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Barbara Kollmeyer highlights five of the cheapest dividend stocks from key global industries -...

Barbara Kollmeyer highlights five of the cheapest dividend stocks from key global industries - stocks that may not be the biggest multinationals, but sport significant dividends and value: MT, FTE, DCM, SU and WBK.
Comments (6)
  • Paulo Santos
    , contributor
    Comments (18142) | Send Message
     
    2 of the 5 face significant issues:

     

    MT is in the steel business, which sould be flooded by chinese steel;

     

    WBK is an Australian bank, which should have problems both with a real estate bubble popping and with the economic impact of reduced mining investment that's about to happen.
    10 Mar 2012, 09:37 AM Reply Like
  • varan
    , contributor
    Comments (3566) | Send Message
     
    I know that dividend investors do not worry about total return but this is ridiculous:FTE's annualized return during 2007-2011 is -4%, and during 2000-2011 it is -11%.
    10 Mar 2012, 11:16 AM Reply Like
  • geneh
    , contributor
    Comments (390) | Send Message
     
    Varan, I disagree with your view of dividend investors. Dividend investors are value investors who also want dividends. If you buy a stock without a margin of safety based on its risk (or its moat) then you face the problem of FTE shareholders. Plus with many foreign stocks, you get clipped by that government when the dividends are paid via tax withholding. Some countries like UK and US have no-tax agreements.
    10 Mar 2012, 11:55 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    These may be very good choices but they are subject to exchange rate risk which I think could be a big negative factor in the total return.

     

    Suncor is interesting but that dividend seems remarkably small. I think a bull case can certainly be made for tar sands now that we have really cheap nat gas which makes the production cost of tar sands much more competitive:

     

    http://bit.ly/zFGFsA
    "Approximately 1.0–1.25 gigajoules (280–350 kWh) of energy is needed to extract a barrel of bitumen and upgrade it to synthetic crude. As of 2006, most of this is produced by burning natural gas.[91] Since a barrel of oil equivalent is about 6.117 gigajoules (1,699 kWh), its EROEI is 5–6. That means this extracts about 5 or 6 times as much energy as is consumed. Energy efficiency is expected to improve to average of 900 cubic feet (25 m3) of natural gas or 0.945 gigajoules (263 kWh) of energy per barrel by 2015, giving an EROEI of about 6.5.[92] However, since natural gas production in Alberta peaked in 2001 and has been static ever since, it is likely oil sands requirements will be met by cutting back natural gas exports to the United States."

     

    The idea of peak oil is pretty much a myth in a practical sense (Canada alone has hundreds of billions of barrels of potential oil from oil sands and the US even more) but the idea of really cheap oil may not be.
    10 Mar 2012, 03:12 PM Reply Like
  • Deepv
    , contributor
    Comments (388) | Send Message
     
    SU doesn't offer much of a dividend and has re-rated substantially against many high quality US E&P players since 2005, whilist being the marginal producer (oil sands=expensive). A good Iran play but yesterdays long term investment I think.
    10 Mar 2012, 05:31 PM Reply Like
  • Tombaum eister
    , contributor
    Comments (180) | Send Message
     
    FTE is down 60% since 2007 in euro terms. It is a very annoying investment performance, despite record high payouts the stock continues to slump. Incompetent management (Stephane Richard is probably the worst CEO in FTE's history) and a vey messy regulatory environment in France that favors the new entrant Free, have depressed the stock to its lowst price range since 2002. It's a real shame, but maybe sth will happen, i.e. replacement CEO, adjustment of the licence etc. However at these levels the stock'downside appears limited the dividend should not go below 1,15 Euros this year which represents a handsome yield of 11%.
    11 Mar 2012, 10:51 AM Reply Like
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