Sunday, August 14, 2011

Stocks I Discussed at the Money Show Part 2

If you missed my previous article on the MoneyShow where I gave a presentation last week, you can see it here. I tried to cover a diversified group of various high income stocks in many different industries.

One area that I covered was inflation proof income stocks. One of the best ways to get inflation protection is from gold and precious metals mining stocks. Unfortunately, investors have only three choices. Goldcorp Inc. (GG) yields only 0.9% but pays dividends on a monthly basis. Because the yield is so low, you would have to invest a significant amount in order to receive a decent monthly dividend check. There is also Hecla Mining preferred B (HL-PB), sporting a yield of 6.5%, payable quarterly. Unfortunately, there is no growth potential.

Finally there is Freeport-McMoRan Copper & Gold (FCX), which closed at 43.50 last Wednesday when I gave the speech. It yield isn't real high at 2.2%, but still beats certificates of deposit. Dividends are paid quarterly. The company produces copper, gold, molybdenum, silver, and cobalt. Revenues for the latest quarter were up an amazing 50.5% year over year, with an outstanding earnings growth of 106%. In 2010, Freeport had its best financial results in the company’s history. In the last five years, revenues have tripled.

In produces 9% of the worldwide mined copper production, with operations in Arizona, New Mexico, and Colorado in the United States, Peru, Chile, Indonesia, and Congo. It has the Grasberg Mining Complex in Indonesia, which has the world’s largest gold reserve, and the world's largest recoverable copper reserve. Overall, the company has 40.0 million ounces of gold, 102.0 billion pounds of copper, 2.48 billion pounds of molybdenum, and 266.6 million ounces of silver.

Another stock I covered was in the real estate field. The company is Realty Income (O), one of the few companies with a one letter stock ticker symbol. This is a Real Estate Investment Trust which yields 5.8%, payable monthly. The stock closed at 30.75 last Wednesday. It has increased its dividend for 16 years in a row and has paid dividends for 42 years. The company has 2,500 properties with an occupancy rate of 96.6%. It leases to over 100 different retail enterprises in more than 30 separate industries, with properties in almost all states.

The leases are typically for 15 to 20 years, usually triple-net leases where the tenant pays the taxes, maintenance and insurance. The properties are usually freestanding buildings in prime locations with good access and visibility. Tenants include Petsmart, Children’s World, Taco Bell, Jiffy Lube, National Tire, AMC Theatres, Boston Market, Rite Aid, La Petite Academy, Sports Authority and Pizza Hut.

The stocks has had an average compounded annual return of 17.8% since it was listed on the NYSE in 1994. The company had maintained property occupancy levels above 96% at the end of each year. No single tenant accounts for more than 10% of total lease revenue. The latest quarterly earnings growth was 26.4%.

An interesting utility is Portland General Electric (POR), which closed at 21.82 when I discussed it last week. The stock yields about 4.6%, and had a 1.9% dividend increase declared in June. Dividends have been increasing every year since 2006. The stock sports a forward price to earnings ratio of 12.2. Revenue for the latest six months grew nearly 4% over the previous year with income increasing 78%.

Earnings should increase this year, primarily due to the 3.9% rate increase in January of this year, which should bring in $65 million. The regulatory climate is improving. The company's capital spending has been declining because major projects have been completed, such as the advanced meter installation and a windfarm.

If you like high dividend stock ideas, check out the numerous lists of high dividend stocks at, that can be downloaded, updated, and sorted. Also, stay tuned for upcoming articles on more stocks from the MoneyShow.

Disclosure: Author did not own any of the above at the time the article was written.


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