Monday, July 25, 2011

Dividend Machine New Jersey Resources or a 10-year Treasury – July 25, 2011 NJR

The Great Seal of the State of New Jersey.Image via Wikipedia
                Do we not all have fantastic friends from New Jersey?  These folks have to buy energy (and they have a lot of energy) from someone and New Jersey Resources, symbol NJR takes their deposits.
                NJR will pay a dividend of $.36 on October 3, 2011 if you own it by September 13, 2011.  NJR has increased the dividend every year for at least five years and at the close on Friday July 22, 2011, NJR fetched $45.86 per share.  NJR earns (out of New Jersey resident deposits) a $1.92 and pays stockholders a $1.42 for a yield of 3.41 percent. Their D/E ratio is .75, which is very respectable for a utility.

                My theory is that if you buy stocks to provide income those companies should pay you more income than you can get from a 10-year U.S. treasury.  Tomorrow, you may be able to buy a US Treasury with a yield greater than 3 percent due to political issues. If you can buy a 10 year  U.S. treasury bond with a coupon of 3% or more at a discount to par, do it. Consider it a short-term trade.  If the price increases above par, sell it. 

Very Truly Yours,

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