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Jonathan Wolfe
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I have been investing for over 13 years now, mostly specializing in Dividend Stocks. I have done extensive research of dividend stocks in the market and I like to share my thoughts and ideas with the public.
My company:
Dividend Income Stocks
My blog:
Dividend Income Stocks
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  • High Yield Utility Stocks (Electric Sector)

    A strong dividend play is investing in high yield utility stocks. Most investors are aware of this strategy, much more than the investments in Business Development Companies or Real Estate Investment Trusts, which I have written articles on here in the past. Utility stocks are usually considered safe dividend stocks, due to the constant demand for their services (electricity, water, gas, etc). This article is going to focus on high yield utility stocks in the electric sector. I am going to even focus even deeper and talk about electric companies with generation and distribution pieces.

     Q3 (Sep '11)Q4 (Dec '11)

    2011

    EXC -Exelon   
    Net profit margin 

    14.26%

    13.01%

    Operating margin 

    24.98%

    23.35%

    EBITD margin  

    30.31%

    Return on average assets 

    4.45%

    4.65%

    Return on average equity 

    16.91%

    17.86%

    Employees 

    19,214

     
    P/E Ratio  

    10.67

    Dividend Yield %  

    5.24%

        
    DUK - Duke Corporation   
    Net profit margin

    11.83%

     

    9.25%

    Operating margin

    19.35%

     

    16.17%

    EBITD margin  

    28.69%

    Return on average assets

    3.12%

     

    2.27%

    Return on average equity

    8.33%

     

    5.95%

    Employees

    18,440

      
    P/E Ratio  

    15.52

    Dividend Yield %  

    4.66%

        
    SO - Southern Company   
    Net profit margin 

    7.49%

    12.84%

    Operating margin 

    15.94%

    23.96%

    EBITD margin  

    33.69%

    Return on average assets   
    Return on average equity   
    Employees 

    25,940

     
    P/E Ratio  

    17.26

    Dividend Yield %  

    4.23%

        
    D - Dominion Resources   
    Net profit margin

    10.41%

     

    19.61%

    Operating margin

    21.90%

     

    37.51%

    EBITD margin  

    44.45%

    Return on average assets

    3.63%

     

    6.98%

    Return on average equity

    13.49%

     

    25.56%

    Employees

    15,800

      
    P/E Ratio  

    19.03

    Dividend Yield %  

    4.26%

        
    TE - Teco Energy   
    Net profit margin 

    7.10%

    8.16%

    Operating margin 

    17.37%

    18.59%

    EBITD margin  

    28.30%

    Return on average assets 

    2.92%

    3.74%

    Return on average equity 

    9.42%

    12.29%

    Employees 

    4,233

     
    P/E Ratio  

    14.12

    Dividend Yield %  

    4.94%

        
    PPL - PPL Corporation   
    Net profit margin

    14.39%

    9.60%

    11.44%

    Operating margin

    25.13%

    20.37%

    23.71%

    EBITD margin  

    33.42%

    Return on average assets

    4.42%

    3.89%

    3.86%

    Return on average equity

    16.49%

    14.88%

    15.17%

    Employees

    13,809

      
    P/E Ratio  

    10.85

    Dividend Yield %  

    5.05%

        
    PGN - Progress Energy   
    Net profit margin

    10.67%

     

    8.51%

    Operating margin

    25.12%

     

    20.16%

    EBITD margin  

    29.19%

    Return on average assets

    3.52%

     

    2.70%

    Return on average equity

    11.58%

     

    8.83%

    Employees

    11,000

      
    P/E Ratio  

    20.61

    Dividend Yield %  

    4.55%

        
    FE - First Energy Corp   
    Net profit margin

    10.79%

     

    5.70%

    Operating margin

    21.66%

     

    13.53%

    EBITD margin  

    19.12%

    Return on average assets

    4.33%

     

    2.20%

    Return on average equity

    15.74%

     

    9.17%

    Employees

    13,330

      
    P/E Ratio  

    17.75

    Dividend Yield %  

    5.16%

    Exelon - EXC is the largest power producer in the United States. Not sure if its merger issues or what, that has the stock stale at about 40 dollars a share. EXC has extremely positive numbers with over a 5% dividend yield and a PE ratio of just over 10. The other numbers above show a positive trend and larger profit margins than most over utilities listed.

    Duke Energy - DUK is approaching a price high they haven't seen since late in 2006. The stock is approaching 22 dollars a share. DUK has a very strong dividend yield of 4.66% and a PE of 15.52. DUK is also showing positive growth in net profit margin and operating margin, but not the same margins that Exelon is showing.

    Southern Company - SO has just came off of an all-time high and their stock is sitting just below 45 dollars a share. SO continues to show strong net profit and operating margins as well as increasing dividend payouts. SO yields 4.23% with a PE of just over 17.

    Dominion Resources - D just like Southern Company is coming off of an all-time high, and their stock is sitting just below 50 dollars a share. D has shown some of the strongest margins over the past couple of years, but their margins have slipped the past couple quarters. D yields the same as SO, with a 4.23% yield and a slightly higher PE of just over 19.

    TECO Energy - TE, is the smallest company I have listed here. I have included TE here due to their high dividend yield, 4.99% and their PE of 14. But buyer beware as they just missed earnings for the 4th quarter, with lower revenues. However, they did increase the dividend once again, so keep an eye on TECO.

    PPL Corporation - PPL beat 4th quarter earnings estimates by 8 cents a share. PPL like TECO decided to raise their dividend 1 cent per quarter to 36 cents a quarter. PPL has a 5.06% yield and a PE of 10.85.

    Progress Energy - PGN sits in the same mold as DUK, SO, and D with its stock at an all-time high. PGN has a 4.54% yield and a PE of over 20.

    First Energy - FE has been a stock laying around 40-42 dollars a share for quite some time. FE has a PE of just under 18, and a yield of 5.16%.

    I could have written pages on each of these companies and reasons of why and why not to buy these stocks. I want to make this as simple as I could for everyone reading this.

    Read the rest of this article at dividendincomestocks.com/high-yield-util.../ or the homepage dividendincomestocks.com/

    Disclosure: I am long PPL.

    Additional disclosure: I also own DUK, but plan on selling that within the next 72 hours. I also plan on initiating a position in EXC during that time. I also work for PPL, but no information I have given is insider information, all information is available via their quarterly reports which are published on the web. I also do not plan on buying or selling any PPL stock within the next 72 hours.

    Feb 14 5:12 AM | Link | Comment!
  • A Sin - Investing In High Yield Tobacco Stocks

    I know some people won't want to even venture into these stocks, but there is money to be made in stocks that aren't healthy or popular. I'm not talking about fast food today, I'm talking about tobacco stocks. I want to talk about the following high yield tobacco stocks:
    RAI
    MO
    PM
    VGR
    LO
    UVV

    These high yield tobacco stocks had a killer year in 2011, and are showing income gains for 2012 as well. Do I think tobacco stocks can duplicate their 2011 performance? No, I don't think so, but I think a couple of them can outperform the market. Below I'm going to talk about the top high yield tobacco stocks for the near term.

    RAI is Reynolds American Inc. They are best known for making Camel cigarettes. They had a monster year in 2011, going from 32 dollars a share to 41 a share, while also raising their dividend from 53 to 56 cents a quarter. Earnings are projected to increase 6% for 2012, while paying well over 5% yield.

    PM and MO are stocks spun off from Philip Morris. PM is Philip Morris International, which basically sells tobacco products internationally. MO sells to the domestic clients, plus owns a large share of SABMillerCoors. PM is showing a bit extra growth over MO, but has a smaller dividend yield than MO, 4.11 to 5.73% respectively. PM and MO also have the highest net margin of all the tobacco stocks.

    VGR is Vector Group LTD. They manufacture Liggett cigarettes and also own real estate properties. VGR stock has not increased much year over year, but pays nearly a 10% dividend along with a 5% stock dividend. Please refer to my article about why to own dividend stocks where I talk about VGR and the profit you can make off of it.

    LO is Lorillard Inc. They are best known for manufacturing Newport cigarettes. LO is highly institutionally owned, at 97%. LO also had a huge year, going from 74 a share a year ago, up to 110 bucks today. LO has a big dividend, at 5.20 a year, a yield of 4.7%. The only negative about LO is pending litigation against menthol cigarettes, and a decreasing net profit margin in 2011.

    UVV is Universal Corporation. They are more on the side of growing the tobacco leafs, and not on the cigarette business. UVV pays a 4.3% dividend. UVV scares me based on their losses on gross income in the last quarter they have reported.

    So I'm not here to convince you to be a sinner and buy any of these tobacco stocks, but I wanted to give you the pros/cons of them, and I personally believe there is money to be made off of them.

    My picks, I would avoid LO and UVV. MO has been industry best for years. RAI still has room to grow. If you want to pick two to invest in for cash money, I would pick MO and VGR. If you want money and growth, pick PM and RAI. Hope this gives you a little insight to the options for high yield tobacco stocks for you.

    Disclosure, I am long MO and VGR.

    See more dividend stock posts on dividendincomestocks.com/

    Disclosure: I am long VGR, MO.

    Feb 09 1:49 AM | Link | Comment!
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