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.

TIP OF THE WEEK - Find potential value/contrarian stocks using a "Map of the Market"

Find potential value/contrarian stocks using a “Map of the Market”

Jason Brizic

May 27, 2011

I sometimes use market visualization tools to spot potential value stocks that I miss using stock screeners.

I look for beat down stocks headed for value territory.  Stocks that are down 30% or more during a bull market deserve at least a quick valuation to see if they have any redeeming qualities overlooked by growth investors.

SmartMoney.com’s “Map of the Market” tool is an excellent visualization of the S&P 500’s ups and downs.  This tool really helps you see sector rotation over a period of time also.  The bad news is that it doesn’t incorporate total return.  That means that it doesn’t include dividends paid into the return on a stock.  But I don’t use it to find dividend stocks.  I’m looking for contrarian investment opportunities.

Go to www.smartmoney.com.  Click on the Tools tab and then find Map of the Market under Featured Tools.  Or follow this link: http://www.smartmoney.com/map-of-the-market/?link=SM_topnav_tools .  I choose the following settings in the legend/control panel area:

Show Change since: 52 weeks

Highlight Top 5: Losers 

Image001

My eye was drawn to the Basic Materials sector.  What is that big red company amongst all that green?  It turned out to be Weyerhaeuser (WY).  I hadn’t heard of them before.  They are a paper and timber company.  Their stock price is in the dumps because of the housing depression.  I did a quick valuation on the company and it has a lackluster dividend and very little earning power.  Its balance sheet looks okay.  I didn’t find a diamond today, but now you have another method to find some contrarian stocks.

For more tips, go here:

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

TIP OF THE WEEK - Why the dividend/earning yield ratio is better than the dividend payout ratio

Why the dividend/earning yield ratio is better than the dividend payout ratio

Jason Brizic

May 13, 2011

Rock solid high dividend stocks earn more than they payout in dividends year after year.  This ratio between earnings per share and dividends per share is commonly known as the dividend payout ratio.  A dividend payout ratio above 100% signals a possible dividend cut (especially the longer it stays above 100%).

The dividend payout ratio is nice but it only shows you the difference between the two numbers being compared.  There is another number that called the earnings yield that can be compared to the dividend yield.  Let’s compare three companies with some similar ratios.  Proctor & Gamble (dividend aristocrat) and Safe Bulkers have similar dividend payout ratios and div yield/earnings yield ratios, but much different dividend yields.  Safe Bulkers and WWE have high dividend yields, but very different ratios.

Proctor & Gamble (PG)

Safe Bulkers (SB)

World Wrestling Ent.(WWE)

Dividend/share

$2.10

$0.60

$1.44

Earnings/share

$4.32

$1.73

$0.72

Dividend Payout Ratio

48.6%

34.7%

200%

Dividend yield

3.0%

7.3%

13.9%

Earnings yield

5.7%

19.2%

4.8%

Div yld./Earning yld.

52.6%

38.0%

289%

It should be no surprise that WWE cut its dividend recently and now its dividend yield is in the 4-5% range.

You can use Morningstar.com to quickly find these yields.  Go to www.morningstar.com.  Type your stock ticker into the box at the top.  Then click on the Valuations tab.  Scroll down to the bottom of the page’s contents and you will see the dividend and earnings yields.  It looks like this:

Image002

I like to see double digit earnings yields with a slightly smaller dividend yield.  Safe Bulkers (SB) is a beautiful thing.  Click here to be taken right to the page:

http://financials.morningstar.com/valuation/price-ratio.html?t=SB

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TIP OF THE WEEK - Opportunities to buy precious metals for procrastinators.

Opportunities to buy precious metals for procrastinators.

Jason Brizic

May 6, 2011

You should have 20-30% of your non-house net worth in precious metals.  They are a hedge against massive price increases and hyperinflation.  I consider price increases of 10-20% per annum to be massive.  I consider hyperinflation price increases above 20% per annum.  Entrepreneurs can't calculate in an environment where prices increase above 20% per year.  The division of labor begins breaking down in the 20-30% range.


The precious metals (gold and silver) are a hedge against massive price increases.  They are not a hedge against low inflation.  Just look at precious metal prices from 1980 - 2000 for confirmation.  Silver took a beating this week.  It was down 29%.  Gold lost 6%.  Silver is more volitile than gold.


I think you should use 80% of your precious metals money to buy gold coins from your country's mint.  Buy 1 ounce and tenth ounce coins.  Buy 20% silver coins.  Buy 1 ounce silver coins and junk silver coins.


I think gold under $1,400 per oz. and silver under $30 per oz. will be good buys.  Don't buy gold and silver ETFs like GLD and SLV if you don't own any physical coins.


Buy from where ever you are comfortable: local coin dealers, EBay, Amazon.com, or my favorite www.apex.com .

For more tips, go here:

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

TIP OF THE WEEK - How to see 10 years of financial info in just two clicks

How to see 10 years of financial info in just two clicks

Jason Brizic

Apr. 15, 2011

Serious investors want to quickly absorb a company’s earning power and balance sheet strength over a long period of time to make better investment decisions.  A long period of time usually contains a Federal Reserve induced boom and bust.  Investors want to know how a potential stock purchase performed during the boom and bust times so they can estimate the potential risk/reward ratio.  We have experienced a boom (2003-2007) and a bust (2008-2009) in the past 10 years.

Big Promise – If you only look at the past year or three of financials, then you might be ignoring some valuable investment information.  You want to be able to quickly see how a company’s average earning power, book value per share, and other key ratios have changed over time to see how the company performed in good times and bad.

Specific claims – Morningstar.com has a 10 years of summary financials available for free on its “Key Ratios” tab.  You can get to it in two clicks.  Type your stock ticker in the Quote box at the top of the homepage and then click on “Key Ratios”.  This is very helpful during the stock screening process.  I use three rows of numbers from this view when I first examine a company: Revenue, Net Income, and Book Value per Share.

Follow with the proof – Here is the “Key Ratios” view of the 6% high dividend stock First Energy (FE) that I’m examining.

http://financials.morningstar.com/ratios/r.html?t=FE&region=USA&culture=en-US

I immediately click on the Export action button to get the data in a spreadsheet.  I use the spreadsheet to find the average net income over the 10 year period.  First Energy averaged $913.2 million in earnings per year (2001-2010).  I take that number divided by the number of current shares (418.22 million).  That gives me average earnings per share over 10 years ($2.18).  Then I multiple the average earnings by 12 and 20 to see if the current market price is below 12x average earnings (VALUE), between 12x-20x average earnings (INVESTMENT), or above 20x average earnings (SPECULATIVE).

$2.18 x 12 = $26.16

Market price = $38.43 (possible INVESTMENT basis)

$2.18 x 20 = $43.60

I can also see that First Energy’s book value per share is $28.02.  I can also see in a glance that revenues have fluctuated between a low of $7.999 billion in 2001 and $13.627 billion in 2008).  This sets me up for the next round of detailed analysis.  I will put First Energy on my watch list at around $28 per share while I perform that analysis.

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TIP OF THE WEEK - Find Corporate Bond Info On Your Stocks Easier Than You Ever Imagined

Find Corporate Bond Info on Your Stocks Easier Than You Ever Imagined

Jason Brizic

Apr. 8, 2011

The high dividend stock investor must be aware of a company’s corporate bond exposure to understand its potential threat to earning power.  A surge in bond interest due can threaten the earnings available for dividends.

You can avoid a tragic investment mistake by examining a company’s bond exposure before you make a common stock purchase.  Two stocks with the same earning power can have different bond exposures.  It is not enough to know the overall long-term debt total.  You must go slightly deeper to gain an edge over the market’s other investors.

Morningstar has an excellent corporate bond analysis feature within its stock pages to help you quickly, graphically, and easily understand the magnitude and maturity of a company’s corporate bond issuances.  Many high dividend stocks are large well established companies like AT&T (T) and Verizon (VZ) have many outstanding bonds.

Click on the link below to go directly to Morningstar’s bond tab for AT&T to see what I’m talking about:

http://quicktake.morningstar.com/StockNet/bonds.aspx?Symbol=T&Country=USA

Here is the link to Verizon’s (VZ) bond tab:

http://quicktake.morningstar.com/StockNet/bonds.aspx?Symbol=VZ&Country=USA

These two telecom companies are similar in many respects.  They should be compared.  Their bonds might be the deciding factor when deciding on which common stock to add to your high dividend stock portfolio.  Note: I haven’t scrutinized their bonds yet.  I’m just providing and examples with lots of bond info.

For more tips, go here:

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

TIP OF THE WEEK - An Extremely Useful Way to Examine 5 Years of a Company's Financials in Less Than Thirty Seconds.

An Extremely Useful Way to Examine 5 Years of a Company’s Financials in Less Than Thirty Seconds.

Jason Brizic

Apr. 1, 2011

You like to do your own investment analysis or you like to dig deeper than the articles you read on a company.  But you are frustrated with all the free investing services only showing the current financials or just three years.  You are a high dividend stock investor, so three years is just not good enough.  You want at least five years worth of financials without a lot of hassle. 

I’ll show you how to easily access five years worth of financials on any exchange listed stock for free and without registration.

You will be able to quickly view five years worth of income statements, balance sheets, and cash flow statements with Morningstar’s stock tool. 

Go to www.morningstar.com and type your desired stock ticker symbol into the Quote box at the top of the screen.  Then chose the Financials tab and you are there.  That was easy!

You can choose annual or quarterly views.  You can chose five years for free and ten years if you are a paid premium member.  The free info exceeds what I’ve seen on other sites like Google Finance, which only shows three years of financials.  Looking at five years of financials will put you ahead of many investors who are really just speculating.  You can even change the numbers to percentages in a single click.

Here are the financials for one of my favorite high dividend stocks, Safe Bulkers (SB):

http://financials.morningstar.com/income-statement/is.html?t=SB&region=USA&culture=en-US

For more tips, go here:

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

TIP OF THE WEEK - A Quick Way to Measuring Price Inflation between any Two Years

A Quick Way to Measuring Price Inflation between any Two Years

Jason Brizic

Mar. 11, 2011

The Federal Reserve, the US central bank, inflates the money supply by purchasing assets with money it creates out-of-thin-air.  An increase in the money supply (inflation) leads to higher prices of goods.  Think “more money chasing the same amount of goods” when you hear the word inflation.

Housing, stock, bond, and commodity prices are affected by central bank inflation of the money supply.  Long term investors must understand the horrible effects of inflation on their savings/investments.  Inflation erodes the purchasing power of your money.  Your savings/investments that are denominated in dollars are exposed to dollar inflation such as QE1 (late 2008), QE2 (late 2010)…QE3 (2012?).

The government’s Bureau of Labor Statistics intentionally understates real price increases by changing the method of CPI calculation.  They do this because it makes their ponzi schemes (e.g. Social Security, Medicare, and government pensions) solvent a few years longer.  There schemes would go into the red many years earlier if the BLS kept its methods of calculating the CPI constant since the Carter administration.  Here is the link the BLS inflation calculator:

http://www.bls.gov/data/inflation_calculator.htm

I double the result that I get from the BLS inflation calculator as a rule of thumb because of their deliberate understating real price increases.

Here are a few examples:

According to the US Census Bureau the median US home price in January 1973 was $29,200.  What is the equivalent price in today’s 2011 dollars due to 38 years of central bank inflation?  Answer: $144,831.34 per CPI.  $288,000 according to my rule of thumb.

Gold cost $850/oz. near its peak in 1980.  How much is that in today’s inflated dollars?  Answer $2,271.  $4,400 per my rule of thumb.

One last example, an investor puts $10,000 into a money market account after the dot.com crash in 2000.  How much does he need in today’s debased dollars to have the same purchasing power as in 2000?  Answer: $12,788 according to the BLS.  I say 24,000 per my rule of thumb.  My rule makes less sense the shorter the time interval due to less time to compound the price increases.

For more tips, go here:

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

TIP OF THE WEEK - Watch What They Do; Not What They Say

Watch What They Do; Not What They Say

Jason Brizic

Mar. 4, 2011

Federal Reserve chairman, Ben Bernanke, says a lot of contradictory statements in his boring speeches.  Ignore what he says.  You should watch what Federal Reserve does instead.  The FED’s balance sheet visually shows you if they are inflating or deflating.

The stock market’s nominal index numbers will go up when the FED is printing money out-of-thin-air.  Commodities will go up when the FED is printing.  The purchasing power of the dollar goes down when the FED prints money.  However, the opposite happens when the FED deflates.

Cumber Associates does a great job of visualizing FED balance sheet data.  It is available for free and it is updated weekly.  Click on this link to see the Federal Reserve’s balance sheet:

www.cumber.com/content/misc/fed.pdf

It looks like this:

Image001

The large dark blue increase at the bottom of the chart since December 2010 is QE2 (the purchase of US Treasuries).

For more tips, go here:

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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

TIP OF THE WEEK - Free Lists of High Dividend Stock, S&P 500, and Commodities ETFs.

Free Lists of High Dividend Stock, S&P 500, and Commodities ETFs.
Jason Brizic
Feb. 18, 2011

You need assets that non-correlate to the stock market. We don't know what events will occur in the future. We are going to experience either a massive price inflation followed by the Greater Depression at the hands of the Federal Reserve, or we are going to experience a hyperinflation at the hands of the fiscally irresponsible Congress once the Federal Reserve stops buying government treasuries.

Massive price inflation will inflate nominal stock prices. Precious metals and commodities will rise in price before the stock market. Currencies will lose during a time of massive price inflation.

Stock prices, commodities, and precious metals will lose nominal value during a period of depression. Currencies will gain real value during a deflationary depression as the money supply contracts like it did in 1930-1934.

There are many free listings of exchange traded funds (ETFs) and exchange traded notes (ETNs) that you can discover yourself through a quick Google search. But I have found a website that will save you hours by grouping them and providing useful links for further investment research.

High Dividend ETF list: http://etf.stock-encyclopedia.com/category/high-dividend-etfs.html S&P500 ETF list: http://etf.stock-encyclopedia.com/category/s&p-500.html Commodity ETF list: http://etf.stock-encyclopedia.com/category/commodity-etfs.html Oil ETF list: http://etf.stock-encyclopedia.com/category/oil-price-etfs.html Natural Gas: http://etf.stock-encyclopedia.com/category/natural-gas-etfs.html Sugar: http://etf.stock-encyclopedia.com/category/sugar-price-etfs.html Wheat: http://etf.stock-encyclopedia.com/category/wheat-etfs.html Currency ETF list: Asian Currency ETF list: http://etf.stock-encyclopedia.com/category/asian-pacific-currency-etfs.html Japanese Yen ETF list: http://etf.stock-encyclopedia.com/category/japanese-yen-etfs.html For more tips, go here:

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