Morning News: January 6, 2012
Posted by Eddy Elfenbein on January 6th, 2012 at 5:19 am

Germany is Biggest Obstacle to Emergency Fund: Knot

Hungary Pledges Compromise on IMF Loan

French Debt Costs Rise at Bond Sale as AAA Decision Looms

IMF’s Lagarde: Euro Likely to Survive 2012

Pay Jumps 25% for Brazilian Investment Bankers

Crude Oil Futures Head for Weekly Gain on U.S. Economy, Iranian Tensions

Samsung Profit Rises to Record on Galaxy Sales

Boeing’s Orders Trail Airbus

Alcoa Earnings Estimates Plunge After Aluminum Drop

Barnes & Noble Considers Spinning Off Its Nook Unit

Private Equity Firm Sees a Future in Flatware

Japan Retailer Seven & I Q3 Profit Rises, Aeon Falls

Former Chief Ends a Bid for Overhaul at Olympus

Caroline Baum: Fed’s New Wordplay to Yield Negligible Results

Paul Kedrosky: Airline Safety Soars

Roger Nusbaum: Chasing Heat

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2011: The Year of the Dividend
Posted by Eddy Elfenbein on January 5th, 2012 at 1:29 pm

Forget the protestors or Bin Laden or Gaddafi or Arab Spring, 2011 was “The Year of the Dividend.” I saw this press release from S&P and thought I’d share it with you:

S&P Indices announced today that dividend increases reached $50.2 billion in 2011, an 89.2% rise over the $26.5 billion in dividend increases posted in 2010. For the full year, S&P Indices reported 1,953 dividend increases – a 13.0% jump over the 1,729 dividend increases reported in 2010. Only 101 companies, of the approximately 7,000 publicly that report dividend information, decreased their dividend in 2011 versus 145 in 2010.

“Dividends had a great year in 2011, with actual cash payments increasing over 16% and the forward indicated dividend rate up 18%,” says Howard Silverblatt, Senior Index Analyst at S&P Indices. “Payout rates (which historically average 52%) remain near their lows at under 30%, yields remain relatively high compared to alternative investments, and companies have strong cash-flow and cash reserves giving them considerable room to increase payments. At this point, we expect 2012 to set a new record for dividend payments, with the indicated rate surpassing the old record set in June of 2008.”

For the fourth quarter of 2011, dividend increases decline 6.8% with 649 issues increasing their dividends versus the 698 that did so during the fourth quarter of 2010. The percentage of issues paying a dividend increased in the fourth quarter, with 41.4% of the issues paying a cash dividend, up from 40.0% at the end of the third quarter. Silverblatt also determined that yields for paying issues decreased to 2.80% at the end of the fourth quarter, compared to 2.99% at the end of the third quarter.

“Yields still remain relatively high, with the quarterly decline due mostly to the 11% price increase,” notes Silverblatt. “The fourth quarter decline in dividend increases was the result of a sharp 44% increase in Q4 2010, as the market entered a recovery period.”

Additionally, Silverblatt reports that individual investors have saved $314 billion on qualified dividend tax cuts from 2003 through 2011, with another $44 billion in saving expected in 2012 before the legislation expires. “As Washington works through revenue requirements and expenditures, the post 2012 tax outlook treatment for dividends is very much in play,” adds Silverblatt.

“For 2012, we expect to see dividend increases continue across the board for all sectors with another double-digit gain in actual cash payments. Given underlying fundamentals, low payouts and cash reserves, we expect 2012 to set a new record for dividends despite lingering concerns over the economy.”

Morning News: January 5, 2012
Posted by Eddy Elfenbein on January 5th, 2012 at 4:31 am

France Seeks Lower Yield at Bond Sale

UniCredit CEO Confident on Success of Rights Issue

Deeper Cuts Needed to Save Greece: Papademos

Japan Chain Pays Record $730,000 For Tuna

Oil Trades Near 8-Month High as Iran Tension Counters Europe Debt Crisis

Oil Price Would Skyrocket if Iran Closed the Strait of Hormuz

Q+A: Why the Fed is Publishing Interest Rate Forecasts

Good Year for Autos, but a Test Waits in ’12

Toyota’s 2011 Sales in China Increase 4%

Fiat Raises Chrysler Stake to 58.5 % With New Dodge in Step Toward Merger

Yahoo’s New CEO Aims at Turnaround as Outlook Dims

Starbucks Raises Prices in U.S. Northeast, Sunbelt

Kodak Teeters on the Brink

Harder for Americans to Rise From Lower Rungs

Aleph Blog: Stock Prices Versus Implied Inflation

Jeff Miller: Bespoke Investment Group and Forecasting Follies

Howard Lindzon: The Consumer is Dead…Retail is Dead… and You are Poor and Dumb Destined to Work at Best Buy

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Coast to Coast
Posted by Eddy Elfenbein on January 4th, 2012 at 8:33 pm

My Watch List
Posted by Eddy Elfenbein on January 4th, 2012 at 2:10 pm

I’m often asked how I go about picking stocks for my Buy List. The answer is really quite simple. I don’t have a magic formula and I hate stock screeners.

Instead, I have a Watch List of about 100 stocks that I try to follow. These are what I would call “really good companies.” They’re in the top tier of Corporate America. It’s taken me years to build up this list and I change it often.

The Watch List serves as the minor leagues for my Buy List. It’s from this list that almost all candidates for the Buy List come, and it’s where they return after they’ve been deleted.

Let me make it clear that I’m not recommending any of these stocks listed below. That’s what the Buy List is for. I just wanted to show you which stocks make the first cut in the process. If a stock is a on this list, you can be pretty sure it’s a decent company (the price may not be).

My secret formula is nothing more than watching really good companies and making a move when the price looks good.

Ford’s Impressive 2011
Posted by Eddy Elfenbein on January 4th, 2012 at 1:30 pm

Shares of Ford ($F) are doing well today on the news that the company reported very good sales for 2011. Here are some highlights from today’s press release:

U.S. sales of the Ford brand totaled 2,062,915 vehicles in 2011, sealing its first three-point market share gain over three consecutive years since 1970

Ford brand small car sales were up 25 percent in 2011, with 244,291 vehicles sold, while utilities increased 31 percent with 579,626 sales. Ford sold 584,917 F-Series pickups in 2011, making it the best-selling truck for 35 consecutive years and the best-selling vehicle for 30 years

Ford posts best December retail sales month since 2005; total company sales in December were up 10 percent

The company said it expects the U.S. economy to expand by 2% to 3% this year. The stock got as high as $11.53 today which is a two-month high.

Morning News: January 4, 2012
Posted by Eddy Elfenbein on January 4th, 2012 at 6:49 am

Euro-Area Inflation Slows, Giving ECB Room

Italy’s UniCredit Offers Heavy Share Discount

Turkish Lira Gains as Central Bank Sells Dollars for Fourth Day

Macau Gambling Revenue Rose 42% Last Year

Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply

Against Euro and Yen, Dollar Defied Reality

Fed Shows Rate Forecasts, Boosts Transparency

Bank Earnings Jump 57% in Analyst Forecasts

Online Sales Buoy U.P.S. and FedEx

France’s Total in $2.3 billion U.S. Shale Gas Deal

Swiss National Bank Chief’s Wife Defends Dollar Trades

WJB Faced 25% Interest on Some Debt Ahead of Brokerage Shutdown

Chinese Retailer Casts Doubt on TV Investigation

Edward Harrison: Krugman, Tabarrok, Cowen and the Bond Vigilante Fallacy

Joshua Brown: UBS: Fed’s New Interest Policy Will Increase Confusion, Not Clarity

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Fourth-Quarter Earnings Guidance
Posted by Eddy Elfenbein on January 3rd, 2012 at 10:44 pm

Barron’s has a round-up of Q4 earnings guidance (h/t: Tadas). I counted them up: 27 positive, nine inline and 96 negative.

This is hardly scientific but it tells us that earnings estimates may be coming down in the weeks ahead. Q4 earnings reports will start next week.

Ross Stores’ Amazing Record
Posted by Eddy Elfenbein on January 3rd, 2012 at 4:08 pm

I’m usually a bit wary of investing in retail although there are a few good names. One stock that deserves attention is Ross Stores ($ROST).

I can’t fully stand behind these numbers, but I believe Ross has one of the most impressive dividend records around. The company has increased its dividend for 17 straight years, which is every year that it’s paid one. According to my numbers, the company has raised its dividend by at least 14% for 16 of the last 17 years. I can’t confirm that, but it appears to be correct.

The stock just finished a blowout year and two weeks ago had a 2-for-1 split. In a few weeks, I expect to see another impressive dividend increase.

I don’t believe that last dividend data point on the chart was adjusted for the stock split.

Me on Lehman Brothers
Posted by Eddy Elfenbein on January 3rd, 2012 at 3:11 pm

Every once in a while I get one right. Six years ago, I listed some thoughts for 2006. Here’s what I said about Lehman Brothers:

There’s something about Lehman Brothers (LEH) that I just don’t get. Every quarter they put up great numbers. I can’t put my finger on it, but I don’t see where all the growth comes from. How can they consistently do what others can’t? Maybe the company really is that good. Maybe not.

True, I didn’t exactly call them out, but I was questioning them when many others were not.