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A Dual Focus on Valuation and Yield Is the Best Way to Combat Changes in Future Dividend Tax Rates

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With a potential hike in the dividend tax rate just around the corner, there is no more important time than now for income investors to evaluate their existing portfolio holdings to determine whether they are well-positioned for a higher-tax environment. Assuming there are no changes to the current trajectory, the top dividend tax rate is expected to rise to 39.6% next year (up from 15% currently), and the highest-income earners will see a Medicare surtax on top of that. Evaluate All Aspects of a Dividend Investment First of all, we think those investing in high-yielders (firms) at any price (HYAAP) may be most affected by this change in tax rates. These high-yielders at any price (HYAAP) tend to be favorites of those at or near retirement, particularly given the paltry payouts on fixed … Read more

Deere Posts Decent Sales Growth, But Profitability Disappoints

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Agricultural equipment giant Deere (click ticker for report: ) reported mixed fourth quarter results Wednesday morning. Revenue increased strongly, growing 14% year-over-year to $9.8 billion, better than consensus estimates. Earnings grew just 8% year-over-year to $1.75 per share, which was well below consensus expectations. Gross margins remained roughly flat, falling just 20 basis points year-over-year to 25.4%. Both research and development costs, as well as SG&A soared during the quarter, jumping 16% and 10%, respectively, and negatively impacting profitability. In fact, when adjusting for healthy share repurchases, net income per share grew only 3% year-over-year. Though it’s probable these investments could yield solid long-term results, we never like to see companies ramp SG&A expenses unless they are able to leverage … Read more

Deere Raises 2012 Earnings Outlook on Strong Equipment Demand

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Deere & Co. (DE) issued record fiscal first-quarter earnings Wednesday as the firm continues to capitalize on the world’s growing need for food, shelter and infrastructure. We’re comfortable with our long-term projections for the farm-equipment maker and are sticking with our fair value estimate.   Worldwide net sales advanced 11% during its fiscal first quarter buoyed by pricing increases of 4%. The company’s Agriculture & Turf segment sales increased 8%, while its Construction & Forestry segment’s revenue climbed 22%. Strength came mostly from outside the US and Canada, as net sales jumped 21% in that geographic category during the period. Net sales in the US and Canada were up a modest 5% for the quarter. The tractor-maker continues to benefit … Read more

Deere Reports Fantastic Fourth-Quarter Results; Outlook Even More Impressive

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Farm-equipment maker Deere & Company (DE) reported strong fiscal fourth-quarter results Wednesday that revealed the continued health of the US farmer and demonstrated higher equipment shipment volumes and improved pricing. We’re comfortable with our long-term projections and are maintaining our $82 fair value estimate on the firm.  Worldwide net sales advanced 20% in its fiscal fourth quarter, as the firm reaped the benefits of rolling out new products and strength outside of the US and Canada, where net sales were up 31% in the quarter. Equipment net sales in the US and Canada jumped 14% during the period. Both paces of growth were lower than the growth experienced for the full year, however. Revenue jumped 18% in its Agriculture & … Read more

CNH Posts Fantastic Quarter, Outlook for Equipment Strong

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CNH Global (CNH), the second-largest maker of farm equipment after Deere (DE), posted fantastic second-quarter results Monday, with net sales increasing 24% and net income more than doubling. The firm experienced substantial strength in agricultural equipment and construction equipment revenue, up 22% and 30%, respectively, and translated this performance into solid profitability improvement. CNH’s operating margin increased to 10.7% during the quarter from 8.4% in the same period a year ago. We were quite pleased with CNH’s performance and have added it to our watch list, a component of our Best Ideas Newsletter. CNH expects demand for agricultural and construction equipment to remain firm through the remainder of 2011, noting strengthened conditions for commodity prices and, by extension, improving farming … Read more

Dividend Increases/Decreases for the Week of December 6

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Below we provide a list of firms that raised their dividends during the week ending December 6. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          A & W Food Services of Canada Inc. (AW:CA): now $0.3748 per share quarterly dividend. ABM Industries (ABM): now $0.265 per share quarterly dividend, was $0.225. Absecon Bancorp (ASCN): now $0.90 per share quarterly dividend, was $0.75. AES (AES): now $0.176 per share quarterly dividend, was $0.172. AFLAC (AFL): now $0.58 per share quarterly dividend, was $0.50. Airports of Thailand Public Company Limited (AIPUY): … Read more

Dividend Increases/Decreases for the Week of May 27

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Below we provide a list of firms that raised/lowered their dividends during the week ending May 27. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header.  Firms Raising Their Dividends This Week      Ashland (ASH): now $0.335 per share quarterly dividend, was $0.300. Bank of Montreal (BMO): now CAD 1.39 per share quarterly dividend, was CAD 1.33. Bank of Nova Scotia (BNS): now CAD 1.03 per share quarterly dividend, was CAD 1.00. California Resources Corporation (CRC): now $0.17 per share quarterly dividend, was $0.16. Canadian Imperial Bank (CM): now CAD 0.83 per share quarterly dividend, was CAD 0.81 (post-split … Read more