While the August stock market experienced a number of ups and downs, the indexes closed slightly lower than the improved July numbers. The Dow Jones Industrials finished at 10,015 for a 4.3% drop over the July figure of 10,466 for the worst August performance since 2001. The Standard and Poor’s 500 Index finished at 1,049 down 4.7% for August when compared to the 1,102 point July number. The Nasdaq Composite Index was the worst performer. It was down 6.2% with a 2,114 closing number down from July’s 2,255 number. For the year, the Dow is down by 4%, the S&P 500 is down by 5.9%, and the Nasdaq is down by 6.8%.

The Bad News

Many investors continue to skeptical about the economic recovery. With the end in sight for many stimulus packages and the threat of increased taxes, many investors and consumers are being very conservative with their spending. Gold prices tend to go up as people look for a more dependable investment choice. Prices jumped 5.8% in August and 14.1% for the year. Forecasts predicted that the US job market would add 13,000 jobs during the month, but 10,000 positions were lost instead.

The Good News

There was some good news in August that provides hope for a turnaround. The Consumer Confidence Index showed a 2.5% increase, and many retailers showed sales numbers that were higher than expected. Costco reported 6% same store sales increases when analysts were only forecasting a 4.2% increase. Family Dollar is also reporting increases of 6.1%. Home prices are finally showing an upward trend partially due to tax credits. While jobs were cut again in August, the rate continues to slow. The August numbers are 55% lower than the ones for the same time last year. Consumer bankruptcies were down by 8%.

The September Outlook

While September is a historically slow period for the stock market with the Dow showing drops for 21 of the last 32 years, there is always hope that this September will be different. Investors will be watching for the manufacturing and auto maker results to be released. These key industries are often used as leading indicators to gauge the overall strength of the economy. Apple is also releasing new IPod and Apple TV options which are virtually guaranteed to push their stock prices higher. With the surge in prices seen on September 1, the recovery may see the boost investors have been waiting for.

Dividend Paying Stocks

The dividend paying stocks continue to perform well in the face of economic challenges. The total returns of the S&P 500 Dividend Aristocrats showed an improvement of 7% for the month, while the price returns were slightly over 6%. The current top performers are:

• Archer-Daniels-Midland from the Consumer Staples sector trading at $31.35
• AFLAC Inc. from the Financials sector trading at $49.57
• Family Dollar Stores Inc from the Consumer Discretionary sector trading at 43.28
• Coca-Cola Co. from the Consumer Staples sector trading at $57.31
• Consolidated Edison Inc from the Utility sector trading at $48.24
• Integrys Energy Group Inc from the Utility sector trading at $49.97
• McDonald’s Corp from the Consumer Discretionary sector trading at $74.54
• Chubb Corp from the Financial sector trading at $55.85
• CenturyLink Inc from the Telecommunication Services sector trading at $36.73
• Air Products & Chemical Inc from the Materials sector trading at $74.75

Most Sectors Are Down For August

While many individual dividend stocks performed well, all but two of the major industry sectors were down for the month of August. This is a huge change in direction from the better performance shown in July. Telecommunications Services and Utilities were up for the month as reflected in the S&P 500 Index that showed an overall 4.75% decline in August. The Industrials, Financials, and Information Technology sectors were virtually tied for last place in the performance statistics for the month. If the investor reviews the 1-year numbers which indicate trends over longer periods, the numbers look a little better. The following list details August, 2010 price return increases compared to July, 2010 by industry along with the 1-year figures:
• Energy sector, down by 4.71% for August, down 1.83% for the past 12 months
• Materials sector, down by 2.85% for August, up by 5.37% for the past 12 months
• Industrial sector, down by 7.33% for August, up by 11.92% for the past 12 months
• Consumer Discretionary Spending sector down by 4.06% for August, up by 15.33% for the past 12 months
• Consumer Staples sector, down by 1.59% for August, up by 7.32% for the past 12 months
• Health Care sector, down by 1.79% for August, down by 1.72% for the past 12 months
• Financials sector, down by 7.91% for August, down by 7.65% for the past 12 months
• Information Technology sector, down by 7.20% for August, up by 2.12% for the past 12 months
• Telecommunication sector, up by 2.25% for August, up by 6.92% for the past 12 months
• Utilities sector, up by 0.89% for August, up by 5.40% for the past 12 months

Nokia is a Finnish company that has been around since 1865. The company employs over 123,000 individuals across the globe. The company has its hand in just about every area of the technology sector. Nokia manufactures and sells mobile devices, such as mobile phones, smartphones, and mobile computers. The company offers a wide array of services, applications, and content.

Last quarter Nokia saw its earnings drop 40% and the company has been losing market share to rivals. Although Nokia has seen its earnings drop over the past three years, the company is still an earnings giant. Nokia has consistently earned over $40 billion euro dollars in revenue each of the past five years. The company had $41 billion in revenue and an operating profit of $1.2 billion euro dollars last year alone. That’s a pretty good year during a global slowdown.

The company has a fantastic balance sheet with over $8.8 billion euro dollars in cash and just $4.4 billion in debt. The company has generated huge amounts of cash over the past few years. Nokia has been able to generate over $3 billion euro dollars in cash from operating activities each of the past 2 years.

The mobile phone market is an extremely competitive market. Apple and Google are the biggest threats to Nokia since both companies are aggressively going after the high end smartphone user. Nokia’s market share has dropped from 35% to 33% due to aggressive campaigns from its rivals. Even if the company continues to lose market share, the smartphone market is large enough for Nokia to create a nice niche for itself.

Shares of Nokia currently trade at $8.60 per share with the company projected to earn 72 cents per share for the current year. The current P/E for 2010 is 11.5, which is right in line with the industry average. Competitors Motorola and Alcatel-Lucent trade at significantly higher valuations. Nokia’s stock is currently yielding 4.7% which is an attractive yield. The current 40 cent payout is greater than last year’s EPS of 33 cents. The company was able to maintain the dividend due to the large amount of cash on its balance sheet. Fortunately for Nokia, earnings are on pace to more than double for the current year. The current year’s payout is projected to drop to 55% of EPS.

The stock appears to have bottomed out trading at levels not seen since the late 90’s. Nokia is a solid rebound play for value investors.

If you are interested in learning more about each stock listed on this page sign up to be a premium member to get access to our Ex-Dividend Ratings. We cover the payout ratio, dividend growth rate, income growth and industry rank.

Company	Symbol	Ex Date	Yield	DSO Rating
United Bancorp	UBCP	1-Sep	6.93%	Join
Potlatch	PCH	1-Sep	6.14%	Join
Psychemedics	PMD	1-Sep	5.83%	Join
American Nat Bankshares	AMNB	1-Sep	4.94%	Join
Espy Man & Elec	ESP	1-Sep	4.62%	Join
Chemical Financial	CHFC	1-Sep	4.19%	Join
Centurytel Inc.	CTL	2-Sep	8.05%	Join
Earthlink, Inc.	ELNK	2-Sep	7.54%	Join
Penn Wood Bancorp	PWOD	2-Sep	6.21%	Join
Weingarten Realty	WRI	3-Sep	5.31%	Join
Frontier Communications	FTR	7-Sep	9.87%	Join
Barnes & Noble	BKS	7-Sep	6.82%	Join
Regal Entertainment Gp	RGC	7-Sep	5.89%	Join
Ameren Corp	AEE	7-Sep	5.49%	Join
Univest Corp of Penn	UVSP	7-Sep	5.06%	Join
Flushing Financial Corp	FFIC	7-Sep	4.69%	Join
Public Service En Group	PEG	7-Sep	4.26%	Join
TICC Capital Corp	TICC	8-Sep	10.03%	Join
Reynolds American	RAI	8-Sep	6.37%	Join
NL Industries	NL	8-Sep	6.06%	Join
Pepco Holdings	POM	8-Sep	6.03%	Join
Qwest	Q	8-Sep	5.65%	Join
Telus Corp	TU	8-Sep	4.97%	Join
SCANA Corp.	SCG	8-Sep	4.90%	Join
Laclede Group	LG	8-Sep	4.80%	Join
H&R Block	HRB	8-Sep	4.49%	Join
Rayonier	RYN	8-Sep	4.28%	Join
Kimberly-Clark	KMB	8-Sep	4.08%	Join
State Auto Financial Corp	STFC	9-Sep	4.32%	Join
Medical Properties Trust	MPW	10-Sep	8.51%	Join
Ntelos Holdings Corp	NTLS	10-Sep	6.98%	Join
Washington REIT	WRE	10-Sep	5.68%	Join
Federal Signal	FSS	10-Sep	4.76%	Join
BancorpSouth	BXS	13-Sep	6.96%	Join
BCE Inc.	BCE	13-Sep	5.83%	Join
Leggett & Platt	LEG	13-Sep	5.66%	Join
World Wrestling Ent	WWE	13-Sep	10.60%	Join
Equity One	EQY	13-Sep	5.61%	Join
Valley National Bancorp	VLY	13-Sep	5.58%	Join
Cheviot Financial Corp	CHEV	13-Sep	5.30%	Join
SWS Group	SWS	13-Sep	4.95%	Join
Community Trust Bancorp	CTBI	13-Sep	4.87%	Join
Northwestern Corporation	NWE	13-Sep	4.84%	Join
Harleysville Group	HGIC	13-Sep	4.63%	Join
Westwood Holdings	WHG	13-Sep	4.48%	Join
Merck	MRK	13-Sep	4.41%	Join
NYSE Euronext	NYX	13-Sep	4.38%	Join
GATX Corp	GMT	13-Sep	4.32%	Join
Sterling Bancorp	STL	13-Sep	4.25%	Join
Community Bank	CBU	13-Sep	4.23%	Join
Porter Bancorp	PBIB	13-Sep	4.09%	Join
Mercury General	MCY	14-Sep	6.09%	Join
Fidelity National Financial	FNF	14-Sep	4.98%	Join
First Capital	FCAP	14-Sep	4.98%	Join
UIL Holdings	UIL	15-Sep	6.63%	Join
Warwick Valley Telephone	WWVY	16-Sep	6.77%	Join
DTE Energy	DTE	16-Sep	4.85%	Join
Gladstone Investment	GAIN	20-Sep	8.42%	Join
Gladstone Capital	GLAD	20-Sep	8.06%	Join
Eni	E	20-Sep	7.24%	Join
Cincinnati Financial	CINF	20-Sep	5.97%	Join
Telefonos de Mexico	TMX	20-Sep	4.74%	Join
Navios Maritime	NM	20-Sep	4.42%	Join
Portland General Electric	POR	22-Sep	5.26%	Join
Kimball International	KBALB	22-Sep	4.08%	Join
Windstream Corp	WIN	28-Sep	8.94%	Join
Getty Realty Corp	GTY	28-Sep	7.93%	Join
B & G Foods	BGS	28-Sep	6.37%	Join
National Health Investors	NHI	28-Sep	5.93%	Join
Arthur Gallagher	AJG	28-Sep	5.24%	Join
Winthrop Realty Trust	FUR	28-Sep	5.19%	Join
TransCanada Corp	TRP	28-Sep	4.43%	Join
Nicor	GAS	28-Sep	4.39%	Join
Koss Corp	KOSS	28-Sep	4.36%	Join
Superior Industries	SUP	29-Sep	4.37%	Join

]]> http://www.dividendstocksonline.com/2010/08/september-ex-dividend-dates-2010/feed/ 2 http://www.dividendstocksonline.com/2010/08/the-perfect-stock-for-the-defensive-investor/ http://www.dividendstocksonline.com/2010/08/the-perfect-stock-for-the-defensive-investor/#comments Tue, 24 Aug 2010 10:56:12 +0000 Mark Riddix http://www.dividendstocksonline.com/?p=3388 Proctor & Gamble is one of the oldest surviving companies in the United States. The company was founded by William Procter and James Gamble in 1873. There are only four companies larger than Proctor & Gamble in the United States. The company boasts about how its market cap is larger than the gross domestic product of nearly 200 countries. Today, the company services over 4 billion customers throughout the world.

The company netted over $13 billion dollars in net income last year alone. That surpasses the revenue of the majority of American companies. The company is an earnings giant grossing nearly $80 billion dollars in revenue last year. Proctor & Gamble has 22 brands that each generate over a billion dollars a year for the conglomerate. These brands include Gillette, Pringles, Duracell, Olay, Old Spice, Tide, Pampers, Head & Shoulders, Crest, and Dawn.

Proctor & Gamble is a recession proof stock because of the company’s huge array of defensive products. The company operates in the consumer goods industry. P& G is divided into the following segments: Household Care, Beauty Care, Health and Well Being. Proctor & Gamble manufactures detergents, deodorants, shampoos, soaps, lotions, razors, and more. All of these products are must owns. Customers buy these products during economic booms and troughs.

Shares currently trade at 15 times this year’s earnings and 13 times next year’s earnings estimates. This is in line with competitors Johnson & Johnson and Kimberly Clark. The company’s operating margins and profit margins are higher than most competitors. Only Johnson & Johnson has higher margins. Proctor & Gamble has a history of stable earnings and is a stock that investors run to during market drops. This is a low risk investment.

While other companies were cutting dividends over the past few years, Proctor & Gamble was increasing their dividend. P&G has increased its dividend for a remarkable 54 consecutive years. That’s no small feat at a time when stalwarts like General Electric and Bank of America were forced to cut their dividends. Proctor & Gamble raised its dividend 10% recently and has a 10 year annual dividend growth rate of 11%.

Right now investors are getting a 3.2% dividend for buying shares of Proctor & Gamble. This is only slightly above the historical dividend payout of 2.8%. The company will have no trouble covering its dividend with the payout being only 44% of earnings. With the company’s huge earnings power and solid free cash flow, Proctor & Gamble is one of the strongest dividend paying stocks in the market.

If the investor does not need the dividend payment to cover expenses, a DRIP program is a pain-free way to build a more robust stock portfolio over time. Each time dividends are reinvested, the investor will receive increasingly larger dividend payments that will purchase slightly more stock during the next cycle. Most investors will find that their return on investment (ROI) dramatically increases as this process compounds their investment. A DRIP strategy can be a smart way to prepare for retirement. With a little planning, some investors may find that their periodic DRIP payments are large enough to provide a healthy income after they quit working.

If one is offered, the company or fund that represents the investment should be able to provide information on how to establish a DRIP. When a DRIP is set up directly with the company, it may be completely free or offered for a nominal fee. This allows the investor to bypass stock brokers and expensive commissions. A few companies will even discount the stock price when it is purchased through their DRIP program.

Once it is determined that the dividend stock’s parent company offers a DRIP program, the investor should verify that they are the shareholder of record. Sometimes, stock brokers will record their own name on stocks that they manage for their customers. If this is the case, instruct them to transfer the registration. The next step is to contact the company directly to request a DRIP application and a prospectus. If the stock’s parent company does not offer a DRIP program, many stock brokers can set up a similar plan to reinvest your dividend payments.

Applying for a DRIP plan is simple and easy, but the investor should be aware of the details of the company’s specific plan. Most companies do not charge anything, but there is a trend toward implementing DRIP plan fees. It is usually small, but it must be compared against the dividend payment to ensure that it doesn’t consume a high percentage of the funds. For example, a small portfolio that only receives a dividend payment of $10 each month would not be a good choice to include in a DRIP plan that charges a $5 fee for each monthly reinvestment

GE has over 300,000 employees and is the second largest company in the United States. General Electric has its hand in just about every area of the U.S. economy. It is one of the most diversified companies in the world. General Electric owns GE Capital, GE Energy, GE Technology Infrastructure, GE Home & Business Solutions, and NBC Universal.

Despite its iconic status, the stock has been a terrible investment since CEO Jeff Immelt took over. The company became too big and bloated suffering through its worst performance ever. General Electric shares have declined 55% over the past 5 years. General Electric even cut its dividend last year for the first time since 1938. The dividend cut was prompted by a move to conserve cash and maintain its AAA credit rating. The company lost its AAA credit rating anyway and things were darkest at GE in the spring of 2009.

But things finally appear to be changing at GE. General Electric is seeking to become a much leaner company. The company has been making moves to divest itself of its industrial and consumer businesses over the past two years. The company is turning its focus towards energy and healthcare. GE is still awaiting regulatory approval of its sale of NBC Universal to Comcast Corporation. GE has also been cutting the size of GE Capital by selling off assets and reducing the unit’s leverage. The financial arm of GE almost brought about the company’s collapse during the crash of 2009.

GE has done an excellent job of writing down the bad loans in it portfolio and increasing its cash reserves. The company expects to have a $25 billion dollar war chest on hand by the end of the year. GE recently increased its dividend last month to 48 cents per share and the company is so flush with cash that it is re-instituting its $15 billion dollar share buyback campaign.

GE is often compared with other financial companies due to the size of GE Capital. However, the market appears to be making a big mistake. GE is more than your typical finance company. The company has great growth opportunities domestically and internationally in the energy, healthcare, and industrial sectors. The conglomerate is investing heavily in renewable resources, turbine technology, appliances, and aircraft engines.

The stock now sells for $15 per share and is currently yielding 3.1%. The stock currently trades at 13.5 times this year’s earnings of $1.11. The company’s earnings declined 13.5% over the past 5 years. The good news is that earnings are expected to grow 10.5% over the next 5 years. Investors are getting a chance to buy an American classic at a bargain price.

The company’s sales have been stable averaging over $14 billion dollars in sales the last 2 years. General Mills generated over $1 billion dollars in net income over the last three years. Sales have grown at a 9.6% clip the last 5 years. The company is on pace to go over $15 billion dollars in sales this year and $15.7 billion for next year. Earnings per share are projected to come in at $2.48 for this year and $2.71 for next year.

General Mills operates in a recession proof industry. People have to eat regardless of whether the economy is good or bad which is a huge competitive advantage in these turbulent economic times. Investors flock to defensive industries like these during market swoons. General Mills chief competitor is Kellogg Company in the breakfast goods and cereals industry. These two companies dominate the market. They are comparable in size, revenue, and net income. Kraft and ConAgra Foods are competitors in the baked goods industry.

General Mills is a highly levered company with $6.6 billion in debt and under $660 million in cash. The large amount of debt should not be a problem for General Mills however since the company generated over $2.1 billion in free cash flow last year. General Mills has more than enough money to service its debt. The company has a healthy operating margin of 17% and a profit margin of 10%.

Shares are currently selling for $33.50. The stock has been trading between $28.55 and $38.98 for the year. Shares currently trade at a price to earnings ratio of 13.5 times this year’s earnings and 12.2 times next year’s earnings. Both of these P/E’s are below the industry average of 14.7.

General Mills is an attractive buy due to its low valuation and solid dividend yield. The company is paying a $1.12 dividend to shareholders, which is a yield of 3.3%. This is higher than the 5 year historical average yield of 2.7%. The current dividend payout ratio is 45% which is slightly higher than the historical payout rate of 43%.

General Mills is a good stock for fixed income investors looking to add some income to their portfolio and value investors looking for a bargain stock. Investors should feel comfortable buying shares in the low $30’s.

Paychex is an earnings juggernaut producing over $2 billion dollars in revenue each of the past three years. Paychex’s growth was affected by the struggling economy over the past few years. The payroll processing industry has been affected by the high unemployment rate and the bankruptcy of many businesses. Some businesses have scaled back on benefits in attempt at cost reduction. All of these factors lead to lower check volumes. The biggest competitor in the industry is ADP. ADP is the largest payroll processor in the industry with revenues over $8.8 billion dollars.

Despite all of these issues, Paychex still managed to have profitable sales growth. Growth came in at 3.2%. Paychex should benefit from an improving economic outlook. The unemployment rate may still be high but it is decreasing. Continued job creation will lead to more clients seeking payroll services. Paychex stands to benefit from any recovery in the job market and its bottom line should increase as well.

Paychex has been able to withstand the poor economy due to its great balance sheet. The company’s balance sheet is one of the best in the industry. Paychex has $366 million dollars and cash and no long term debt obligations. The payroll company generated $610 million dollars in free cash flow this year. Paychex is able to generate interest income in the mid teens off of money held for clients.

Shares currently trade just south of $26. Analysts are looking for earnings of $1.37 this year and $1.48 next year. That would place a price to earnings ratio of 19 on the stock for this year and 17.5 for next year. Both are higher than the industry average. Earnings are expected to rebound with the company growing at an 11% rate over the next 5 years. The earnings growth drivers will be human resource services and investment income. Payroll processing growth is expected to be flat for the near future.

Paychex currently has one of the best yields in the market for a blue chip company. The stock is yielding 4.77%. The dividend payout rate is alarmingly high at 83% of next yea’s earnings. However, the company should be able to sustain it due to the company’s balance sheet and expected earnings growth. Shares may not be cheap based on its P/E and book value but income seeking investors may find the shares worth buying for the juicy dividend.

What do you think about Paychex?

The dividend stock lists have been updated for August. All stock data is current as of August 9th. Our premium content is available to members only.

We decided to make some changes to the lists this month based on user feedback. We’ve removed some of the lists that people were not using and added a high yield ETF list. For members we added ETF ratings and Industry ratings.

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Primary Competitors
Boeing Company and Lockheed Martin ranked first and second in the defense contractor industry in 2009. Boeing achieved $13.4 billion in profits in 2009, against revenues of $68.3 billion. Lockheed Martin posted 2009 profits of $5.08 billion against revenues of $45.2 billion.

Stock Performance Versus Competitors
During the period between August 1, 2009 and July 31, 2010, Northrop Grumman’s stock achieved its highest price per share on May 3, 2010, when it reached $69.80. Its lowest stock price was $42.51 per share, recorded July 29, 2009. During the same time frame, Boeing’s stock price soared to a high price per share of $76.00 per share on May 3, 2010 versus an October 29, 2009 low price of $41.43. From a low price per share of $69.49 on October 29, 2009, Lockheed Martin’s stock price rose on May 3, 2010 to $87.19.

Dividend Information
Northrop Grumman has a dividend yield of 3% and a very low payout ratio of 36%. The five year growth rate of the dividend is a nice 13.27% but they have only been able to increase their dividend for the last 4 years. NOC has an ex-dividend date this month – August 26th.

Dividend History
2009: $1.69
2008: $1.57
2007: $1.48