Welcome to the 10th issue of The Big Dividend Report!
For new readers, in this series my aim is to check under the hood of the biggest dividends in the market and to keep you updated on the latest and greatest. We will limit ourselves to the biggest 20 dividend yields coming from companies with at least $2 billion in market cap.
In our first go-round, we looked at the payout ratio, the most fundamental metric to check for dividend health. In our second report, we looked at recent price movements in this volatile market. In our third report, we looked at recent news for the mortgage REIT industry. Our fourth report highlighted possible opportunities in foreign telecom. The fifth report focused on master limited partnerships and Nokia news. For the sixth report, we had some telecom and mREIT updates. For the seventh report, we previewed earnings season. And for the eighth report and ninth report, we covered earnings.
In today's report, we dive further into earnings season. But first, let's take a look at where our cohort of 20 companies stands today. Usually I rank the group in order of highest yield (after all, that's what this report is all about), but for earnings season we're looking at the list chronologically based on estimated earnings-release date.
Earnings Date (Est.)
|Nokia||Information Technology||7.1%||Reported 10/20|
|American Capital Agency||Real Estate||19.9%||Reported 10/25|
|Hatteras Financial||Real Estate||15.3%||Reported 10/25|
|Southern Copper||Materials||8.8%||Reported 10/28|
|Annaly Capital||Real Estate||14.6%||Reported 11/1|
|Terra Nitrogen||Materials||8.8%||Reported 11/1|
||Telecommunication Services||7.9%||Reported 11/2|
||Telecommunication Services||13.3%||Reported 11/3|
||Telecommunication Services||12.8%||Reported 11/3|
|Pengrowth Energy||Energy||8.1%||Reported 11/4|
||Telecommunication Services||8.2%||Reported 11/4|
|MFA Financial||Real Estate||14.8%||Reported 11/7|
|Hospitality Properties Trust||Real Estate||7.6%||Reported 11/7|
|Cheniere Energy Partners||Energy||10.3%||Reported 11/7|
|Chimera||Real Estate||17.1%||Next few days|
|BP Prudhoe Bay Royalty Trust||Energy||7.1%||11/8-11/26|
Sources: Yahoo! Finance, S&P Capital IQ, and Earnings.com.
*YPF's last earnings data was given in a Form 6-K in August.
CenturyLink just met analyst expectations, and Frontier and Windstream missed. Each has been trying to supplement its dying landline telecom business with acquisitions and by paying investors to stick around in the meantime by offering them dividends.
Here's what CenturyLink CEO Glen F Post III had to say about the quarter:
CenturyLink achieved solid third quarter results, as we continue to make good progress with the Embarq, Qwest, and Savvis integrations, while maintaining our focus on serving our customers and strengthening our revenue growth opportunities. We generated strong free cash flow of $891 million during the quarter, while also making strategic investments to expand and enhance our high-speed Internet, Prism TV, and high-bandwidth Ethernet services, to deploy fiber-to-the-tower (FTTT), and to expand our managed hosting and cloud-services capabilities. We added nearly 57,000 new high-speed Internet customers during the quarter and achieved 5% growth in pro forma strategic revenues year over year.
Frontier reported a post-quarter-end bank financing, saying, "This financing substantially satisfies maturities through 2012 and enables the company to retain strong liquidity through its existing, undrawn $750 million revolving credit facility." From a dividend standpoint, it used 75% of free cash flows to cover dividends in the first three quarters of 2011. Remember that its free cash flow has been far outstripping its earnings. Check out its earnings release.
Windstream CEO Jeff Gardner had this to say:
I am very pleased with the improvements in revenue trends we have accomplished this year. Our goal over the past few years was to transform our business to achieve revenue and cash flow growth. Given our shifting revenue mix, success-based capital investments and expected deal synergies, we are on the verge of showing growth in both of these areas.
In line with that, we see customer growth in broadband and video and some loss of landline customers. It achieved residential broadband penetration of 65% of landlines served.
See Windstream's full earnings release.
For a look at the payout ratios of these three telecoms, fellow Fool Tamara Rutter put together a handy overview.
We have to wait a few days on Cellcom Israel's results, but we can see what Portugal Telecom did. If you look at its third quarter versus last year's, you'll see an enormous decline. However, that's the result of discontinued operations. Cash flows were not broken out. See the entire release in PDF form.
Argentina's largest oil and gas company beat last year's quarterly earnings: $1.06, compared with $0.96. And a few days ago, it reported a shale discovery in Argentina's Vaca Muerta. It could yield as much as 50,000 barrels per day.
That concludes this report, and we'll continue with going through earnings next week. If you can't wait, get a head start by checking out the earnings releases we haven't covered:
- Pengrowth (opens a PDF)
- MFA Financial
- Hospitality Properties Trust (opens a PDF)
- Cheniere Energy Partners
For some in-depth dividend stock analysis right now, check out our free report "Secure Your Future With 11 Rock-Solid Dividend Stocks." Although no investment is surefire, the stocks in this report were picked to require a lot less guessing about future prospects. Get your copy today -- it's free!
Anand Chokkavelu owns shares of Frontier Communications. The Motley Fool owns shares of Chimera Investment and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Cellcom Israel and Veolia Environnement. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.