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.

Seeking Alpha contributor Power Hedge is bullish on SeaDrill (SDRL).

Seeking Alpha contributor Power Hedge is bullish on SeaDrill (SDRL).  He cites reasons why in this article:

http://seekingalpha.com/article/255853-seadrill-why-i-remain-bullish

I agree with his sentiments, but I would wait for a stock market correction or crash to buy it dirt cheap at around $20.00 share.  That 7% yield would jack up to double digits.

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Why you shouldn't be concerned with SeaDrill's exposure to Gulf of Mexico drilling permit delays.

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Deepwater oil driller SeaDrill (SDRL) has the least exposure to the US government’s drilling permit delays amongst ultra-deepwater drillers.  They only have one rig operating in the Gulf of Mexico (West Sirius pictured).

http://www.reuters.com/article/2011/03/01/energy-drillers-gulfofmexico-idUSN0113598720110301

Rig type: Semi-submersible

Name: West Sirius

Generation/type: 6th-BE

Built: 2008

Water depth (feet): 10,000

Drilling depth (feet): 35,000

Location: Gulf of Mexico

Client: BP

Current contract: Start – July 2008; Expire – July 2014; Dayrate - $474,000

Previous contract: none

Source: SeaDrill Fleet status report 4Q2010 (http://www.seadrill.com/investor_relations/fleet_update_report )

SeaDrill is paid by BP $474,000 per day regardless if they are allowed to drill or not.  However, oil companies will eventually terminate their contracts with drilling providers (like SeaDrill) if the US government doesn’t issue permits in a manner timely enough to profitably drill for oil.  The good news is that if the US government is slow to issue permits to drill, then SeaDrill is exposed the least amongst the companies mentioned in the article link above.  Transocean (RIG) has the most exposure to the Gulf of Mexico deepwater permit delays.

The West Sirius should bring in $173 million dollars in revenue per year for SeaDrill per its contract with BP.  I couldn’t find the cost to build the West Sirius in a simple Google search.

Most of SeaDrill’s rigs are in Southeast Asia waters.

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Farrell Predicts Market Crash 2011: It Will Hit by Christmas

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Paul B. Farrell

Feb. 22, 2011, 12:01 a.m. EST

Market Crash 2011: It will hit by Christmas

Commentary: The S&P 500 is worth only 910. Get out or lose big

Mr. Farrell, behavioral economics columnist and former Morgan Stanley investment banker, recently wrote a damning commentary on the lies that Wall Street and the Federal Reserve continue to feed you.  Ignore it at your own peril.

There will be another opportunity to buy high dividend stocks at or near the bottom of the next phase down in this Federal Reserve induced bust (bear market).  Keep your invested savings on the sideline in a money market fund.  Make sure you are raising your trailing stops on your winning high dividend stocks.

http://bit.ly/BearMarket

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(Hat tip to Larry)

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TIP OF THE WEEK - Quickly Find High Dividend Stocks in Very Specific Industries to Diversify Your Portfolio.

Quickly Find High Dividend Stocks in Very Specific Industries to Diversify Your Portfolio.

Jason Brizic

Feb. 25, 2011

Are you having trouble quickly finding high dividend stocks in for your diversified portfolio?  This tip should help you save time finding high dividend stocks in specific industries.

Ycharts.com can help you find high dividend stocks in very specific industries.  Google Finance’s stock screener is a more of a blunt instrument compared to www.ycharts.com drill down features.  Click on the website’s Sectors tab then follow these instructions.

You can quickly compare two measurements on their charts and you can sort by those same measurements in the table data below the chart.  I set the Y-axis to dividend yield and the X-axis to PE Ratio because I’m looking for high dividends and low PEs.  However, you could also set the metrics to dozens of different combinations.  For example, you could use Price to Sales vs Price to Book Value to find extreme value/contrarian stocks that probably don’t have a dividend.

I’ve written several articles on one of my favorite high dividend stocks.  The stock is Safe Bulkers Inc. (SB).  Click on this link to see the results for the shipping industry:

http://ycharts.com/industries/Shipping/dividend_yield,pe_ratio

Safe Bulkers is amongst the highest dividend yielders with one of the lowest P/E ratio.  I’ve done the fundamental analysis on them, so I know they are solid on earning power and possess a strong balance sheet.

I’m visually screening for stocks with dividend yields over 6% and a P/E less than 25 (preferably under 12).  Some new names jump out at me on the dividend yield vs P/E ratio charts: Paragon Shipping, Knightsbridge Tankers, Navios Maritime Partners, and Teekay Tankers.  I will go investigate the fundamentals (dividend record, earnings power, and strength of balance sheet) to determine if any are worthy of purchase and at what price.

You can go back up the hierarchy to get to other sectors | sub-sectors | niche-sectors

For more tips, go here:

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

SeaDrill (SDRL) Higher Ahead of Earnings.

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Seadrill Higher Ahead of Earnings

Written by Christian Paolinetti   

Wednesday, 23 February 2011 11:03

New York, February 23rd (TradersHuddle.com) - Shares of Seadrill Ltd. (NYSE:SDRL) are trading higher by +0.36% ahead of its quarterly earnings release. Seadrill, the offshore drilling contractor is expected to release its quarterly results on February 24th.

Wall Street Analysts consensus calls for a profit of $0.76 a share on $1.13 billion revenue.

Seadrill estimates have a range of $0.07 a share. The high estimate calls for profit of $0.8 a share and the low estimate is calling for a profit of $0.73 a share, a year ago for the quarter the company reported $0.74 a share.

Seadrill Ltd. (NYSE:SDRL) provides contract drilling services to the oil and gas industry. The Company operates in shallow to ultra-deepwater areas in harsh and benign environments utilizing a versatile fleet, which includes drillships, semisubmersible rigs, jackup rigs, and tender rigs.

Link to original article: http://www.tradershuddle.com/20110223171933/Earnings/seadrill-higher-ahead-of-earnings.html

SeaDrill (SDRL) is a high dividend stock, but it does not have a strong balance sheet.  Its high current liabilities outweigh its current assets (quick ratio).  I will be looking for improvement in the quick ratio in its 4Q2010 earnings report tonight.  Check back for updates later tonight.

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Bad News for Mortgage REIT AGNC. Housing Prices Headed Lower.

The financial press is reporting today that house prices are headed back down following the ill conceived government stimulus known as the “First Time Home Buyer” subsidy.

http://www.reuters.com/article/2011/02/22/us-usa-economy-confidence-idUSTRE71L3XL20110222

I believe these continued adverse developments in the broader residential mortgage market will negatively impact the earnings of high dividend stock American Capital Agency Corp. (AGNC).  The following risk excerpt from AGNC’s 2009 annual report states the risk quite succinctly:

Continued adverse developments in the broader residential mortgage market may adversely affect the value of the agency securities in which we invest.

In 2008 and 2009, the residential mortgage market in the United States experienced a variety of unprecedented difficulties and changed economic conditions, including defaults, credit losses and liquidity concerns. Many of these conditions are expected to continue in 2010. Certain commercial banks, investment banks and insurance companies announced extensive losses from exposure to the residential mortgage market.  These losses reduced financial industry capital, leading to reduced liquidity for some institutions. These factors have impacted investor perception of the risk associated with real estate related assets, including agency securities and other high-quality RMBS assets. As a result, values for RMBS assets, including some agency securities and other AAA-rated RMBS assets, have experienced a certain amount of volatility. Further increased volatility and deterioration in the broader residential mortgage and RMBS markets may adversely affect the

performance and market value of our agency securities.

We invest exclusively in agency securities and rely on our agency securities as collateral for our financings.  Any decline in their value, or perceived market uncertainty about their value, would likely make it difficult for us to obtain financing on favorable terms or at all, or maintain our compliance with terms of any financing arrangements already in place. The agency securities we invest in are classified for accounting purposes as available-for-sale. All assets classified as available-for-sale are reported at fair value, based on market prices from third-party sources, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity. As a result, a decline in fair values may reduce the book value of our assets.  Moreover, if the decline in fair value of an available-for-sale security is other-than-temporarily impaired, such

decline will reduce earnings. If market conditions result in a decline in the fair value of our agency securities, our financial position and results of operations could be adversely affected.

There really is a double-dip recession.  It never went away.  Federal Reserve counterfeiting and government stimulus just papered over the problems for many months.  The structural problems caused by fractional reserve banking and government deficit spending are not only present, but they have worsened.  Prices must drop to clear markets and to bring supply and demand into balance.

There is a glut of unemployed people, there is a glut of houses, and businesses are not hiring.  These facts are finally imposing reality on some people.  More people will default on their mortgage payments when housing prices decline.  They will join a growing number of strategic defaulters (people who could make their mortgage payments but chose not to).  This occurs because their loans exceed the dollar price of their homes and also due to the resentment against bankers who receive Federal Reserve and US government bailouts.

Look at this chart.  The trend is clearly down.  Keep this in mind as you watch the short video clip at the end of this article.

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[D]ata showed single-family home prices fell in December, bringing them closer to the low seen in 2009.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.4 percent in December from November on a seasonally adjusted basis, as expected.

For the year, prices fell 2.4 percent, slightly more than the 2.3 percent decline analysts had forecast.

While the composite held above its 2009 low, 11 cities hit their lowest levels since home prices peaked in 2006 and 2007, the report showed.

Unadjusted for seasonal impact, home prices fell 1 percent for the month, leaving them just 2.3 percent above their April 2009 troughs, S&P said.

VIDEO: House prices drop; Case-Shiller: 10 city index

Robert Shiller, Yale University Professor of [Keynesian] Economics, and David Blitzer, S&P 500 Index Committee chairman, discusses [housing price] declines in the 10 and 20 City Indices.

VIDEO http://on-msn.com/HousingDown

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Eliminate debt and then build savings. Then you will be ready for high dividend stocks.

Today's article is going to be a short one.  I want you to own a portfolio of high dividend stocks that will provide you a steady stream of income that beats the Federal Reserve's price inflation for the rest of you life.  But you must take care of first things first.  You must eliminate consumer debt first.  Then you should build up your savings.  Then you will have money to invest in high dividend stocks, your own business, and/or rental real estate.
 
For free help to get out of consumer help visit www.deliverancefromdebt.com.  That is a program similar to Dave Ramsey's, but for free.  Check out this excellent article on the cancer of debt by Jack Spirko, the man behind www.thesurvivalpodcast.com .  It will motivate you to get out of debt.
 
Next, you should build up savings that will cover six months of expenses in a bank savings account.  Choose a local bank that is paying the highest interest rate for savings accounts.  Those are usually the weakest banks that are trying to attract deposits so as to hold off the government regulators from shutting them down on a Friday afternoon.  Your money is FDIC insured.  There is no danger until the Federal Revserve stops buying US government bonds.  US government bonds fund the government and the FDIC.  There will come a time when you don't want your savings in a bank as digital money, but right now is not that time.  That time is years away.
 
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Terra Nitrogen will become a high dividend stock during pullbacks. TNH Basic Financial Metrics.

Terra Nitrogen (TNH) Basic Financial Metrics.  Buy Terra Nitrogen on stock market corrections that make this stock yield more than 6% again.  This stock has strong basic financial metrics that will improve even more on pullbacks.

Disclosure: I do not own Terra Nitrogen stock.

Terra Nitrogen Company, L.P. (TNCLP) is a Master Limited Partnership consisting of one nitrogen manufacturing facility in Verdigris, Oklahoma, and terminal operations in Blair, Nebraska and Pekin, Illinois. TNCLP’s New York Stock Exchange ticker symbol is TNH.  TNCLP is the sole limited partner of Terra Nitrogen, Limited Partnership (TNLP), owner of the Verdigris, Oklahoma manufacturing facility and related assets. Terra Nitrogen GP Inc., an indirect, wholly-owned subsidiary of CF Industries Holdings, Inc., is the General Partner of TNCLP and exercises full control over all of TNCLP's business affairs.

TNCLP has the capacity to produce annually 1.9 million tons (32% nitrogen basis) of urea ammonium nitrate solutions (UAN) and 1.1 million tons of ammonia, the basic ingredient for most nitrogen fertilizer and many industrial products.

Sales per share. Terra Nitrogen’s sales for trailing 12 months ended December 31st, 2010 were $564,600,000.  At the end of 4Q 2010 there were 18,501,576 common units (shares) outstanding.  By dividing $564,600,000 by 18,501,576, we get sales per share of $30.52.

Earnings per share. Terra Nitrogen’s earnings per share of $10.90 for the trailing 12 months were calculated by dividing net income (income statement) by outstanding shares (balance sheet).  They earned $201,600,000 over the last 12 months.

Dividends per share. By dividing $148,200,000 in dividends paid in the last 12 months by 18,501,576 common units (shares) outstanding, we find that Terra Nitrogen had dividends per share for the last 12 months of $8.01.

Cash flow per share. The cash flow per share of $11.53 for the last 12 months was calculated by taking net income of $201,600,000 and adding back in the depreciation of $11,810,000 (estimated as 11.4% of long-term assets; same as 3Q2010 quarterly SEC filing) on their income statement, which has no impact on cash flow (income statement), and then dividing by the 18,501,576 shares outstanding (balance sheet).

Dividend yield. Terra Nitrogen’s stock had a dividend yield on December 31st, 2010, of 7.4 percent.  The dividend yield is calculated by dividing the dividend per share of $8.01 per share at the close of 2010 by the stock price of $108.11.  The stock is currently yielding 4.4% ($1.36 quarterly dividend / $122.51 stock price).

Now let’s begin our analysis of the ability of Terra Nitrogen to meet its maturing loan obligations and current cash flow needs by computing its liquidity and debt coverage ratios.

Quick ratio

The quick ratio is an important liquidity ratio that is computed by removing inventory from current assets and then dividing by the remainder by current liabilities.  This information can be found on Safe Bulkers’ balance sheet.  Since inventories are typically the least liquid of a company’s current assets and are likely to produce a loss if liquidated, it is prudent to look at the firm’s ability to cover short-term liabilities without relying on them.  The rule of thumb is that a company with a quick ratio over 1 or better indicates that it could cover all current liabilities with the liquid assets it has on hand, thereby reducing any need to cut its dividend.

Terra Nitrogen’s quick ratio for the last 12 months is 1.92, more than the standard rule of thumb that you would like to see.  The higher the ratio, the better we like the company.

Calculation: $193,100,000 current assets in 2010 minus $27,600,000 inventory divided by $86,300,000 in current liabilities in 2010.

Debt coverage ratio

The short-term debt coverage ratio allows you to quickly see if the company’s short-term debt obligations can easily be paid by using the cash that is being generated from company operations.  This ratio is calculated by dividing income from operations by current liabilities or short-term debt (balance sheet).  This ratio should equal at least 2.0.

Terra Nitrogen’s short-term debt coverage ratio equals 2.34 for the last 12 months.  This means that the company is generating more than twice the cash flow it needs from operations to pay off all of its short-term obligations.  Taken by itself, this ratio would indicate that the dividend is pretty secure and would also indicate that there is sufficient operating income to offset a slightly lower liquidity position if that were indicated by the company’s quick ratio.

Valuation ratios

There are two important ratios that can help you identify companies with good value characteristics.

Price-to-sales ratio. We rank companies with low price-to-sales ratios higher than those companies whose stock is pricey relative to the sales being generated.  You can calculate the ratio by dividing the stock price at the end of 4Q2010 ($108.11) by sales per share ($30.52).  Terra Nitrogen’s price-to-sales ratio for the last twelve months is 3.54, which is not better than our 2.00 rule of thumb ratio that we use to indicate good value.

Price-to-earnings ratio (P/E). Also known as the price-to-earnings multiple, this ratio tells you how expensive the stock is from a price standpoint given earnings that the stock is generating.  Historically, stocks are a good value when the ratio or multiple is below 10, but we consider stocks that have a P/E of less than 12 – the lower the ratio the better.  You can calculate the ratio by dividing the stock’s price by the earnings per share being generated.  Terra Nitrogen’s price-to-earnings ratio for the last 12 months was is 9.91 ($108.11 stock price divided by $10.90 per share).  It is slightly higher today at 11.23.

Dividend ratios

Dividend coverage ratio. This ratio shows how secure the dividend is based on the cash flow being generated by the company.  Instead of applying the cash flow to analyze whether the company can meet its debt obligations, we analyze this ratio to assess how easily the company can keep making its dividend payments.  To calculate this ratio, you divide cash flow per share ($11.53) by dividend per share ($8.01).  The higher the dividend coverage from cash flow, the better we like it.

Terra Nitrogen has a dividend coverage ratio of 144 percent.

Dividend payout ratio.
This ratio tells you how much profit the company is paying out to shareholders in dividends.  Once again, the higher the better, so long as the ratio does not exceed 100 percent.  Since a company can only pay dividends from current or retained earnings, it is a warning sign if a company is paying dividends that exceed current earnings.

Terra Nitrogen’s dividend payout ratio is 73.4 percent and is calculated by dividing its dividend per share ($8.01) by earnings per share ($10.90).  We tend to look for companies that have payout ratios of at least 50 percent, which to us indicates that company is committed to rewarding shareholders through dividend payouts.

Growth ratios

One-year revenue growth ratio.  This ratio measures the one-year percentage change in revenue growth.  It is calculated by subtracting last year’s revenue ($507.7 million) from the current year’s revenue ($564.6 million) to find the difference ($56.9 million), and then dividing that difference ($56.9 million) by last year’s revenue ($507.7 million) to find the percentage change.  Terra Nitrogen’s revenue growth rate for 2010 is 11.2 percent indicating that revenue has improved by slightly more than our 10 percent rule of thumb.

One-year earnings growth ratio.  This ratio measures the one-year percentage change in earnings growth.  It is calculated by subtracting last year’s earnings ($144.3 million) from the current year’s earnings ($201.6 million) to find the difference ($57.3 million), and then dividing that difference ($57.3 million) by last year’s earnings ($144.3 million) to find the percentage change.  Terra Nitrogen’s earnings growth rate was 39.7 percent in 2010, which is several times greater than our 10 percent rule of thumb for earnings growth rate.  With both revenue and profits rising, Terra Nitrogen’s stock price should reflect this positive trend and move higher.

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Safe Bulkers Stock To Go Ex-dividend Tomorrow (SB)

Safe Bulkers Stock To Go Ex-dividend Tomorrow (SB)

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By TheStreet Wire 02/15/11 - 10:04 AM EST

NEW YORK (TheStreet) -- The ex-dividend date for Safe Bulkers (NYSE:SB) is tomorrow, February 16, 2011. Owners of shares as of market close today will be eligible for a dividend of 15 cents per share. At a price of $9.55 as of 9:35 a.m. ET, the dividend yield is 6.4%. The average volume for Safe Bulkers has been 141,000 shares per day over the past 30 days. Safe Bulkers has a market cap of $614 million and is part of the services sector and transportation industry. Shares are up 7.6% year to date as of the close of trading on Monday.

Safe Bulkers, Inc. provides marine drybulk transportation services worldwide. The company transports various bulk cargoes, such as coal, grain, and iron ore. The company has a P/E ratio of 5.3, below the average transportation industry P/E ratio of 5.4 and below the S&P 500 P/E ratio of 23.3.

Link to the original article: http://www.thestreet.com/story/11009028/1/safe-bulkers-stock-to-go-ex-dividend-tomorrow-sb.html

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(download)

Safe Bulkers: Making a Move, Up 2.6%

I’ve been blogging about Safe Bulkers Inc. for a few weeks.  They are a good high dividend stock with earning power and a strong balance.  The markets appear to be validating this fact today.

I would look to buy Safe Bulkers if the price falls back under $7.75 per share.

http://bit.ly/SB3yrChart

Disclosure: I don’t own Safe Bulkers (SB) right now.

Safe Bulkers: Making a Move, Up 2.6% (SB)

(via COMTEX News Network)--

Safe Bulkers (NYSE: SB) is one of today's notable stocks on the rise, up 2.6% to $9.56. The S&P is currently trading fractionally higher to 1,331 and the Dow Jones Industrial Average is trading fractionally lower to 12,264.

Safe Bulkers is in SmarTrend's Shipping & Marine Services industry and this industry is currently in an Uptrend according to our research. We are monitoring many other stocks on the move within this industry.

In the last five trading sessions, the 50-day MA has climbed 1.29% while the 200-day MA has risen 0.3%.

In the past 52 weeks, shares of Safe Bulkers have traded between a low of $6.50 and a high of $9.39 and are now at $9.56, which is 47% above that low price.

SmarTrend currently has shares of Safe Bulkers in an Uptrend and issued the Uptrend alert on July 30, 2010 at $7.71. The stock has risen 20.9% since the Uptrend alert was issued.

Write to Chip Brian at cbrian@tradethetrend.com

Link to the original article: http://bit.ly/SBwayup

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