In 2013 I am looking for dividends of at least four percent. So many good dividend producing companies are priced high and paying barely over three percent. If you can find a company that also provides in the money covered call options, you can boost a three percent yield into a four percent yield.For those who want an easier way to four percent consider utilities. Let's take a look at this idea and review my newest favorite utility.
UTILITIES for Dividends & Income
Bond prices and yields affect utilities. They perform in concert. When bond prices increase, the yield goes down; you already know that. During periods of inflation, bond yields increase. These increased yields compete with the yields that utility companies pay.
For instance, why buy a utility which is a stock and could go up or down significantly in price when you could buy a five year bond with the same yield and you are pretty sure you are going to get your principle returned at maturity.
Currently our economy is weak. We have a lot of unemployment. Bond prices are up and bond yields are down. They are no competition for utilities. This is why I am adding to a few positions.
CONSOLIDATED EDISON (ED) - A 2013 Dividend Machine
Consolidated Edison was a dividend machine in 2011 (http://www.themoneymadam.com/2011/08/consolidated-edison-symbol-ed-dividend.html) and again in 2012 (http://www.themoneymadam.com/2012/01/dividend-machine-con-ed-january-23-2012.html.) It makes the grade for 2013.
ED - DIVIDEND MACHINE FUNDAMENTALS
This utility pays a yield of around 4.2%. They have increased the dividend every year for more than 10 years. Earnings of $3.42 per share per year clearly exceed the dividend pay out of $2.46 per share per year. Debt to Equity Ratio (D/E) is 1.042. By all measure this is a dividend machine. I added to my position today. See the table below for a quick review of ED's dividend machine fundamentals.
Consider Consolidated Edison (ED) for the income producing portion of your portfolio.
The Money Madam
