CHICAGO, Aug. 10, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BP (NYSE: BP), Bank of America (NYSE: BAC), Toronto Dominion (NYSE: TD), Royal Bank of Canada (NYSE: RY) and Lockheed Martin (NYSE: LMT).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Tuesday's Analyst Blog:
Finding High (and Rising) Dividends
The screen shows that you should not be afraid to look outside the borders of the U.S. if you are looking for bargains, especially if you define bargain by high and rising dividend yields. Almost half the companies on the screen are based outside the U.S. That includes all five of the highest yielders, and eight of the top ten.
The list is dominated by oil companies and financial firms based outside of the U.S. While oil prices have recently retreated in response to the economic slowdown, they are still at high levels on a historical basis, and those levels are very profitable for the oil companies.
Given how difficult it is to find and develop the amount of oil that is required by the rapidly growing middle class of places like China and India, I suspect that oil prices will continue to remain high over the next five years or so (and probably permanently).
In any case, it is very hard for me to envision any of the major oil companies shown on this list going out of business anytime soon. With the payout ratios generally below 40% and very low P/E's based on 2012 earnings, it looks like the sort of dividend growth rates they have posted over the last five years can easily be sustained.
Yes, there is always the chance that major oil company could be involved in a BP (NYSE: BP)-type disaster, but hey, even BP is still in business. Buying a basket of firms is probably your best defense against that sort of thing happening to you.
The Canadian Banks also show up the screen. They came through the 2008 meltdown with flying colors, in large part because the Canadian Bank Regulators were far more competent than were ours or the Europeans. While Bank of America (NYSE: BAC) and others were forced to slash their dividends during the crisis -- and given the state of their balance sheets even today, regulators would be nuts to allow most of them to raise their dividends anytime soon -- Toronto Dominion (NYSE: TD) and Royal Bank of Canada (NYSE: RY) have been able to consistently raise their dividends.
Canadian Banks are well, Canadian: nice safe and stable, but a little boring. But heck, these days boring can be a great virtue!
One group that shows up well on the screen that I would be a bit cautious with, even though they are cheap, are the defense contractors. The austerity madness that is sweeping Washington is likely to hit defense spending (half of the "backup" $1.2 Trillion in cuts that happen if the Super Committee can't come to an agreement or Congress does not approve it, will come from Defense). In that case, while a Lockheed Martin (NYSE: LMT) might not have to cut its dividend, it is not likely to continue to raise it at 21.5% a year either, even if its trailing payout ratio is only 40%.
Turmoil Likely to Continue
Is the current downturn in the market over? Honestly I don't know. There are some very good reasons for it. While corporations are in great shape, the economy is not. The government is not in a good position to help get it going again, especially after the recent debt-ceiling agreement essentially took away the possibility of using fiscal stimulus to get unemployment down and economic growth up.
It is very brittle to any external shock, and the shocks coming out of Europe -- with the potential breakdown of the single currency itself -- are big ones. Still, the U.S. has been through worse, and has always come out the other side.
These are the sorts of times that are the best friend to the long-term investor. Don't try to be a hero in here and shoot for the most aggressive names. But don't hide in a hole and curl up in the fetal position. Start buying good, solid companies paying attractive, safe and preferably growing dividends. Five years from now you will be very glad that you did.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.
Share this article