I
have two stock ideas for your consideration.
Technically both qualify as Dividend Machines but it is stretching the
use of my Dividend Criteria on one stock to make it comply, so I will name only
one of these two as a Dividend Machine but I will take a position in both.
Both
of these stocks have low debt to equity ratios. They are in a most unloved sector,
energy. One is a diversified company
engaging in three segments (1) exploration and development of oil and gas, (2)
chemicals and (3) midstream and marketing services. The other drills wells for others.
In
this crazy volatile market, I want stocks that are safe and I use D/E ratio as
a measure of safety. When I refer to
safe, I want to be assured that the company is not going to fail. This is in contrast to the concept of safe
as interpreted by stock price. Safe to
some is that the stock price will not go down. Both of these companies have low D/E
ratios. Both have volatile price
histories as have all stocks in the energy sector.
Another
aspect of safety for the income investor, is the prospect that the stock will
continue to pay me ever increasing income.
It is highly likely that these stocks will continue to pay if their
earnings per share are substantially greater than their dividends paid out. Both stocks have good earnings history in
relation to dividends paid out.
I
also concentrate on dividend yield.
Both of these stocks have greater than the minimum requirement of 3.5%
dividend yield. Each has five year
history of growing the dividend but their dividend growth rates are quite dissimilar. And it is this dividend history that
separates these two stocks. Let’s look
at their Dividend Machine Fundamentals.
Helmerich
& Payne, symbol HP
Helmerich
& Payne is the driller. Trading
today at about $60.045, HP is off the 52 week high of $118.95 and just above
the 52 week low of $58.4001 (source Nasdaq.) D/E ratio is .01 which is almost nothing
(source MSN Money.) Earnings far exceed
dividends over the past four quarters:
EPS = $6.46 and dividends = $2.75.
The most recent quarterly dividend is $.6875 for an annual yield of
4.7%. Five years ago the dividend was
$.05. Only recently has HP been
dedicated to paying out such a high dividend.
Although technically the dividend growth rate over 5 year is 255% per
year, I am really looking for a more steady growth rate rather than just a
recent big increase. This is why HP
will not be my first 2015 Dividend Machine.
HP
Dividend Machine Criteria Table
Occidental
Petroleum, symbol OXY
OXY
is the diversified energy company and is my first 2015 Dividend Machine. Trading today at about $76.97, OXY is a
touch above the 52 week low of $72.32 and well off the 52 week high of $105.64. Earnings far exceed dividends $7.16 EPS and
$2.88 dividends. The most current
quarterly dividend is $.72 which is an annual yield of 3.74%. D/E ratio for OXY is .16 well below the
industry average of .31.
Dividend
growth has been consistent and sustained.
Growth over the past 5 years has averaged 23.63% per year. This is a growth rate I can live with.
OXY
Dividend Machine Criteria Table
Consider
one or both of these stocks for the income producing portion of your portfolio.
TheMoneyMadam
