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)
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
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
Dividend-paying stocks continue to outperform the broader market averages, and we believe that trend can continue.
Due to the abbreviated market session and shortened trading week, we will send out our next summary on July 7.
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