Tags: Van Doorn | dividend | stocks | income

MarketWatch's Van Doorn: This Is No Time to Abandon Dividend Stocks

By    |   Tuesday, 16 December 2014 02:37 PM

What's an income investor to do? Bond yields are hovering near historic lows, and the Federal Reserve is expected to begin raising interest rates around the middle of next year, throwing the bond market for a loop.

One alternative is dividend stocks.

"The bottom line is that there are plenty of good dividend stocks to be had while interest rates remain at historically low levels," writes MarketWatch columnist Philip Van Doorn. "A long-term commitment backed up by your own research can help ensure that the income keeps flowing."

Van Doorn put together a list of the 10 S&P 500 stocks with dividend yields of more than 3.5 percent that have the most room to increase dividends, based on trailing 12-month free cash flow yields.

Cash flow yield consists of cash flow per share over the last 12 months divided by the share price. A company's room to raise its payout is then calculated by subtracting the current dividend yield from the cash flow yield.

The top five stocks in Van Doorn's list are LyondellBasell Industries, Frontier Communications, Entergy, CenturyLink and Coach.

To be sure, Morningstar analyst Charles Fishman isn't so sure about Entergy's ability to raise its dividend.

"We believe Entergy's attractive dividend is secure thanks to solid utility earnings and a strong balance sheet," he writes on Morningstar.com.

"However, increases are unlikely until wholesale power markets recover and there is more visibility with respect to the Indian Point relicensing, probably 2017 at the earliest."

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Finance
What's an income investor to do? Bond yields are hovering near historic lows, and the Federal Reserve is expected to begin raising interest rates around the middle of next year, throwing the bond market for a loop.
Van Doorn, dividend, stocks, income
247
2014-37-16
Tuesday, 16 December 2014 02:37 PM
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