Tags: van Doorn | stocks | dividends | cash flow

MarketWatch's van Doorn: High-Yielding Stocks With Room to Boost Dividends

By    |   Thursday, 19 February 2015 11:50 AM

With interest rates still at or near historic lows, now is a good time to take a look at dividend stocks. That's a space in which you may be able to earn bountiful income and capital gains to boot.

When considering dividend stocks, you would do well to search for ones that have room to increase their dividends. MarketWatch columnist Philip van Doorn has put together such a list, based on cash flow yield.

Such a yield is calculated by dividing cash flow per share by the share price. "If the resulting figure is higher than the dividend, the company has headroom to increase the dividend," van Doorn writes.

Using free-cash flow estimates for 2015 and actual cash flow from the past 12 months, he created a list of the S&P 500 stocks with the highest dividends that have room to increase those dividends.

The tally includes Windstream Holdings, Mattel, CenturyLink, AT&T, Frontier Communications, Verizon Communications, Plum Creek Timber, GameStop, Seagate Technology and Garmin.

As for Verizon, Morningstar analyst Michael Hodel has words of praise, though it's trading above its fair value of $45 per share.

"Verizon has focused relentlessly on network quality over the years, cementing its reputation with customers and its position as the premier U.S. carrier in terms of customer loyalty and profitability," he writes on Morningstar.com.

"This position has enabled the firm to weather increased competitive intensity well despite reacting slowly. Verizon Wireless is a good business, and the best of the U.S. carriers."

When it comes to AT&T, S&P Capital IQ Equity analyst Angelo Zino has a four-star (out of five) buy rating. "Our buy recommendation primarily reflects valuation and belief that subscriber growth will remain healthy, partially offset by our concerns about increasing competitive pressures," he writes in a report.

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With interest rates still at or near historic lows, now is a good time to take a look at dividend stocks. That's a space in which you may be able to earn bountiful income and capital gains to boot.
van Doorn, stocks, dividends, cash flow
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2015-50-19
Thursday, 19 February 2015 11:50 AM
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