This month we take a look at three companies that we call “Dividend Champs”. At CAIM our philosophy is built upon the foundation that investing in high quality, dividend paying stocks over the long term, will benefit clients in both up and down markets. In our current environment of historically low interest rates, this philosophy is even more meaningful. Money market funds are yielding close to 0% and the 10 year Treasury bond is currently yielding 2.0%. Today’s newsletter highlights three companies yielding 50% or higher than the 10 year Treasury.
Warm regards,Catherine Maniscalco Avery
The backbone of CAIM is to employ a classic long term investment strategy including dividend paying stocks. CAIM is an independent, women owned investment management firm specializing in managing investment portfolios for women and baby boomers.
February 24, 2012| Issue No. 31
In This Issue Dividend Champs 1/4 2012 Yahoo Finance CAIM 2012 Outlook
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Dividend Champs 1st Quarter 20124th quarter 2011 earnings are in and many of our companies have met expectations. The few glitches that did occur were due in the main to a stronger dollar and delays in orders. One message that was clear across the board was the impact of events in Europe. Thankfully most of our companies have broadened their international exposure and continue to see growth in the emerging markets.As we go forward the United States will have some growth but will not be a meaningful contributor to earnings in 2012. Cash flow amongst the companies that fit our investment criteria, however, is expected to be robust. Our universe of stocks shows an average of $6.00 a share in cash flow and $1.84 in free cash flow per share. The universe has a dividend average of 2.7% versus 1.9% for the S&P 500. 6 of our companies have increased their dividend in the 1st quarter of 2012.In this newsletter we would like to highlight 3 companies that have had significant increases in their dividend this quarter. Each of these companies pays a dividend yield in excess of the 10-year Treasury bond, which is currently yielding 2.0%.
Eaton Corp (ETN) is an industrial company with 26% of its sales coming from the emerging markets. They also benefit from a strong trucking replacement cycle here in the United States. Despite a small miss in 4th quarter earnings due to order delays, the company still had a 27% year over year increase in profits. Profitability remains strong and is expected to continue into 2012. Their quarterly dividend increased by 12% from $.34 to $.38 and the company is currently yielding 3.0%.
Coca-Cola (KO) made a smart move in 2010 when it completed its’ purchase of the North American bottling operations from Coca-Cola Enterprises. In 2011, sales rose over 32% mostly as a result of this purchase. In trying to reinvigorate the brand in a slowing carbonated beverage market, the company has introduced several new products in the non-carbonated group. 2012 will also pose its challenges, especially in regards to currency translations; however, earnings are still expected to increase in the high single digits. The quarterly dividend was increased from $.47 to $.51 for an increase of 8.5% and the company is currently yielding 3.0%.
Pfizer (PFE) lowered earning guidance for 2012 due to a stronger dollar and an aging drug pipeline. The company expects to overcome these issues through further restructuring and advances in new drugs. The company trades at a very attractive 30% discount to the market. They increased their dividend by 10% from $.20 to $.22 per quarter and the company currently yields 4.2%
S&P 500 Gets 9% Cheaper as Record Profit Restores $3.2 Trillion to StocksProfits in the Standard & Poor’s 500 Index are rising faster than its price, leaving the gauge 9 percent cheaper than it was in April even after American equities climbed within 6 points of last year’s peak. The S&P 500 fell 0.3 percent to 1,357.66 yesterday, trimming a rally since October that has added more than $3.2 trillion to share values, according to data compiled by Bloomberg. Read more >>>
CAIM 2012 OutlookSaying good-bye to 2011 has been an easy thing to do. It was another tough year for the financial markets, fraught with fear and doubt. Uncertainty in Europe and the United States, a tsunami in Japan, slowing emerging markets, and downgrades of U.S. and European debts were just some of the major worries. Read more >>
©Copyright 2012, CAIM LLCDisclaimer: NO CONTENT PUBLISHED AS PART OF THE CAIM LLC NEWSLETTER CONSTITUTES A RECOMMENDATION THAT ANY PARTICULAR INVESTMENT, SECURITY, PORTFOLIO OF SECURITIES, TRANSACTION OR INVESTMENT STRATEGY IS SUITABLE FOR ANY SPECIFIC PERSON. TO THE EXTENT ANY OF THE CONTENT PUBLISHED AS PART OF THE BLOG MAY BE DEEMED TO BE INVESTMENT ADVICE, SUCH INFORMATION IS IMPERSONAL AND MAY NOT NECESSARILY MEET THE OBJECTIVES OR NEEDS OF ANY SPECIFIC INDIVIDUAL OR ACCOUNT, OR BE SUITABLE ADVICE FOR ANY PARTICULAR READER. EACH READER AGREES AND ACKNOWLEDGES THAT ANY SPECIFIC ADVICE OR INVESTMENT DISCUSSED IN THE BLOG MUST BE INDEPENDENTLY EVALUATED BY THE READER AND HIS OR HER ADVISER IN VIEW OF THE READER’S INVESTMENT NEEDS AND OBJECTIVES.