Monthly Archives: October 2009

American Ecology (ECOL): Turning Trash Into Cash – Oct. 31, 2009

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By Robert Hauver

Another one of the many high dividend paying stocks from our High Dividend Stocks by Sector tables, American Ecology, (ECOL), is the highest dividend stock in the Waste Mgt. industry, with a current dividend yield of approximately 4.25%.

ECOL provides hazardous and non-hazardous waste treatment, disposal, transport, and recycling services to government and commercial businesses, such as oil refineries, chemical producers, manufacturers, utilities, medical facilities and military bases, among others.

The firm managed to maintain steady earnings year-over-year for the quarter ending Sept. 30, 2009, coming in at  $.23/share again, which covered its dividend of $.18/share.  Their income was aided by the intro of their new thermal recycling services at their Texas facility, which helped their refinery segment business to increase by over 100%.

ECOL bests its peer group in several important metrics in our Industry Comparison table :

American Ecology Waste Mgt. Industry
Quick Ratio 3.04 .06
Total Debt/Equity .03 105.60
Cash/Share $1.37 $  0.07
Price/Free Cash/Share 20.68 38.62
ROE 18.23% 12.41%
ROI 24.98% 5.54%
ROA 13.02% 4.28%
Revenue/Employee $625,000 $225,000
Profit Margin 10.66% 7.02%

There are covered calls and put options available for ECOL.  The March 2010, $17.50 covered call option, (WQCCW), is currently bid at $.95. Covered call sellers could  more than double this dividend by selling call options against their underlying shares.  They’d also receive $.18/share in dividends during this period, for an annualized static yield of roughly 16%.

More conservative investors may want to sell the March 2010 $15.00 put option, (WQCOC), which is currently bid at $.80.  As always, we advise selling cash-secured puts.  The amount of cash reserve held by your broker varies from firm to firm.  Some hold 100%, others as little as 25%, which can leverage your yields higher.  Just be aware that, even if you do use leverage, you’re still liable for the net cost of the underlying shares, if they get put/sold to you.

Disclosure: No positions

Disclaimer: This article is intended for informational purposes only.

Microchip Technology – Turnaround Time For A Tech Dividend Stock? – Oct. 24, 2009

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By Robert Hauver

Microchip Technology, (MCHP), a tech stock from our
High Dividend Stocks tables
has the second highest dividend yield, 5.13%, in the semiconductors sub-industry. Like most other chip companies, they’ve been hurt in the downturn, as evidenced by their falling revenue and income for the period ending 6/30/09.

However, better news may be in store for investors when the company reports on Nov. 4th. Barron’s recently reported that “channel checks and corporate booking trends suggest that chip companies will beat 3rd quarter estimates”.  Since chip companies have recently lagged the market, there should be some value in some of these stocks, such as MCHP.

MCHP looks good in Industry Comparisons, besting their peers in several key ratios:

MCHP Semi-Conductor Industry
Current Ratio 11.80 3.88
Profit Margin 24.14% .26%
P/E 24.25 40.67
Price/Free Cash Flow/Share 10.85 38.42
ROE 15.93 .18
ROI 36.46 .16
ROA 8.11 .09
Dividend Growth Rate (5 Years) 64.13% 43.79%

MCHP has a low debt-to-equity load of 23%.

The net annualized yield for selling April 2010 $25.00 covered call options
on MHCP is approximately 19% NET, with MCHP’s price of $25.29 today.

MCHP also has 
put options available.  Just check our  Covered Put Tables
 for the current annualized yield for selling puts on MHCP.

Value and Income investors looking for dividend paying stocks in the tech sector may want to follow MCHP’s earnings report in early November.

Disclosure: Author doesn’t own shares of MCHP.

The Highest Dividend in the Consumer Staples Sector – Oct. 17, 2009

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By Robert Hauver

CCA Industries, (CAW), currently has the highest dividend yield in the Consumer Staples industry sector in our High Dividend Stocks tables. CAW, founded in 1983, sells health and beauty aid products, mainly in the US and Canada.

CCA just reported a 40%-plus jump in third quarter earnings per share, and a 5%-plus jump in revenue.

CCA’s board of directors declared a $0.07 cash dividend payable to all shareholders of record November 2, 2009 payable on December 2, 2009, the twenty-second consecutive dividend paid by the company.

The 7-cent quarterly dividend appears to be well covered by CAW’s 16-cents earnings per share this quarter, giving CAW a conservative dividend payout ratio.

CAW is virtually debt-free, and has a quick ratio of 1.72, vs. an industry average of only .57.

It also looks undervalued, when compared to its peers’ averages for P/E, Price/Book, and Price/Free Cash Flow/Share.

Although there are no options available for CAW, it appears to be one of the best stocks to buy in its sector, which isn’t known for high dividend paying stocks.  You can increase your returns on this stock via dividend reinvestment, which, as we’ve written about previously, is a very powerful tool, when coupled with compound interest. (See our article, “Einstein and the Rule of 72″).

“ENP – Another High DIvidend Energy LP” – Oct. 10, 2009

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By Robert Hauver

Encore Energy’s 12%-plus dividend yield puts it near the top of the heap for solid, high dividend stocks in our free Energy Sector Dividend Tables .

Formed in 2007, and primarily based in the West and Midwest, ENP’s assets consist mainly of producing and non-producing oil and natural gas properties in the Big Horn Basin in Wyoming and Montana, the Williston Basin in North Dakota and Montana, the Permian Basin in West Texas, and the Arkoma Basin in Arkansas.

ENP also ranks very high vs. its Oil/Gas Drilling/Exploration peers for many other metrics:

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Drilling For Dividends With EV Energy – Oct. 3,2009

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By Robert Hauver

If you’re searching for strong dividend paying stocks, make sure that you take a look at our new High Dividend Stocks by Sector tables, where you’ll find some of the best dividend stocks in each industry sector.

EV Energy, (EVEP), which currently tops our Energy Sector table, is one of the best stocks on this list, in terms of their industry comparisons. Not only do they have the highest dividend in the Oil & Gas Drilling/Exploration group, they outshine their peers by many other important metrics:

EVEP Oil&Gas Drilling-Exploration Industry
Dividend Yield 13.01% 2.24%
P/E 1.33 13.45
P/B 0.77 2.85
Current Ratio 8.43 1.3
P/Cash Flow/Share 1.26 8.23
Operating Margin 20% 10.08%
ROE 81.64% 12.58%
ROI 63.00% 6.86%
ROA 45.64% 4.97%

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