When it comes to traditional blue-chip dividend investing, income driven investors are looking for solid yields with regular (monthly, quarterly, etc.) dividend distributions. Many income-driven investors use a strategy that revolves itself around something called the ex-dividend date. According to Investopedia the ex-dividend date is defined as: "It should be noted that many income-based investors use a strategy involving purchasing shares on or before the company's ex-dividend date. On the ex-dividend date, the person who owns the security will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend".
In the case of the three companies featured, there were also three criteria I chose to use in my screen:
- Each Company Must Be Going Ex-Dividend On Oct. 5th
- Each Company Must Outpace At Least One Direct Competitor In Terms of Profit Margin
- Each Company Must Yield At Least 3.50%.
UDR, Inc. (NYSE:UDR), which closed trading on Thursday at $24.14/share, will be going ex-dividend at the close of trading on Friday, October 5. The Highlands Ranch, Colorado-based firm, "which currently yields 3.60% ($0.88), is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It owns, operates, acquires, renovates, develops, redevelops, and manages multifamily apartment communities." (Profile: Yahoo! Finance)
In terms of UDR, there is one primary catalyst that potential income investors should find attractive and that is the company's profit margin when compared to some of its direct industry competitors. In the last 12 months, UDR has demonstrated a profit margin of 35.25%, whereas direct competitor Apartment Investment & Management Co. (NYSE:AIV) had only managed to demonstrate a profit margin of 0.95%. UDR's profit margin is nearly 37.10 times that of Apartment Investment & Management Co.'s, which in my opinion, is certainly quite impressive.
Darden Restaurants, Inc. (NYSE:DRI), which closed trading on Thursday at $56.03/share, will be going ex-dividend at the close of trading on Friday, October 5. The Orlando, Florida-based firm, "which currently yields 3.60% ($2.00), owns and operates full service restaurants in the United States and Canada. It operates restaurants under the Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, and Wildfish Seafood Grille brand names. " (Profile: Yahoo! Finance)
When it comes to DRI, potential investors should also consider the company's profit margin when compared to some of its industry competitors and how the company outpaces those competitors. In the last 12 months, DRI has demonstrated a profit margin of 5.93%, whereas direct competitor Brinker International, Inc. (NYSE:EAT) has only managed to demonstrate a profit margin of 5.36%. Based on those statistics Darden Restaurant's profit margin is nearly 1.11 times that of Brinker International, which in my opinion is pretty attractive.
Verizon Communications, Inc. (NYSE:VZ), which closed trading on Thursday at $47.26/share, will be going ex-dividend at the close of trading on Friday, October 5. The New York, New York-based firm, "which currently yields 4.50% ($2.06), provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. Its Verizon Wireless segment offers data services and applications comprising Internet access through smart phones and basic phones; mobile broadband services; messaging services, which enable its customers to send and receive text, picture, and video messages; customer-focused and business-focused offerings; location-based services; and global data services, as well as access to data applications and services of third parties." (Profile: Yahoo! Finance)
In terms of VZ, the one thing potential income investors should find attractive is the company's profit margins when compared to some of its direct competitors. In the last 12 months, VZ has demonstrated a profit margin of 2.53%, whereas Sprint Nextel Corp. (NYSE:S) had only managed to demonstrate a negative profit margin of -11.09%. Verizon Communications, Inc.'s profit margin is nearly 5.38 times that of Sprint Nextel Corp.'s, which in my opinion is pretty impressive.
Potential investors looking to establish a position in UDR, DRI or VZ should do so with a small to moderate position and add to that position as dividend and earnings announcements approach. Although the primary attraction comes in the form of the dividend yield for all three companies, one of the more important secondary catalysts to consider is clearly the profit margins of each company versus the competition over the last 12 months (and how each company clearly outpaces the competition).