3 Dividend Buys and 1 You Need to Avoid: Altria Group, Inc. (MO), CenturyLink, Inc. (CTL), ConocoPhillips (COP)

Page 1 of 2

Dividend stocks are useful for more than just income investors. This paper discusses how over longer timespans, dividend stocks out-perform non-dividend paying stocks. That makes perfect sense, since corporations love to spend money on outlandish corporate compensation, one or two extra corporate jets, and share buybacks that just happen to occur when the stock is trading at all-time highs. Dividends return some of earnings to shareholders, to help reduce the amount of unproductive spending and keep companies accountable.

Below, we’ll examine four dividend stocks with yields over 4% and market caps over $2 billion that can add a little to your portfolio.

PBI Total Return Price data by YCharts

A Company to Avoid

Pitney Bowes Inc. (NYSE:PBI) offers a strong yield, but this is the price the company is forced to pay to maintain investors’ interest in a declining industry.

Investing in Pitney Bowes is a high-roller version of hot potato. The company operates in the declining mail business. The advent of a little piece of technology called the Internet has forced a major decline of mail volumes. Customer communications management services and enterprise mail services are the company’s two biggest business segments.

Over the past 12 months, insiders have only purchased $60,000 worth of shares, which is hardly a strong vote of confidence for a company with a $2.4 billion market cap. Revenue has shrunk -3.88% over the past five years, and the company has a high total debt-to-equity ratio of 29.69. Its $3.3 billion of long term debt and $2.7 billion of current liabilities are latent risks.

Declining revenue and a super-high yield rate are not the signs of a dependable company — just a declining firm for traders to play with.

Firms to Invest in

ConocoPhillips (NYSE:COP) is a major oil company with a yield of 4.3%. Unlike Pitney Bowes, it has a total debt to equity ratio of only 0.45. Another sign of confidence is that its payout ratio is only 33%, and its ROI is 15.8%.

The company has recently undergone some major changes. In 2012, they spun off their midstream and downstream operations into a new firm, Phillips 66. In addition to selling off their downstream assets, ConocoPhillips has decided to sell a number of assets in politically risky areas like Nigeria and Algeria. They have also discussed selling off some portion of their Canadian assets. If only foreign bidders come to the table, then Canada’s political system may throw up roadblocks, as occurred with CNOOC and the Nexen sale.

ConocoPhillips is raising all of this cash to ensure that it hasa large enough capital investment budget to replace reserves and maintain production levels. It’s a large multinational with decades of experience, and its recent reorganization shows that it’s willing to do what is necessary to maintain production levels and keep the company focused.

CenturyLink, Inc. (NYSE:CTL) is a rural telecommunication company that is learning to deal with the switch to cell phones. It has tried to make the best of this situation, engaging in a number of acquisitions over the past couple years. It continues to grow its fiber network and expand its number of datacenters worldwide. The loss of revenue from its legacy operations is expected to continue for the time being, though revenue is expected to stabilize in 2014.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!