MY DIVIDEND STOCKS ALL-STAR TEAM FOR SPRING/SUMMER 2014
— ALL-STAR CHOICES SO THAT YOU CAN SLEEP AT NIGHT,
Time is passing; but it wasn’t so long ago that sporting fans were treated to the live televised broadcast of the recent MBL (Major League Baseball ) game.
Granted that most of the game was as exciting as watching paint dry.
Or perhaps trying to watch Nancy Pelosi justify the latest Obama White House anti-Israel suggestions for a “peace” settlement in the Middle East.
Which reminds me: How can you tell when a Democratic politician is lying?
When she moves her lips!
And how can you be sure that the politician is Nancy Pelosi herself?
ONLY her lips move!
NOW WHERE WAS I?
Sorry for that brief digression; let me return to the subject of the recent MBL all-star game.
Highlight of the game was the ‘Home Run Derby” – a contest to see which batter could hit the most home runs over the fence of Boston’s Fenway Park.
Of course, the fence is so close to the batter, even one of my 3-year-old twin granddaughters could step up to the plate and hit a home-run over Fenway Park’s “green monster” (fence)!
SO WHERE IS THIS PIECE OF SPORTS DRIVEL HEADED?
Which got me thinking: If I put together an INVESTMENT all-star team, which companies would I choose?
Well, I’ve give the subject some thought, and here now (drum roll, please!) is my 2014 INVESTMENT ALL STAR TEAM:
Based on my personal opinions, of course!
And here, in no order of priority, is the batting order:
Stepping to the plate, as lead-off hitter, is none other than Canada’s proud energy giant:
ENCANA ($ECA), yielding 1.54% annually.
And why Encana?
Beginning in 2017, look for a shift in the company's strategy – by the savvy management of this mammoth energy giant -- towards extracting and then EXPORTING natural gas & liquefied natural gas (LNG)…
Additionally, in 2017, Encana is aiming for a 10% compounded annual growth rate…
The company will be (in the words of their CEO) additionally focusing on higher netbacks (profits after maintenance costs) and higher overall profit margins.
Sounds like a good plan to me!
WHO’S BATTING NEXT?
Stepping up to the plate now is another giant company which U.S. investors will likely be most interested in buying:
The GAP ($GPS), yielding 2.16% annually.
And why this retailing behometh?
In fiscal 2015 (which starts in late January), the company’s earnings are expected to grow by 11.4 per cent, to $3.02 a share.
Just as important, the Gap has RAISED ITS DIVIDEND EACH YEAR SINCE FISCAL 2010, when it paid out an annual dividend of 34 cents a share…
And the “Street” consensus is that the company will continue to pursue a strategy of SYSTEMATICALLY RAISING ITS DIVIDENDS … to satisfy yield-hungry investors.
The Gap has also rewarded its shareholders by buying back its shares. For example, in fiscal 2003, it had a peak of 887 million shares outstanding.
And the company has bought back its shares ever since.
The result: at the end of fiscal 2014, the share count is expected to fall to 461 million.
Consequently, retail analysts' expectations for The Gap in 2014 (and beyond) include COPIOUS CAPITAL GAINS and AN INCREASING DIVIDEND YIELD.
ANY GOOD METAL SECTOR RECOMMENDATIONS?
And now stepping up to the plate for interested U.S. & Canadian buyers:
ATLAS IRON ($AGO.AU), yielding 4.35% [Over The Counter Purchase – Qualified Trader Required]
And why invest in Atlas Iron, Australia’s cash-rich mining giant?
About a year ago, iron ore was selling for $90 a metric ton.
With demand from China escalating, the price of iron ore has jumped to around $130.
With the continued exodus of rural populations to China’s most prospering cities, the Chinese leadership has committed the government to huge infrastructure projects (e.g., highways & mass transit).
And iron ore is needed to manufacture steel, which in turn is used to build such projects.
Consequently, China imported a record 77.84 million metric tons of steel in the month of November -- an 18% increase over the same period a year ago.
And higher prices are great news for Atlas Iron.
Most important, the 2014 outlook is even better because the Western Australian government recently awarded Atlas Iron ADDITIONAL SHIPPING CAPACITY out of Port Hedland, the country’s primary iron ore export terminal.
According to Expedia, Port Hedland is the busiest port in Australia and handles 20% of the entire world iron-ore traffic.
Consequently, Atlas Iron management have already rolled over contracts with existing customers for both higher prices and increased orders.
And, of course, some of those customers are Chinese steel mills, hungry for any iron ore they can get their hands on.
ANY PROGNOSIS FOR THE FUTURE?
So, in my humble opinion, Atlas Iron offers plenty of future capital gains (share profit) opportunities…
And don't forget that it additionally pays a 4.35% ANNUAL dividend while you wait for future profits to roll in!
WHO’S BATTING IN THE CRUCIAL CLEAN-UP SPOT?
And now stepping up to the investing plate, is what I consider the most powerful investment for future capital gains and dividend increases:
VERMILLION ($VET.CA; $VET), currently paying a dividend of 3.71%
Vermilion is an energy producer that focuses on buying & then developing gas & oil properties in Western Canada, Europe and Australia.
According to management, their business model predicts "annual organic PRODUCTION GROWTH of approximately 5%."
Not to mention INCREASING DIVIDENDS whenever possible.
Vermilion is targeting growth, in its energy production, primarily through the exploitation of conventional resource plays in Western Canada, including:
(1) Cardium light oil & (2) valuable liquids-rich natural gas (LNG)...
As well as (3) through the exploration & development of high impact natural gas opportunities in the Netherlands.
Not to mention Vermilion's 18.5% working interest in the Corrib gas field in Ireland.
And remember that any oil, which Vermillion is able to ship to & sell in Europe, benefits from recent record-high BRENT (EUROPEAN) crude-oil prices (up to $120 per barrel recently).
What also helps the Vermillion cause is that Vermilion management & directors hold approximately 8% of the outstanding shares.
And consequently, they have a self-serving incentive to increase the company's growth & dividends.
HOW ABOUT A LOOK IN THE VERMILLION CRYSTAL BALL?
Why is Vermillion my favorite choice in a very extensive stock universe?
Because while you wait for what I consider will be inevitable future capital gains, you can sleep at night through even the most distressing market fluctuations – collecting your steady (and sustainable) 3.88% dividend.
In fact, I personally continue to hold a ton of shares in this company -- expecting more profits and sustainable dividend increases in the next three years.
ARE THERE ANY OTHER WORTHY INVESTING CHOICES?
And now let’s finish stocking our team with investing all-stars:
Let’s start with:
Silver Standard Resources Inc. ($SSO.CA;$SSO), generating no current dividend (yield).
Riding the escalating price of gold lately (above $3,000 an ounce), SSO is one particular precious-metal miner which is now metaphorically reaching for the moon (pricewise):
And that’s because, Silver Standard is one of the few gold/silver miners, in the world, which mines PURE silver.
Normally, silver is extracted & refined from gold or zinc tailings.
But in this case, the product is the highest-quality silver available today – much in demand from today’s timepiece makers (e.g. Swiss high-end watches) and from car manufacturers (eg., catalyctic converters).
And Silver Standard executives have indicated that the company’s silver production will grow exponentially over the next 3 years.
The Company’s properties are located in six countries in the Americas. But currently, Silver Standard is focused on operating and producing silver from the Pirquitas Mine in Mexico.
That factor, along with improving “netbacks” (profit after maintenance costs), means increasing FUTURE profits for Silver Standard, minimally from 215 to 2017.
There’s currently no dividend yet from this stock…but there should be plenty of capital gains in the future,
And there is a growing consensus among mining analysts that, as Silver Standard’s cash flow increases, the company might even start rewarding shareholders with a dividend.
ARE WE FINISHED YET?
And now two final additions to our team:
So let's shift our focus to a more familiar company in the U.S. and even in Asia...
Yes let’s take a look at that perennial profits generator: WALMART STORES INC. ($WMT), yielding 2.60%
I mean how can you go wrong with investing in this perennially successful company?
After all, every week 245 million people shop at Wal-Mart, and Wal-Mart is nearly five times the size of its nearest competitor, Costco ($COST)!
And additionally, Wal-Mart generated more than $473 billion in net sales between Feb. 1, 2013 and Jan. 31, 2014 ...
After all, it dominates the U.S. retail industry so much that $1 out of every $10 spent in the U.S. is spent at Wal-Mart.
And the most important factoid about Wal-Mart?
Wal-Mart has paid increasing dividends for 41 CONSECUTIVE YEARS!
Furthermore, stocks with 25-plus years of rising dividends have outperformed the S&P 500 by 2.88%, per year, over the last 10 years...
And consequently, in my opinion, it's worth buying Wal-Mart now -- even considering its nose-bleed-high share price today.
Hence, in my opinion, this a timely stock purchase for future capital gains & a steadily increasing dividend.
WE MUST BE DONE BY NOW
And now onto my final personal stock recommendation today:
GENWORTH MIC ($MIC.CA; $GMICF, OTC), yielding 3.74% .
Yes, being a Canadian citizen, there goes my Canuck bias again....
Mortgage insurer, Genworth MIC, is the second largest provider of mortgage insurance in Canada.
And what’s so special about this company?
In the 4rth quarter, Genworth management reported that for the full year Genworth's net operating income rose 3% to $349 million...
And that's compared to $339 million the previous year -- an impressive gain.
Not only that, but “return on equity” was 12%, and the “Minimum Capital Ratio” was 222%, 4% higher than a year ago...
And so it wouldn’t be unreasonable to expect further profit growth from Genworth...
Especially since it has already provided a TOTAL RETURN of OVER 50% in the LAST 12 MONTHS...
In my opinion, another profitable company, which (although Canadian) promises future capital gains, accompanied by a sustainable annual dividend yielding 3.74%.
And there you have them ... your Soupcoff Report 2014 All-Stars!
Now time to throw the first pitch ... and let’s play ball!