One possible red flag on this stock is the P/E ratio of 26.03, which is higher than the rule-of-thumb 20, but not terrible. Most Fools see this as indicative of a volatile propane market rather than any issue with the company. Experts are predicting a $0.10 per share dividend increase per year until 2016, making this high dividend player even more of a solid bet. Overall, the fundamentals look good for this company and it appears to be well-managed with a bright future ahead of it.
Arlington Asset Investment Corp (NYSE:AI) is an investment banking firm with low debt, a dividend yield of 12.7% , and a solid strategy of capitalizing on the housing boom by investing in mortgages and mortgage securities. Rated as a “Buy” by Thestreet.com, this company has increased its net operating cash flow by 422.78% to $11.66 million when compared to the same quarter last year. Pretty impressive! But offsetting this increase is a 70.3% decrease in revenue for the same period – this may be because the mortgage industry as a whole tends to be pretty volatile, but it bears some watching. Another possible pitfall for this stock is the fall out from the mortgage crisis, some claim that we just have a period of calm between storms. Nevertheless, this dividend yield is not be be sneezed at, and the low debt ratios as well as strong management should buoy this company forward if or when the waters get rough.
Arlington Asset Investment Corp (NYSE:AI) is more of a risk than the other two stocks mentioned in this article. The smart Fool will tread carefully and pick the right time to enter this investment, preferably by watching revenue levels and listening to the next investor conference call.
The bottom line
In summary, dividend stocks are a great way to diversify your portfolio, and they can be great income builders. But it is important to choose companies that are also strong in other ways. Here are three smart picks, presented in order of risk and return. Happy Foolish Investing!
Brenda Johnson has no position in any stocks mentioned. The Motley Fool recommends Vodafone. Brenda is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Great Dividend Plays for Long-Term Growth originally appeared on Fool.com is written by Brenda Johnson.
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