High dividend yield stocks

[So_Cynical]

does tls come close to this

The big problem IMO with Telstra is that management has spent most of the last decade defending its monopoly instead of embracing the inevitable and trying to grow the business.

To there credit they have the best mobile network in the country and its the mobile part of the business that's proped up the rest of the company. I would call TLS a low risk company but certainly not high growth...low risk as in there not going to fall over any time soon, have the cash flow and deep pockets to keep the dividend high and will almost certainly be a major player in the NBN.

Don't be fooled....the market isn't as smart as some people think it is.

 

[skc]

So_Cynical and Condog... great debate in a mostly gentlemanly manner. Well done.

My on HDF

High yield - yes. Can't argue with the numbers.
Low risk - yes. On the P&L as the income are regulated, and hopefully costs will rise only in line with CPI. On the Balance sheet side the debt is high but serviceable, and re-financing risks are decreasing as overall market sentiment improves - but still there nonetheless.
High growth - Debatable. The existing revenue, being regulated, has little growth (growing with CPI means you are only breaking even). Any new revenue from capacity expansion will also likely earn a regulated ROA. So not exactly growth in the ROE sense.

There is probably one question missing. How sustainable is the current dividend payout?

There are many scenarios where the payout will need to be reduced... if banks get nervous again and like to see gearing reduced, dividends will be cut in no time and directed towards repaying debt. Another clear risk to payout is rising interest rates... NPAT comes after interest payments.

Before the GFC utilities were yielding 6-8%, with 6% being in bubble territory. With a new age of financial conservatism preaching lower leverage, my guess is the current 10% yield makes the stock a little bit on the cheap side, but not by much.

Other utilities on the same boat include TSI (12% yield), ENV (10.3%), APA (13.2%), SKI (11.2%), DUE (10.8%). All of them haven't implode as bad as HDF. The sector as a whole has plenty of coverage so they can't be all sure bets that people have neglected.

 

[So_Cynical]

Thanks for your input skc...well summarised as usual, and would have to agree that if anything went wrong and the banks got nervous the dividend would be first to go closely followed by the SP.

The new debt for the pipeline expansion (from memory) around 700 mill was all fixed interest 3, 4 and 5 years with only a small part of it as a line of credit, at lest that's how i read it...there an ann about it for anyone interested.

I mite have to revise down my $2 target.:shake:

 

[condog]

I would call TLS a low risk company but certainly not high growth...low risk as in there not going to fall over any time soon, have the cash flow and deep pockets to keep the dividend high and will almost certainly be a major player in the NBN.

Don't be fooled....the market isn't as smart as some people think it is.

See thats where you and I differ so much....risk perception / risk assessment
.... you seem to classify a stock as low risk if you think its not going to fall over any time soon....

Where as when i wiegh up whether its low or high risk...I look at
Firstly its debt to equity....and personally TLS debt to equity is getting up amongst many companies that have already failed.....
Secondly thier current assets to current liabilities
Their ROE projections and ROE history and ROE growth
Risk of dilution of share holders equity to institutions...
If that all check out plus a few other minors I then look at political risk, partigularly regulatory ones....risk of new competitors and barieres to entry or market share....
Risk to price control

On nearly all these fronts TLS rates fairly high risk....
You say TLS wont fall over any time soon.....I dont think it will either but a 128% debt to equity ratio is tremendessly high.....its unsustainable if free cash flow falls too much and only the govt would be stupid enough to refinance them.....

As you pointed out yesterday you have only been in this game just over three years, and there is still a lot to learn.... Ive been doing it since roughly very early 1990's and im still learning everyday......

You accuse me of being risk averse....however i am not....i invest in many stock that i highlight as being high risk, and my argument is not to avoid risk....

My argument is that there are many factors associated with risk other then an inexperienced assessment of whether the company will iminently collapse....and that this risk is nearly always reflected in the risk/yeild/ growth price characteristics of the stock......

An example im in right now with rediculous positive and negative risk is VIL....its a tiny oil miner with potential for massive upside in an area very possibly likely to yeild a oil and gas strike....but the risks are massive...and thats priced in....there is no yeild, the price is extremely cheap compared to if its result are positive, but the risk and possible reward is massive...hence why im in it.....

I weighed up all thos risks, claculated the likilihood of a find, its probabilities, discounted them, came out with worst, best and most likely prices and chose to go in with a lot of money as an acceptable risk....right now im up more then
$40,000 in just a few weeks.....My point is the risk was huge and it was priced in.......and learning how to calculate it and assess it from many dimensions is very important...and when you start to get better at it , it aslo becomes not only a capital preservation issue, but a way oif generating huge profits.....

Another example of this is MMS. MacMillan Shakespeare....they have excellent ROE and financials in most but not all regards...on corrections they often offer quite good yeilds.....they where hurt by the GFC but are now recovering.....

From time to time MMS throws up rediculous yeilds, but generally its when the govt looks like making a big chnage that will affect them for the worse...or when an announcment is due...

But in investing in them they always have a huge risk....looking at thier financials they have little risk of falling over as you put it...with 0% debt to equity , rising sales, no capital raising, stable operating margins, growing NPAT, Good ROE, and ROC, sensible payout ratio...current assets double current liabilities...

I do own them,,but the risk they carry is a significant legislative one and its important when investing to know your risks so you can react if they change for the positive or negative...the huge risk with MMS is that the Henry review may lead to a reduction in salary sacrifice benefits..... MMS primary business is govt employee salary sacrifice.....

Now this risk may be both positive and negative...if the govt makes minor changes thats a huge positive as all govt employees will want their SS arrangments altered....if however SS is eliminated or reduced significantly, initially MMS may benefit, but as people drop out of SS , MMS would suffer a massive earnings and sp hit.......

So in light of an imminent Henry response from the govt, I didnt sell MMS, but i assessed the risk as extremeley high and have sold half of my holdings to reduce exposure.....

So my point here is , risk is not necesarily all bad, but it exists in many ways , and it pays to know your risks on your stocks, know how its priced in and then make decisions and act accordingly......

This is all opinion, no reccomendation of stocks is suggested or implied....Always DYOR and seek expert advice....

 

[So_Cynical]

See thats where you and I differ so much....risk perception / risk assessment
.... you seem to classify a stock as low risk if you think its not going to fall over any time soon....

Where as when i wiegh up whether its low or high risk...I look at
Firstly its debt to equity....and personally TLS debt to equity is getting up amongst many companies that have already failed.....
Secondly thier current assets to current liabilities
Their ROE projections and ROE history and ROE growth
Risk of dilution of share holders equity to institutions...
If that all check out plus a few other minors I then look at political risk, partigularly regulatory ones....risk of new competitors and barieres to entry or market share....
Risk to price control

An example im in right now with rediculous positive and negative risk is VIL....its a tiny oil miner with potential for massive upside in an area very possibly likely to yeild a oil and gas strike....but the risks are massive...and thats priced in....there is no yeild, the price is extremely cheap compared to if its result are positive, but the risk and possible reward is massive...hence why im in it.....

I've been reading over the TON and VIL threads and will concede that you are not risk adverse at all...in fact i totally miss read you, in fact im at the point where im bamboozled.

On the one hand your bagging a good stock like HDF based on fundamentals and financial's...and then your Ramping a new speckie explorer with basically nothing, and ramping VIL which is a 20 year old investment company with a market cap of around 28.5 mill.

When i examine a stock the first thing im looking at is..will they still be here next week, month, year etc, and i cant stress how important this is to all new investors and any ultra small cap investors, ask anyone who held stock in the little explorers and producers (Gold etc) that fell over in the last 2 years....just of few of the ones i remember

• VRE - View Resources (Gold)
• GDR - Goldstar Resources (Gold)
• TMR - Tamaya Resources

Risk comes in 3 basic flavours...lose a little bit, lose alot, lose everything.

One thing to avoid is company's that don't make any money and basically own nothing that has any realistic hope of making money, VIL is an almost perfect example of this..having a look at there annual report relieved a direction-less company with a 20+ year history of near total failure.

Have a look at there revenues over the last 5 years...keeping in mind the Bull market and the easy money to be had....and this is an investment company! VIL are bleeding money, a 1 for 1 rights issue last year followed a few months later with a placement.

And now there in the oil business to me there standing at a roulette table and putting all there money on an exotic, not even smart enough to go for an even money win.

I really don't know what to make of you condog...and i call myself a punter lol, anyway good luck.

http://www.asx.com.au/asxpdf/20090930/pdf/31l20yc674pmr3.pdf
.

 

[Liar's Poker]

I'll probably regret using my first post on ASF to enter into a heated debate, nonetheless hopefully this adds to the thread or at least to the OP.

Yield in many cases should be used as an indicator of risk, or the markets perceived risk (risk = return, greater the return, the greater the risk... etc, etc). Generally a higher than normal, or even lower than normal yield has me researching for days more trying to justify the difference.

For example, in May 2009 Spark Infrastructure (SKI) was around $1.02. At the time, it had a yield of approximately 17%. I had followed SKI for some time and was reasonably comfortable with it as a long term investment and as a company in general. Yet a yield that high must prompt further research.

After reading through recent announcements, the high gearing, debt refinancing, and potential changes to government regulations facing ETSA Utilities, of which SKI had a 49% interest seemed to be enough for the market to be preempting the next dividend amount (a reduction) and in turn, the adjusted yield.

Over the coming 6 months, announcements were made that were in favor of SKI. As the market gained confidence, the share price increased to almost bring the yield on par with the sector.

The investors whom bought at around $1.00 took a risk, whether they knew it or not I don't know, but in this case it paid off in the order of 30-40%. It could have easily resulted in a relatively stagnant, average yielding stock. A burden on the portfolio.

In my opinion, there is nothing wrong with chasing the odd yield. You just have to be much more diligent and willing to loose more than you may have with the more average yielding stocks.

Note: Currently holding SKI.

Hopefully the above conforms with the rules and regulations of the site - I did read the posting guidelines prior.

-end-

 

[So_Cynical]

That's a great first post, you sure you haven't done this before.

Welcome to the forum.

 

[condog]

I disagree with the incorrect insulting and defamtory remarks or accusations of ramping...if you need to resort to such trash talk I do not engage in such rabble...

I aim to engage with people who do not follow me into other threads making defamatory remarks and looking for cheap throw away lines aimed at nothing more then to attempt to discredit...

Begginners good luck , and hope you can learn form others...

 

[squeegee]

Im with Cynical on this one, big time. I have a portfolio based in shares I trade, and shares I hold for yield AND SP growth. I try and balance. "Dont turn an investment into a trade, and dont turn a trade into an investment" (just a quote from a wiser guy than me)

However, yield is invariably linked to purchase price, and earlier this year, the ASX100 was a smorgasboard of low risk stocks with high yields due to the meltdown..... IMO, many of the ASX100 stocks have now bolted, and their yields are now more normalised in comparison to their current SP v Yield (eg banks 6% to 7%, but still fully franked...so plus another 30%). Im happy with the blend I picked of risk (for future) and stablility (for now). Yes, I picked a couple that have switched off the dividend tap....but thats ok, they have all had SP growth, and when that tap gets turned on again.....happy days!!

In the future many you will see many of these same stocks increase in SP, as their yield increases.....as many people are buying them for this reason. So long as course they arent paying from retained earnings. ie payout ratios are important to consider. I try and stick around 75% EPS/DPS

Stocks dont increase, and then the company goes "oh wow, look our SP has gone up, well pay a higher dividend now".....its the opposite to this. Dividend goes up, SP goes up. (for dividend paying stocks that is)

Why have JUST SP growth when if you bought and held at the bottom of the market you could have had BOTH yield AND SP growth!!

Dont forget those other fantastic words "fully franked"...

 

[So_Cynical]

Hey squeegee...while on the subject of investing and dividends.

I hold a few MRE shares and had a look at there quarterly last nite and was a little surprised to see them sitting on 240 odd million in cash and making 3 to 4 mill a week....this got me thinking that a dividend mite not be to far away for MRE as they were good divi payers back at the top of the mining boom.

So i figure that maybe there's a few more company's like MRE that stopped paying divis in the last 18 months and are now doing ok again, and getting to that stage where a dividend becomes almost inevitable...and i bet a lot of these types of company's are way under valued....flying under the radar.

 

[So_Cynical]

To new investors reading this, even though I feel So-Cynical is completely wrong on this, it goes to highlight how two investors can analyse the exact same company and come away with entirely different views and decisions.

For beginners, as a learning experience go and look at the 5 year price charts and balance sheet summary for HDF and then compare it to JBH....very quickly you will see why JBH has a low dividend and why HDF has a high dividend... ..... if the balance sheet confuses you just look at the share price charts and you will see why one is classified as growth and the other is not.

I though it would be interesting to revisit this thread and see how condogs JBH and my HDF have performed over the last 2 months....since both have reported half year results.

• JBH gross yield approx 4%
• JBH share price -10%
• HDF share price +6%
• HDF gross yield approx 10%
• 

~

 

[So_Cynical]

I though it would be interesting to revisit this thread and see how condogs JBH and my HDF have performed over the last 2 months....since both have reported half year results.

Three months on from my last post and i thought it would be interesting to see how HDF and JBH are travelling as high growth stocks....in general over the last 5 months the sell off in JBH has continued while HDF has continued to rally, with the divided return situation only slightly different.

Even with the latest market pullback HDF has continued to shine with only a small adjustment to its share price...while the now 6 month downtrend for JBH continues....if nothing else i hope some new comers here as ASF mite be able to take something away from this thread RE timing and stock selection.

• JBH gross yield approx 4.4%
• JBH share price -20%
• HDF share price +19%
• HDF gross yield approx 9.8%
• 

~

 

[Julia]

HDF has done well. I guess we'd expect retail stocks to underperform following the discontinuation of cash handouts.
Wonder if more might follow Clive Peeters.

 

[akkopower]

HDF has done very well as of late, share purchases fro APA have helped this one out. Just waiting to crack the $1.40 resistance. Comparing HDF to similar stocks like APA and ENV gives

 

[akkopower]

hmmmmmm, another attempt at a chart may be helpful.
maybe its time for me to go read the upload chart thread

 

[cocojambo]

Here are the top yielding utility dividend plays

Symbol Company Name Current Dividend Yield %
NGG National Grid PLC 9.2
APU Amerigas Partners, L.P. 6.7
CPL CPFL Energy SA 6.7
EDE Empire District Electric 6.7
UIL UIL Holdings Corporation 6.7
UTL Unitil Corporation 6.7
POM Pepco Holdings, Inc. 6.5
BIP Brookfield Infrastructure 6.4
PGN Progress Energy, Incorporated 6.1
AEE Ameren Corporation 6
NI NiSource, Inc. 5.9

Source: http://www.best-dividend-paying-stocks.com/

DUK Duke Energy Corporation 5.8
TEG Integrys Energy Group, Inc. 5.8
OTTR Otter Tail Corporation 5.8
FE FirstEnergy Corporation 5.7
CNP CenterPoint Energy, Inc. 5.6
PNW Pinnacle West Capital Corporation 5.6
VVC Vectren Corporation 5.6
PPL PPL Corporation 5.4
WR Westar Energy, Inc. 5.4
CHG CH Energy Group Incorporated 5.3
ED Consolidated Edison Company 5.3
HE Hawaiian Electric Industries, Inc. 5.3
POR Portland General Electric Company 5.3
SO The Southern Company 5.3
TAC TransAlta Corporation 5.2
EXC Exelon Corporation 5.1
SCG SCANA Corporation 5.1
TE Teco Energy, Inc. 5.1

 

[pixel]

I keep a watchlist of "Yielders" in the Market Analyser, which I use to either check whether a stock that "pops up" for some reason pays good dividend, or sort by yield if I feel I need to top up my portfolio of income producers.

One thing to remember with yields: The figures are always retrospective, based on the last dividend paid. The company may, for all it's worth, have paid a 5% dividend at the time, before their sp hit a snag, dropping close to zero. With that in mind, have a look at


In addition, I maintain a spreadsheet of companies' upcoming and last paid dividends., which can be customised to any watchlist (ASX stocks only) and updated at any time:
http://rettmer.com.au/TrinityHome/Services/index.htm#_Prev6

 

[earlyretirement]

Hi

I am the editor of a recently launched website covering higher yielding FTSE100 shares. Over time the site will include information on a number of high yield companies, including write-ups on their dividend histories and prospects. Currently, we have published several write-ups.

 

[noie]

Hi

I am the editor of a recently launched website covering higher yielding FTSE100 shares. Over time the site will include information on a number of high yield companies, including write-ups on their dividend histories and prospects. Currently, we have published several write-ups.

Awesomely helpful to this AUSSIE-STOCK forum..
thank-you!, good luck with YOUR early retirement.

 

[earlyretirement]

Cheers Noie

W're aiming to publish one new write-up every ten days or so, depending whether we believe they fit our mid-term criteria.

Be Happy: Retire Earlier and Richer!