"Dogs of the Dow" is the name given to one of the simplest dividend strategies for beating the market. Over the coming year, I'll track the Dogs' performance and keep you abreast of news affecting these companies.
The strategy
The Dogs is an investing strategy that buys and holds equal dollar amounts of the 10 best-yielding dividend stocks of the Dow Jones Industrial Average (DJINDICES: ^DJI ) . The strategy banks on the idea that blue-chip stocks with high yields are near the bottom of their business cycle and should do much better going forward. Investors in the strategy then would not only get large dividends but also gains in the stocks underlying those dividends.
High-yield dividends
High-yield portfolios are often dismissed as inferior to their growth counterparts for various reasons:
Top 10 Dividend Companies To Invest In Right Now: Plum Creek Timber Company Inc.(PCL)
Plum Creek Timber Company, Inc. is a publicly owned real estate investment trust (REIT). The trust owns and manages timberlands in the United States. Its products include lumber products, plywood, medium density fiberboard, and related by-products, such as wood chips. The trust also focuses on mineral extraction and natural gas production, communication, and transportation. Plum Creek Timber Company was founded in 1989 and is based in Seattle, Washington.
Advisors' Opinion:- [By Richard Young]
Prices for lumber are improving after a big drop in early 2011. Plum Creek Timber (NYSE:PCL) took advantage of the increased export demand from China last year by increasing its harvest by 40%. When lumber prices fall, timber companies can wait out the hard times with assets (the trees) that keep increasing in value. My price chart for Plum Creek shows a nice breakout around its 200-day moving average. Buy.
- [By Jonas Elmerraji]
Plum Creek Timber (PCL) isn't your typical commercial REIT. Instead, the firm is a niche trust that operates in the timber business, one of the less conventional businesses allowed by the REIT Act signed in 1960. PCL owns 6.6 million acres of timberlands in 19 states.
Only the timberland business falls under REIT rules, with logging operations treated as a traditional taxable corporation. For all intents and purposes, though, PCL's bread and butter remains its timberland; the firm earns more money through recreation, development, and conservation efforts than through logging. That could change as the housing market heats up, especially as supply constraints push timber prices higher. Either way, Plum Creek's combination of tax-advantaged REIT income and conventional business makes the firm a unique name to own right now...
Financially, PCL is in strong shape, with more than $350 million in cash offsetting a reasonable $3 billion debt load. While PCL resorted to liquidating land to fund its dividend in the wake of the Great Recession, recent acquisitions should help calm investors' concerns. For the moment, this stock pays a 3.5% dividend yield. While Plum Creek isn't a conventional REIT by most measures, it does make a great non-core holding for income-seekers in 2013.
Top 10 Dividend Companies To Invest In Right Now: MCG Capital Corporation(MCGC)
MCG Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm does not prefer investments in highly cyclical and volatile industry sectors and businesses with significant volatility exposure. It seeks to invest in small to mid sized companies. The firm prefers to invest in acquisitions, growth financings, organic growth, recapitalization, and leveraged buyouts. It invests in companies based in the United States. The firm seeks to invest upto $75 million in debt and equity in companies having revenues between $20 million and $200 million and EBITDA between $3 million and $25 million. It seeks to invest in the form of senior debt, including amortizing, bullet maturity, term loans, and revolving credit facilities; institutional sub debt, including junior capital; second lien debt, that includes term loans on sole source and participant basis; secured and unsecured subordinate loans structured as current interest, deferred in terest, and equity linked components; mezzanine debt and equity that includes minority equity investments. The firm may invest in minority or control equity positions. It was formerly known as MCG Credit Corporation. MCG Capital Corporation was founded in 1990 and is based in Arlington, Virginia.
5 Best Financial Stocks To Own For 2014: China Nepstar Chain Drugstore Ltd (NPD)
China Nepstar Chain Drugstore Ltd. operates retail drugstores in the People?s Republic of China. The company?s drugstores provide pharmacy services and other merchandise, including prescription drugs; over-the-counter drugs; nutritional supplements, such as healthcare supplements, vitamins, minerals, and dietary products; herbal products, including drinkable herbal remedies and packages of assorted herbs for making soup; and private label products. Its stores also offer personal care products, such as skin care, hair care, and beauty products; family care products, including portable medical devices for family use, birth control products, and early pregnancy test products; and convenience products, such as soft drinks, packaged snacks, other consumables, cleaning agents, and stationeries, as well as seasonal and promotional items. The company operates its stores under the China Nepstar brand name. As of December 31, 2009, its store network comprised 2,479 retail drugstores located in approximately 71 cities in Guangdong, Jiangsu, Zhejiang, Liaoning, Shandong, Hunan, Fujian, Sichuan, and Hubei provinces, as well as in Shanghai, Tianjin, and Beijing municipalities of the People?s Republic of China. The company was founded in 1995 and is headquartered in Shenzhen, the People?s Republic of China.
Top 10 Dividend Companies To Invest In Right Now: Simon Property Group Inc.(SPG)
Simon Property Group, Inc. is a real estate investment trust. The firm engages in investment, ownership, and management of properties. It invests in the real estate markets across the globe. The firm?s portfolio includes regional malls, premium outlet centers, the mills, community / lifestyle centers, and international properties. Simon Property Group was founded in 1960 and is based in Indianapolis, Indiana.
Top 10 Dividend Companies To Invest In Right Now: TotalFinaElf S.A.(TOT)
TOTAL S.A., together with its subsidiaries, operates as an integrated oil and gas company worldwide. The company operates through three segments: Upstream, Downstream, and Chemicals. The Upstream segment engages in the exploration, development, and production of oil and natural gas. It also involves in the transportation, trade, and marketing of natural gas and liquefied natural gas (LNG), as well as in LNG re-gasification and natural gas storage operations. In addition, this segment engages in the shipping and trade of liquefied petroleum gas (LPG); power generation from gas-fired power plants, nuclear, or renewable energies; production, trade, and marketing of coal, as well as in solar power systems and technology operations. As of December 31, 2010, it had combined proved reserves of 10,695 Mboe of oil and gas. The Downstream segment involves in refining, marketing, trading, and shipping crude oil and petroleum products. It also produces a range of specialty products, s uch as lubricants, LPG, jet fuel, special fluids, bitumen, marine fuels, and petrochemical feedstock. This segment holds interests in 24 refineries located in Europe, the United States, the French West Indies, Africa, and China, as well as operates a network of 17,490 service stations. The Chemicals segment produces base chemicals, including petrochemicals and fertilizers, as well as engages in rubber processing, resins, adhesives, and electroplating activities. TOTAL S.A. was founded in 1924 and is based in Paris, France.
Advisors' Opinion:- [By Glenn]
TOT has a market capitalization of $130 billion. Its dividend yield last year of 5% is among the best in the industry. Current P/E ratio of 9.2 seems very attractive compared to the industry average of 12. The stock prices did not participate much in the recent bull market. While smaller sized competitors such as ConocoPhillips (COP), Marathon Oil Corporation (MRO) and Statoil ASA (STO) offered spectacular returns (ranging from 30% to 50%), Total’s return in 2010 was only 2%. One may find that the price will catch up with profits.
Top 10 Dividend Companies To Invest In Right Now: Regal Beloit Corporation(RBC)
Regal Beloit Corporation, together with its subsidiaries, manufactures and sells electric motors and controls, electric generators and controls, and mechanical motion control products primarily in the United States and Asia. The company operates in two segments, Electrical and Mechanical. The Electrical segment manufactures and markets AC and DC commercial, industrial, and commercial refrigeration electric motors and blowers, as well as heating, ventilation, and air conditioning (HVAC) electric motors and blowers. It also provides precision servo motors, electric generators, automatic transfer switches and paralleling switchgear, and control electric power generation equipment; AC and DC variable speed drives and controllers, and other accessories for industrial and commercial applications; and capacitors for use in HVAC systems, high intensity lighting, and other applications. The Mechanical segment manufactures and markets a range of mechanical motion control products, i ncluding worm gears, bevel gears, helical gears, and concentric shaft gearboxes; marine transmissions; after-market automotive transmissions, and ring and pinions; custom gearing; gearmotors; electrical connecting devices; and manual valve actuators, which are used in oil and gas, water distribution and treatment, and chemical processing applications. The company sells its products to original equipment manufacturers, distributors, and end users through its direct sales people and manufacturer?s representative organizations. Regal Beloit Corporation was founded in 1955 and is based in Beloit, Wisconsin.
Top 10 Dividend Companies To Invest In Right Now: Sempra Energy(SRE)
Sempra Energy, together with its subsidiaries, develops new energy infrastructure, operates utilities, and provides energy-related products and services worldwide. It operates in six segments: SDG&E, SoCalGas, Sempra Generation, Sempra Pipelines & Storage, Sempra LNG (liquefied natural gas), and Sempra Commodities. The SDG&E segment has electric and natural gas franchises that locate, operate, and maintain facilities for the transmission and distribution of electricity and natural gas to residential, commercial, industrial, street and highway lighting, and direct access customers. The SoCalGas segment has natural gas franchises that locate, operate, and maintain facilities for the transmission and distribution of natural gas to electric generation, wholesale, large commercial, industrial, and enhanced oil recovery customers. The Sempra Generation segment involves in the generation and wholesale distribution of electricity through a fleet of natural gas-fired power generati on facilities in Arizona, Nevada, and Indiana, as well as Mexico with a total capacity of 2,513 megawatts. The Sempra Pipelines & Storage segment operates 1,883 miles of distribution pipelines, 224 miles of transmission pipelines, and 3 compressor stations in Mexico; operates Mobile Gas, a natural gas distribution utility located in Mobile and Baldwin counties in Alabama; and operates natural gas storage facilities in Washington County of Alabama and Simpson County of Mississippi. The Sempra LNG segment involves in the receipt, storage, and vaporization of LNG, as well as the purchase and sale of natural gas. It operates Energia Costa Azul LNG receipt terminal in Baja California, Mexico, as well as Cameron LNG receipt terminal in Hackberry, Louisiana. The Sempra Commodities segment engages in the commodities-marketing business. Sempra Energy has operations in the United States, Canada, Mexico, Argentina, Chile, and Peru. The company was founded in 1998 and is headquartered i n San Diego, California.
Top 10 Dividend Companies To Invest In Right Now: Cincinnati Financial Corporation(CINF)
Cincinnati Financial Corporation engages in the property casualty insurance business in the United States. Its Commercial Lines Property Casualty Insurance segment provides coverage for commercial casualty, commercial property, commercial auto, and workers? compensation. It also offers specialty packages, including coverages for property, liability, and business interruption for specific industry classes, such as artisan contractors, dentists, or street businesses. In addition, this segment provides contract and commercial surety bonds, fidelity bonds, and director and officer liability insurance, as well as machinery and equipment coverage. The company?s Personal Lines Property Casualty Insurance segment offers coverage for personal auto and homeowners, as well as other insurance products, such as dwelling fire, inland marine, personal umbrella liability, and watercraft coverages to individuals. Cincinnati Financial?s Excess and Surplus Lines Property Casualty Insurance s egment offers commercial casualty insurance that covers businesses for third-party liability from accidents occurring on their premises or arising out of their operations, including products and completed operations; and commercial property insurance, which insures loss or damage to buildings, inventory, equipment, and business income from causes of loss, such as fire, wind, hail, water, theft, and vandalism. The company?s Life Insurance segment provides term insurance; universal life insurance; whole life insurance; and worksite products, which include term, whole life, universal life, and disability insurance offered to employees through their employer. This segment also markets disability income insurance, deferred annuities, and immediate annuities. Its Investment segment invests in fixed-maturity investments, equity investments, and short-term investments. Cincinnati also offers commercial leasing and financing services. The company was founded in 1950 and is headquarte red in Fairfield, Ohio.
Top 10 Dividend Companies To Invest In Right Now: Prospect Capital Corporation(PSEC)
Prospect Capital Corporation is a mezzanine finance and private equity firm that specializes in late venture, middle market, mature, mezzanine, buyouts, recapitalizations, growth capital, development, and bridge transactions. It makes secured debt and equity investments. The firm typically invests across all industry sectors, with a particular expertise in the energy and industrial sectors. It invests in oil and gas production, coal production, materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sectors. The firm prefers to invest in the United States and Canada. It seeks to invest between $5 million to $50 million in companies with EBITDA between $$ million and $75 million, sales value up to $500 million, and enterprise value of up to $250 million. The firm also co- invests for larger deals. It seeks control acquisitions by providing multiple levels of the capital structure. Prospect Capital Corporation was founded in 1988 and is based in New York, New York.
Top 10 Dividend Companies To Invest In Right Now: Telular Corporation(WRLS)
Telular Corporation designs, develops, and distributes products and services that utilize wireless networks to provide data and voice connectivity among people and machines primarily in the United States and internationally. It provides machine-to-machine and event monitoring services, including Telguard that comprises a specialized terminal unit, which interfaces with commercial security control panels and communicates with event processing servers to provide real-time transport of alarm signals from residential and commercial locations to an alarm company?s central monitoring station; and TankLink solution that combines a cellular communicator, wireless data services, and a Web-based application into a single offering, which allows end-users to monitor the product level in a given tank vessel. The company also offers fixed cellular terminals for voice, fax, and Internet access over the wireless networks. It sells its products to security equipment distributors, cellular carriers, and value added resellers. The company was founded in 1986 and is headquartered in Chicago, Illinois.
Advisors' Opinion:- [By Arohan]
Telular provides wireless connectivity solutions to home alarm and industrial segments for monitoring, security and data applications. The $89 million market value company currently can be bought at 2.42 PE ratio and offers a 6.8% dividend yield. The company reported a revenue growth of 16.6% in the latest quarter and is expected to grow earnings 16.7% this year and 43% the next. The company does not have analyst following so a deeper due diligence is advised.
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