquisitions and new partnership deals.

DIVIDEND RECORD: Steady dividend payer since at least 1987.  Strong dividend grower – the quarterly dividend was $0.09 in 1987 and it has grown to $0.34 quarterly.  That is about 11% straight-line dividend growth per year.

Dividend: $0.34

Dividend yield: 4.17% ($1.36 annual dividend / $32.59 share price)

Dividend payout: 63% using recent Google Finance reported EPS of $2.16 –OR- 58% using average adjusted earning power of $2.35 per share.

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EARNING POWER: $2.35 @ 1.69 billion shares (*Note: This amount only includes net income from continuing operations.  There was significant net income from discontinued operations in 2009 ($8 billion) and 2008 ($2.5 billion).  The earning power would be higher if I included the discontinued ops, but that would skew earning power going forward).

(earnings adjusted for changes in capitalization – typically share buybacks and/or additional shares created)

EPS

Net income*

Shares

Adjusted EPS

2007

$1.09

$1,968 M

1,980 M

$1.16

2008

2.62

$3,686 M

1,999 M

$2.18

2009

$5.34

$4,420 M

1,974 M

$2.62

2010

$1.79

$4,513 M

1,713 M

$2.67

2011

$2.16

$5,260 M

1,700 M

$3.11

Five year average adjusted earnings per share is $2.35 @ 1.69 billion shares

Consider contrarian buying below $18.80 (8 times average adjusted EPS)

Consider value buying below $28.20 (12 times average adjusted EPS)

Bristol-Myers Squibb (BMY) is currently trading at 13.86 times average adjusted EPS.  This is stock is priced for investment.

Consider speculative selling above $47.00 (20 times average adjusted EPS)

BALANCE SHEET – Bristol-Myers Squibb has a strong balance sheet.

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Book value per share: $9.44

Price to book value ratio: 3.45 (under 1.0 is good)  Wait for the share price to retreat below $20.00 to drop this ratio down.

Current ratio: 1.96 latest quarter (over 2.0 is good)  BMY has plenty of current assets to cover current liabilities.

Quick ratio: 1.12 latest quarter (over 1.0 is good)  BMY has 112% of its current liabilities in cash alone.  This is good.

Debt to equity ratio: 0.33 (lower is better)  A nice low debt rate.

Percentage of total assets in plant, property, and equipment: 13.71% (the higher the better)  I like companies with a higher percentage of real assets relative to total assets.  BMY has 16% of its total assets in goodwill and another 9.5% in intangibles.  I would want to know if any of its most profitable drugs are going generic anytime soon.  That event will drop the value of their assets.

CONCLUSION – As usual, the best time to buy BMY in recent years was in March 2009 when it was below $20.00.  It was a value investment back then.  It is still a pretty good buy at 13.86 times average adjusted earning power.  Bristol-Myers Squibb has been a steady dividend payer and a strong dividend grower.  The dividend is very stable and payout ratios look good because there is still ample room to pay the dividend if some of its drugs go generic.  The only thing that bothers me is the high price to book value ratio, but that will come down as the worldwide recession returns.  The company has a lot of current assets and cash to cover upcoming.  I would read the company’s quarterly financials and annual reports to learn what product provide most of the company’s profits.  Their biggest revenue producing product, Plavix, is going generic in the USA this year.  US sales of all BMY drugs account for 65% of sales, Europe accounts for 17%, and Canada and Japan at 3% each.  Read the beginning of the 2011 annual report for an excellent overview of their products, their revenues, and when they go generic: http://quote.morningstar.com/stock-filing/Annual-Report/2011/12/31/t.aspx?t=&ft=10-K&d=82bed019190b624cc2daf43fd54c3551

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DISCLOSURE – I don’t own Bristol-Myers Squibb (BMY).

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Your Rotten Monetary Policy Is Destroying This Country by Ron Paul.

Your Rotten Monetary Policy Is Destroying This Country

by Ron Paul

Before the United States House of Representatives Committee on
Financial Services, Hearing on 'Monetary Policy and the State of the
Economy,' 2/29/2012

Mr. Chairman, thank you for holding this hearing on monetary policy
and the state of the economy. I believe that now, more than ever, the
American people want to hold the Federal Reserve accountable for its
loose monetary policy and want full transparency of the Fed's actions.

While the Fed has certainly released an unprecedented amount of
information on its activities, there is still much that remains
unknown. And every move towards transparency has been fought against
tooth and nail by the Fed. It took disclosure requirements enacted
within the Dodd-Frank Act to get the Fed to provide data on the its
emergency lending facilities. It took lawsuits filed by Bloomberg and
Fox News to provide data on discount window lending during the worst
parts of the financial crisis. And it will take further concerted
action on the part of Congress, the media, and the public to keep up
pressure on the Fed to remain transparent.


Transparency is not a panacea, however, as a fully transparent
organization is still capable of engaging in all sorts of mischief, as
the Federal Reserve does on a regular basis. Ironically, one of the
Fed's more egregious recent actions, adopting an explicit inflation
target, was hailed by many as another wonderful example of
transparency. Yet if you think about what this supposed 2% inflation
target actually is, you realize that it is an explicit policy to
devalue the dollar and reduce its purchasing power. Two percent annual
price inflation means that prices rise 22% within a decade, and nearly
50% within two decades.

Indeed, if you look at the performance of the consumer price index
(CPI) under Chairman Bernanke's tenure, prices have risen at a rate of
2.25% per year. Many, perhaps even most, economists would consider
this a modest rise, an example of sober, cautious monetary policy.
Some economists of Paul Krugman's persuasion might even argue that
this is too tight a monetary policy. However, 2.25% is not too far off
from the Fed's new 2% target.


Now look at the performance of the US economy since February 1, 2006,
the date Chairman Bernanke took the mantle from Alan Greenspan.
Trillions of dollars have been wasted on bailouts, stimulus packages,
and other feckless spending. Millions of Americans have lost their
jobs and have lost hope of ever regaining employment. The national
debt has risen to more than 100% of GDP, as the federal government
continues to rack up trillion-dollar deficits, aided and abetted by
the Fed's policies of quantitative easing and zero percent interest
rates. And we are supposed to believe that a 2% inflation rate,
similar to what has prevailed during the worst economic crisis since
the Great Depression, is the cure for what ails this economy.

This explicit 2% target also fails to take into account that whatever
measure is used to determine price inflation, be it CPI, core CPI,
PCE, etc., will always be chosen with an eye towards underreporting
the true rate of inflation and price rises. Pressure will be exerted
on those calculating the price indices, so as not to alarm the public
when prices begin to accelerate. One need only look at what is taking
place in Argentina today, where the government publishes an official
CPI figure that is often less than half that reported by private
sources.

A similar situation exists in this country, where economists
calculating CPI according to the original basket of goods have
determined that price inflation has increased 9.5% per year since
2006, rather than the 2.25% reported by the government. Even the
government's own data reports price rises of nearly 7% per year since
2006 on such consumer goods as gasoline and eggs. Bread, rice, and
ground beef have increased by nearly 6% per year, while bacon and
potatoes have increased nearly 5% per year. This means that in a
little over half a decade, prices on staple consumer goods have
increased 30-50%, all while wages have stagnated and millions of
Americans find themselves out of work and without a paycheck. Of
course, government officials claim that price increases do not affect
the average American because they can always buy hamburger instead of
steak, or have cereal instead of bacon. But the American people can
see how they are suffering because of the Federal Reserve. The
government’s claims that the official statistics show no reason to be
concerned about inflation is Marxist – as in Groucho, who famously
said: "Who are you going to believe, me or your own eyes?"

The Federal Reserve continues to keep interest rates low in the hopes
of boosting lending and consumption. But keeping interest rates at
zero discourages saving, particularly as the rate of price inflation
continues to rise. Why stick money in a savings account earning 0.05%
if it is guaranteed to lose at least 2% of its value every year? And
this is a guarantee, as the Fed has promised a 2% rate of increase in
price inflation, while also guaranteeing a zero percent federal funds
rate through 2014. Retirees living on fixed incomes, dependent on
savings, or on interest income from investments will see their savings
drawn down as they are forced to consume principal. Young people, hard
hit by the recession and struggling to find jobs, will fail to see the
virtue of thrift. Saving or investing is an exercise in futility, as
parking money in the bank or in CDs will guarantee a loss, while
investing in stocks, bonds, or mutual funds will net at best paltry
gains, and at worst massive losses in this continuing weak economy.

The longer the Federal Reserve keeps interest rates low and
discourages savings and investment, the more societal attitudes will
change from being future oriented to present oriented. The Federal
Reserve and its policies already served to stimulate and prioritize
consumption over saving, creating the largest debt bubble the world
has ever known. The extended zero interest rate policy only serves to
promote more consumption and debt now, eviscerating thrift and savings
– the true building blocks of prosperity. This present-oriented
mindset has become pervasive especially among politicians, putting the
government in dismal financial shape as Congressmen and Presidents
over the years have taken to heart Louis XV's famous saying: "Après
moi, le déluge." If the American people follow the same path in their
own lives, this country will be ruined. Capital will be depleted,
infrastructure will fall into disrepair, and the United States will be
a mere shadow of its former self. It is well past time to end the
failed monetary policy that encourages this mistaken preference for
cheap money now.

March 1, 2012

Dr. Ron Paul is a Republican member of Congress from Texas.

Original link at LewRockwell.com: http://lewrockwell.com/paul/paul794.html

TIP OF THE WEEK: Have you ever wondered how much things cost in gold? PricedInGold.com does it for you.

Have you ever wondered how much things cost in gold?  PricedInGold.com does it for you.

Jason Brizic

March 2nd, 2012

Prices can be expressed many ways.  In a barter economy the price of fish can be expressed in terms of any other good.  “I’ll give you 12 eggs for 1 fish.”  The price of the fish is 12 eggs.  It can be said another way: the price of one egg is 1/12th of a fish.   Barter is tedious because both owners of goods have to want what the other guy is willing to part with.  This is called double coincidence of wants.  Money solves this problem.  It acts as a medium of exchange.  Mr. A has eggs.  He trades them to Mr. B for some silver coins.  Mr. A has silver now.  He wants fish.  He trades Mr. C some silver coins for fish.  Everyone is happy.  Money is the most marketable commodity.  It make exchange of goods easier than barter.

All prices in the US are expressed in dollars because of immoral legal tender laws.  There is a website that allow you to see many interesting prices expressed in weights of gold.  Not only does it show the current price, but it shows the historical price going back over a hundred years.  Prices can be measured in troy ounces of gold or gold grams.  Gold grams are a good measurement for smaller goods such as barrels of oil or food.  Here is the conversion formula for troy ounces to grams:

one troy ounce = 31.1034768 grams

As you can see in the long term chart below, oil is a volatile commodity, with it's price swinging wildly in a range from less than 1 gram per barrel to almost 5 grams per barrel. But this chart also shows that these oscillations are part of a sideways price movement centered around 2.5 grams per barrel. Crude's current price around 2 grams is a bit below it's long term average.

Of course, the fluctuating value of the dollar makes it very hard to gauge whether oil prices themselves are rising or falling… Oil today at 2 grams, is about the same as it was in the early 1950s; but if you measure the price in US dollars, you would get the impression that it is about 30 times more expensive today!

Crude Oil, West Texas Intermediate From 1950:

To see dozens of more prices expressed in gold go to www.pricedingold.com

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week