3 Sweet Spots for Income Investors: Kinder Morgan Inc (KMI), Oaktree Capital Group LLC (OAK)

Page 1 of 2

Income investors usually invest in those dividend stocks that have a mature business model and a strong balance sheet. My idea of finding a dividend stock is just an extension to it, where I also look for a solid growth opportunity in the stock price. Scouring the investing landscape, I have picked up three such stocks that maintain a higher dividend yield as compared to S&P 500′s dividend yield, and their future cash flows look strong. Additionally, their stock price growth in the last 12 months was more than or equal to the S&P 500′s growth of 11%. Let’s discuss them in detail

Name of Company Trailing Annual Dividend Yield Growth in stock price in last year(~)
Fidelity National Information Services (NYSE:FIS) 2.20% 19%
Oaktree Capital Group LLC (NYSE:OAK) 5.90% 15%
Kinder Morgan Inc (NYSE:KMI) 3.80% 11%

Source: Yahoo Finance

Kinder Morgan Inc (NYSE:KMI)Fidelity

For the fourth quarter of 2012, Fidelity’s total revenue was in-line with the market expectations. The company’s EPS for the quarter was just a cent short of the consensus estimate of $0.69. Additionally, it signed 30 new processing agreements in 2012, half of them in 4Q12. Of these contracts, around 40% were of more than $25 million annually. The cross sale initiative was in focus because of its increased growth in the company’s top 25 clients. The new deals included a major client, Webster Bank, which will expand the company’s consultancy services. This deal will also increase the company’s revenue from CapCo segment by 50% in the next three years.

For 2013, Fidelity expects to grow through tuck-in acquisitions. The guidance for capex in FY13 came around $330 million. The company is already making moves to expand its horizons. It recently announced the acquisition of mFoundry for ~$120 million. mFoundry is well known for its payment and banking solutions on mobile. Its clientele of around 850 different organizations includes big names like Bank of America, Starbucks, Zions Bank and many top financial institutions. The acquisition is in line with the company’s vision of investing in innovative products like PayNet, mobile banking, P2P payments where the competition is low and opportunities are higher.

Fidelity has ~80% recurring revenue and has increased the return to shareholders by 50% last year. I am optimistic about this dividend stock and its future ability to generate and distribute cash. I’ll recommend a Buy.

Oaktree Capital Group

Last quarter of 2012 saw a record distribution of close-ended funds leading to a good incentive income of $210 million, up from last quarter’s $59 million. In 2012 the fund distributed $2.94/unit to unit-holders. For 4Q12 the Fund had an adjusted net income of $1.36 beating the consensus estimate of $0.92. All-in-all the fund’s performance as a stock was better than expected. In the short-term, I see an upside in the revenue of Oaktree Capital Group LLC (NYSE:OAK) because of its Opportunities Fund VIIb, Oaktree’s largest fund. Oaktree announced that it will distribute half of the accrued investment (~$700 million) from VIIb to its unit-holders in 2013. The distribution of Opps VIIb fund results in incentive income of ~$195 million in 2013 for Oaktree.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools 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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!