Royal Dutch Shell plc (ADR) (RDS.B), Philip Morris International Inc. (PM): Fat Dividends for Lean Times

Page 1 of 2

Amidst tough economic times it’s critical that investors produce significant passive income. In this post we’ll examine several dividend stocks that meet specific income-producing criteria, expand upon current market opportunities, and offer growth potential to investors. By doing so, investors will be better able to analyze potential investment opportunities, as well as acquire knowledge of key stock metrics.

The first of these, Royal Dutch Shell plc (ADR) (NYSE:RDS.B), offers a whopping 5.3% payout. But it’s important to execute what I like to call a “dividend x-ray.” What’s important is not only high yield, but that the stock also possesses a strong dividend history and excellent dividend growth. In other words, the company needs to have paid dividends consistently for at least 20-30 years (and hopefully longer) and never missed a payment. Payout consistency is key, as investors want reliable income. Next, the company’s dividend needs to offer income growth. Does the company increase its dividends on at least a yearly basis, and if so at what rate? Also, it’s important to examine less mentioned aspects of special dividend payments. Does the company reward long-term investors with optional “bonus” payments, often at a higher rate?

Royal Dutch Shell plc (ADR) (NYSE:RDS.A)So, let’s “x-ray” Royal Dutch Shell plc (ADR) (NYSE:RDS.A). Recently, the company introduced a new DRIP that initially lets Royal Dutch check out without any broken bones. But let’s analyze further. Does the company offer regular payouts, and if so for how long and is there a healthy rate of increase? When we x-ray our stock, it clearly possesses regular quarterly payouts, but the rate of increase is unimpressive, and as a heavy weight large cap stock long-term growth may be limited. Therefore, a special dividend here would be rare, if not unheard of. In sum, although the 5.3% yield is initially impressive our x-ray seems to reveal that Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has a few fractures. So, let’s keep moving.

Next, let’s explore our options when it comes to Transocean LTD (NYSE:RIG). To be honest, the company is not without its share of headaches, primarily its involvement in the 2010 Deepwater Horizon oil spill. That being said, this alone shouldn’t keep it from the running. On initial glance the company offers a juicy 4.5% yield. However, as before, it’s time to get to work applying the x-ray. Drilling down further we can see Transocean’s payouts are irregular at best and highly inconsistent to say the least. But let’s discount that judgement momentarily. Remember that the company has been saddled with ongoing litigation for several years, and yet despite this the fat 4.5% yield is enticing. However, for brevity’s sake let’s skip on the rate of increase as the company’s infrequent dividends do not make this an accurate analysis, and in fairness as a more speculative debt-laden stock Transocean LTD (NYSE:RIG) is not a prime candidate for long-term value investing. For these reasons I think I’ll pass.

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

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

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!