Three Dividend Stocks You Must Buy: AT&T Inc. (NYSE:T), PPL Corporation (NYSE:PPL), Southern Copper Corp (NYSE:SCCO)

Page 1 of 2

I wish that I had a dollar for every horrifying story I read about the fiscal cliff and its effect on the general appeal for dividend stocks. I have read so many by now that I wish I would have decided to backpack across South East Asia just to avoid them.  Ultimately, fiscal cliff fears surrounding dividend stocks were completely blown away. Dividend stocks still stand strong and income investors remain on the hunt for the next addition to their portfolios. Well for the scary story writers, they too have settled down on to their routine business of creating the next fad story.

AT&T Inc. (NYSE:T)

I consider investing in high dividend yielding stocks as a safe bet, because of two reasons. One, these companies have a strong cash flow to distribute dividends and secondly they have secure future revenue inflows. One more thing which I like about them is their performance in the long horizon. Keeping these in mind, I have screened three high dividend yielding stocks PPL Corporation (NYSE:PPL)AT&T Inc. (NYSE:T) and Southern Copper Corp (NYSE:SCCO). These stocks have consistently declared high dividend and helped the portfolios of its investors by providing stable cash returns. Let’s discuss them in detail:

Name of Company Forward Dividend Yield Payout Ratio 5 Year Average Dividend Yield
PPL Corporation 4.70% 51.00% 4.20%
AT&T Incorporated 5.10% 141.00% 5.60%
Southern Copper Corporation 2.40% 72.00% 6.20%

Source: Yahoo Finance

PPL

The recently settled Kentucky and Pennsylvania rate cases of PPL’s subsidiaries, Louisville Gas and Electric Company and Kentucky Utilities Company, has resulted in an increase in revenue from electricity and natural gas by ~$99.7 million. Louisville Gas’s base electric and natural gas rates have increased by ~4.8% and ~7.3% while Kentucky Utilities’s base electric rate has increased by ~5.8%. The return on equity (ROE) is ~10.25% of the base rates and the increased rates are implementedfrom the starting of 2013. I estimate ROE for the next few years from these subsidiaries to be around their authorized levels, but expect a double-digit growth in the base rate till 2015.

Additionally, with the disclosure of 4Q12 results in mid February, 2013 the company will give more details about two important factors. The first one is the hedged position of outputs for the year 2014. The company has hedged ~60% of its output for FY14 thereby providing clarity about its future cash flows. This hedged position will be up to ~90% of output. The second important factor is its outlook towards the UK business. The continued strong results of its UK segments shall drive PPL’s share price over the next twelve months. Along with that, I view the recent balance report of OFGEM, the UK Utility Regulator, about the gas distribution companies as a positive sign for the electricity distribution companies as well. I expect that its UK division shall contribute around 50% to the next year’s EPS.

AT&T

The company recently announced its results for 4Q12. Its consolidated revenue for the quarter was up by ~2.7% year-over-year (y/y), but its profit was down by ~3.9% y/y. Yet, it maintained an increase in EPS by ~10.2% y/y. The increment in EPS was mainly because of extensive share buybacks in4Q12, i.e. ~126 million shares. The company presented a mixed result for the quarter but after considering its guidance for the year 2013, I believe it will post a decent year with its consolidated revenue growth up by ~2%.

Page 1 of 2
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 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

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!