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5 Stocks For Growth and Income In 2012

Most long term investors strive to find companies that offer consistent high yield dividends payments, along with the potential for capital appreciation. This article will examine five companies that have the potential for significant capital appreciation. The stock price of each of these companies has increased in the last 52 weeks, and all five pay a dividend with a yield of higher than 4%.

Enterprise Products Partners L.P. (EPD) has a market cap of $45.4 billion with a price to earnings ratio of 21.64. The stock has traded in a 52 week range between $36 and $52.95. The stock is currently trading around $52. The company reported fourth quarter revenues of $11.5 billion compared to revenues of $9.5 billion in the fourth quarter of 2010. Fourth quarter net income was $721 million compared to net income of $160 million in the fourth quarter of 2010.

One of Enterprise’s competitors is Plains All American Pipeline LP (PAA). Plains is currently trading around $80 with a market cap of $12.4 billion and a price to earnings ratio of 16.42. Plains pays a dividend which yields $5.1% versus Enterprise whose dividend yields 4.8%.

Enterprise is an MLP that operates pipelines in the United States and Canada. The company has paid quarterly dividends since 1998, and has increased the dividend in every quarter for the last five years, by a total of 41.5%. In the fourth quarter, the company increased year-over-year revenues by 21% and net income by 350%. Despite the impressive fourth quarter earnings growth, the company is looking to further improve earnings, and has $6.5billion in growth projects under construction. These projects are designed to take advantages of the “new unconventional shale plays in: the Haynesville/Bossier shale, the Eagle Ford shale, the Rockies, the Permian Basin / Avalon Shale / Bone Spring, and the Marcellus / Utica.” Even though Enterprise is not overly dependent on natural gas usage, it should benefit as LNG liquefaction factories come online and natural gas usage increases. Enterprise’s five year EPS growth estimate is 30.2% per year. Enterprise’s stock price has increased by 25% over the last 52 weeks and 233% over the last three years. Prospective investors should do further research.

Energy Transfer L.P. (ETE) has a market cap of $9.6 billion with a price to earnings ratio of 31.13. The stock has traded in a 52 week range between $30.78 and $47.34. The stock is currently trading around $43. The company reported fourth quarter revenues of $2.1 billion compared to revenues of $1.7 billion in the fourth quarter of 2010. Fourth quarter net income was $85.8 million compared to net income of $76 million in the fourth quarter of 2010.

One of Energy Transfer’s competitors is AmeriGas Partners L.P. (APU). AmeriGas is currently trading around $46 with a market cap of $3.9 billion and a price to earnings ratio of 25.43. AmeriGas pays a dividend which yields 6.7% versus Energy Transfer whose dividend yields 5.8%.

Energy Transfer engages in the storage and transportation of natural gas. The company has paid quarterly dividends since 2006 and over the last five years the dividend has increased by 83.8%. The company increased year-over-year fourth quarter revenues by 23% and net income by 13%. In 2011, the company had distributable cash flow of $3.73 billion compared to distributable cash flow of $2.25 billion in 2010. Even though Energy Transfer’s earnings have been remarkably stable, the company spent $3.6 billion on capital growth projects in 2011. These projects will help the company benefit from increased production from the Haynesville and Eagle Ford shale reserves. The company should also benefit from the expected increase in the use of natural gas. While the price of natural gas is at record lows, revenues for pipeline operators remain steady. Enterprise’s stock price has increased by 9% over the last 52 weeks and 175% over the last three years. Prospective investors should do further research.

Electro Rent (ELRC) has a market cap of $446 million with a price to earnings ratio of 17.22. The stock has traded in a 52 week range between $12.64 and $18.93. The stock is currently trading near its 52 week high at around $19. The company reported second quarter revenues for the period ending on November 30th, in the amount of $61.6 million compared to revenues of $53.2 million in the second quarter of 2010. Second quarter net income was $6 million compared to net income of $7.1 million in the second quarter of 2010.

One of Electro Rent’s competitors is McGrath RentCorp (MGRC). McGrath is currently trading around $32 with a market cap of $779 million and a price to earnings ratio of 15.82. McGrath pays a dividend which yields 3% versus Electro Rent whose dividend yields 4.4%.

Electro Rent, leases, rents and sales general purpose test and measurement instruments, personal computers, workstations, and servers, and electrical test equipment and inspection equipment. Electro Rent has paid quarterly dividends since 2007 and has increased the dividend two times by 100% since the dividends inception. The last dividend increase was in June of 2011 and the current dividend is $0.80 with a 4.4% yield. The company increased year-over-year fourth quarter revenues by 15% but saw it net income decrease by 18%. Over the last year Electro Rent has done an excellent job of growing earnings. In 2011, the company increased year-over-year revenues by 57% and net income by 104%. In addition to its strong earnings growth, the company has a balance sheet which features zero debt. With growing earnings and a strong balance sheet, Electro Rent should have no problem maintaining its dividend. The company’s stock price has increased by 24% over the last 52 weeks and 169% over the last three years. Electro Rent offers a growing dividend and capital appreciation. Prospective investors should do further research.

British American Tobacco (BTI) has a market cap of $98.7 billion with a price to earnings ratio of 20.36. The stock has traded in a 52 week range between $73.48 and $103.08. The stock is currently trading around $100. The company reported fourth quarter revenues of $7.9 billion compared to revenues of $7.4 billion in the fourth quarter of 2010. Fourth quarter net income was $1.22 billion compared to fourth quarter net income of $1.2 billion in the fourth quarter of 2010.

One of British American’s competitors is Phillip Morris Industries Inc. (PM). Phillip Morris is currently trading around $85 with a market cap of $145.7 billion and a price to earnings ratio of 17.45. Phillip Morris pays a dividend which yields 3.6% versus British American whose dividend yields 5.5%.

British American manufactures and sales cigarettes and other tobacco products. The company has paid bi-annual dividends since 1998 and has increased the dividend in each of the last five years. The March dividend payment will be $2.775 per share which is a 77% increase over the March 2007 dividend. The company increased year-over-year fourth quarter revenues by 6.7% but had relatively flat year-over-year net income. British American will not provide investors with fast growing earnings. However, its earnings have grown at a remarkably steady rate. The company has increased earnings in each of the last five years. Over that period of time revenues have increased by 53.9% and net income has increased by 45%. Investors have been impressed by British American’s steady earnings and dividend growth, and have bid up the stock price by 28.8% over the last 52 weeks and 146% over the last three years. British American investors can sleep well. Prospective investors should do further research.

Ventas (VTR) has a market cap of $16 billion with a price to earnings ratio of 35.1. The stock has traded in a 52 week range between $43.25 and $59.05. The stock is currently trading around $55. The company reported fourth quarter revenues of $571 million compared to revenues of $266 million in the fourth quarter of 2010. Fourth quarter net income was $193 million compared to net income of $56 million in the fourth quarter of 2010.

One of Ventas’s competitors is HCP (HCP). HCP is currently trading around $39 with a market cap of 15.9 billion and a price to earnings ratio of 30.26. HCP pay a dividend which yields 5.1% versus Ventas whose dividend yields 4.5%.

Ventas is a healthcare real estate trust. The company has paid quarterly dividends since 2000, and the dividend has increased by 30% over the last five years. The last dividend increase of 8% was announced during the February 17th fourth quarter earnings call. Ventas has done an excellent job of growing earnings, and increased year-over-year fourth quarter revenues by 114% and net income by 148%. In 2011, the company increased year-over-year revenues by 76% and net income by 47%. In additional good news, Ventas Chairman and CEO Debra Cafaro explained in the fourth quarter earnings call, that Ventas’s December 27th agreement to purchase of Cogdell Spencer, would make Ventas the largest owner of medical office buildings in the US. Debra Cafaro also announced that the company’s 2012 funds from operation guidance of $3.63 to $3.69 per share, which was an increase from the company’s funds from operations of $3.37 per share in 2011. Ventas stock price has increased by 5% over the last 52 weeks and 124% over the last three years. Prospective investors should do further research.

About the author:

Dividend King
I am primarily an investor interested in creating passive income streams through dividends. I focus on finding and analyzing dividend paying stocks, MLPs and REITs that are a good fit for income investors.

I practice Judaism and my faith is very important to me. I visit family in Israel once a year, but I am educated and work in the United States where I hold an MBA and a bachelor’s in English. I am a patient man, enjoy wine but am not a connoisseur, and I listen more than I speak.

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