As we look toward a new year with renewed determination to be better investors, we'd do well to include some solid dividend-paying stocks in our portfolios. Dividends from healthy, growing companies deliver to us, like mail carriers, in any kind of weather -- boom, bust, or stalled economy.
All year long I've prepared articles reviewing dividend payers from a host of different industries. I thought that it would be an interesting exercise to review the ones that seemed most compelling, and among them, to single out some that feature high yields, promising prospects, and a lot of thumbs up from our CAPS community of investors.
Below are a few companies about which you might want to learn more. Note that several are limited partnerships, which offer some tax advantages as well as some complications. Note, too, that very high yields are sometimes tied to riskier stocks that have fallen in value. Be sure to research such companies carefully before jumping in.
Suburban Propane Partners, L.P. (SPH -0.66%) yields 8.9%, but its payout ratio is steep, reflecting the fact that it's paying out more than it earns per share. That could change, as it digests its $1.9 billion acquisition of Inergy's (CEQP) retail propane business. But in the meantime, its debt has risen. In fiscal 2012, retail sales of propane dropped 5%, due mainly to a warm winter, and sales of other fuels fell even more sharply.
Veolia Environnement (VEOEY 0.97%), based in France, yields 6.3%. The company has been whacked by slowdowns in Europe. Some wonder whether its attractive dividend is in danger, given the company's hefty debt load. Veolia has been cutting costs and selling some assets to address that. It has also been shifting its focus from waste to water, and is a major player in the water world.
Terra Nitrogen, L. P. (NYSE: TNH) yields 7.9%, and that's after the stock surged more than 40% over the past year. The rise was partly due to a warm winter last year bringing an early planting season, as well as growing demand for nitrogen from emerging markets seeking bigger crop yields. There's a lot to like about Terra Nitrogen, such as its ability to profit from the low price of natural gas, necessary in its production process, and its fat profit margins.
Teekay LNG Partners, L. P. (TGP), a gas and oil shipper, yields 7.2% and also sports a worrisome payout ratio well above 100%. The company has been increasing its number of ships, and benefited from robust day rates during the year. Natural gas prices have been quite low lately, but demand for liquefied natural gas, which TK LNG Partners transports, is expected to rise in coming years. The company's share count has nearly doubled over the past five years, so interested investors might want to keep an eye out for further dilution.
Alliance Resource Partners, L.P. (ARLP -0.05%), focused on coal, yields 8%. Despite coal's troubles in recent years, this company has maintained double-digit average annual growth rates for revenue and earnings over the past few years, setting many records along the way. Part of its success is tied to its favoring long-term contracts.
As you consider companies such as the ones above for your portfolio, be sure to consider your big picture, too. Keep yourself diversified across industries and by company size, lest you end up with too many eggs in energy companies or large-cap enterprises. Then sit back and collect your dividends. If your overall yield on a $200,000 portfolio is 5%, you're looking at $10,000 in annual income, which is rather powerful and useful. And better still, healthy and growing companies tend to increase their payouts over time.
