Low interest rates have put pressure on millions of investors who rely on bank CDs and other safe investments for their income. In response, many of them have replaced some of their former exposure to fixed-income investments with dividend stocks. Although making that move will get you a lot more income than a bank CD will, you need to understand the risks you're taking by boosting your holdings of dividend stocks as your primary source of income.
The best way to understand the risks of dividend stocks is to see actual stories of how investors got hurt by owning them. Let's look at five ways that dividend stocks are far riskier than pure income investments.
1. Dividends can get cut.
With bank CDs, you know upfront exactly how much and when you're going to get income payments. Like clockwork, interest comes in every month or every quarter, either paid out to you directly or added to your CD account balance. Bonds and other fixed-income investments tend to be similar, with quarterly or semi-annual payments being the norm, and with fixed interest rates that tell you how much income you'll get.
Top 5 High Tech Stocks To Watch For 2015: Altria Group(MO)
Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. It offers cigarettes under the Marlboro, Virginia Slims, Parliament, Benson & Hedges, Basic, and L&M brands; smokeless tobacco products under the Copenhagen, Skoal, Red Seal, Husky brands, and Marlboro snus brands; and machine-made large cigars and pipe tobacco. The company also produces and sells blended table wines under the Chateau Ste Michelle and Columbia Crest names; and distributes Antinori and Villa Maria Estate wines and Champagne Nicolas Feuillatte in the United States. In addition, it maintains a portfolio of leveraged and direct finance leases in rail and surface transport, aircraft, electric power, real estate, and manufacturing. The company sells its tobacco products to wholesalers, including distributors; large retail organizations, such as chain stores; and the armed services. Altria Group, Inc. markets its wine products to restaurants, wholesale clubs, supermarkets, wine shops, and mass merchandisers. The company was founded in 1919 and is headquartered in Richmond, Virginia.
Advisors' Opinion:- [By Lawrence Meyers]
Everyone�� heard of the big tobacco companies like Altria (MO), but did you ever wonder who actually sells the tobacco leaves to the big tobacco manufacturers? I love the distribution business and that�� why I love Universal Corporation (UVV).
- [By DAILYFINANCE]
Tobacco marketing has been increasingly restricted. TV commercials for cigarettes were banned in 1970. Later legal settlements and new regulations took ads off billboards and banned event sponsorships. Cigarette marketing can't use celebrities or cartoons. While they must include health warnings, companies can still advertise cigarettes and smokeless tobacco in magazines that don't have a large youth readership. The electronic cigarette ads push the same themes as old cigarette ads: sophistication, freedom, equality and individualism, said Timothy de Waal Malefyt, a visiting associate professor at Fordham University's business school and former advertising executive. That's the problem, tobacco opponents say. "The ads, themes and messages are precisely the same [as those] used by the tobacco industry for decades that made those products so appealing to young people," said Matt Myers, president of the Campaign for Tobacco-Free Kids. "For an industry that wants to project itself as helping to solve the tobacco problem, they're behaving just like the tobacco industry in its worst days." Reynolds American (RAI), owner of the nation's No. 2 tobacco company, has said it plans to use TV ads to promote a revamped version of its Vuse brand electronic cigarette that it launched last month. Altria Group (MO), owner of the nation's biggest cigarette maker, Philip Morris USA, has declined to detail its marketing strategy for its first electronic cigarette under the MarkTen brand set to launch this month.
- [By Albert Alfonso]
In terms of creating value for its shareholders, Altria (MO) has to be near the top of the list. Unlike some of its other domestic tobacco peers, Altria does offer some diversification, due to its large stake in SABMiller and other alcohol related holdings. Altria currently offers a $0.44 per share quarterly dividend. At current prices, Altria yields slightly under 5%.
- [By Alex Planes]
One smoking investment
Before tobacco companies became barbarians at the gates during the buyout-fueled '80s, they were simply tobacco companies -- reliable, cash-gushing portfolio cornerstones for many long-term investors. However, the tobacco industry's diversification began many years before most investors might remember. One of the most successful volleys of tobacco's diversification came on June 12, 1969, when Altria (NYSE: MO ) acquired a majority interest in top U.S. brewer Miller from W.R. Grace.
Top 10 Dividend Stocks To Watch Right Now: Waste Management Inc.(WM)
Waste Management, Inc., through its subsidiaries, provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling, and disposal services. The company also owns, develops, and operates waste-to-energy and landfill gas-to-energy facilities in the United States. Its collection services involves in picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility, or disposal site; and recycling operations include collection and materials processing, plastics materials recycling, and commodities recycling. In addition, it provides recycling brokerage, which includes managing the marketing of recyclable materials for third parties; and electronic recycling services, such as collection, sorting, and disassembling of discarded computers, communications equipment, and other electronic equipment. Further, the company e ngages in renting and servicing portable restroom facilities to municipalities and commercial customers under the Port-o-Let name; and involves in landfill gas-to-energy operations comprising recovering and processing the methane gas produced naturally by landfills into a renewable energy source, as well as provides street and parking lot sweeping services. Additionally, it offers portable self-storage, fluorescent lamp recycling, and medical waste services for healthcare facilities, pharmacies, and individuals, as well as provides services on behalf of third parties to construct waste facilities. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is based in Houston, Texas.
Advisors' Opinion:- [By Dan Caplinger]
One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Waste Management (NYSE: WM ) fits the bill.
- [By John Persinos]
One dominant company in the handling, treatment, and disposal of solid waste is Waste Management (WM). With this industry leader, investors are paying for market dominance, relative predictability, good dividends, and high cash flow.
- [By Damian Illia]
Furthermore, the company has a wide economic moat largely stemming from three factors: its efficient scale, its high switching costs and its intangible assets. Of the 20 commercial hazardous-waste landfills operational in the U.S., the majority are run by US Ecology and its main competitors Waste Management Inc. (WM), and Clean Harbors Inc. (CLH). With barriers to entry stemming from regulatory permits, and a limited market size, ECOL has managed to achieve an efficient scale in the market with five hazardous waste-sides. The company�� intangible assets consist of long-term regulatory permits, which enable US Ecology to posses a ��atekeeper privilege��regarding barriers to new entrants. In addition, customer switching costs are high, thus further adding to the firm�� ability to sustain growth in the long term.
Top 10 Dividend Stocks To Watch Right Now: Kimco Realty Corporation (KIM)
Kimco Realty Corporation is a publicly owned real estate investment trust. The firm engages in acquisitions, development, and management of neighborhood and community shopping centers. It also provides property management services relating to the management, leasing, operation, and maintenance of real estate properties. The firm primarily invests in real estate markets across the globe with a focus in North America. It also invests in operating properties. The firm also provides equity and mezzanine debt to developers and owners of commercial properties. It also makes secondary market investments including under performing mortgage loans, secured bank debt, and corporate securities. Kimco was formed in 1960 and is based in New Hyde Park, New York with additional office in Mesa, Arizona; Daly City, California; Granite Bay, California; Irvine, California; Carmichael, California; Vista, California; Walnut Creek, California; West Hartford, Connecticut; Largo, Florida; Margate, Florida; Sanford, Florida; Lisle, Illinois; Rosemont, Illinois; Columbia, Maryland; Lutherville, Maryland; Bellevue, Washington; Mesquite, Texas; Houston, Texas; Dallas, Texas; Austin, Texas; Ardmore, Pennsylvania; Portland, Oregon; Kettering, Ohio; Canfield, Ohio; Raleigh, North Carolina; Charlotte, North Carolina; New York, New York; and Las Vegas, Nevada.
Advisors' Opinion:- [By Rich Duprey]
Shopping center REIT KIMCO Realty (NYSE: KIM ) announced yesterday that it sold to an affiliate of Starwood Capital Group its�InTown Suites company and related real estate assets for�$735 million, including $609 million of existing mortgage debt. Upon closing, KIMCO realized�approximately $103 million in proceeds.
- [By Sean Williams]
A smart investment
Short-sellers have been out in full force this month in Kimco Realty (NYSE: KIM ) , a real estate investment trust that has owned interests in 895 shopping centers across North, Central, and South America. The selling has been particularly noticeable ever since Kimco announced it was purchasing a partner's stake in 70 shopping centers via two portfolios -- the Kimco Income Fund I and Kimco Income REIT joint venture ��for $67 million. Investors may not be thrilled with this purchase, but I'm certainly not doing any complaining. - [By Ken McGaha]
The four REITS I reviewed are Kilroy Realty Corp. (KRC), Kimco Realty Corp. (KIM), Eastgroup Properties (EGP) and Federal Realty Investment Trust (FRT).
- [By Dimitra DeFotis]
Apartment Invest & Management (AIV)
Ameriprise (AMP)
Edison International (EIX)
Host Hotels & Resorts (HST)
Kimco Realty (KIM)
Kroger (KR)
Lincoln National (LNC)
Newfield Exploration (NFX)
Republic Services (RSG)
UnitedHealth (UNH)
Verizon (VZ)
Wells Fargo (WFC)
WellPoint (WLP)
Wyndham Worldwide (WYN)
Xcel Energy Utilities (XEL)
Top 10 Dividend Stocks To Watch Right Now: ConocoPhillips(COP)
ConocoPhillips operates as an integrated energy company worldwide. The company?s Exploration and Production (E&P) segment explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids. Its Midstream segment gathers, processes, and markets natural gas; and fractionates and markets natural gas liquids in the United States and Trinidad. The company?s Refining and Marketing (R&M) segment purchases, refines, markets, and transports crude oil and petroleum products, such as gasolines, distillates, and aviation fuels. Its Chemicals segment manufactures and markets petrochemicals and plastics. This segment offers olefins and polyolefins, including ethylene, propylene, and other olefin products; aromatics products, such as benzene, styrene, paraxylene, and cyclohexane, as well as polystyrene and styrene-butadiene copolymers; and various specialty chemical products comprising organosulfur chemicals, solvents, catalyst s, drilling chemicals, mining chemicals, and engineering plastics and compounds. The company?s Emerging Businesses segment develops new technologies and businesses. It focuses on power generation; and technologies related to conventional and nonconventional hydrocarbon recovery, refining, alternative energy, biofuels, and the environment. This segment also offers E-Gas, a gasification technology producing high-value synthetic gas. ConocoPhillips was founded in 1917 and is based in Houston, Texas.
Advisors' Opinion:- [By Joel South and Taylor Muckerman]
In the following video, Motley Fool energy analysts Joel South and Taylor Muckerman discuss ConocoPhillips (NYSE: COP ) , and the recent Department of Energy approval for its Freeport LNG facility to export liquefied natural gas. This is the second facility in the U.S. to gain DOE approval, which could bring the total export capacity up to around 3.4 billion cubic feet per day. In the video, Joel tells investors why increased natural gas exports will have a stabilizing effect on the price of the commodity and discusses why this could make low-cost natural gas producers a great long-term play.
- [By Bryan Perry]
CVX stock has had a rough start to 2014, trading lower by about 7% alongside peers ConocoPhillips (COP) and Exxon Mobil (XOM). Fortunately, the company increased its dividend by 10 cents to $1.00 per share last year, which translates to a legitimate 3.4% yield.
- [By Ben Levisohn]
Shares of Anadarko have dropped 2.8% to $93.22 at 11:30 a.m. today, a bigger loss than those experienced by others in the sector.�Chevron�(CVX) has fallen 0.2% to $117.90, for instance,�Devon Energy�(DVN) has declined 0.7% to $63.98 and�ConocoPhillips (COP) has 0.8% to $72.76.
- [By Eric Volkman]
The company is a limited partnership created earlier this year by downstream oil concern Phillips 66 (NYSE: PSX ) . In the words of its parent, Partners was formed to "own, operate, develop, and acquire primarily fee-based crude oil, refined petroleum product, and natural gas liquids pipelines and terminals and other transportation and midstream assets." Partners is a spinoff of a spinoff; Phillips 66 was carved out of energy major ConocoPhillips (NYSE: COP ) and made its market debut in 2012.
Top 10 Dividend Stocks To Watch Right Now: Spectra Energy Corp(SE)
Spectra Energy Corp, through its subsidiaries, engages in the ownership and operation of a portfolio of complementary natural gas-related energy assets in the United States and Canada. The company operates in four segments: U.S. Transmission, Distribution, Western Canada Transmission and Processing, and Field Services. The U.S. Transmission segment engages in the transportation and storage of natural gas for customers in various regions of the northeastern and southeastern United States and the Maritime Provinces in Canada. Its natural gas pipeline systems consist of approximately 19,000 miles of transmission pipelines; and storage capacity comprises 305 billion cubic feet in the United States and Canada. The Distribution segment engages in the natural gas storage, transmission, and distribution in Western Canada and the United States. This segment has approximately 37,600 miles of distribution main and service pipelines serving approximately 1.3 million residential, comme rcial, and industrial customers. The Western Canada Transmission and Processing segment provides natural gas transportation, and gas gathering and processing services; and provides services to natural gas producers to remove impurities from the raw gas stream including water, carbon dioxide, hydrogen sulfide, and other substances. This segment serves local distribution companies, end-use industrial and commercial customers, marketers, and exploration and production companies. The Field Services segment gathers and processes natural gas, as well as fractionates, markets, and trades natural gas liquids. It engages in gathering raw natural gas through gathering systems located in nine natural gas producing regions consisting of the Mid-Continent, Rocky Mountain, east Texas-north Louisiana, Barnett Shale, Gulf Coast, South Texas, Central Texas, Antrim Shale, and Permian Basin. The company is headquartered in Houston, Texas.
Advisors' Opinion:- [By Aimee Duffy]
Outside of Dominion and Energy Transfer Partners, Royal Dutch Shell and El Paso Pipeline Partners are teaming up to convert EPB's import terminal on Elba Island, just off the Savannah coast, to an export facility. ExxonMobil and Sempra Energy (NYSE: SE ) , among others, have also thrown their hats in the ring. Both companies would export from the U.S. Gulf Coast.
- [By Selena Maranjian]
Spectra Energy (NYSE: SE )
To earn their high scores, the companies above engaged in a variety of good practices, including, among many other things, disclosing carbon dioxide emissions, disclosing greenhouse gas emissions, and applying their climate-change policy standards to their suppliers and vendors.
Digging deeper
So what, exactly, are these companies doing right? Here are a few examples of their climate-change-related activities:
- [By Tom Rojas var popups = dojo.query(".socialByline .popC"); popups.forEach(func]
Spectra Energy Corp.(SE) said its second-quarter profit fell 26%, reporting weaker-than-expected results as plant turnarounds dented revenue growth and increased costs.
- [By Jon C. Ogg]
Spectra Energy Corp. (NYSE: SE) was reiterated as Buy with a $38 price target (versus a $34.92 closing price) at Argus. The move follows the Spectra’s announcement that it will drop its storage and transmission assets down to its master limited partnership, Spectra Energy Partners L.P. (NYSE: SEP). Argus now believes that Spectra will be able to grow its dividend faster than the firm had originally projected and will be rewarded with a higher valuation multiple.
Top 10 Dividend Stocks To Watch Right Now: Merck & Company Inc.(MRK)
Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The company?s Pharmaceutical segment provides human health pharmaceutical products, such as therapeutic and preventive agents for the treatment of human disorders in the areas of bone, respiratory, immunology, dermatology, cardiovascular, diabetes and obesity, infectious diseases, neurosciences and ophthalmology, oncology, vaccines, and women's health and endocrine. This segment also offers human health vaccines, such as preventive pediatric, adolescent, and adult vaccines. Its Animal Health segment discovers, develops, manufactures, and markets animal health products. This segment offers antibiotics, anti-inflammatory products, vaccines, products for the treatment of fertility disorders, and parasiticides for cattle, swine, horses, poultry, dogs, cats, salmons, and fish. The Consumer Care segment develops, manufac tures, and markets over-the-counter, foot care, and sun care products. Its over-the-counter product line includes non-drowsy antihistamines; treatment for occasional constipation; decongestant-free cold/flu medicine for people with high blood pressure; nasal decongestant spray; and treatment for frequent heartburn. This segment?s foot care products comprise topical antifungal, and foot and sneaker odor/wetness products; and sun care products include sun care lotions, sprays and dry oils; and sunburn relief products. The company serves drug wholesalers and retailers, hospitals, government agencies, physicians, physician distributors, veterinarians, animal producers, and managed health care providers, as well as food chain and mass merchandiser outlets in the United States and Canada. Merck & Co., Inc. was founded in 1891 and is headquartered in Whitehouse Station, New Jersey.
Advisors' Opinion:- [By Sally Jones] �s Current Shares: 1,215,659
Kahn Brothers also increased its position with Merck & Co. Inc. (MRK) by 4.38%, buying 50,998 shares at an average price of $46.81, for a 3.4% gain. For the 1,888,219 shares bought since the second quarter of 2005, Kahn�� average price was $41.90 per share with a 15% gain.
Up 9% over 12 months, MRK has a market cap of $146.12 billion, and trades at a P/E of 24.80, a P/B of 2.70 and a P/S of 3.22. The current share price is $48.39.
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Merck announced its second quarter 2013 financial results highlighting $11 billion in revenue, a decrease of 11%. The company had non-GAAP EPS of $0.84, and GAAP EPS of $0.30. The company reaffirmed its full-year non-GAAP EPS target of $3.45 to $3.55, excluding certain items and a revised GAAP EPS range of $1.84 to $2.05. Merck has seen growth in key franchises including vaccines, diabetes and immunology, and a continued return of cash to shareholders, including the $5 billion accelerated share repurchase announced in May, according to a company press release.
New York Community Bancorp Inc. (NYCB)
Kahn�� Current Shares: 4,006,237
In second quarter 2013, Kahn Brothers also increased its position with another long-time holding, New York Community Bancorp Inc. (NYCB) by 3.74%, buying 144,329 shares at an average price of $13.51, for a 13.8% gain. For the 4,006,237 shares bought since the second quarter of 2005, Kahn�� average cost was $13.48 per share with a 14% gain.
NYCB reported second quarter 2013 GAAP earnings of $122.5 million, or $0.28 per diluted share, and $241.2 million, or $0.55 per diluted share for the six months ending June 30, 2013. The company�� balance sheet shows assets of $44.2 billion as of June 30, 2013. The company had a net income of $501.1 million in 2012.
Up 17% over 12 months, NYCB has a market cap of $6.78 billion, and trades with a P/E of 13.30, a P/B of 1.20, and a P/S of 4.62. The current share price
Top 10 Dividend Stocks To Watch Right Now: Reynolds American Inc(RAI)
Reynolds American Inc. (RAI), through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. It offers cigarettes under the brand names of CAMEL, PALL MALL, WINSTON, KOOL, DORAL, SALEM, MISTY, and CAPRI; and cigarettes and other tobacco products under the NATURAL AMERICAN SPIRIT brand name, as well as manages various licensed brands, including DUNHILL and STATE EXPRESS 555. The company also provides smokeless tobacco products, including moist snuff under GRIZZLY and KODIAK brand names; pasteurized tobacco under CAMEL Snus brand name; milled tobacco under the brand name of CAMEL Dissolvables; other tobacco products, such as little cigars under WINCHESTER and CAPTAIN BLACK brand names; and roll-your-own tobacco under the brand name of BUGLER. RAI sells its products primarily through distributors, wholesalers, and other direct customers, including retail chains, as well as distributes its cigarettes to public warehouses. The compan y was founded in 1875 and is headquartered in Winston-Salem, North Carolina.
Advisors' Opinion:- [By Ben Popkin]
The recent launches
While Lorillard has the leading e-cigarette, other major tobacco companies like�Reynolds American (NYSE: RAI ) and Altria (NYSE: MO ) have begun making versions of their own.
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