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Two Names Post Dividend Increases

BY David Peltier | 07/10/14 - 02:57 PM EDT
Action: KLAC, COP

The broader U.S. stock market averages have struggled this week, but dividend-paying stocks continue to outperform. This Alert is an update on the model portfolio, as two of our names have had dividend increases this week. We are not recommending any trades at this time.

KLA-Tencor (KLAC:Nasdaq) raised its quarterly dividend on July 8, to $0.50 a share (2.7% yield). Management has yet to set a record and payment date, but the new payout can be covered 2.15x with expected fiscal 2015 (ending June) earnings.

The company also added 13 million shares to its stock buyback program, which had 2 million shares remaining. Management expects to execute the repurchase, which represents 9% of the shares outstanding, over the next 12 to 18 months.

In addition, management said that they received orders of $895 million to $900 million in the June quarter, which was ahead of previous guidance.

The stock hit a new 14-year high today and is currently changing hands around $74.95. Even though the company is trading 54% above our cost-basis, we remain convinced that the shares are attractively valued.

ConocoPhillips (COP:NYSE) also increased its quarterly dividend on July 10, to $0.73 a share (3.4% yield). Investors at the close of trading on July 16 will qualify for the payment on Sept. 2. Management can cover the new payout with 45% of expected full-year earnings.

At $85.80, the stock is up 21%, year-to-date. Even so, we maintain the company is attractively valued ahead of the company's quarterly report, which is set for on July 31.


David S. Peltier

Optimistic for the Year's Second Half

Dividend-paying stocks continue to outperform the broader market averages, and we believe that trend can continue.

07/07/14 - 03:08 PM EDT
No Portfolio Overview This Week

Due to the abbreviated market session and shortened trading week, we will send out our next summary on July 7.

07/03/14 - 06:18 AM EDT

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