Sophisticated dividend investors find companies that meet consistent criteria and have solid fundamentals. Today, we're taking a look at American Capital Agency (AGNC, Financial), M&T Bank (MTB, Financial), New York Community Bancorp (NYB, Financial), Regal Entertainment (RGC, Financial) and Transocean (RIG, Financial) to see if these companies can keep paying big dividends.
American Capital Agency
American Capital Agency is paying a yield of 19.80%. The payout ratio is .832 and there is $1.51 billion in cash. The profitability of the firm includes profit margins of 92.42% and operating margins of 92.59%. These figures are illustrating how the company can maintain the current dividend rate. This is because the firm is earning more than is being paid out to investors and there is a large cash position. Moreover, the fact that the Federal Reserve is leaving interest rates alone until 2013 will help to ensure that the company can maintain this consistent yield. As a result investors can look forward to the firm continuing with these levels until interest rates are rising consistently.
M&T Bank
M&T Bank is paying a dividend yield of 3.60%. The payout ratio is .404 and the company has a cash position of $4.34 billion. The profitability of the firm includes profit margins of 26.61% and operating margins of 42.17%. These facts are highlighting how the corporation can maintain its current dividend rate. This is because the firm is paying lower amounts of dividends out to shareholders and they are reinvesting the majority of the earnings back into the business. Furthermore the company recently acquired Wilmington Trust. This is giving M&T Bank access to a large customer base of wealthy individuals. As a result the dividend will more than likely remain the same if not increase in the future.
New York Community Bancorp
New York Community Bancorp is yielding 7.80%. The payout ratio is .884 and the firm has total of $1.64 billion in cash. The profitability of the company includes profit margins of 37.19% and operating margins of 58.92%. These figures are illustrating how the firm can be able to maintain and increase these dividends. The reason why is because the firm is seeing consistent profits from a subsidiary called New York Community Bank. At the same time the business model of the company is focused on loans for apartment buildings that are trading below market value. This is important because it is showing how New York Community Bancorp can be able to maintain and possibly increase the yield based on the solid business model that is in place.
Regal Entertainment
Regal Entertainment is paying a dividend yield of 7.10%. The payout ratio is .941 and the cash on hand is $179.10 million. The profitability of the firm includes profit margins of 1.83% and operating margins of 9.55%. These figures are showing how the company will more than likely cut or eliminate dividends in the future. This is because the majority of the firm’s earnings are paid out to shareholders in dividends. While the revenues, sales and cash cannot be able to support these levels continuously. At the same time consumers aremonitoring spending which is causing a slump inside the entertainment sector. This means that in the future the dividends will more than likely be cut or eliminated completely.
Transocean
Transocean is now yielding 7.8%. The payout ratio is 1.59 and there is $3.29 billion in cash on the books. The profitability of the firm includes profit margins of -4.52% and operating margins of 15.94%. These numbers are indicating that the current dividend rate is unsustainable for this John Paulson pick. The reason why is the company is paying out more than the actual earnings in dividends to investors. While the extra amounts of cash are being utilized to pay down outstanding debt. As a result in the next 12 to 24 months, Transocean will more than likely reduce the total amount of dividends. Once this occurs is when the odds increase that the stock could experience tremendous levels of volatility.
Clearly the biggest challenges that most investors will face is identifying companies that have the ability to pay consistent amounts of dividends. In the case of American Capital Agency, M&T Bank and New York Community Bancorp these firms will more than likely continue to pay the current dividend yields or increase these levels in the future. For investors this is an indication that these stocks will have lower amounts of volatility. At the same time these firms can provide stock portfolios with consistent income and increasing total returns. While Regal Entertainment and Transocean, could see a reduction in dividends. The reason why is these companies are paying out more in dividends versus actual earnings and there is some kind of catalyst that will place pressure on the revenues of these firms. In the case of Regal Entertainment this is because the company is facing challenges from slower consumer spending and ticket sales at the box office. Whereas Transocean, will see smaller dividends from paying down some of the outstanding debt. This will place pressure on the prices of these stocks with any kind of announcement increasing the total amounts of volatility and reducing the overall return. As a result these two companies should be avoided by investors who are looking for consistent dividends and earnings growth. While the other mentioned firms will be able to provide a portfolio with consistently rising earnings and dividends. This will increase the total returns that are being realized.
American Capital Agency
American Capital Agency is paying a yield of 19.80%. The payout ratio is .832 and there is $1.51 billion in cash. The profitability of the firm includes profit margins of 92.42% and operating margins of 92.59%. These figures are illustrating how the company can maintain the current dividend rate. This is because the firm is earning more than is being paid out to investors and there is a large cash position. Moreover, the fact that the Federal Reserve is leaving interest rates alone until 2013 will help to ensure that the company can maintain this consistent yield. As a result investors can look forward to the firm continuing with these levels until interest rates are rising consistently.
M&T Bank
M&T Bank is paying a dividend yield of 3.60%. The payout ratio is .404 and the company has a cash position of $4.34 billion. The profitability of the firm includes profit margins of 26.61% and operating margins of 42.17%. These facts are highlighting how the corporation can maintain its current dividend rate. This is because the firm is paying lower amounts of dividends out to shareholders and they are reinvesting the majority of the earnings back into the business. Furthermore the company recently acquired Wilmington Trust. This is giving M&T Bank access to a large customer base of wealthy individuals. As a result the dividend will more than likely remain the same if not increase in the future.
New York Community Bancorp
New York Community Bancorp is yielding 7.80%. The payout ratio is .884 and the firm has total of $1.64 billion in cash. The profitability of the company includes profit margins of 37.19% and operating margins of 58.92%. These figures are illustrating how the firm can be able to maintain and increase these dividends. The reason why is because the firm is seeing consistent profits from a subsidiary called New York Community Bank. At the same time the business model of the company is focused on loans for apartment buildings that are trading below market value. This is important because it is showing how New York Community Bancorp can be able to maintain and possibly increase the yield based on the solid business model that is in place.
Regal Entertainment
Regal Entertainment is paying a dividend yield of 7.10%. The payout ratio is .941 and the cash on hand is $179.10 million. The profitability of the firm includes profit margins of 1.83% and operating margins of 9.55%. These figures are showing how the company will more than likely cut or eliminate dividends in the future. This is because the majority of the firm’s earnings are paid out to shareholders in dividends. While the revenues, sales and cash cannot be able to support these levels continuously. At the same time consumers aremonitoring spending which is causing a slump inside the entertainment sector. This means that in the future the dividends will more than likely be cut or eliminated completely.
Transocean
Transocean is now yielding 7.8%. The payout ratio is 1.59 and there is $3.29 billion in cash on the books. The profitability of the firm includes profit margins of -4.52% and operating margins of 15.94%. These numbers are indicating that the current dividend rate is unsustainable for this John Paulson pick. The reason why is the company is paying out more than the actual earnings in dividends to investors. While the extra amounts of cash are being utilized to pay down outstanding debt. As a result in the next 12 to 24 months, Transocean will more than likely reduce the total amount of dividends. Once this occurs is when the odds increase that the stock could experience tremendous levels of volatility.
Clearly the biggest challenges that most investors will face is identifying companies that have the ability to pay consistent amounts of dividends. In the case of American Capital Agency, M&T Bank and New York Community Bancorp these firms will more than likely continue to pay the current dividend yields or increase these levels in the future. For investors this is an indication that these stocks will have lower amounts of volatility. At the same time these firms can provide stock portfolios with consistent income and increasing total returns. While Regal Entertainment and Transocean, could see a reduction in dividends. The reason why is these companies are paying out more in dividends versus actual earnings and there is some kind of catalyst that will place pressure on the revenues of these firms. In the case of Regal Entertainment this is because the company is facing challenges from slower consumer spending and ticket sales at the box office. Whereas Transocean, will see smaller dividends from paying down some of the outstanding debt. This will place pressure on the prices of these stocks with any kind of announcement increasing the total amounts of volatility and reducing the overall return. As a result these two companies should be avoided by investors who are looking for consistent dividends and earnings growth. While the other mentioned firms will be able to provide a portfolio with consistently rising earnings and dividends. This will increase the total returns that are being realized.
