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Investors should not base their decision on yield alone - there are many stocks that offer extremely high yields but their performance over the years has been dismal. In fact, in some cases even with the yield the total rate of return has been negative for the past 3-5 years. One should look at the robustness of the company, the dividend growth rate, the sustainability of the dividend and finally one should take a look at the company's dividend history. Companies with stellar records will do everything possible to avoid cutting the dividend in order to maintain this record.

Company: Teva Pharmaceuticals (NYSE:TEVA)

Basic Key ratios

  1. Percentage Held by Insiders = 7.1
  2. 5 year sales growth = 16.6%
  3. Long term debt to equity = 0.44
  4. Relative Strength 52 weeks = 43
  5. Dividend 5-year Growth = 17.5
  6. Cash Flow 5-year Average = 3.74

Growth

  1. Net Income ($mil) 12/2011 = 2768
  2. Net Income ($mil) 12/2010 = 3339
  3. Net Income ($mil) 12/2009 = 2004
  4. Net Income Reported Quarterly ($mil) = 859
  1. EBITDA ($mil) 12/2011 = 4025
  2. EBITDA ($mil) 12/2010 = 3646
  3. EBITDA ($mil) 12/2009 = 3111
  1. Cash Flow ($/share) 12/2011 = 5.85
  2. Cash Flow ($/share) 12/2010 = 4.41
  3. Cash Flow ($/share) 12/2009 = 4.26
  1. Sales ($mil) 12/2011 = 18312
  2. Sales ($mil) 12/2010 = 16121
  3. Sales ($mil) 12/2009 = 13899
  1. Annual EPS before NRI 12/2007 = 2.38
  2. Annual EPS before NRI 12/2008 = 2.86
  3. Annual EPS before NRI 12/2009 = 3.37
  4. Annual EPS before NRI 12/2010 = 4.54
  5. Annual EPS before NRI 12/2011 = 4.97

Dividend history

  1. Dividend Yield = 1.10
  2. Dividend Yield 5 Year Average 12/2011 = 1.15
  3. Dividend 5 year Growth 12/2011 = 17.5

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.11
  2. Payout Ratio 5 Year Average 12/2011 = 0.16

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 8.27
  2. 5 Year History EPS Growth 12/2011 = 21.08
  3. 5 Year History EPS Growth 09/2011 = 21.08
  4. ROE 5 Year Average 12/2011 = 17.24
  5. Return on Investment 12/2011 = 15.89
  6. Debt/Total Cap 5 Year Average 12/2011 = 20.48
  1. Current Ratio 12/2011 = 1.1
  2. Current Ratio 5 Year Average = 1.52
  3. Quick Ratio = 0.68
  4. Cash Ratio = 0.23
  5. Interest Coverage Quarterly = N/A

Suggested strategy

Divide your money into 2-3 lots and consider deploying one lot on a test of 35.00. Another strategy would be to start selling puts on a test of 35 in the 30-35 ranges. If the stock closes below the strike price, you could be assigned the shares. Your final price would be the strike price minus the premium you were paid. If the stock does not close below the strike price, you get to keep the premium and repeat the process again.

Company: Enterprise Prod (NYSE:EPD)

Basic Key ratios

  1. Percentage Held by Insiders = 34.7
  2. 5 year sales growth rate = 24.7%
  3. Long term debt to equity= 1.11
  4. Number of Institutional Sellers 12 Weeks = 1
  5. Relative Strength 52 weeks = 85
  6. Dividend 5-year Growth = 5.73
  7. Cash Flow 5-year Average = 2.37

Growth

  1. Net Income ($mil) 12/2011 = 2047
  2. Net Income ($mil) 12/2010 = 321
  3. Net Income ($mil) 12/2009 = 204
  4. Net Income Reported Quarterly ($mil) = 651
  1. EBITDA ($mil) 12/2011 = 3867
  2. EBITDA ($mil) 12/2010 = 3137
  3. EBITDA ($mil) 12/2009 = 2690
  1. Cash Flow ($/share) 12/2011 = 3.34
  2. Cash Flow ($/share) 12/2010 = 1.63
  3. Cash Flow ($/share) 12/2009 = 3.15
  1. Sales ($mil) 12/2011 = 44313
  2. Sales ($mil) 12/2010 = 33739
  3. Sales ($mil) 12/2009 = 25511
  1. Annual EPS before NRI 12/2007 = 0.96
  2. Annual EPS before NRI 12/2008 = 1.85
  3. Annual EPS before NRI 12/2009 = 1.81
  4. Annual EPS before NRI 12/2010 = 1.39
  5. Annual EPS before NRI 12/2011 = 2.21

Dividend history

  1. Dividend Yield = 5.10
  2. Dividend Yield 5 Year Average 12/2011 = 6.72
  3. Dividend 5 year Growth 12/2011 = 5.73

Dividend sustainability

  1. Payout Ratio 09/2011 = 1.06
  2. Payout Ratio 5 Year Average 12/2011 = 1.32

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 6.4
  2. 5 Year History EPS Growth 12/2011 = 15.17
  3. ROE 5 Year Average 12/2011 = 12.81
  4. Return on Investment 12/2011 = 7.94
  1. Current Ratio 12/2011 = 0.79
  2. Current Ratio 5 Year Average = 0.93
  3. Quick Ratio = 0.67
  4. Cash Ratio = 0.06
  5. Interest Coverage Quarterly = 4.33

Company: Schlumberger (NYSE:SLB)

Basic Key ratios

  1. Percentage Held by Insiders = 0.21
  2. 5 year sales growth rate= 11.26%
  3. Long term debt to equity ratio 0.26
  4. Relative Strength 52 weeks = 41
  5. Dividend 5-year Growth = 7.55
  6. Cash Flow 5-year Average = 5.34

Growth

  1. Net Income ($mil) 12/2011 = 4997
  2. Net Income ($mil) 12/2010 = 4267
  3. Net Income ($mil) 12/2009 = 3134
  4. Net Income Reported Quarterly ($mil) = 1301
  1. EBITDA ($mil) 12/2011 = 9917
  2. EBITDA ($mil) 12/2010 = 8122
  3. EBITDA ($mil) 12/2009 = 6631
  1. Cash Flow ($/share) 12/2011 = 6.15
  2. Cash Flow ($/share) 12/2010 = 4.66
  3. Cash Flow ($/share) 12/2009 = 4.86
  1. Sales ($mil) 12/2011 = 39540
  2. Sales ($mil) 12/2010 = 27447
  3. Sales ($mil) 12/2009 = 22702
  1. Annual EPS before NRI 12/2007 = 4.19
  2. Annual EPS before NRI 12/2008 = 4.49
  3. Annual EPS before NRI 12/2009 = 2.78
  4. Annual EPS before NRI 12/2010 = 2.86
  5. Annual EPS before NRI 12/2011 = 3.66

Dividend history

  1. Dividend Yield = 1.70
  2. Dividend Yield 5 Year Average 12/2011 = 1.25
  3. Dividend 5 year Growth 12/2011 = 7.55

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.28
  2. Payout Ratio 5 Year Average 12/2011 = 0.25

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 13
  2. 5 Year History EPS Growth 12/2011 = -6.79
  3. ROE 5 Year Average 12/2011 = 24.42
  4. Return on Investment 12/2011 = 13.37
  5. Current Ratio 12/2011 = 1.97
  6. Current Ratio 5 Year Average = 1.73
  7. Quick Ratio = 1.5
  8. Cash Ratio = 0.6
  9. Interest Coverage Quarterly = 22.51

Company: Kraft Foods Inc (KFT)

Basic Key ratios

  1. Percentage Held by Insiders = 0.36
  2. Number of Institutional Sellers 12 Weeks = 1
  3. Five year sales growth rate= 8.85%
  4. Long term debt to equity ratio = 0.63
  5. Relative Strength 52 weeks = 79
  6. Dividend 5-year Growth = 2.07
  7. Cash Flow 5-year Average = 2.61

Growth

  1. Net Income ($mil) 12/2011 = 3527
  2. Net Income ($mil) 12/2010 = 4114
  3. Net Income ($mil) 12/2009 = 3021
  4. Net Income Reported Quarterly ($mil) = 813
  1. EBITDA ($mil) 12/2011 = 8142
  2. EBITDA ($mil) 12/2010 = 7106
  3. EBITDA ($mil) 12/2009 = 6114
  1. Cash Flow ($/share) 12/2011 = 3.14
  2. Cash Flow ($/share) 12/2010 = 2.81
  3. Cash Flow ($/share) 12/2009 = 2.66
  1. Sales ($mil) 12/2011 = 54365
  2. Sales ($mil) 12/2010 = 49207
  3. Sales ($mil) 12/2009 = 40386
  1. Annual EPS before NRI 12/2007 = 1.82
  2. Annual EPS before NRI 12/2008 = 1.81
  3. Annual EPS before NRI 12/2009 = 2.02
  4. Annual EPS before NRI 12/2010 = 2.02
  5. Annual EPS before NRI 12/2011 = 2.29

Dividend history

  1. Dividend Yield = 3.00
  2. Dividend Yield 5 Year Average 12/2011 = 3.71
  3. Dividend 5 year Growth 12/2011 = 2.07

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.5
  2. Payout Ratio 5 Year Average 12/2011 = 0.57
  3. Change in Payout Ratio = -0.07

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 8
  2. 5 Year History EPS Growth 12/2011 = 4.35
  3. ROE 5 Year Average 12/2011 = 10.91
  4. Return on Investment 12/2011 = 6.87
  5. Current Ratio 12/2011 = 0.92
  6. Current Ratio 5 Year Average = 0.97
  7. Quick Ratio = 0.57
  8. Cash Ratio = 0.22
  9. Interest Coverage Quarterly = 3.06

Company: Enbridge Energy Partners (NYSE:EEP)

Basic Key ratios

  1. Relative Strength 52 weeks = 63
  2. Dividend 5-year Growth = 2.85
  3. Cash Flow 5-year Average = 3.14

Growth

  1. Net Income ($mil) 12/2011 = 624
  2. Net Income ($mil) 12/2010 = -199
  3. Net Income ($mil) 12/2009 = 317
  4. Net Income Reported Quarterly ($mil) = 99
  1. EBITDA ($mil) 12/2011 = 1343
  2. EBITDA ($mil) 12/2010 = 456
  3. EBITDA ($mil) 12/2009 = 899
  4. Cash Flow ($/share) 12/2011 = 3.52
  5. Cash Flow ($/share) 12/2010 = 3.58
  6. Cash Flow ($/share) 12/2009 = 3.32
  1. Sales ($mil) 12/2011 = 9110
  2. Sales ($mil) 12/2010 = 7736
  3. Sales ($mil) 12/2009 = 5732
  1. Annual EPS before NRI 12/2007 = 1.39
  2. Annual EPS before NRI 12/2008 = 1.58
  3. Annual EPS before NRI 12/2009 = 1.38
  4. Annual EPS before NRI 12/2010 = 1.46
  5. Annual EPS before NRI 12/2011 = 1.39

Dividend history

  1. Dividend Yield = 7.20
  2. Dividend Yield 5 Year Average 12/2011 = 8.09
  3. Annual Dividend 12/2011 = 2.09
  4. Dividend 5 year Growth 12/2011 = 2.85

Dividend sustainability

  1. Payout Ratio 09/2011 = 1.64
  2. Payout Ratio 5 Year Average 12/2011 = 1.42

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 3
  2. 5 Year History EPS Growth 12/2011 = -0.96
  3. ROE 5 Year Average 12/2011 = 10.55
  4. Current Ratio 12/2011 = 0.75
  5. Current Ratio 5 Year Average = 0.93
  6. Quick Ratio = 0.85
  7. Cash Ratio = 0.32
  8. Interest Coverage Quarterly = 2.37

Conclusion

The markets are still in a corrective mode, and we believe that we will need to see one more selling climax before a bottom is in place. In the interim, some sort of relief rally could take hold as we are extremely oversold. Long-term investors can use strong pullbacks to slowly start deploying money into long-term investments. A great way to get into a stock at a price of your choosing is to sell puts at strikes you would not mind owning the stock at. Investors looking for other investment ideas might find these articles to be of interest - Reasons To Be Bullish On Honeywell International and American Capital Agency: Significantly Boost Your Yield with a simple strategy.

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware.

Source: Teva Pharmaceuticals A Long-Term Prospect To Consider

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com.