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Quality Systems Out with Quality Earnings

Quality Systems


issued solid earnings, reporting earnings per share that were 3 cents ahead of consensus estimates. Revenue in the quarter also jumped 31%. Dividend investors were also treated to a 20% increase in the company's payout.

Management cited the company's NextGen Healthcare Information Systems division, which posted record revenue of $51.2 million, up 34%, as a key to the earnings results.

We have upgraded QSII shares to our "Recommended" list on this news. We think the shares are very attractive at current levels, and the dividend yield of 3.60% (Based on last night's closing stock price of $33.29) is very enticing.

Quality Systems is a "Recommended" dividend stock, holding a Rating of 3.5 out of 5 stars.

Fannie Mae Reports More Losses and a Big Dividend Cut

Fannie Mae


came out with more bad news today for investors. The company reported losses of $2.3 billion for the quarter, and slashed its annual dividend payout from $1.40 to 20 cents.

The company has undertaken a series of initiatives, including raising more than $7 billion in additional capital during the second quarter, to help it manage its way through the subprime credit turmoil. A big part of the loss reported was due to $5.3 billion in credit-related expenses, but management expects 2008 will be the peak year for those charges.

We have avoided Fannie Mae shares for months, and still believe investors need to be wary of bottom-fishing. We highly suggest skipping the present turmoil, and waiting until the smoke really clears to invest in this stock, even if that means paying higher prices. For now, we would look elsewhere for safer gains and better dividends.Fannie Mae is not a recommended dividend stock at this time, holding a rating of 1.9 out of 5 stars.

Windstream Reports Mediocre Results, but Dividend Yield Still Strong



earnings results came in slightly below what Wall Street had been expecting. The company posted a 3% decline in revenue to $800 million. Net income was $102 million, a 12% decrease from a year ago, or 23 cents per share.

On the plus side, the company added approximately 23,000 new high-speed Internet customers during the second quarter, bringing its total customer base to more than 934,000. The company also added nearly 21,000 digital TV customers in the quarter, bringing its total customer base to approximately 231,000.

Despite the mediocre earnings, we are standing our ground and keeping Windstream on our "Recommended" list. We find the dividend yield of 8.24% (based on last night's closing stock price of $12.13) very attractive, but will monitor the news flow for any items that may change our mind on the stock.

Windstream is a "Recommended" dividend stock, holding a Rating of 3.5 out of 5 stars.

Edison International Reports Good Quarter, but Future Margins a Concern

Edison International


delivered a solid earnings beat on earnings per share and revenue today. The company beat EPS estimates by 4 cents, and its revenue increased 11% to $3.38 billion, which also beat Street estimates.

Management cited a couple of factors for the solid results. Those factors included higher gross margins in its Midwest Generation, higher generation, and average realized energy prices and capacity prices. The company also realized a gain on the sale of Edison Capital's Beaver Valley lease.

We think shares of EIX would be more attractive at lower levels. Part of our concern is the margins may contract a bit on the energy side, thus affecting earnings results as we look ahead. The company currently has a dividend yield of 2.63%, based on last night's closing stock price of $46.45. In short, we would look elsewhere for better opportunities.

Edison International is not a recommended dividend stock at this time, holding a rating of 3.4 out of 5 stars.

Hormel Foods Lowers Guidance on Higher Costs

Hormel Foods


, well-known maker of Spam as well as other meat products, is taking its earnings estimate numbers down due to higher-than-expected costs.

Management now expects earnings of $2.22 per share to $2.28 per share, below their previous guidance of $2.30 per share to $2.40 per share. Higher than expected feed and fuel input costs are denting the results, which will be officially reported on Aug. 21.

We are presently waiting for an opportunity to get into the shares, as we believe the costs will start to subside for the company. We will wait to see the report in a couple of weeks, and monitor the news flow, before we decide on upgrading Hormel Foods to our "Recommended" list. The stock has a 1.97% dividend yield, based on last night's closing stock price of $37.60.

Hormel Foods is not a recommended dividend stock at this time, holding a rating of 3.2 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 Visit for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.