Over the past several years, no type of stock has been more popular than the dividend-paying variety. Investors have long been wooed by the guarantee of payouts to help secure their investments.
At the same time, however, shareholders need to realize that steep increases in the price of their shares could be offering up an opportunity. While we here at the Fool often advocate holding shares for the long term, there are situations where selling your dividend payers now would guarantee a higher return than holding on and collecting quarterly payments.
Below I will highlight four popular dividend stocks that have taken steep climbs lately and determine their prognosis moving forward. At the end I'll offer you access to nine company tickers we believe represent excellent dividend opportunities.
Tankers no longer tanking
The past month has been a rewarding one for shareholders in several tanker companies. Take a look at how two popular stocks in the sector have done, as well as their current dividend yield.
1-Month Price Change
|Teekay Tankers (NYSE: TNK )||30%||7.5%|
|Frontline (NYSE: FRO )||32%||1.1%|
Source: Google Finance, Yahoo! Finance.
Things started getting interesting in mid-March, when Frontline CEO John Fredriksen said the outlook for oil shipments to China was very positive and business had picked up dramatically as of late.
Both Frontline and Teekay continued their upward trend later last month when a slew of upgrades came their way. Analysts basically agreed with Fredriksen, saying that as oil prices rise, so will stocks of companies that help ferry the black gold from country to country.
Personally, I'm no fan of companies that only have positive cash flow via stock offerings (Teekay) or by going into debt (Frontline). I'm not willing to make a bullish CAPScall on either company, but I'm also not willing to bet against an industry that may well be on the mend.
All anyone can talk about these days in the energy industry is cheap natural gas. Though low prices right now certainly aren't good for the short-term prospects of providers, they are serving as a catalyst for a host of other industries to take advantage of natural gas.
That, in time, will increase demand and serve as a boon for companies like Atlas Energy (NYSE: ATLS ) , a limited partnership that offers investors a 2.7% yield. The company got a big boost last month when its subsidiary, Atlas Resource Partners, purchased 277 BCFE of natural gas from the Barnett shale from Carrizo Oil & Gas (Nasdaq: CRZO ) .
Carrizo was willing to part ways with the land as it focuses on liquid natural gas, and Atlas was more than happy to take it off Carrizo's hands. Although there are certainly obstacles to overcome within the industry, I think Atlas' move was a smart one and it will pay off in the years to come. I'll be making a bullish CAPScall on the company in my All-Star profile.
A failed buyout
Shares of beauty product maker Avon (NYSE: AVP ) were up big time last week, when privately owned Coty announced that it had made an offer for the company for $23.50 per share. That caused Avon to jump 17%, even though it turned Coty's offer down.
Avon then followed that up by announcing this week that it was finally replacing ousted former CEO Andrea Jung with Sherilyn McCoy. McCoy definitely brings a distinguished pedigree to the company, as she was once considered the heir-apparent at Johnson & Johnson.
That being said, Avon has been a mess lately. Jung, who was once considered a CEO superstar, had a rough last few years at the helm, unable to execute the company's international strategy. It also doesn't help that the company was probed for possible bribery charges. Though Coty may keep up the bidding, I don't think things are quite so bright at Avon, and I will be making a bearish CAPScall on the company.
Dividends with legs
If you think the best way to create a safe, steady portfolio to usher you into retirement is through dividend stocks, you aren't alone. Our top analysts at the Motley Fool have created a special free report to help you find some great candidates: "Secure Your Future With Nine Rock-Solid Dividend Stocks."
Inside, they'll offer you nine more companies they believe will produce market-thumping results for years to come. To find out which nine companies were selected, get your copy of the report today, absolutely free!