Dividend Income
March 6, 2023 | Daily JAM, Dividend Income, Videos |
This week’s Trend of the Week video is Utilities are Struggling as Inflation Surges. As utilities start to update their grid infrastructure to support renewable energy sources, utility companies have filed for rate increases. Those rate increases have to be approved by state government regulators, and they’ve recently gotten some pushback, specifically from utility commissions in the Midwest, including Wisconsin, Minnesota, and Michigan. As an example, in Michigan, DTE applied for a $388 million rate increase and the utility got approval for just $31 million. Utility commissions are arguing that they can’t approve rate increases when consumers are already facing soaring utility bills. Investors have expected utilities to be a place to hide in this market, with projected growth and higher revenue, but due to this kind of resistance from regulators, you can’t count on utilities to revenue and income to fuel dividend increases at the same rate as in recent years. I suggest picking utilities one by one, as opposed to ETFs in order to stay away from some of those companies that do business in less accommodating states. You can find specific utility stocks in my Dividend Portfolio available on JubakPicks.com and JubakAM.com.
February 28, 2023 | Daily JAM, Dividend Income, Jubak Picks, PXD |
On Friday, shares of Pioneer Natural Resources (PXD) fell on a Bloomberg story reporting rumored talks between the Permian Basin oil shale producer and Appalachian natural gas producer Range Resources (RRC). On Monday shares of Pioneer rebounded as the company denied that it was in acquisition talks. The lesson? Investors really don’t want Pioneer to spend money on acquiring more assets.
February 23, 2023 | Daily JAM, Dividend Income, Jubak Picks, PXD |
Wednesday, February 22, Pioneer Natural Resources (PXD) reported better-than-expected adjusted earnings for the fourth quarter of 2022 while revenues came up short of Wall Street estimates. Revenue was still up 18% year-over-year to $5.1 billion. Fourth quarter net income nearly doubled to $1.48 billion or $5.98 share, from $763 million, or $2.97 a share, in the fourth quarter of 2021. The company declared a quarterly total dividend of $5.58/share, made up of a $1.10 base dividend and a $4.48 variable dividend. The total annualized dividend yield is approximately 11%.Which is why I’m adding the shares to my Dividend Portfolio today.
February 22, 2023 | Daily JAM, Dividend Income, INTC, Jubak Picks |
So it wasn’t much of a surprise to most investors–although some of us were hoping that Intel (INTC) would hold its dividend steady after a big bond offering in the last few weeks. But today Intel cuts its dividend by 66% to 12.5 cents a share from a prior 36.5 cents. The stock dropped only 2.26% on that big news.
February 8, 2023 | Daily JAM, Dividend Income, INTC, Jubak Picks |
The possibility that Intel (INTC) would cut its dividend has been hanging over the stock price since the company announced one of the ugliest quarters I’ve seen in a while on January 26. No question why. Intel’s adjusted free cash flow was a negative $4.075 for the full 2022 year. And with the company looking to invest heavily in new fabs, the $6 billion a year in dividend payouts looked like a potential source of investing cash. And certainly, you wouldn’t want to buy into a stock paying 5.09% (as Intel did today) if the company was about to cut its dividend. But a dividend cut looks less likely today.
February 2, 2023 | Daily JAM, Dividend Income, Videos |
Today I posted my two-hundred-and-thirty-second YouTube video: Quick Pick Intel Today’s Quick Pick: Intel (NASDAQ: INTC). Intel’s revenue and earnings report last week was terrible. It was a classic kitchen sink quarter, where the company laid out all the bad news at once, so investors only have positive things to look forward to. The stock was trading at $28 on January 31, and the 52-week range is $52.5 – $24, so we’re currently pretty close to the bottom of the range. The 2022 loss is a little over 38% but year to date, even with all of this bad news, the stock is actually up 5.75. If you have a longer time range, this is the time to buy Intel. We’re close to a bottom here and their plans going forward include new chips and, in 2024, new technology that can really compete with AMD. Additionally, Intel’s fab business, where they manufacture chips designed by other companies, went up about 30%. They are one of the few companies left that are actually manufacturing the chips, (their biggest competitor being Taiwan Semiconductors.) As Intel improves its own technology, its fab business will grow and become more appealing to chip designers. As long as Intel hits its projected milestones throughout 2023, this is a good buy for 2024.
December 8, 2022 | ABBV, Daily JAM, Dividend Income, MMM |
Once a company has put in the time and money to make the Dividend Aristocrats list, the company isn’t likely to squander that investment just because a recession looms. To make the list–and garner a big chunk of cash from conservative dividend investors–a company has had to pay a dividend for a least 25 consecutive years and has had to raise that dividend every year. A company like 3M (MMM), which owns a 64-year record of paying and raising its dividend payout, is as close to a dividend sure thing as exists. Which is why it’s not surprising that AbbVie (ABBV), which owns a 50-year record of paying and raising its dividend, announced that it would raise its dividend in 2023 to $1.48 a quarter with the February 2023 payout. That would bring the annual dividend yield to 3.5% But…
December 7, 2022 | Daily JAM, Dividend Income, DOW |
The November rally was kind to Dow (DOW) with the stock up 10.4% from November 1 through December 1. The shares have given back some of that lately, but I’d still like to book any gains here ahead of a possible recession or at least a further economic slowdown in 2023.
November 30, 2022 | BHP, Daily JAM, Dividend Income, Special Reports |
You have to do a fair amount of work rearranging the dividend numbers for BHP (BHP) to understand why this diversified commodities producer makes this list. First, throw that 11.02% dividend yield reported on Yahoo Finance and other sources. As part of its corporate strategy of moving away from fossil fuels and investing in expanding existing copper production and in opening its first potash mine (in Canada at a cost of $5.7 billion), BHP sold its petroleum unit. Part of the big “dividend” distribution in fiscal 2021 and 2022 is a result of the company distributing the shares in the purchaser it acquired in payment for that deal to BHP shareholders. Of the $7.11 paid in dividends in fiscal 2022, for example, $3.86 came from the distribution of those shares. If you buy BHP now, you can’t expect a repeat of that distribution of shares. (BHP also sold its U.S. onshore petroleum assets in 2019.) So the question is what dividend payout can you expect from BHP in 2023?
November 17, 2022 | Daily JAM, Dividend Income, Jubak Picks, PXD, Special Reports |
When I put together my Special Report: “5 Safe Dividend Stocks Paying 6% or More,” one key requirement was that the company showed a long track record of raising dividends every year and the clear potential to continue to raise dividends every year. That formula could turn a 6% annual dividend yield now into 8% or 9% or even more over the next ten years. A safe almost guaranteed 10% yield at the end of 10 years strikes me as a very attractive prospect, especially given how tough I think the financial markets are going to be over the next five years or more. (For more on that outlook see my recently revised Special Report: “Your Best Investment Strategy for the Next Five Years.”) But I realized, looking at all the high-yield stocks that didn’t make the cut for that report that the requirement for a high-probability trend of higher dividends each year for the next 10 years, that this requirement left a lot of stocks paying very attractive high dividends now on the cutting room floor. Stocks paying 8% or more got left off the list because I didn’t see a commitment at the company to continued dividend increases every year or enough growth in free cash flow to make it possible for a company to raise or maintain its dividend through the ups and downs of the business cycle. These stocks paying 8% or more were very safe bets to continue paying that yield for the next year or two. But 10 years? Too much uncertainty. Which doesn’t mean you shouldn’t own some of these stocks now. An 8% or better yield for a couple of years is a very attractive prospect given how uncertain the economy and the stock market are right now. And an investor has a very simple remedy if a company looks like it can’t or isn’t committed to sustaining that yield. Sell the stock. So with all that in mind, I’ve put together a list of five “outlier” dividend stocks paying 8% or more at a time when the SPDR S&P 500 Trust ETF (SPY) has a yield of just 1.6%.
November 8, 2022 | Daily JAM, Dividend Income, Special Reports |
You might expect this list to be dominated by oil and natural gas producers. You might expect that–but you’d be wrong. Stocks like Pioneer Natural Resources (PXD) and Devon Energy (DVN) certainly pay dividends now high enough t qualify for this list, at 9.86% and 7.50% for the trailing 12 months, respectively, but I don’t think it’s possible to project that level of dividend payout for the 10-year period that I’ve focused on for this strategy. (Which doesn’t mean stocks like these aren’t worth owning on their dividends for the shorter term. In fact, I’m putting together a list of what I’d call current dividend outliers as an extra for this Special Report. These outlier stocks pay very attractive (better than 6% again and sometimes way better than 6%) dividends but the companies don’t have a track record or corporate culture that makes me feel certain about the longevity of this level of payout. Pioneer, for example, pays a 2-part dividend with a core rate and a variable rate depending on revenue and profits. That to me speaks to a company that doesn’t feel able to commit to the current high payout for very long. For a dividend stock with a high payout and a predictably long duration of that level of payout in the energy sector, I’m going to look at pipeline companies, especially those with big exposure to natural gas exports (specifically LNG exports) and the growing CO2 sector.
November 8, 2022 | Daily JAM, Dividend Income, Special Reports |
This is what I wrote yesterday in my Special Report. (You can find all the picks (so far 2) and the strategy I’m using if you go to the full Special Report.) I think Verizon provides a very useful checklist of what to look for in long-term safe picks that yield 6% or more. Which is why I’m putting it in the leadoff position on this list. Verizon isn’t anyone’s favorite stock right now. And it’s pretty clear why.
