I am retired and take educated guesses on all things financial.

July 29, 2010

July 30, 2010: Dividends You Want? Dividends You Get

Apparently,inflation that many expected with the government printing presses running red hot is not imminent or likely to appear soon. Many articles have been written about dividend explorations seeking companies that pay a regular dividend and will likely raise dividends a few cents per year. Sorry, that is not for me.

I don't want to wait eons for the dividend to show meaningful growth within my portfolio. And, with the present world order and Beltway economic geniuses working hard to separate you from your wealth, staying married to a stock for a paltry annual raise in a dividend may be bad portfolio management.

Why not hefty dividends now? Why wait? Balanced with other securities and hard asset investments, the investor will create a diversified and enriched portfolio.

Here are some current choices for consideration:

Recommended are trust preferred investment grade securities that are priced below the call price (usually $25.00). A screened list is available at Quantum Online and likely available elsewhere. If they are not priced below the call price and/or rarely traded, don't buy them.Use limit orders.The yield should be north of 6.25%.

For those wanting instant yield through preferred stocks, I recommend the iShares Preferred Stock Index Fund (PFF), trading at $39.24 and yielding 7.57%.

Here are a few individual securities that I like and in some instances own:

National City Capital Trust II (NCCpA): $24.22/ahare, 6.92% yield, ex 8/12,average 10-day volume 75g.

Commonwealth REIT 7.5% Senior Notes (CWHN): $19.99/share,7.42% yield, ex-10/29, average 10-day volume 24g.

Deutsche Bank Capital Funding Trust X (DCE): $24.50/share, 7.52% yield, ex-9/10, average 10-day volume 63g.

Bank of America Preferred J (BACpJ): $23.43/share, 7.73% yield, ex-10/13, average 10-day volume 225g.

Archer Daniels Midland Preferred A (ADMpA): $37.98/share, 8.04% yield, ex 8/12, average 10-day volume 145g. This security is convertible at $50.00/share with consideration for stock price targets within the prospectus.

For those seeking inflation protection diversified away from TIPs, two securities out of several with inflation protection features are worth exploring:

MetLife Preferred A(METpA): $23.25/share,4.42% yield, ex 8/26, average 10-day volume 125g. The minimum dividend is 4% or 1% above the 3 month LIBOR.

Prudential Financial(PFK): $24.92/share,4.68% yield, monthly dividends, average 10-day volume 9g. The minimum dividend is the CPI plus 2.40%.

Certainly, some Master Limited Partnerships would qualify as immediate dividend-rich securities, so long as the profits are earned to support the dividend.

Above all, be nimble as the economic and political winds change in both course and intensity.

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