Analog Devices may not be a household name, but the company could have provided investors with substantial wealth in 2011: During the year shares rallied 33% off of their 52-week lows of $29 a share. The company manufactures analog and digital processing circuits used in computer, industrial, communication and consumer applications.
The company has a market cap of $11.85 billion and shares are currently trading below the market's long-term P/E average at 14.15. Management has also managed to increase income $2.81 per share, which far exceeds the EPS of any of the company's competitors. More impressively, the company has managed to perform extremely well with little leverage; Analog Devices only has $886 million in total debt outstanding and $3.6 billion of cash on hand. The dividend of $1.00 per annum is currently yielding 2.5% and the company has a payout ratio of 34%.
Intel Corporation operates in the technology sector and has performed extremely well during 2011. The company has continuously out-performed its peers and is positioned to continue the trend in 2012. Despite its size, the company has still managed to grow; recent fourth-quarter revenues exceeded analysts' expectations and as the company increases output from disaster-stricken Southeast Asia, the company is likely to grow revenues further. The dividend yield currently sits at 3.2% on a forward basis, implying a 32% payout ratio.
REITs have always paid high yields. However, due to current market conditions, REITs are positioned to be as profitable as ever with record low interest rates. Chimera is a favorite of many individual and institutional investors; the dividend is yielding 15.1% and the share price is up 22% from its 52-week low of $2.38. Moreover, Chimera is currently trading at a discount compared to its peers; shares are trading at a P/E multiple of 5.31, which is significantly below the industry average of 15.
Due to the law governing the industry, all REITs pay out at least 90% of income as dividends. However, Chimera currently pays out 116% of earnings, and lately, the company has had to issue debt to pay dividends. The company has almost $10 million of cash on hand and $6.2 billion total debt outstanding, $4.22 billion of which is due within the short term. Chimera is definitely a risky investment. However, the dividend rates may provide some investors enough reward for the risk posed. Chimera is definitely not a dividend stock for all investors.
Interpublic Group of Companies
Interpublic is a global advertising and marking, the company offers its clients various services including digital marketing, public relations, market research, e-commerce solutions and much more. The company had a great 2011, exceeding analyst expectations for third-quarter 2011. Subsequently, estimates for the fourth quarter were raised.
Shares are currently trading at a P/E multiple of 12.29, below the multiples of 14.6 and 16.1 of the company's two largest competitors, Omnicom Group (OMC) and Publicis Groupe SA (PUBGY.PK), respectively. Interpublic also offers investors a dividend yield of 2.3%. Currently the firm is paying out 21% of earnings as dividends. Interpublic has a beta of 1.79, and the advertising agency industry as whole is contingent on the general economy; as the economy strengthens I anticipate revenues and earnings to surge as more companies seek Interpublic's service.
Management has also performed extremely well; the company recently completed the acquisition of German-based Nicole Weber, to increase efficiencies and grow market share. Management has also issued a total debt of $1.72 billion; in contrast the firm has $1.8 billion of cash on hand.
Time Warner Inc.
Time Warner is arguably the premier media company in the world. The company had a strong 2011 with major movies such as Harry Potter and Sherlock Holmes. The company plans to capitalize on the success of Harry Potter and the 2012 London Olympics by creating a mini Potter-themed studio/theme park. The company will earn revenues from this venture in the second quarter third quarters of 2012. Moreover, Time Warner has aggressively revamped its digital media content to meet the needs of its customers, with partnerships with Netflix (NFLX) and Hulu.
Time Warner currently has a dividend yield of 2.5% and a payout ratio of 35%. Despite the company's total debt of $18.5 billion, earnings have grown at a rate of 57% for third-quarter 2011 on a year-over-year basis. If the company can continue to deliver big box office movies such as Harry Potter and Happy Feet, leverage should not be an issue.
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