Showing posts with label almost dividend machines. Show all posts
Showing posts with label almost dividend machines. Show all posts

Wednesday, April 24, 2013

Gold Should retirees have gold in their portoflios?



I have often said that gold has no place in an income investor’s portfolio.   In my own investing career the price of gold has gyrated incredibly.   It is odd, however for gold to be highly valued when the stock market is near a high and so are bond prices.



James Grant publishes Grant’s Interest Rate Observer (his website link.)  He tells us that as long as money is being printed by governments, gold will be a good bet.    I really respect Grant and read all his stuff, but I still say owning the metal is not for income investors.    I have two ways to deal with this conundrum:    Jewelry and Miners.  Neither of the stocks profiled below qualifies as a dividend machine yet they both have income investment potential.  



Jewelry:

The problem with jewelry on your body is that you can rarely sell it for the price you paid.    It can be bartered or pawned but it will not create income.     However, you could invest in a jeweler.   In the past I wrote about investing in Tiffany, symbol TIF.    TIF pays a dividend and often times covered call income can boost your income to an acceptable level.     Let us look at today’s action.



CALL OPTION
TIF

Aug-13
Strike Price
$77.50
Cost Basis
$71.81
Call Premium
$1.80
Dividend
$0.32


Assigned Gain
$7.49
Call Yield
2.32%
Gain Yield
9.66%
Total Gain Yield
10.08%

TIF closing price $71.81
Last four quarters EPS $3.25
Current Dividend $1.28
Current Yield 1.78%
Dividend steadily increased since 2003
D/E ratio .37




I have played this angle in the past and it worked out well.   You can review the post here.






Miners:

Another investment to consider are the companies that mine gold.    Newmont Mining, symbol NEM is a company worth considering.   Let’s look at today’s action in NEM.




CALL OPTION
NEM

Jul-13
Strike Price
$34.00
Cost Basis
$32.43
Call Premium
$1.35
Dividend
$0.00


Assigned Gain
$2.92
Call Yield
3.97%
Gain Yield
8.59%
Total Gain Yield
8.59%
NEM closing price $32.43
Last four quarters EPS $3.63
Last four quarters Dividend $1.70 
Current Yield 5.09%
Dividend Increases:   Held steady from 2004 through 2010 with increases since then.
D/E Ratio:  .46











My Take:


I currently own NEM and will add to my position as the price is weak.   I do not own TIF as this time.

Consider these stocks for the income producing portion of your investment portfolio.



TheMoneyMadam



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Friday, January 25, 2013

Sasol, SSL Natural Gas to Liquid Gas plus a dividend!



International companies pay dividends on a different schedule than American companies.  Here in the States we expect a dividend every quarter.   Foreign companies tend to pay twice a year.   During my two years of profiling dividend machines, I included only a few foreign companies (i.e. BCE); these companies paid dividends quarterly.  Today I profile company that is foreign, trades in the U.S., and pays dividends twice a year. 

You should consider investing in some international stocks and one that I like and just bought is Sasol, symbol SSL.    SSL pays dividends twice a year.  One dividend tends to be large and the other small.   When you add up the two dividends and look at the company's history, SSL has delivered a very good dividend over time.  The company is not technically a dividend machine because they paid a lesser dividend in 2008 than it did in 2009.   Since 2008, the dividend has increased every year.  

The table below presents SSL's company fundamentals.






DIVIDEND COMPANY
1/25/2013


SASOL
SSL


Price when profiled
$42.60


Earnings Per Share
$4.33


Dividends Per Share
$2.06


Current Qtr Dividend
$0.50


Annualized Div Yield
4.90%


Dividend Increases
       Since 2008


Debt/Equity ratio
0.13









            In addition to this company’s fundamentals, I like their business.  SSL is a South African Company that deals in chemicals, fuels, and oils.  They have created the technology for converting natural gas to liquid gas.  I feel this is the technology that will reap profit from the abundance of natural gas available around the world.
           
            Consider this international dividend company for the income producing portion of your portfolio.

TheMoneyMadam  
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