Download: S&P Dividend Aristrocrats Lists 2011

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The S&P Dividend Aristocrats indices constitute stocks that have increased dividends for many consecutive years. For example, the S&P 500® Dividend Aristocrats measures the performance of large-cap blue chip companies in the S&P 500 that have followed a policy of increasing dividends for at least 25 consecutive years. So investors looking to add dividend stocks to their portfolios can use these indices as a starting point.

Download S&P Dividend Aristocrats indices in excel:

1. SP 500 Dividend Aristocrats List-2011

2. S&P High Yield Dividend Aristocrats-2011

3. S&P Pan Asia Dividend Aristocrats-2011

4. S&P Europe 350 Dividend Aristocrats-2011

5. S&P TSX Canadian Dividend Aristocrats-2011

Foreign Utilities Trading on the OTC Markets

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Some of the foreign electric utilities trading on the OTC markets as sponsored ADRs are listed below with their current dividend yields:

1.Company:AES Tiete (AESAY)
Current Dividend Yield: 10.14%
Country: Brazil

2.Company:Centrais Elet. de Santa Catarina-Celesc  (CEDWY)
Current Dividend Yield: 5.67%
Country: Brazil

3.Company:CLP Holdings  (CLPHY)
Current Dividend Yield: 3.47%
Country: Hong Kong

4.Company:Comp. de Transmissao-Paulista (CTPZY)
Current Dividend Yield: 11.42%
Country: Brazil

5.Company:Comp. Energetica de Sao Paulo (CSQSY)
Current Dividend Yield: 1.36%
Country: Brazil

6.Company:Comp. Paranaense de Energia-COPEL (ELPVY)
Current Dividend Yield: 3.92%
Country: Brazil

7.Company:Energias de Portugal  (EDPFY)
Current Dividend Yield: 7.44%
Country: Portugal

8.Company:Iberdrola  (IBDRY)
Current Dividend Yield: 1.12%
Country: Spain

9.Company:ISA (IESFY)
Current Dividend Yield: 1.60%
Country: Colombia

10.Company:Light SA (LGSXY)
Current Dividend Yield: 12.54%
Country: Brazil

11.Company:Scottish & Southern Energy (SSEZY)
Current Dividend Yield: 5.44%
Country: UK

12.Company:VERBUND (OEZVY)
Current Dividend Yield: 2.23%
Country: Austria

Disclosure: No positions

EuroMoney: There is No Credit Bubble in Brazil

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Brazilian stocks have been hit hard in recent months as investors have become increasingly worried about many economic factors including inflation, over-heating of the economy, commodity price volatility, buildup of a credit bubble, etc. Some of the reasons for this fear are well-founded as confirmed by the following data:

  • Growth of credit in the last five years has almost doubled from 24% of GDP in 2004 to 46.5% in January, 2011.
  • The 90-day delinquency ratio rose to 5.1% of total credit according to Central Bank figures.
  • The average debt service to income ratio reached 21.5% at the end of 2010.

But despite all the above reasons, Euromoney magazine notes in an article that there is no risk of a credit bubble in Brazil. Locals also believe that their banking system is in a much better shape than most banks in the developed world.

The following are some of the reasons why credit is not a bubble in Brazil:

  • At under half the size of GDP, credit is still a small proportion when compared to developed countries and is also lower than other countries such as Thailand, the Czech Republic and South Africa.
  • Brazil is still largely a cash-based economy and it is difficult for most Brazilians to access credit.
  • Consumer credit accounts for over 70% of total credit and mortgages account for just 4% of the GDP. Most consumer loans are fixed rates loans protecting consumers from interest rate hikes.
  • The average tenor of consumer loans is under two years. Hence banks are protected from future voltatility.
  • A large portion of the increase in credit growth has been among higher income A, B and C-rated borrowers who have more experience with credit and therefore present  a lower risk of default.
  • The Central Bank recently increased the monthly minimum payments required on credit card balances to 15%. This is very high compared to the U.S. where credit card companies can charge as low as just 1.0% of the total balance for minimum payments.

Investors looking to gain exposure to the Brazilian financial sector can buy into the following major banks trading on the US markets as ADRs:

1.Bank:Banco Bradesco SA (BBD)
Current Dividend Yield: 3.48%

2.Bank:Banco do Brasil SA (BDORY)
Current Dividend Yield: 6.50%

3.Bank:Itau Unibanco Holding SA (ITUB)
Current Dividend Yield: 3.61%

4.Bank:Banco Santander Brasil SA (BSBR)
Current Dividend Yield: 7.68%

Note: Dividend yields noted are as of Aug 26, 2011

Another simple and easy to invest in the Brazilian financial sector is via the Global X Brazil Financials ETF(BRAF). The ETF has an asset base of about $7.2 million and an expense ratio of 0.77%. In addition to the above four banks, the fund’s portfolio holdings include many other financials.

Disclosure: Long BBD, ITUB

Not All Dividend Stocks Are Worth Investing In

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The Weekend Investor section of The Wall Street Journal had an interesting article on dividend stocks.

From the article:

Mutual funds specializing in dividend stocks have seen inflows of $12.6 billion so far this year, four times as much as in all of 2010—even as stock funds as a whole have posted outflows of nearly $25 billion, according to fund tracker Lipper.

But dividend stocks aren’t a panacea—and buying them willy-nilly can lead to disappointment down the road. Dividend stocks are notorious laggards during big rallies, which often start when investors are most averse to risk. And the market is full of “dividend traps”—troubled companies that pay hefty dividends merely to keep investors from bailing out, a risky gambit that usually isn’t sustainable.

Click to enlarge

Source: The Wall Street Journal

The best way to view dividends, say money managers, isn’t as an end in themselves but rather as a means to other goals such as reducing volatility or boosting (but not turbocharging) income. Used smartly, dividend stocks can even generate returns that match the overall market—with beefier income streams. But investors shouldn’t live on the div alone.

“A focus on dividend-yield strategies is an important part of an investor’s tool kit,” says Rob Arnott, chairman of money manager Research Affiliates in Newport Beach, Calif., which helps oversee $80 billion. “But they’re a little bit overrated today.”

The key to dividend investing, say strategists, is to be selective. That means avoiding the juiciest dividends and concentrating instead on companies that are boosting their payouts—and have the growth potential to keep those payments coming.

“You should never be taking shortcuts,” says Ben Inker, director of asset allocation at money manager GMO LLC in Boston. “Just because a stock pays a dividend doesn’t mean you don’t have to worry about the rest of the company.”

All the stocks mentioned in the above graphic have decent yields. But how did they perform in the past 10-years in terms of price appreciation?.

Click to enlarge

Of the six stocks, only Coca Cola(KO), UPS (UPS) and P&G (PG) had their stock prices rise by 44%, 16% and 67% respectively while Intel (INTC), Abbot Labs(ABT) and Duke Energy (DUK) actually lost 29%, 4% and 52% respectively. The returns of KO, UPS and PG have been average but not excellent.

Intel is a technology company and hence its stock will never be a dividend stock. Intel rode the technology wave of the 80s and 90s and its high growth period is long gone. Until a few years ago Intel did not pay a dividend. So despite its 4.3% yield now, its best to avoid Intel. Since January 13th 1978, Intel grew by over 16,000% easily beating the other five companies noted above. That type of performance is unlikely to repeat in the future.

Though the share price of Abbot Laboratories(ABT) has been pretty much flat in the past decade, it is still a good long-term investment. The company has increased dividends consistently over the past 25 years and with the health-care reform and millions of baby boomers retiring from workforce, demand for drugs and other healthcare services are projected to increase.

Duke Energy (DUK) is one of the worst run utilities in the U.S. The 5.4% dividend yield is not great considering that the stock price has plunged 52% in the past decade. Investors expect utilities to have decent dividend yields AND steady price appreciation. From Jan 13th, 1978 (as far back as Google Finance goes) thru Aug 26, 2011 Duke’s stock price has grown by a miserable 285%. In 2005, Duke bought Cincinnati-based Cinergy for $9.1 B in an all-stock deal. This year Duke announced to merge with Progress Energy. As part of this deal, Duke has set a revere stock split in the ratio of 1:3. All these acquisitions have not helped Duke earn respect from the market.

In summary, some of the dividend stocks can be traps and its best to stay clear off them. Like the Duke Energy example noted above, some stocks may pay good dividends but their stock prices may crash erasing any gains earned with dividends.

Disclosure: No Positions