BOSTON (TheStreet) -- With the 10-year Treasury yielding less than 2.7% and possibly falling if the Federal Reserve initiates QE2, dividend stocks are looking more attractive.
model rates equities based on expected risk-adjusted performance. Here are 10 of its favorite dividend stocks. They offer yields between 6.4% and 10% and regularly increase payouts. They are ordered by yield, from high to highest.
Kinder Morgan Energy Partners
is a master limited partnership, or MLP, which owns oil and gas pipelines in the U.S. Its third-quarter distributable cash flow decreased marginally to $318 million, but cash flow per unit dropped 8.9% to $1.02 cents, hurt by a higher share count. The operating margin narrowed from 23% to 20%. Kinder Morgan Energy increased its quarterly distribution to $1.11 a share, equaling an annual yield of 6.4%. The stock has a three-year distribution growth rate of 29%. It has delivered 11% annualized gains since 2007.
is a real estate investment trust, or REIT, that owns fuel and convenience store properties. During the past three years, it has grown sales 5.4% annually, on average. Third-quarter funds from operations rose 17% to $16 million, but on a per share basis, funds from operations decreased marginally due to a larger float. Getty pays a quarterly distribution of 58 cents, converting to an annual yield of 6.5%. The stock has a three-year distribution growth rate of 1.2% and a five-year growth rate of 1.8%. It has returned 2.3% a year since 2007.
is a REIT that invests in commercial properties and advises similar companies. It is scheduled to release third-quarter results Nov. 4. The second-quarter occupancy rate improved to 92%. W.P. Carey paid a $1.01 distribution out of $1.22 of adjusted cash flow per share, translating to a payout ratio of 83%. The REIT has not only increased its distribution every year since going public, but it has also boosted the distribution for 37 consecutive quarters. The stock has a three-year distribution growth rate of 7.7%. It has advanced 11% in 2010.
Universal Health Realty
is a REIT that specializes in health-care properties. During the past three years, it has grown sales 1.9% annually, on average. Third-quarter funds from operations decreased 9.6% to $7.5 million and funds per share fell 13% to 61 cents, all of which was distributed to shareholders. The REIT offers an annual yield of 6.6%. Universal Health has been expanding its float since the fourth quarter of 2009. It plans to issue $50 million, in total, of new equity. The REIT has a three-year distribution growth rate of 1.7% and a five-year distribution growth rate of 2.6%.
is an integrated telecommunications company, formed through the merger of CenturyTel and Embarq. The company is currently attempting to merge with
. It is scheduled to release third-quarter results Nov. 3. Second-quarter net income more than tripled to $239 million, but earnings per share climbed a more modest 16% to 79 cents due to a larger float. CenturyLink pays a quarterly dividend of 73 cents, equaling an annual yield of 7.1%, with a payout ratio near 100%. It has rallied 12% in 2010 and 24% in 12 months.
is an Internet service provider for businesses and individuals. Its revenue has tumbled 21% annually, on average, since 2007, but it has grown net income 56% a year over that span. Third-quarter tenure rates improved to 89% for customers there for two years or more and 54% for customers there for five years or more. Profit fell 28% to $771 million, or 20 cents a share, as revenue decreased 17%. EarthLink ended the quarter with $771 million of cash, a $32 million increase. It offers a 7.2% dividend yield, with a payout ratio of 24%.
is an MLP that stores and terminals oil and natural gas. Second-quarter revenue inched up 2.6% to $37 million. TransMontaigne generated $14 million of distributable cash flow and paid out $9.4 million, or 67%. The MLP has $4.6 million of cash and $110 million of debt. It offers a quarterly distribution of 60 cents, equaling an annual yield of 7.2%. Since 2007, TransMontaigne has boosted sales 14% annually, on average. Its stock has a three-year distribution growth rate of 29% and a five-year distribution growth rate of 40%.
is a grantor, deriving income from royalties from the production of iron ore at Minnesota mining properties. The Agreement of Trust has a duration ending 21 years after the death of the last survivor of 25 individuals living at inception of the Trust, all of whom were alive several years ago when the matter was investigated. Mesabi offers a yield of 8.9%. It has a three-year distribution growth rate of 31% and a five-year growth rate of 14%. It has more than tripled in 2010 on commodity optimism. Investors should investigate further.
Main Street Capital
is a business-development company, investing in small and middle-market companies. Its second-quarter distributable net investment income surged 131% to $5 million, or 33 cents a share. Revenue more than doubled to $8.7 million. The operating margin contracted from 81% to 78%. Main Street pays a quarterly dividend of 38 cents, translating to an annual yield of 9.1%. It carries $4.7 million of cash and $139 million of debt on its balance sheet. The stock has delivered three-year annualized gains of 3.8%. It is flat in 2010.
Ituran Location and Control
is an Israel-based company that provides location-based services, including stolen-vehicle recovery and tracking systems. During the past three years, it has grown sales 6.6% annually, on average. Second-quarter profit nearly doubled to $4.8 million, or 23 cents a share, as revenue rose 23%. The operating margin declined from 22% to 21%. Ituran has $42 million of cash and $6.3 million of debt. The company pays an annual dividend, announced in February. Last year's $1.50 payout translates to a current yield of 10%.
-- Written by Jake Lynch in Boston.
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