3 Dividend Superstars

Includes: GA, ITCB, PT
by: Rick Dude

Nothing fixes a down year like a big dividend. Today we're going to talk about 3 companies that pay exceptional dividends.

To meet the criteria, the company must have:

  • Paid 20% or more yield over the last 12 months
  • Have paid dividends at least once per year over the last 3 years

Giant Interactive Group (NYSE:GA)

Forcastix score 153/200 - Exceptional

What they do: Giant Interactive develops and operates online games in the People's Republic of China. The company focuses on massively multiplayer online games that are played through networked game servers in which thousands of players are able to simultaneously connect and interact. In other words, they're the Blizzard of China (World of Warcraft anyone?).

How the books look: FY 2010 profit before tax of 136 million from 202 million in revenue, 961 million in tangible equity, only 108 million of debt. Pretty good if you ask me.

What they paid: GA had been paying dividends for the last few years, paying out 18 cents a share against an average share price of a bit over $7 in 2009 and 2010, giving a yield of 2.5%. This is not bad on its own, but in August 2011 they announced they would pay a whopping $3/share special dividend, bringing total yield to an unbelievable 42%! The most amazing thing to me is that the share price didn't move, proving once again that irrational fear (even of China) is truly irrational.

Portugal Telecom (NYSE:PT)

Forcastix score 87/200 - Fair

What they do: Portugal Telecom provides telecommunications services in Portugal, Brazil, and Africa. Among their services to these regions are wired and wireless phone services, internet, and satellite TV.

How the books look: I'll be the first to admit they could look better. They have a very suspicious 7.2 billion non-operational gain in FY2010, which inflated their profits beyond the normal 1-1.5 billion to 7.7 billion before tax. They sit on 14 billion of debt, of which 10 billion is long term, against about 20 billion in assets. I would really like to see a little less debt and minimization of the non-operational gains here.

What they paid: PT paid spectacular yields between 6-9% for the last several years. Then in December 2010 they paid 2 special dividends of $1.03 and $1.04, boosting the rolling 12 month yield to a ridiculous 30%.

Onebeacon Insurance Group (NYSE:OB)

Forcastix score 94/200 - Fair

What they do: Insurance. All different kinds of insurance.

How the books look: If you throw out 2008 (a disaster for all Financial and Insurance companies), not bad. They last reported 126 million in before tax profit after 1.6 billion in revenue in FY 2010, or a 7.5% profit margin. For comparison purposes, Metlife also operates on a 7.5% profit margin as of FY2010. Their debt load looks very reasonable, with 1.2 billion in tangible equity from 6.1 billion in assets.

What they paid: OB has a history of paying very nice dividends, with a 13.75% and 7.34% yield during 2008 and 2009 respectively. What is amazing is that they broke 20% in dividend yield both in 2010 and 2011 due to their special dividend payment.

So while the market is still trying to figure out if Europe can plan to make a plan while planning a plan to save the euro, you can find a safe haven in companies making money, rewarding shareholders.

All stocks screened and information gleaned using the Forcastix scoring engine.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.