Is Lehman Brothers Selling Its Crown Jewel?
may be getting ready to shop its much-heralded Neuberger Berman investment unit. There are reports the company is considering offers from potential buyers.
The Neuberger Berman division has been a strong performer for Lehman. Unfortunately, Lehman finds itself at the mercy of the capital markets, where it may need to continue raising funds to offset the damage from its mortgage troubles. Management is trying to restore investor confidence, which it can best accomplish by reducing its higher-risk credit exposure.
Investors would be wise to avoid the shares during this period of extreme uncertainty. We aren't sure if the company's 4.52% dividend yield, based on Monday's closing stock price of $15.03, can be sustained much longer, given Lehman's various financial troubles.
Lehman Brothers is not a recommended dividend stock at this time, holding a Dividend.com rating of 2.7 out of 5 stars.
Retailer's Earnings Not on Target
reported its fourth straight quarterly profit decline, as the consumer slowdown is showing no signs of letting up anytime soon. Sales in Target retail stores rose nearly 6% to $14.97 billion.
Sales grew more for low-margin items, such as food and paper goods, away from the company's better-margin products, such as house wares and clothing. Unfortunately, this trend puts the company on a collision course with competitor
Target shares aren't pricey at 16 times 2009 earnings, but the company faces a huge problem in that its margins on items consumers are buying now won't increase the bottom line. The company has a low dividend yield of 1.12% based on Monday's closing stock price of $50.05. We prefer investors take a look at Wal-Mart as a better way to play the tough retail environment.
Target isn't a recommended dividend stock at this time, holding a Dividend.com rating of 3.1 out of 5 stars.
Staples Warns on Second-Quarter Earnings
reported Tuesday its quarter isn't going so well, citing weak sales in North America and Europe for an impending earnings miss. The company also is experiencing less-than-expected savings from its $2.65 billion purchase of Corporate Express.
The office-supply market has been hit hard lately, as small-business customers have cut back on spending. The slowing economy, credit crisis, and higher energy costs are just some of the factors affecting this sector.
The company is in a tough sector, but when the rebound begins to take shape Staples will be the only one worth a look from investors. The company has a 1.34% dividend yield based on Monday's closing stock price of $24.58. Investors should wait the current office supplier slowdown out, and look elsewhere with their investment dollars.
Staples isn't a recommended dividend stock at this time, holding a Dividend.com rating of 3.2 out of 5 stars.
Medtronic Beats Revenue Numbers, Misses Analysts' EPS Estimates
Medical device company
reported earnings per share that came in 3 cents below analyst expectations. The company did beat revenue estimates last quarter, however, as sales jumped 19% to $3.71 billion.
Management cited cost savings and strong sales of its medical devices to treat heart, spine, and pain conditions for the revenue gains. Revenue in the cardiovascular, neuromodulation, and surgical technologies product lines each rose more than 15% in the quarter. Revenue outside the U.S. of $1.457 billion rose 24% and was led by the diabetes, spinal and surgical technologies businesses. Revenue outside the U.S. accounted for 39% of Medtronic's revenue this quarter.
The stock has been on our upgrade watch list for a bit here, but we are still holding off on an upgrade to the "Recommended" list. MDT stock is trading at 18 times 2009 earnings estimates, which isn't excessive. The company has a dividend yield of 1.40% based on Monday's closing stock price of $53.44. We prefer that investors look at
Johnson & Johnson
, a name we like a bit better in the medical space.
Medtronic isn't a recommended dividend stock at this time, holding a Dividend.com rating of 3.4 out of 5 stars.
Home Depot Revenue Slips 5.4% as Sales Weakness Persists
earnings Tuesday showed revenue fell 5.4% to $21 billion, as sales at stores opened at least a year fell 7.9%.
Management saw improved execution in its merchandising and operations initiatives during the past quarter. The company is setting its sights on the do-it-yourself customer and the small repair niche. The sluggish economy and the housing slowdown have dragged shares of Home Depot down 40% in the last two years.
We are holding shares at this level, but would avoid adding to existing positions. The company is much more attractive in the low $20s on this type of earnings report. Home Depot has a dividend yield of 3.34% based on Monday's closing stock price of $26.96.
Home Depot is a "Recommended" dividend stock, holding a Dividend.com Rating of 3.5 out of 5 stars.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.