3 Upcoming Spinoffs Could Pay Huge Dividends
D.E. Master Blenders will trade on the New York Stock Exchange and be headquartered in Amsterdam. The business generated operating income (before corporate overhead) of $452 million last year, and analysts think the standalone business will easily produce more than $380 million of income this year.
D.E. Master Blenders and Sara Lee will pay dividends and have investment-grade credit ratings. Sara Lee has a 65-year track record of paying dividends, but recent dividend growth has been weak at just 1% a year.
Risks to consider: ConocoPhillips bases its income projections on "flat" gas prices and in the short-term will be partially funding the dividend from cash on hand and asset sales. This limits future flexibility and means a dip in oil prices could hurt the dividend. In addition, while both Sara Lee businesses will pay a dividend, the company hasn't disclosed initial rates, payout targets or dividend growth policy.
Action to take--> My top pick is ConocoPhillips because of the company's excellent dividend track record and transparent plan for future dividend growth. Abbott is also a strong choice for dividend investors who want a safe payout and steady growth. Sara Lee is appealing as a value play with modest income growth.
>>To see these stocks in action, visit the 3 Upcoming Spinoffs Could Pay Huge Dividends portfolio on Stockpickr. Also see:Select the service that is right for you!
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