7 dividend Champs With Yields As High As 23%, Part II

This is part II of the dividend champ series. In part I we looked at seven stocks with yield as high as 15%. Extreme volatility is propelling more and more investors into dividend yielding investments in contrast to speculative investments. In coming up with this list we screened for the following;

1) A dividend payment history of 4 or more years, or 3 years or more of increasing the yearly dividend. The only exception is ARR and it has been included because of its stunning quarterly revenue growth rate (yoy) of 12484%

2) EBITD of $200 million or higher. The only exception is ARR and the reason for this has been listed under point 1.

3) A Yield of 5.5% or higher.

4) Quarterly revenue growth rate (yoy) of 26% or higher. We have 3 exceptions, BWP, KMP and ARR. The reason we included ARR is covered in point 1. BWP was included because it has a strong Operating cash flow rate of $450 million, a healthy levered free cash flow rate of $177 million and has increased its dividends for 4 consecutive years in a row. KMP was included because it is a true dividend champ; it has increased its dividend consecutively for 14 years in a row, has a very strong operating cash flow rate of $2.87 billion and a healthy levered free cash flow rate of $265 million.

Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a small amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa. Earnings can often be manipulated via accounting gimmicks, but it’s much harder to fake cash flow. As a result, many investors feel that free cash flow (FCF) provides a better picture of a company’s ability to generate cash. Negative FCF numbers do not necessarily bode badly for the company in question, for it could be a sign that a company is making large investments, which could lead to big payoff in the future.

Stock	Dividend	Market Cap	Forward PE	EBITDA (ttm)	Quarterly revenue growth	Operating margins	Revenue	Operating Cash flow
BWP	7.6	5.52B	19	650M	4.40%	37.12%	1.14B	455M
EEP	6.8%	8.45B	19	871.8M	25%	5.75%	618M	-420M
BBEP	9.65	1.06B	16.85	223M	26.9%	31%	366M	167M
TEO	11.5%	3.73B	5.84	1.27B	26.6%	22%	4.14B	1.06B`
ARR	23%	606M	5.8	N/A	--	136%	-18.98M	77M
NS	8%	3.48B	16	500M	60.3%	5.76%	5.84B	283M
KMP	5.8%	26.24B	34	2.64B	6.6%	20%	8.13B	2.87B

B= billion M= million

Boardwalk Pipeline Partners, LP (BWP)

It has enterprise value of $8.6 billion and price/sales value of 4.79. It has a positive levered free cash flow rate of $177 million and Quarterly revenue growth (yoy) of 4.4%. Insiders have a solid 53.4% stake in the company. Net income for the past 3 years is as follows; in 2008 it came in at $294 million, in 2009 it dropped down to $162.7 million and in 2010 it moved up to $289 million. The full upgrade and downgrade history can be accessed here.

· ROE 7.2%

· Return on assets 3%

· Total debt 3.2B

· 200 day moving average $27.01

· Book value $16.04

· Dividend yield 5 year Average 7.3%

· Dividend rate $2.19

· Payout ratio 171%

· Dividend growth rate 5 year average 10.8%

· Consecutive dividend increases 4 years

· Paying dividends since 2006

· Total return last 3 years 75%

· Total return last 5 years 23%

Enbridge Energy Partners (EEP)

Enbridge Energy Partners, L.P. owns and operates crude oil and liquid petroleum transportation and storage assets, in the United States. Transporting oil is one of the biggest opportunities in the Bakken shale area (ND). The roads in the Williston Basin are not sturdy enough to support a constant fleet of truck transporting oil day and night and so this provides an immense opportunity for pipeline companies. EEP is moving in the right direction by expanding its capacity to handle an additional 80,000 barrels of oil. The project is expected to be ready by 2013. It already has commitments for 70% of the rail loading capacity and expects to complete agreements for the remaining capacity soon.

The full upgrade and downgrade history can be accessed here.

· ROE 10.23%

· Total debt $5.61 B

· 200 day moving average $ 29.14

· Book value $13.03

· Dividend yield 5 year Average 8.8

· Dividend rate $ 2.09

· Payout ratio 212

· Dividend growth rate 5 year average 2.5%

· Consecutive dividend increases 4 years

· Paying dividends since 1992

· Total return last 3 years 188%

· Total return last 5 years 61.8%

Breitburn Energy Partners L.P (BBEP)

Breitburn Energy Partners L.P has enterprise value of $ 1.5 billion. BBEP has a levered free cash flow of $4.76 million and a price/sales value of 2.92 Net income for the past 3 years has been dropping and is as follows; in 2008 it came in at $378 million, in 2009 it turned negative to -$107 million and in 2010 it moved up to $34 million. Net income for 2011 so far is roughly $141 million.

Out of the 19 analysts following BBEP, 5 rate it as an outperform and 6 rate it as a buy.The full list can be accessed here

A potential warning signal

Beneficial owner QUICKSILVER RESOURCES INC sold over 8 million shares in November at $16.52 per share. They have been cutting back on their position since Jan 2011, but turned rather aggressive from June onwards. The full list of transactions can be accessedhere .

· Short percentage of float 0.7%

· Percentage held by institutions 27%

· Percentage held by Insiders 29%

· ROE 5.21%

· Quarterly earnings Growth (yoy) N/A

· Total debt $516

· 200 day moving average $ 18.45

· Book value $23.52

· Dividend yield 5 year Average -0.36%

· Dividend rate $1.69

· Payout ratio 145%

· Dividend growth rate 3 year average 6.27%

· Consecutive dividend increases 1 years

· Paying dividends since 2007

· Debt/equity ratio N/A

· Total return last 3 years 174%

Telecom Argentina S.A. (TEO)

Telecom Argentina has a very healthy levered free cash flow rate of $503 million, a quarterly revenue growth (yoy) rate of 26%, a quarterly earnings growth rate (y0y) of 36%, a ROE of 35.9%, a very strong levered free cash flow rate of $506 million and an impressive total return for the last 3 years of 166%.

Gross profits have been steadily increasing for the past 3 years; in 2008 they stood at $1.4 billion, in 2009 they jumped to $2.57 billion and in 2010 they surged to $3.01 billion. Net income also surged during the same time period; in 2008 net income was $278 million, in 2009 it rose to $373 million and in 2010 it surged to $491 million.

· ROE 35.9%

· Quarterly earnings growth (yoy) 36%

· Quarterly revenue growth rate 26%

· Total debt 34.(M

· 200 day moving average $22.10

· Book value $8.48

· Dividend rate $1.57

· Payout ratio 70%

· Dividend growth rate 3 year average 0

· Consecutive dividend increases 0 years

· Paying dividends since 1994

· Total return last 3 years 166%

· Total return last 5 years 19.8%

ARMOUR Residential REIT Inc. (ARR)

It has a stunning quarterly earnings growth rate (yoy) of 12,484%, a ROE of -8.13%, and total 3 year return of 11.9%. Net income surged from negative $1.1 million dollars in 2009 to a massive gain of $6.5 million dollars in 2010. The short percentage of float is a huge 30.30%, which makes ARMOUR Residential REIT Inca very good candidate for a short squeeze. Gross profits have increased from $369,000 in 2009 to $7.8 million in 2010. Net income also surged nicely from negative $1.14 million in 2009 to $6.53 million in 2010.

ARMOUR Residential REIT Inc. has been named as a Top 10 Real Estate Investment Trust (REIT), according to Dividend Channel, which published its most recent ”DividendRank” report. The report noted that among REITs, ARR shares displayed both attractive valuation metrics and strong profitability metrics. For example, the recent ARR share price of $6.87 represents a price-to-book ratio of 1.0 and an annual dividend yield of 19.21% — by comparison, the average stock in Dividend Channel’s coverage universe yields 4.4% and trades at a price-to-book ratio of 1.9. The report also cited the strong monthly dividend history at ARMOUR Residential REIT Inc., and favorable long-term multi-year growth rates in key fundamental data points.

There were several Insider purchases for the month of October. Director Thomas Guba invested $275,000 in 50,000 shares at a cost of $5.50 per share. Director Daniel Staton purchased 150,000 shares at $6.29 a share, an investment of $943,000. The full list of insider transactions can be accessed here.

· ROE -8.19%

· Quarterly earnings growth (yoy) N/A

· Quarterly revenue growth rate 12,484.26%

· Total debt 5.32 billion

· 200 day moving average $7.26

· Book value $6.78

· Dividend rate $1.32

· Payout ratio 135%

· Consecutive dividend increases 0 years

· Paying dividends since 2010

· Total return last 3 years 11.73%

NuStar Energy L.P. (NS)

It has enterprise value of $6.02 billion and price/sales value of 0.60. It has strong quarterly revenue growth (yoy) of 60%, a total return of 72% for the past three years, a 5 year dividend growth rate of 4.19%, and has been paying dividends since 2001. Out of a total 5 stars we would assign NS 3.5 stars.

Net income for the past 3 years is as follows; in 2008 it came in at $254 million, in 2009 it dropped down to $224 million and in 2010 it moved up to $238 million. Net income for 2011 so far is roughly $191 million. The full upgrade and downgrade history can be accessed here.

· ROE 3.8%

· Return on assets 9%

· Total debt $2.57B

· 200 day moving average $ 58.64

· Book value $37.98

· Dividend yield 5 year Average 7.8%

· Dividend rate $4.34

· Payout ratio 138%

· Dividend growth rate 5 year average 4.19%

· Consecutive dividend increases 9 years

· Paying dividends since 2001

· Total return last 3 years 70%

· Total return last 5 years 32%

Kinder Morgan Energy Partners LP (KMP)

Kinder Morgan Energy Partners LP has a market cap of $ 25 billion and enterprise value of $ 38 billion. KMP has a levered free cash flow of $265 million and a price/sales value of 3.07. Out of a possible five stars we would assign Kinder Morgan Energy Partners LP four stars. For such a large cap stock insiders have a very healthy 18% stake in the company.

· Percentage held by Insiders 18%

· ROE 15.97%

· Quarterly earnings growth (yoy) -33

· Total debt $13.62 billion

· 200 day moving average $ 71.90

· Book value $22.16

· Dividend yield 5 year Average 7.10

· Dividend rate $4.58

· Payout ratio 93%

· Dividend growth rate 5 year average 7.31%

· Consecutive dividend increases 14 years

· Paying dividends since 1992

· Debt/equity ratio N/A

· Total return last 3 years 93%

· Total return last 5 years 97%

Conclusion

Our favorite two plays are KMP and NS; both have stellar records of consecutive dividend increases. In addition KMP has a very strong levered free cash flow rate of $265 million and NS has a very strong quarterly revenue growth rate of (yoy) of 60%. Value players might also be interested in the 4 stocks we recently covered that are trading significantly below book value in our latest article;4 Magnificent Value Plays With Dividends

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.