This Alert is a recap of some major dividend news this
Linn Energy (LINE:Nasdaq) eliminated its monthly dividend
of $0.1042 a share on Oct. 6 . For investors, this news
should have come as little surprise for a few reasons.
For one thing, the energy exploration firm yielded 39%
before the announcement and had lost more than a dollar
per unit over the past 12 months.
Linn and its sister company, Linn Co. (LNCO:Nasdaq) have
been poster children of the boom and subsequent bust of
the energy industry. And less than a year to the day that
we told readers to sell/avoid Linn, this
chapter has closed with the company’s second and final
Ironically, LINE stock has been swept up along with the
rest of the energy sector in a recent short-covering
rally and has actually gained nearly 7% since eliminating
its quarterly dividend. Even so, at Thursday’s closing
price of $3.41, the company is still down 66% year to
date and has punished investors that chased the
abnormally high dividend yield.
On a brighter note, Northwest Natural Gas (NWN:NYSE)
raised its quarterly dividend on Oct. 6 to $0.4675 a
share (4% yield). Investors at the close of trading on
Oct. 27 will qualify for the payment on Nov. 13. The
Oregon-based utility has boosted its payout 60
consecutive years and its dividend is toward the high end
of the industry range.
Management can cover the payout with 82% of expected 2016
earnings of $2.27 per share. We believe that regulated
utilities, especially with strong balance sheets can
afford to pay out more than our usual threshold of 50% of
While we continue to favor Southern Co. (SO:NYSE) for the
model portfolio, at first glance, Northwest Natural
appears to be an attractive investment. The stock closed
Thursday at $47.24.
Yum! Brands (YUM:NYSE) increased its quarterly dividend
of 12% on Oct. 6, to $0.46 a share (2.7% yield).
Investors at the close of trading on Oct. 13 will qualify
for the payment on Nov. 6. The restaurant operator has
raised its payout 11 consecutive years at a double-digit
percentage rate and the dividend is toward the high end
of the industry range.
Management can cover the payment 2x with expected 2016
EPS of $3.72. That said, given Yum!’s well-documented
struggles in China and lower-than-expected quarterly
results this week, we believe that readers should wait
until the yield moves above 3% before considering a
purchase. The shares closed Thursday at $67.46.
Here are some notable upcoming must-own dates:
Oct. 12 – Abbot Laboratories (ABT:NYSE), AbbVie
(ABBV:Nasdaq), Aetna (AET:NYSE) and Freeport-McMoRan
Oct. 13 – Accenture (ACN:NYSE), Foot Locker (FL:NYSE) and
Oct. 14 – Hormel Foods (HRL:NYSE).
Oct. 15 – Barnes & Noble (BKS:NYSE).
David S. Peltier
5 portfolio names gained more than 9% over the past two weeks.
We stand to qualify for payouts from 2 portfolio names, this week.
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