Laid-back dividend investing means that I don't want to spend too much time researching dividend-paying companies. This is my attitude with regard to high-yield dividend investing. If a company is too difficult to understand, then I leave it alone.
In this post-Enron/Arthur Andersen world, dividend companies already are inherently more safe than their non-dividend paying counterparts. They pay cash, they have real earnings.
While looking for safe, high yields, I selected three companies. Criteria for selection are:
- high dividend yield
- companies operating in different sectors
- sustainability of dividends
Sabra Health Care REIT, Inc. (SBRA) operates as a real estate investment trust in the United States. The company, through its subsidiaries, owns and invests in real estate properties for the healthcare industry.
It had quite a run lately, since it went from a low of $8.65 on October 4, 2011, to a high of $14.49 on January 27, 2012. A run of more than 65% in less than four months.
If you take a look at the chart with Google Finance, and try to zoom in back in time, you'll notice that quotes start on 12 November, 2012. While on Yahoo Finance you can go back in time as far as 2002. This happens because Sabra began operations on November 15, 2010, following the completion of a restructuring of Sun Healthcare Group, Inc.'s ("Old Sun") business whereby Old Sun separated its real estate assets and its operating assets into two separate publicly traded companies - Sabra and SHG Services, Inc. (which has been renamed Sun Healthcare Group, Inc., "New Sun") (SUNH) (SUNHD).
It is my belief that, due to the aforementioned separation, the market as a whole has been unable to properly value SBRA stock. There's been no trend to observe. But it's not too late to consider an investment with SBRA. Healthcare in general is a robust sector to be in, with no signs of a slowdown. Quarterly dividend is $0.32, adequately covered by Adjusted Funds From Operations, which is the correct way to measure REITs' profitability. On 11/02/2011, SBRA increased its guidance. At the time of writing this article, SBRA current dividend yield is 8.86%.
Medical Properties Trust, Inc. (MPW) operates as a real estate investment trust in the United States. It acquires, develops, and invests in healthcare facilities; and leases healthcare facilities to healthcare operating companies and healthcare providers.
While it shares the same sector with Sabra Health Care, the two companies cater to different markets. While SBRA main focus is nursing facilities, MPW invests in hospitals. MPW suffered the 2008 stock market downturn, as shown by dividend trend. MPW paid $0.27 quarterly until September 16, 2008. Then it dropped it to $0.20, where it sits now.
Reported fourth quarter Normalized Funds from Operations and Adjusted FFO per diluted share of $0.19 and $0.19, respectively (Source: Company website). While dividend might drop again from $0.20, floor is currently $0.19. MPW is a growing company, as it is investing in new facilities. I expect to see both dividend and capital gains in the future.
At the time of writing this article, MPW is yielding 8.2% per annum.
New York Community Bancorp Inc. (NYB) operates as a multi-bank holding company for New York Community Bank and New York Commercial Bank, which offer banking products and services in New York, New Jersey, Ohio, Florida, and Arizona. This bank is performing well. According to the last quarterly report, the net interest margin rose (12 basis points), non‐performing non‐covered loans declined, total loan originations rose, the efficiency ratio improved. It seemed to me to read a press release from the good old days when housing market was strong and banks were very profitable. Interactive chart from Yahoo! Finance (click here to view) shows steady dividend payments since 1994 ($0.0028 at the time).
NYB pays now a $0.25 quarterly dividend. Last quarter's earnings per share were $0.29. Thus, dividend looks secure. At the time of writing this article, NYB is yielding 7.9% per annum. While running a stock screener to find high-yield dividend paying companies, I came across Cellcom Israel, Ltd. Ordinary S (CEL). CEL provides cellular communications services in Israel.
This is what I found while doing my due diligence on that name:
- Of Feb 7, 2012, CEL closed @ $15.09. 52wk Range:$14.20 - $34.00. So it is currently close to the bottom of the range.
- Five-years interactive chart (courtesy Yahoo! Finance. Click here to view) shows a steady dividend policy.
- Profit and operating margins (trailing three months - ttm) are good at 16.42% and 25.68% respectively.
So, what's not to like with this company?
One answer is competition. Gone are the days when an investor was able to buy any Telecom, Technology, Media company and see the investment just go up. Cellcom Israel is experiencing revenue growth slowdowns, increased customer turnover, and pressure from competitors. Another bad sign is that on January 19, 2012, Cellcom said that it would raise about $52.83M-$79.24M through a debt offering to the Israeli public. Also, a class action is under way. The company said that it believes the decision to be mistaken and intends to appeal the decision and request to stay proceedings until the appeal is decided.
True to my Laid-back dividend investing attitude (if a company is too difficult to understand, then I leave it alone) I will keep CEL on my watchlist but will not buy it for now. At the time of writing this article, CEL is yielding 9.8% per annum.