· Have a dividend yield of more than 3%.
· Have a strong history of stable and increasing dividends.
· Maintain Guru ownership.
· Have a market cap of greater than $10 billion.
The following two companies come from very different sectors of the market, but they both fit the necessary criteria needed to qualify them as dividend growers.
A comparison of Verizon and Seadrill’s dividend growth:
Verizon Communications (VZ)
On June 6, Verizon Communications declared a dividend of $0.515 per share, setting the dividend yield at 4.10%. This dividend is payable on Aug. 1 to shareholders of record at the close of business on July 1.
The company’s historical dividend growth is as follows:
· 10-year: 2.2%
· 5-year: 3.2%
· 3-year: 2.1%
Verizon has offered a quarterly dividend since 1984. The company made $5.2 billion in cash dividend payments in 2012.
Verizon is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies with a presence in over 150 countries around the world.
The analysis on Verizon reports:
· The operating margin has been in decline for the past five years. The average rate of decline per year is -8.4%.
· The price is near a 10-year high of $53.63.
· The P/B ratio is nearing a 10-year high of 4.62.
· The P/S ratio is nearing a five-year high of 1.31.
During the first quarter Verizon reported results of:
· $0.68 in EPS in first-quarter 2013, a 15.3 percent increase compared with first-quarter 2012 earnings of 59 cents per share.
· 4.2% year-over-year increase in total operating revenues.
· Cash flow from operating activities up $1.6 billion, or 26.4 percent, from first quarter 2012.
· Total operating revenues in first-quarter 2013 were $29.4 billion, a 4.2 percent increase compared with first- quarter 2012.
Verizon has a market cap of $148.97 billion; its shares were traded at around $50.47 with a P/E ratio of 127.20 and a P/S ratio of 1.20. The company had an annual average earnings growth of 2.6% over the past 10 years.
The Peter Lynch Valuation Chart shows that Verizon appears to be overvalued:
There are currently 16 gurus that hold a stake in Verizon. Click here to see their holding histories.
Seadrill Ltd. (SDRL)
Seadrill declared a dividend of $0.88 per share on May 29. This sets the dividend yield for the company at 4.20%. The dividend is payable on July 8 to shareholders of the record at the close of business on June 17.
Seadrill’s dividend growth history is as follows:
· 10-year: 0%
· 5-year: 34.6%
· 3-year: 58.1%
Seadrill has offered a quarterly cash dividend every quarter since June 2010.
Seadrill Limited is an offshore drilling contractor. It provides drilling and well services to the offshore industry. The company has 42 drilling units and a fleet of harsh-environment semi-submersibles, jack-ups, shallow and deep water tender rigs and deepwater drillships.
The company released its first quarter results at the end of May which reported:
· Best operating quarterly revenue to-date at $713 million.
· Net income of $440 million, or $0.87 EPS.
· Increased cash dividend by $0.03 to $0.88 per share.
Seadrill has a market cap of $18.53 billion; its shares were traded at around $39.90 with a P/E ratio of 17 and a P/S ratio of 4.00. The company had an annual average earnings growth of 20.2% over the past five years.
The Peter Lynch Valuation shows that the company appears to be overvalued:
Seadrill is held by George Soros, Steven Cohen, Jim Simons and James Barrow. Click here to see their holding history of the company.
To view a complete list of high yielding dividend stocks found among the gurus’ portfolios, click here.