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Blue-Chip Firm
Appreciates +70% and Increases Dividends +76% in Three Years
Published:
April 28, 2008
As
you are probably aware, the U.S. dollar has been stuck in a
precipitous decline, sliding to record lows against the euro
last week. While this freefall has made life tough for U.S.
citizens traveling abroad, it has provided a brisk tailwind for
domestic multi-national firms that take in a large chunk of their
revenues overseas. Not only does a weak dollar sweeten currency
translation, but also makes exported products less expensive for
foreign consumers.
Carla Pasternak, editor of our premium
High-Yield Investing newsletter, predicted this in
January 2005 when she first recommended Caterpillar (NYSE:
CAT, $82.25) -- a Dow Jones Industrials component that
derives almost 60% of its sales in foreign markets. But that's
not the only thing that Carla found attractive about this heavy-equipment manufacturer.
As she pointed out at the time, increased demand for mining and
farm equipment were likely to become key growth drivers -- and
that has indeed been the case, as metals and agriculture have
been red-hot lately. And, of course, with a modest payout ratio
of just 25% and a history of dividend hikes dating back to the
Woodrow Wilson administration, there was ample opportunity for a
rising income stream as well.
Since that time, Caterpillar has announced three +20% dividend
increases, with the overall annual payout rising +76%, from
$0.82 per share to the current $1.44. Meanwhile, thanks in part
to soaring sales overseas, investors have pushed the shares from
a split-adjusted price of $48.75 to Friday's close of $82.25 --
a healthy gain of nearly +70%.
In this month's newsletter, Carla has singled out another
blue-chip firm with a comfortable payout ratio and a reliable
pattern of lifting its dividend distributions year after year.
The company, one of the most venerable financial institutions in
the United Kingdom (that trades conveniently on the NYSE), has a stable earnings outlook, a rock-bottom
P/E ratio of 7.5, and a hefty yield above 8%.
To see Carla's complete lineup of today's most attractive
income-producing securities, including the firm mentioned above,
we invite you to take a test-drive of our
High-Yield Investing newsletter. To learn more,
please
visit this link.
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Nathan Slaughter
StreetAuthority Staff Writer
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Income Security
of the Month
Our "Income Security of the Month" for May 2008 invests in
a fast-growing overseas market that doesn't get much exposure in the
mainstream financial press. And although it typically makes enormous
annual dividend payments -- it has paid an average dividend of 24.5%
per year over the past five years -- this fund is perhaps most
appealing for its total return potential. Specifically, the fund has
delivered total returns of +297.3% since 2003, and
it ranks in the top 10% of its category over the past decade.
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