Value Investing News

With the market up strongly year to date after hitting a multiyear bottom in March, it is hard for investors to get excited about current dividend yields of 3%-4%. It is even harder to convince an investor that a 3% yielder which manages to raise distributions by 10% annually over the next 7 years would lead to a yield on cost which is twice the current yield right now.

Investing in dividend stocks provides the investor with continuous feedback. As time passes, dividend investors see their income steadily grow. You do not have to wait five to ten years to determine if the strategy is working.

After a slow week for dividend increases last week, eleven companies with strong balance sheets showed enough confidence in their ability to generate sufficient cash flows to substantiate dividend raises. Despite the tough economic conditions the USA is experiencing, these companies still managed to defy the odds and increase their cash dividends.

There are two types of partners in a Master Limited Partnership structure, a general partner and limited partners.

One company, which, despite the current financial meltdown, continues business as usual, is Procter & Gamble. Other companies which show their confidence in their ability to grow earnings and generate enough cash in the future include Enterprise Products Partners L.P. (EPD), H.B. Fuller Company (FUL), People's United Financial (PBCT) and Anworth Mortgage Asset Corporation (ANH).

Master Limited Partnerships are limited by US Code to only apply to enterprises that engage in certain businesses, mostly pertaining to the use of natural resources, such as petroleum and natural gas extraction and transportation. They combine the tax advantages of a partnership and higher dividend yields with the day to day tradability of common stocks.

MLPs are not like regular corporations and do not get taxed on income. Instead they tend to return most of their income (typically 85 to 90%) to investors or partners through quarterly distributions. This shifts the tax responsibility to the partners, who are taxed at their ordinary income rates.

I always enjoy this time of year. The Christmas music, decorations, family gatherings, holiday plays and stock picks. Stock picks? Yes, 'tis the season for stock predictions! Here are some excerpts and picks from several of the experts: