With the US Energy Information Administration predicting a long-term uptrend for oil prices over the next few decades in its Annual Energy Outlook 2013, investors around the world have started looking closely at stocks of companies in the energy sector. As per AEO 2013 released recently, in 2040, Brent Crude is likely to hover around $163 per barrel which is equivalent to $269 per barrel in nominal terms. For AEO2013, the oil price is represented by spot prices for light, sweet Intercontinental Exchange Brent crude oil instead of WTI crude oil traded on NYMEX. This change was made to better reflect the price refineries pay for imported light, sweet crude oil and takes into account the divergence of WTI prices from those of globally traded benchmark crudes such as Brent. WTI prices have... Read more
General BDC Overview
Dividend investors seeking monthly income can achieve their investment objective through several Business Development Companies (BDCs). These companies are cyclical investments that generally lend to speculative businesses that have difficulty accessing credit from traditional sources. BDCs also may hold equity interest, such as warrants, in invested companies or may buy the companies’ debt. As tax-advantaged investment vehicles, BDCs generally pass on at least 90% of their income to investors in a form of cash distributions (dividends). Hence, BDCs tend to pay high dividend yields. There are only about 28 BDCs in the United States, out of which merely six pay dividends on a monthly basis. Still, despite the appeal of monthly... Read more
A number of refiners and integrated oil companies recently reported strong financial performance in the previous quarter, with significant expansions in refining margins. The boom in unconventional oil shale output in North America has provided opportunities for some U.S.-based refiners to substitute their higher-priced imported oil for lower-cost domestic oil, which is resulting in a substantial refined-products margin expansion. This trend is likely to be sustained in the longer run, which will have a positive effect on the cost structure of U.S.-based oil refiners. Plus, improving profitability could mean continued dividend growth in the sector, even though most dividend-paying refiners have been boosting their payouts robustly over the past year.
Last week, the two largest... Read more
Income investors who look for supplemental income during retirement or consistent income streams to meet their regular monthly expenses, such as rent, mortgage, utility bills, and other expenses, have some options for monthly income in equity instruments, including real estate investment trusts (REITs). There are a few publically-traded REITs in the United States that pay their distributions on a monthly basis. Investors who seek monthly income from investments should evaluate them as possible sources of regular monthly income.
Given that REITs are legally required to distribute at least 90% of their taxable income to... Read more
Last year, dividend investors flocked to UK dividend-paying stocks, as UK dividend payouts swelled and the number of companies raising dividends increased from the year earlier. This year, following an estimated 15.6% increase in 2012, aggregate dividends paid by UK companies are expected to rise 3% to a new record of £81 billion ($128 billion), according to Capita Registrars (for comparison, see chart below, courtesy of Capita). While investors have plenty of options to find attractive yields and dividend growth in the UK, one of the best sources of ideas about stable and sustainable dividends in the UK is Mergent’s United Kingdom Dividend Achievers™ Index.
... Read more
Over the past ten years, the Canadian stock market has outperformed the U.S. stock market by 100%, according to David Rosenberg, chief economist at Glushkin Sheff & Associates Inc. While the Canadian market's returns lagged the broad U.S. equity indices last year, they are expected to outperform this year. Some analysts forecast that the S&P/TSX will grow slightly more than 7% in 2013, whereas the S&P 500 index will gain 4.6%, based on the average 2013 year-end target of nine equity strategists including, inter alia, analysts at Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch, and UBS. The Canadian market could see more upside potential this year and in the longer-term, if the commodities demand and prices rebound, boosting the performance of Canadian resource... Read more
Some energy market observers and executives hold that oilfield services will see a boom parallel to the Internet boom of the mid 1990s, if oil prices remain at current levels or climb higher. The primary reasons for their upbeat view include the expectation of a strong long-term growth in emerging markets, which amid a surge in the demand and despite the gains in the energy output will threaten to cause an imbalance in the energy market. The tightening of the market conditions and the rising cost of oil exploration and extraction bode well for the long-term growth of the oilfield services market. This sanguine outlook is a boon for the sector’s companies, most of which have solid balance sheets, pay dividends, and boast attractive valuation characteristics.
The optimistic... Read more
Historically, Australian stocks have paid higher dividends than most global stocks. According to 2011 Russell Investments/ASX Long-Term Investing Report, over the past 20 years, Australian equities have outperformed all other asset classes, including real estate, fixed-income instruments and cash. Dividends have accounted for an increasing share of this total return on equities. In fact, according to SSgA Research and FactSet, on a cumulative basis, dividends contributed more than a third of Australian equities' total returns since 1980. Over the past 10 years through December 2011, that proportion has increased to about 45% of Australia's total equity returns. With 10-year government bond yields sitting close to record lows and given the modest growth outlook for the next five... Read more
The oil and gas shale boom in North America has caused a surge in the supply of hydrocarbons, shifting the balance in the energy markets and attracting substantial investments in the sector. Dubbed the new “revolution” of the 21st century, the oil and natural gas shale developments have substantially boosted energy output, created new jobs, invigorated auxiliary industries, and given the needed impetus to the local and national economies. Moreover, these developments, due to price declines, are in the process of shifting consumption trends toward environmentally clean natural gas. All this is creating opportunities to invest in energy companies that, in the years to come, are likely to grow significantly faster than the U.S. or even global economies. Investors can take... Read more
Dividend stocks have been in vogue for several years, strongly buoyed by investors seeking meaningful yield in a generally yield-starved investment environment. Canadian small-cap dividend-paying stocks have seen especially robust demand. They outperformed their peers paying no dividends over both three- and five-year investment horizons, rallying 44% and 35%, respectively, while non-payers declined 2% and 23%, respectively.
Investors pursuing the small-cap income investment strategy can benefit greatly from both rapid growth of the small-cap companies and their high dividend yields for regular income. Indeed, while price volatility and risk of the small-cap stocks are generally higher than those of the large-cap stocks, small cap dividend-paying stocks provide a major opportunity for... Read more