Join        Login             Stock Quote
Top News :  

3 Cash-Rich Stocks Ready To Start Paying Dividends
By: StreetAuthority   Thursday, February 23, 2012 3:19 PM
The company has $3.9 billion in cash, only $231 million of debt and produced cash flow totaling $1.5 billion in the past 12 months, which is more than twice the company's 12-month reported earnings of $688 million. 

Western Digital trades at only seven times cash flow, well below the industry peer average of 11. Analyst forecast Western Digital to earn $5.75 per share this year. At 30% payout, Western Digital would pay a $1.73 annual dividend and yield a rich 4.3%.

3. EMC Corp. (NYSE: EMC)
EMC is the global leader in data-storage and information-security products, holding a 25% share of the data-storage market.

An evolving IT landscape benefits EMC by fueling continual demand for new storage and security products. In 2011, the company made $20 billion in revenue, an 18% increase from 2010. Earnings increased 24% to $3.4 billion and cash flow grew 25% to $5.7 billion in the same period. Consensus estimates target 15% earnings growth in each of the next five years.

EMC has a high-quality balance sheet, showing $6.3 billion of cash and $3.4 billion of debt. EMC shares have gained less than 2% in the past 12 months, and the company trades for just 14 times cash flow, which is well below the industry peer average of 26.

Market observers forecast earnings to reach $1.72 per share in 2012. If EMC initiated a dividend payment at 30% payout, it would amount to $0.52 and shares would yield 2%, with room to grow payments down the road. 

Risks to consider: There is no guarantee any of these companies will initiate dividend payments anytime soon, if at all. They may choose to use their cash for share repurchases or to make acquisitions. In addition, the cap on the dividend tax rate is set to expire this year, which will likely affect dividend-payment decisions by corporations. A higher tax rate would make dividends less appealing and discourage companies from initiating payments.
Action to take --> All of these stocks have strong earnings and more than enough cash and cash flow to support dividends. These three companies are strong candidates, but my top choice is Western Digital because the company may come out of the gate with the highest yield, followed by Tech Data and EMC.

Lisa Springer

Lisa Springer does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.

<< Previous Page12  

Comments Closed


Related Press Releases
Popular Articles
Recent Articles by StreetAuthority

Subscribe to Email Alerts rss feed or RSS feeds rss feed for articles from more than 800 contributors and press releases, SEC filings and full text news from thousands of sources.

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.