Can This High Dividend Stock Maintain Its 18% Dividend Yield?

by Robert Hauver

Looking for high dividend stocks? Our search for interesting dividend stocks has uncovered a refining/retailing/pipeline stock with one of the highest dividend yields in the market: Northern Tier Energy, (NTI), is a combination refining/retailing company, based in St. Paul, Minnesota, near the booming Bakken shale play in the Midwest.

NTI’s ability to source Bakken light sweet crude and Western Canadian heavy crude, gives it a big advantage as a refiner, since both of these sources are cheaper than West Texas Intermediate crude. NTI owns one of only two refineries in Minnesota and one of four refineries in the Upper Great Plains area within the PADD II region.

In addition to refining, NTI also has a ready sales outlet for its refined products, as it owns 166 convenience stores under the SuperAmerica brand and also supports 68 franchised convenience stores, mainly in Wisconsin and Minnesota. NTI also owns various storage and transportation assets, including a light products terminal, a heavy products terminal, storage tanks, rail loading/unloading facilities and a Mississippi river dock.

The refining business also includes a 17% interest in the Minnesota Pipe Line Company, which owns and operates the Minnesota Pipeline, a 455,000 bpd crude oil pipeline system that transports crude oil (primarily from Western Canada and North Dakota) for approximately 300 miles from the Enbridge pipeline hub at Clearbrook, Minnesota to the refinery. The Minnesota Pipeline has historically transported the majority of the crude oil used and processed in the refinery. (Source: NTI website)

Dividends: Since its IPO in July 2012, NTI has paid 2 distributions: $1.48 on 11/29/12, and $1.27 on 2/28/13. Projecting their most recent $1.27 distribution forward for 3 more quarters gives NTI a very high dividend yield of 18.55%!


Here’s the million $ question: Will NTI maintain this level of dividends? The following may offer a clue for the upcoming May distribution:

In the 1st quarter of 2013, the avg. retail gasoline price was $3.55, better than 4th quarter 2012. If you use 37% as a projected ratio of distribution paid to avg. retail gasoline price, this would indicate a potential May payout of $1.31. Of course, this is a very rough estimate, and it could be derailed by other factors – NTI’s refining margins may have shrunk in the 1st quarter, or mgt. may decide to utilize more of its cash for infrastructure expansion investments. NTI stated in a recent investor presentation that it “plans to invest in logistics operations targeting trucking, terminal and pipeline assets.”


Given this uncertainty, and NTI’s big 88% rise since its IPO, what should you do?
Options: Here’s what we did, (so far). We sold puts below NTI’s share price, to lower our breakeven, in case the stock price falls, if NTI cuts its May distribution. This trade projects the same quarterly distribution of $1.27 in May and August. Coincidentally, the Sept. 2013 $25.00 put pays $2.50, which nearly matches this projected payout. (Note: put sellers don’t receive dividends.) You can find more details on this and over 30 other put trades in our free Cash Secured Puts Table.


Covered Calls: Alternatively, you could buy NTI and sell covered calls to hedge your bet. This would pay you less option $ up front, but allow you to participate in future distributions and potential price gains.
This trade, from our Covered Calls Table, offers a $1.60 call premium, plus the potential for $2.61 in price gains, ($30 call strike minus $27.39 share price). You’ll also receive NTI’s next distributions, unless NTI rises above $30 before the ex-dividend dates, and your shares get assigned/sold. NTI should announce its next distribution sometime around May 13th.

Earnings: NTI looks very undervalued on a 2013 PEG basis, but analysts are projecting much less growth for 2014. However, given its ability to pay very attractive distributions thus far in its short history, even if NTI just keeps its yield in the “double-digit realm”, its dividend yield should continue to attract investors, and support its share price in the future.
Financials: NTI’s ratios look better than its peers so far. It does carry more debt, but it has sufficient Interest Coverage and a strong Current Ratio:
Disclaimer: This article was written for informational purposes only and is not intended as investment advice.
Disclosure: The author was short NTI put options at the time of this writing.

These 2 Dividend Aristocrats Have The Best Earnings Growth

By Robert Hauver

Are you searching for dividend paying stocks you can depend on?  The Dividend Aristocrats is an elite group of dividend stocks, created by Standard & Poors, whose members have increased their dividends for at least the last 25 consecutive years.  In fact, some of them have done so for many more years than that.  This group lost a few members during the economic downturn, so it’s quite a testament to the earnings power and management of those stocks that not only survived the crisis, but also managed to increase their dividend payouts during it.

We looked for stocks within this group who had consistent earnings growth, good mgt. metrics, and valuations that haven’t gone sky high, via the rally of the last few months, and we found these 2 impressive companies from 2 different sectors and industries, Nucor Steel, and VF Corp:


(We listed Company profiles at the bottom of this article.)

Earnings & Valuations: These are 2 of the very few Dividend Aristocrats stocks which achieved strong growth not only in their most recent fiscal year, but also impressive quarter-over-quarter earnings and sales growth, AND, have strong growth forecasts for their next fiscal year. NUE looks undervalued vs. its Steel & Iron industry peers, on a PEG, P/E, and Price/Sales basis, but is pricier on a Price/Book basis.

VFC’s earnings industry comps also look superior. Their projected Next Fiscal Year EPS growth is lower than the industry avg., since the industry is bouncing back from very poor growth in the most recent fiscal year and most recent quarter.  Having gained over 26% in the past 6 months, VFC’s share price gains have pushed its valuations higher as well, particularly Price/Sales:


Dividends: With its above-avg. dividend, NUE is listed in the Industrials section of our High Dividend Stocks By Sectors Tables.  Both of these stocks have upcoming March ex-dividend dates:


Covered Calls: If you want to increase your yields over the short term, selling covered call options can offer you some lucrative additional income. In addition to often paying you fat premiums, selling options is a way to generate quick income from stocks that you own or wish to buy. Both of these 2 covered call trades feature high options yields, and have strike prices that are higher than their respective stocks’ current share prices. The higher strike price gives you the possibility of potential price gain profits, in addition to your dividend and call option income. If you’re more bullish about a stock, you may want to sell covered calls at a higher strike price – the difference between the strike price and the stock’s cost equals your potential price gain, or assigned yield.

These two 3-5 month trades have call options that outpay the dividends by up to 6 times.

(You can find more details for these and over 30 other trades in our Covered Calls Table.)


Performance & Technical Data: Both NUE and VFC have been among the best stocks to buy for price gains over the past few months, but NUE is still down for the past year:


Cash Secured Puts: Since these stocks are near their 52-week highs, you may want to consider another strategy, selling cash secured puts, in order to achieve a lower break-even.  The VFC  $145 put option is below VFC’s current price, and gives you a break-even of approx. 6% below VFC’s price.  The put options pay out up to over 8 times more than the dividends do over this short term.

If you want to be even more conservative, and get a lower break-even price, you can sell cash secured put options at a strike price even further below the stock price, which won’t pay you as much of a put premium, unless you sell them further out in time. Generally, the further out in time you sell an option, the higher premium/payout you’ll receive.

(You can see more details on these and over 30 other high yield Cash Secured Puts trades in our Cash Secured Puts Table.)


Financials:  Not much to complain about with these financial figures, excepting Nucor’s lower operating margin, which is probably due to them using scrap metal as their feedstock:


Company Profiles:

Nucor:: Established in 1940, Nucor is the largest steel producer in the US, and is the largest recycler of scrap steel in the world. Nucor produces many steel products, such as structural steel, sheet steel, plate steel, cold finished steel, and wire mesh, and also acts as a raw materials broker in the steel industry. (Source: Nucor Corp. website)

VF Corp: At $9 billion in sales, VF is the world’s largest apparel company. VF owns many famous apparel and footwear brands, such as Lee, Nautica, Wrangler, Eagle Creek, and others. VF’s lifestyle businesses – Outdoor & Action Sports, Sportswear and Contemporary Brands – are targeted to be more than 60% of total revenues by 2015. VFC is aiming to add $5 billion in organic revenue growth and $5 in earnings per share over the next five years from 2010 levels. Strong growth in our highly profitable international and direct-to-consumer businesses is expected to fuel an expansion in operating margins to 15%. Over the next five years, VFC’s goal is to grow its international revenues by 15% annually to comprise 40% of total revenues. VFC also expects 15% growth in its direct-to-consumer businesses, which should account for about 22% of revenues by 2015. (Source: VFC website)

Disclosure:  Author has no positions in NUE and VFC as of yet, but has definitely worn Wrangler and Lee jeans sometime in the distant past…

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Author: Robert Hauver © 2012 Demar Marketing All Rights Reserved

3 High Dividend Stocks With Strong Growth And High Options Yields

By Robert Hauver

This week we’re focusing on 3 high dividend paying stocks, from 3 different industries, sectors, and countries – all of which have strong growth over the past year, past quarter, and also have good growth forecasts for their next fiscal year.  This diverse group contains a large cap, mid-cap, and a small cap, all of whom are listed in our High Dividend Stocks By Sector Tables:


(All Company Profiles are listed at the bottom of this article)

Growth & Valuations: All 3 firms had robust earnings growth in their most recent fiscal years, and quarters. Next fiscal year growth is also projected to be good. CTEL and NUE both have low PEG valuations, (P/E to Earnings Growth).

BGS rose 69% over the past 12 months, and is currently trading near the high end of its 5-year P/E range. CTEL is much closer to its 5-year P/E low of 6.21 than its high 5-year high P/E of 39.65.  NUE is also in the low end of its 5-year P/E range, which was very wide: 7.72 to 104.86.  All 3 of these dividend stocks currently have above-average Price/Book ratios for their industries.


Dividends: NUE is one of the stocks in the Dividend Aristocrats group, and has increased its dividends every year for the past 27 years. CTEL pays semi-annual dividends, and had ex-dividend dates in May and December in 2011, with equal payments of $0.386/share, a 53% increase over 2010’s dividend.  BGS also increased its dividend in 2011, from $.21 to $.23.


Covered Calls: All 3 of these stocks have options available , which offer an opportunity to improve upon your dividend yields and improve your cash flow.

The options listed in the 2 tables below have the following expiration months:

BGS: August; CTEL: Sept.;  NUE: July.

Frequently, selling covered call options can offer you much higher, short-term payouts than just collecting dividends. The covered call strategy will give you a second, immediate income stream, since you get paid within 3 trading days when you sell options.  NUE’s call options pay over 5 times the dividend payouts in this 5-month trade listed below.  BGS’s covered call options pay over 3 times more than its dividends pay over the next 6 months.

(You can discover more details for these and over 30 other lucrative option trades in our Covered Calls Table.)


Cash Secured Puts: Selling cash secured put options is another options trading strategy that also has high yield, quick cash payouts, such as those listed below.  The put options for NUE outpay the quarterly dividends by over 7 to 1 in this 5-month trade.

The annualized yields below are based upon a 100% Cash Reserve, which is the amount your broker will set aside in your account when you sell put options.  This amount equals 100 shares times the Put Strike Price. We covered more of the specifics of put selling in last week’s article. Unlike call sellers, though, put sellers don’t collect dividends.

(Note: There are more details on these and over 30 other high yield Cash Secured Puts trades in our Cash Secured Puts Table.)


Financials: Even though Nucor’s mgt. ratios look lower than these other 2 firms’, they are actually much better than its steel industry peers. Nucor’s website also says that its “5-year 371% return to shareholders beats all other S&P 500 firms”.  CTEL’s ratios are much higher than its telecom industry peers, plus it’s debt-free, and BGS has a superior ROE and in-line ROA and ROI to its food industry peers.


Performance & Technical Data: Although these stocks are way above their 52-week lows,  CTEL and NUE are still down vs. 1 year ago, even though they both greatly improved their earnings.

However, investors have been rewarding CTEL and NUE this year, and they’ve been among the best stocks to buy in 2012 for price gains so far:


Company Profiles:

BGS: B&G Foods and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, shelf-stable foods across the United States, Canada and Puerto Rico. B&G Foods’ products include hot cereals, fruit spreads, canned meats and beans, spices, seasonings, marinades, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, taco shells and kits, salsas, pickles and peppers and other specialty food products. B&G Foods competes in the retail grocery, food service, specialty store, private label, club and mass merchandiser channels of distribution. Based in Parsippany, New Jersey, B&G Foods’ products are marketed under many recognized brands, including Ac’cent, B&G, B&M, Brer Rabbit, Cream of Rice, Cream of Wheat, Don Pepino, Emeril’s, Grandma’s Molasses, Joan of Arc, Las Palmas, Maple Grove Farms of Vermont, Ortega, Polaner, Red Devil, Regina, San Del, Sa-són Ac’cent, Sclafani, Trappey’s, Underwood, Vermont Maid and Wright’s. (Source: B&G Website)

CTEL: Established in 1992, City Telecom (H.K.) Limited provides integrated telecommunications services in Hong Kong via its own self-built fibre network. City Telecom’s wholly-owned subsidiary, Hong Kong Broadband Network Limited (HKBN), is the fastest growing broadband service provider in Hong Kong. HKBN offers a diversified portfolio of innovative products that service over 1,240,000 subscriptions for broadband, local telephony and IP-TV services.  CTI participated in the investment for construction of submarine cables, including Japan-US Cable to connect the US and Japan across the Pacific Ocean, as well as Asia Pacific Cable Network 2, connecting us to eight districts in Asia and allows direct connection with the major fixed network operators in China. (Source: City Telecom website)

NUE: Founded in 1940, Nucor is the largest steel producer in the US, and is the largest recycler of scrap steel in the world. Nucor produces many steel products, such as structural steel, sheet steel, plate steel, cold finished steel, and wire mesh, and also acts as a raw materials broker in the steel industry. (Source: Nucor Corp. website)

Disclosure:  Author is long BGS and short BGS call options.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Author: Robert Hauver © 2012 Demar Marketing All Rights Reserved

The Top 5 Foreign Dividend Stocks For 2012

By Robert Hauver

Which will be the best stocks to buy for dividends in 2012, foreign or US? Just like the dividend paying stocks in last week’s article,  The Top 5 US dividend stocks for 2012, the top 5 foreign dividend stocks for 2012 are ranked here by which ones will make the largest total cash payouts in 2012. This elite group contains firms from 5 countries, in these industries: oil majors, mobile phones, money center banks, and commodities producers. Two of these stocks are listed in our High Dividend Stocks By Sectors Tables :


Dividend Growth Rate: Excepting financial stock HBC, all of these stocks have an impressive 5-year dividend growth rate. All of them also increased their 2011 dividends per share, except for Shell, which, however, just announced plans to increase its dividend in 2012:


Projected 2012 Dividends: For the table below, we took the conservative route, and projected the same dividend payouts/share as in 2011.  However, given these firms’ strong earnings, low debt loads, and past dividend growth rates, it’s very probable that they’ll continue to increase their dividends in 2012. (There are 2 classes of Shell shares, while Billiton actually operates as 2 different companies, with different ticker symbols, and divergent prices, but reports as one economic unit. The cheaper BBL shares have a higher dividend yield than the BHP shares, since the dividends are the same.)


Covered Calls: Interested in earning more income from these dividend paying stocks?  You might want to try selling covered call options, a strategy which gives you a second income stream that often pays you much more than dividends do, over the short term. The Sept. 2012 call options listed here for BBL and PTR both outpay their dividends by nearly 2 to 3 times during this 8-month term.

What’s the catch? Your shares of BBL and PTR may potentially be sold/assigned at their call strike prices, if the stocks rise above them near expiration in September.  In the BBL trade, you’re basically getting paid $5.90/share now, to make the bet that BBL won’t rise higher than its $70.00 call strike price.

In addition to the call option $, you’ll also collect the 2 semi-annual dividends, which have ex-dividend dates prior to the call option expiration date, provided that the shares don’t get called/sold away from you before the ex-dividend dates. However, if the shares do get assigned, you’ll also earn an additional $.97/share in this example- the difference between BBL’s 2/2/12 $69.03 share price, and the $70.00 call strike price.

(You can see additional details for these and 30 other trades in our Covered Calls Table.)


Cash Secured Puts: Maybe you fell that PTR is too expensive at $148.90?  If so, you may want to sell cash secured put options below PTR’s current price, in order to achieve a much lower break-even price.

PTR closed at $148.90 on 2/2/12, but selling the Sept. 2012 $145.00 put option listed here will pay you $12.90/share now, and give you a break-even of $132.10, over 11% below PTR’s current $148.90 price.  As with selling covered call options, selling these put options will pay you over twice what the dividends pay during this 8-month term. However, unlike covered call sellers, put sellers never receive dividends.

The cash reserve equals the amount that your broker will hold in your account, so that you have enough funds to pay for the shares if they get sold/assigned to you. The cash reserve is equal to the put strike price times the amount of puts you sell, times 100. (One option contract corresponds to 100 shares of the underlying stock.) The main key to selling cash secured puts is to make sure you’d be comfortable owning the underlying stock at your break-even price, before you sell any puts.

(Note: You can find more info on these and over 30 other Cash Secured Puts trades in our Cash Secured Puts Table.)


Earnings/Valuations: (* CCS EPS figure, which excludes the effects of oil price changes on inventory carrying amounts.)


Financials: Like many other financial firms, HBC’s mgt. efficiency ratios got decimated in the financial crisis. BBL/BHP has the best mgt. ratios and operating margin in the group:


Disclosure: Author is short BBL put options.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Author: Robert Hauver © 2012 Demar Marketing All Rights Reserved

2 Undervalued Financial High Dividend Stocks

By Robert Hauver

Looking for undervalued high dividend stocks? Check out the unloved Financials sector, which is barely up 1% year to date, and lags all other sectors.  Business Development Companies, (BDC’s), are a sparsely-covered Financials sub-industry with some high dividend paying stocks, and low PEG ratios.  In this article we’ve also included an undervalued private equity firm which uses mezzanine debt.

BDC’s are similar to venture capital funds, in that they’re created to help grow small companies in the early development stages. Many BDCs are set up much like closed-end investment funds and are listed on the NYSE, AMEX and Nasdaq. A big difference between a BDC and a venture capital fund is that BDCs allow smaller investors to invest in startups. BDCs have become popular because they provide permanent capital to their management, they allow investments by the general public and they use mezzanine financing opportunities, among other reasons.

Here are 2 dividend stocks we found that currently look undervalued on a PEG ratio basis. (We’ve also added them to our High Dividend Stocks by Sector Tables🙂

Prospect Capital (PSEC): Founded in 1988, with an IPO in 2004.  A mezzanine debt and private equity firm that manages a publicly-traded, closed-end, dividend-focused investment company which completed its IPO in 2004. PSEC primarily provides non-control debt financing to management teams or financial sponsors as well as selectively making control acquisitions by providing multiple levels of the capital structure. Using both partnership and publicly traded closed-end structures, Prospect has invested more than $2.5 billion since its inception in 1988 in multiple asset classes. Prospect seeks investments with historical cash flows, asset collateral, or contracted pro forma cash flows. Prospect’s mutual fund has paid a continuous, regular dividend since inception.  Although its past expertise has been in the energy and industrial sectors, Prospect Capital has broadened its scope to include healthcare, manufacturing, and specialty minerals among others.

Solar Capital (SLRC): Founded in 2007, SLRC invests primarily in leveraged, middle-market companies in the form of senior secured loans, mezzanine loans and equity securities. SLRC invests in a very broad range of industries, and also invests in equity securities, such as preferred stock, common stock, warrants and other equity interests received in connection with its debt investments or through direct investments. The firm also invests in United States government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-United States investments, or securities of public companies that are not thinly traded.

Financial Ratios:


Both firms have similar operating margins, but SLRC has the edge on Mgt. ratios, and it has a lower overall debt load.



Both firms currently have high dividend yields, but the dividend history for SLRC is very short – they just started paying dividends in March 2010. PSEC converted to monthly dividends in June 2010 – its next monthly ex-dividend date is May 26, and it has already posted monthly ex-dividend dates and payout dates through August on its website.



PSEC is trading near its 5-year low P/E. Both firms are also way below the Benjamin Graham 22.5 ceiling for P/E times Price/Book, with PSEC at 9.53, and SLRC at only 6.16. SLRC looks undervalued in the near term, with a 12 month PEG of only .48, whereas PSEC has a lower long-term PEG of .64.



Both stocks have room to grow for more institutional ownership, although PSEC looks like it has much more. PSEC is also closer to oversold territory, with a Relative Strength Index of 41.87.

Disclosure: No positions as of yet.

Disclaimer: This article is written for informational purposes only

The Top 5 Foreign Dividend Paying Stocks For 2010

By Robert Hauver

In our previous article, “The Top 5 U.S. Dividend Paying Stocks for 2010”, we identified the five U.S. dividend stocks which are projected to make the largest cash dividend payouts to shareholders in 2010.  This elite group included 2 Energy stocks, 2 Healthcare stocks, and a Telecom stock.

The top 5 foreign dividend paying stocks that we’ve identified include a Spanish bank, 2 Chinese and British telecoms, and 2 energy companies, from Holland, and France.  It turns out that 1 of these foreign Energy stocks is actually projected to pay out more cash dividends than any of the U.S. stocks.  All 5 of these foreign dividend stocks trade in the U.S. on the NYSE.

Topping this list is Holland’s Royal Dutch Shell, (RDS-A & RDS_B), both of which are major integrated Oil & Gas firms, that are active in the Upstream, Midstream and Chemicals segments of this business. Concerning risk, this group certainly has some.  The list includes Banco Santander, (STD), a conservatively run Spanish bank with a strong presence in Brazil, but a part of the ongoing Eurozone Sovereign debt crisis.

China Mobile, (CHL), has the second largest market cap of any Chinese/Hong Kong-based stocks traded on the NYSE, (PetroChina is the biggest), and offers mobile telecom and related services, mostly in mainland China.

The group is rounded out by a French and British firm: Total, (TOT), and Vodafone, (VOD).

Vodafone paid out $1.24/ADR share in 2 semi-annual payments in 2009.  They raised their summer semi-annual 2010 payout to $.812. The ex-dividend date was June 2nd.  Their next ex-date should be around Nov. 18th.  In 2009, this Nov. payment was $.448/ADR share, so, if it stays steady, VOD will pay out $1.26/ADR in 2010.  VOD’s current dividend yield is 6.1% on ADR shares.

Here’s the table for the Top 5 Foreign Dividend Stocks:




Royal Dutch Shell (RDS/A & RDS/B)



Banco Santander (STD)



China Mobile (CHL)



Total (TOT)



Vodafone (VOD)



The other risk issue for investors involves foreign currency translation.  When currencies such as the Euro and the Dollar have big moves vs. each other, as we’ve seen in 2010, it will affect companies who conduct a large % of their business in foreign currencies.  As even many U.S. companies generate a lot of their revenue overseas, U.S. investors have been increasingly seeing the effects of foreign currency fluctuations and translations impact many firms’ profits, both foreign and domestic.

We’ve put together a table of Projected Upcoming ex-Dividend Dates and Quarterly Dividends/Share for these stocks. (Keep in mind, however, that none of the payouts listed below are confirmed as of yet, and the amounts can vary):


2010 PROJECTED Ex-Dividend Dates

PROJECTED Quarterly or Semi-Annual Dividend/Share

Royal Dutch Shell (RDS/A & RDS/B))



Banco Santander (STD)



China Mobile (CHL)


$0.868 (Semi-Annual)

Total (TOT)


$1.615 (Semi-Annual)

Vodafone (VOD)


$.448 (Semi-Annual)

Disclosure: Author has no positions at this time.

Disclaimer: This article is written for informational purposes only.