These projects should result in cash flow 30% to 50% higher in the next three years compared with the previous three years. Since listing American depositary receipts (ADRs) on the New York Stock Exchange seven years ago, Shell's earnings have grown more than 75%. The company produces $37 billion a year of cash flow and has an exceptional balance sheet, showing $11 billion of cash and debt at only 16% of capital.
With payout at only 30% of earnings, Shell's dividend looks very secure. Shares offer a rich 4.9% yield. While Shell hasn't increased the dividend in three years, a modest increase is planned in 2012.
Risks to consider: BHP shares have a high 1.5 beta, which means the stock is roughly 50% more volatile than the overall market. CA faces increasing competition from tech giants IBM (IBM) and Hewlett-Packard (HPQ), as well as earnings challenges because of the eurozone crisis. The Dutch government takes a 15% withholding tax on Shell dividends, though U.S. investors can reclaim that from the Internal Revenue Service as a tax credit.
Action to take: All three of these stocks carry high yields, yet each of these companies could easily afford to raise dividends. My top pick overall is BHP because of its control over scarce assets and the diversity of its revenue sources, which reduces risk. CA is attractive based on a growing dividend and unusually high yield for a technology stock. Shell should appeal to investors who want a rich dividend and a pure energy play.
>>To see these stocks in action, visit the 3 High-Yield Stocks That Could Easily Boost Dividends portfolio on Stockpickr. Lisa Springer does not personally hold positions in any securities mentioned in this article.
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