The Southern Company (SO), BCE Inc. (USA) (BCE): Where to Still Find Good Yields

Page 1 of 2

This year’s market rally, with the S&P up about 15% during 2013, has rendered it more difficult to find above-average dividend yield investments. Most companies have not maintained elevated payout ratios (dividends as a proportion of net income), as share prices climbed. That said, there are a few industries where total-return remains an appealing factor, and healthy income can be received. The current 10-year Treasury bond yield, currently around 2.2%, can be considered a reference point for high dividend yields.

The sectors/investments worth consideration include: Oil and Gas MLPs (master limited partnerships), tobacco firms, utilities, and telecom firms. Here’s an example from each category.

MLPs – Alliance Resource Partners, L.P. (NASDAQ:ARLP)

Master Limited Partnerships usually distribute about 100% of the limited partner shareholders’ share of total income as payouts, almost always rendering them good purchases for those seeking solid income. Coal producer Alliance is not only growing its revenues and profits, but also pays out what amounts to approximately a 6.4% yield.

Conditions in the coal market are favorable, marked by rising demand and falling supply. Moreover, Alliance Resource Partners, L.P. (NASDAQ:ARLP) has secured a strong backlog of commitments for domestic steam coal. Estimates suggest that volumes could grow around 10% in 2013 at improved pricing levels. Accordingly, another good year seems to be on tap.

Alliance shares have sold off of late, providing an opportunity for purchase in my view. It is one of the best MLPs I’ve found, among a group that includes Plains All American Pipeline, Williams Partners, Energy Transfer Partners and others.

Tobacco producers – Reynolds American, Inc. (NYSE:RAI)

I have blogged about tobacco firms in the past, including in another posting related to income holdings where I mentioned Lorillard. They tend to have solid financials, with price hikes helping to offset slowing demand. Plus, the companies consistently increase payouts.

Reynolds American, Inc. (NYSE:RAI) shares offer an annual dividend yield of roughly 5.2%. The company combines dividends with repurchases, boosting shareholder value. In terms of operational initiatives, it is keeping costs in line with the reduced volume environment, likely allowing for ongoing profit growth. Although its core RJR Tobacco unit is under sales pressure, two of its smaller divisions, American Snuff and Santa Fe, are growing their sales and income.

RAI shares hold appeal for their yield and are a good addition to a long-term stock portfolio.

Utilities – The Southern Company (NYSE:SO)

Over the years Southern has been one of the most steady stocks available. Its beta of 0.24 indicates very low volatility. That said, the shares have sold off a bit along with the broader income stock universe. They yield about 4.6%, and ongoing hikes to the dividend are probable.

The Southern Company (NYSE:SO)Notably, The Southern Company (NYSE:SO)’s core wholesale revenues climbed a whopping 59% in the March quarter, driven by both pricing and higher kilowatt hours. This pace of growth will probably not persist, though the economic climate in Southern’s southeast market is showing signs of improvement.

Now may be a good time to shares of The Southern Company (NYSE:SO), based on their yield and low-risk attributes.

Telecom service providers – BCE Inc. (USA) (NYSE:BCE)

Not too long ago, I posted an entire blog concerning Canadian telecoms (read it here). Despite the price falloff, I continue to believe shares of BCE Inc. (USA) (NYSE:BCE), Canada’s largest telecom, hold appeal as a total-return investment. They yielded 5.3% at the most recent price.

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 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

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!