More Motley Fools are taking notice of high dividend stock Safe Bulkers (SB)

The Motley Fools are taking notice of my current favorite high dividend stock – Safe Bulkers (SB).  I agree with the positive reasons for being long this stock.

Disclosure: I don’t own Safe Bulkers (SB)  right now, but I want to.   I’m working on freeing up some funds to purchase this high dividend stock while it is still on sale at a low price.

Click on this link to see all the articles I’ve written on Safe Bulkers:  http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb

Subscribe today for free at www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets.

Be seeing you!

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4-Star Stocks Poised to Pop: Safe Bulkers

By Brian D. Pacampara | More Articles
May 31, 2011 | Comments (0)

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, dry bulk shipper Safe Bulkers (NYSE: SB  ) has earned a respected four-star ranking.

With that in mind, let’s take a closer look at Safe Bulkers‘ business and see what CAPS investors are saying about the stock right now.

Safe Bulkers facts

Headquarters (Founded)

Athens, Greece (2007)

Market Cap

$521.7 million

Industry

Shipping

Trailing-12-Month Revenue

$165 million

Management

Chairman/CEO Polys Hajioannou

CFO Konstantinos Adamopoulos

Return on Capital (Average, Past 2 Years)

13.3%

Cash/Debt

$48.2 million / $486.4 million

Dividend Yield

8.2%

Competitors

Eagle Bulk Shipping (Nasdaq: EGLE  )

DryShips (Nasdaq: DRYS  )

Navios Maritime Holdings (NYSE: NM  )

Sources: Capital IQ (a division of Standard & Poor’s) and Motley Fool CAPS.

On CAPS, 92% of the 228 members who have rated Safe Bulkers believe the stock will outperform the S&P 500 going forward. These bulls include dh1000 and All-Star TSIF, who is ranked in the top 0.1% of our community.

Earlier this year, dh1000 listed several of Safe Bulkers’ positives: "Relatively new ships on contracts for varying periods of time (staggered terms) with solid customers; reasonable debt and good dividends."

Currently, Safe Bulkers even sports a cheapish P/E of 4.6. That represents a discount to rivals like Eagle Bulk (10.0), DryShips (6.1), and Navios Maritime (7.9).

CAPS All-Star TSIF elaborates on the bargain opportunity:

The excess shipping is creating bargains for those who can afford to buy new ones from cancelled orders left at distressed shipyards, but they have to come to market profitably. I think Safe Bulkers after it’s drop the last two months has a decent chance of holding it’s own, which is all you really need right now. If they can maintain thieir dividend, (which at today’s depressed share price is almost 8%, they should be able to hold up handily against the S&P).

What do you think about Safe Bulkers, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!  

Link to original article: http://www.fool.com/retirement/general/2011/05/31/4-star-stocks-poised-to-pop-safe-bulkers.aspx

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Published in: on May 31, 2011 at 2:11 pm  Leave a Comment  

What’s wrong with insider trading?

Doug Casey on Insider Trading

Interviewed by Louis James, Editor, International Speculator

Recently: Doug Casey on Ron Paul

 
   

L: So, Doug, several people have asked us to talk about the scandal that deposed the head of the IMF; what’s your take on it?

Doug: To all appearances, it couldn’t have happened to a nicer guy, but I’ve got insider trading on my mind – let’s talk about DSK next week.

L: Ah. Raj Rajaratnam’s troubles got you riled up?

Doug: It’s a disgrace. Rajaratnam is – or was – a productive member of society who, even if he did break the law, may very well have done nothing morally wrong –

L: Good grief, Doug, you want the SEC to invite us over for tea and a chat? I know better than to expect you to ever beat around the bush, but …

Doug: The SEC is concerned with the enforcement of a set of stupid, counterproductive, expensive, completely unnecessary, and destructive laws. It does so by having its bureaucracy create a myriad of even more stupid, counterproductive, expensive, completely unnecessary, and destructive regulations.

L: But you’d say that about all government law.

Doug: I would, actually, although I know that confuses some people because there is an overlap between government law and what might be called natural law. But this one is topical at the moment, and worth debunking here and now, even though by this time next week people will have totally forgotten that the guy has been locked away for years… along with about 2.2 million others now in American prisons – most of whom absolutely shouldn’t be there.

L: Okay, okay, but for the record – there must be a few snoops who read these things – we abide by all securities and all U.S. law at Casey Research. In fact, the ethics policy I had to sign and that is strictly applied to all of us here at Casey Research exceeds SEC standards, because we not only don’t want to run afoul the law, our reputation is our business and we don’t want to give anyone any reason to doubt our integrity.

This reminds me of your old stunt, asking the Feds in your audiences to stand up and identify themselves, because you knew who they were. Amazing that you got a few to fall for that.

So… where to begin?

Doug: With a definition, as always. The SEC’s definition of insider trading is constantly evolving and growing, though the definition itself – forget about its application – is imprecise and arbitrary. But, more or less, it says that any officer, director, holder of more than 10% of a public company’s stock, or anyone they talk to about material information regarding the company, is an insider.

Like most of the SEC’s rules, the ones on insider trading are arbitrary. They’re similar to the tax laws, in that you often can’t know whether you’re breaking them or not. You’d almost have to live with a specialized attorney to keep from getting in trouble. They can’t be enforced in anything but a sporadic way – basically to cause fear, in the hope that fear will keep the plebes in line. But worse, they are unnecessary and destructive.

L: One thing at a time, then. Unnecessary?

Doug: Yes. There’s nothing wrong with insider trading, per se. For example, there’s nothing wrong with a manager, who knows his company will report a good quarter, buying shares in his company in advance. This causes no one any harm. Let me repeat that: the fact that an insider knows – or thinks he knows – good news is coming and buys shares does not hurt anyone. Actually, it spreads out the buying pressure and may help everyone buy at better prices. Moreover, if someone needs to sell urgently on a given day, maybe for tax reasons, or maybe because their kid needs an operation, then the fact that someone is in there buying with gusto does him a lot of good.

L: But people say it isn’t fair.

Doug: There’s no such thing as fair. “Fair” is necessarily an arbitrary and contentious word, usually employed by busybodies and losers. You think it’s fair to the antelope when the lion eats it? Was it fair to the dinosaurs when Mother Nature wiped them out? Or how about this: is giving everyone an equal share of something fair, if some worked for it harder than others? The guy who knows something and buys has not taken anything from unwilling hands – just uninformed hands – and people have to make decisions with varying amounts of uncertainty all the time. You can’t regulate uncertainty or the uneven spread of information out of existence any more than you can regulate the capacity to intuit the significance of information into every human skull. Not only is it impossible to do, it’s ethically wrong to try. If you’re no good at this game, don’t play it. Life’s not fair. Get over it.

L: I’ve long seen fairness as a false ideal, created by people whom I suspect were simply jealous of those who had more than they did. It’s the have-nots, or want-mores, trying to use power over others to compel them to share what they would not share willingly, instead of working hard to become haves themselves, honestly.

This has caused nothing but harm to all people – especially poor people, actually – because calls for “fairness” often wind up with the ends justifying the means. Assuaging the plight of poverty-stricken people seems like a noble enough reason, perhaps enough to justify a little bit of force, a mild redistribution, especially from those who don’t really need all they have… But this is not justice; it’s brute force with a benevolent mask. And once a governing system has been given such power, it can use it for less noble goals – and in time, it always does. So-called social justice is just the opposite of what it claims to be. Taking from people what they will not give willingly is theft, and by any other name, it smells just as bad.

Justice is hard enough to achieve, though it can be done, with effort. Fairness is just jealousy dolled up.

Sorry… That one really gets me. Back to insider trading. Buying on good news is one thing – what about on the sell side? What if someone knows a company is going to be sued, or have a patent rejected, or some such negative insider info?

Doug: What of it? So, they get out before others do. Some kid gets to the water fountain before the rest – it happens. And, again, it can spread out the selling, actually blunting the impact of the bad news.

Look, there’s no problem with insiders buying or selling based on their knowledge. Even if news is kept airtight until it’s press-released, some people will get it before others. Only the people paying close attention at that time will be able to act immediately. Is that “fair” to everyone else? If the exchanges slapped trading halts on every share every time a company reported news, everyone would be trying to buy or sell the moment the halts were lifted, greatly magnifying the swings, both up and down. This would tend to cause more harm to all shareholders. The whole idea is simply silly.

The fact is that there are many buyers and sellers, each with different levels of knowledge, ability, and need, and the more important differences – in understanding and insight, for example – are internal and individual. There’s no way to truly level the playing field. It’s an impossible ideal, and therefore a destructive goal.

L: What if an insider knows there’s bad news and is telling people otherwise, urging them to buy, like the proverbial used car salesman who fills a knocking transmission with sawdust to quiet the sound?

Doug: Well, that’s fraud then. It’s got nothing to do with being an insider, it’s got to do with lying. A crook is a crook, and he doesn’t stop being a crook just because there are rules – rules just change the way he cheats people. There are ways to deal with this – even laws, if you want to use them. I’m not defending deceit, fraud, or theft. All I’m saying is that it’s impossible for everyone to hear of financially relevant news at the same time, and that it would be counterproductive if it could be made to happen.

Further, if shareholders really want to try equalizing trading opportunities by demanding certain policies regarding trading and the handling of material information, they could do that. This could all be dealt with by contract between the company and its employees. Or by allowing exchanges to regulate this in different ways, appealing to investors who care about different things.

Instead, we get the SEC, which should really be called the Swindlers Encouragement Commission, telling people it’s making sure everything’s fair, thus luring the lambs to the slaughter. The investment world is full of sharks, and it always will be – all the SEC does is lower the average guy’s defenses, which really does encourage swindlers. Just look at Bernie Madoff, a perfect example. The SEC has never prevented a fraud, to my knowledge. Rather, by making everyone think they’re protected, it makes a fraud much easier to perpetrate. Lambs to the slaughter.

L: Don’t hold back, Doug…

Doug: [Chuckles] It gets worse: adding insult to injury, the SEC costs business billions of dollars annually – probably scores of billions, if you take all the secondary and trickle-down costs into account: direct fees, legal fees, printing, mailing, and other costs of compliance. They have a direct budget cost of something over a billion dollars per year, but that’s trivial relative to the indirect costs they impose on the economy. They ought to be ashamed, diverting a significant fraction of GDP from productive use into the pockets of parasites, in the name of protecting business and investors, when they do the opposite. The SEC is like a Pied Piper who attracts ravening hordes of rats with his flute instead of getting rid of them – and then charges people tenfold for the “service.”

This is one agency I would abolish, immediately and completely. Not a single one of its functions should even be handed off to other agencies. The SEC serves absolutely no useful purpose whatsoever – just the opposite. It’s not a question of getting it under control, or paring it back. It should be eliminated in toto.

L: On some level, I think everyone in the market knows this is true. They go along with the insider trading charade because Big Brother is watching, but they know they’ve read things others have not, they know people others do not, they have relevant experience others do not. To hear the bawdy tales around the trendy pubs in financial districts, everyone thinks they know something others don’t. Nobody is trying to be fair – they are trying to win. Short sellers are perhaps the brassiest of the lot; their very positions proclaim that they think they know something others do not. Their counterparties to the short sells know this, and willingly enter into contract with them, pitting their own knowledge and understanding against that of the shorts.

It’s all about skating around the edges without crossing the lines… and for some, it’s all about crossing the lines without getting caught. I think this really is a case of the emperor’s new clothes, at least among investors. But if everyone knows this, why does the myth persist?

Doug: The public and the fat cats – and absolutely the politicians – all think that a high stock market is, almost by definition, a good thing. But a high stock market doesn’t necessarily mean an economy is doing well, or that public companies are doing well – it just means there’s a perception that this is the case. Or worse, in some cases – like now, I suspect – it means nothing at all, other than that people are afraid to hold currency, government bonds, real estate, or other assets and so-called assets. An artificially high stock market can send dangerous, false signals to businessmen and investors. It can cause false confidence – the kind Wile E. Coyote still has when he runs off a cliff. But the government seems to love a high stock market…

Of course short sellers love to see an overpriced market too. And speaking of short sellers, I’d go further and say that they provide a very valuable positive service to other market participants.

L: How so?

Doug: To start with, they’re always on the lookout for frauds. They’re really the policemen of the market, taking down inflated stock prices of bad companies, and alerting other investors of the danger.

Plus, when they short a stock, no matter how the trade goes, they have to actually buy it back at some point, to be able to deliver on the contract. If they are right about a company being grossly overvalued, their selling provides a warning by driving down the price. Further, they are there to provide a bid after they’ve been proven right. By then, almost no one else is buying, and the shorts offer some liquidity, a bid, to the fools and amateurs who didn’t do their homework. And if they are wrong, being forced to cover their short position can push the stock higher, to the benefit of the incorrectly judged company.

L: So, it’s the Wild West?

Doug: First, the Wild West wasn’t nearly as wild as Hollywood has made it out to be. It had an unregulated economy that worked quite well most of the time – better than ours does now, I’d say, given the huge wealth it created for so many people who had the grit to go out there and take nature on. But that’s a conversation for another day. Second, “security” is a fiction – it doesn’t exist once you leave your mother’s womb.

What I’m saying now, to use your metaphor, is that at least out in the Wild West, people knew that they had to be on their guard and take extra care. In the so-called Civilized East, that was just as true – but the need was masked by the veneer of civilization, and people were conned in droves.

And that’s still true today; every investor who enters the market needs to understand that on the other side of every single trade he makes, is another human being. As in all walks of life, not all human beings are equally honest, or smart, or friendly. Remembering this would encourage investors to do more homework.

L: So, back to Raj Rajaratnam. He didn’t do anything wrong?

Doug: I don’t know – I don’t have all the facts of the case at my disposal. If he did something unethical, shame on him. From what I know, it would appear the possible real wrongdoers were the executives of the companies who relayed information to him – if their deal with the company required them to keep it confidential. Of course, if that was the case, then Raj may have been guilty of receiving stolen goods. But that is not what he’s been convicted of. He’s only been convicted of breaking SEC rules.

But I do know one thing: Raj was a very smart and productive guy – that’s how he became a billionaire. Now, instead of creating value and wealth in society, he’s going to be locked up in a cage for years, and transformed into a burden on society.

In any event, if he committed a tort, it should be the subject of a civil suit. It’s not something that should automatically be the subject of a criminal prosecution. If a crime is involved, let an action be brought by the party who was stolen from – not by a government agency, acting on its own.

L: Well, if people want to help him, Rajaratnam’s brother is leading a letter-writing campaign. But the SEC isn’t going away any time soon, so this is all academic. Are there any real-world investment implications you want to point out?

Doug: Sure. Remember that government regulation is just another distortion in the marketplace, like taxes, trade barriers, inflation, and so forth. All such distortions have consequences, and one of them is to create opportunities for speculators. I haven’t done it, I confess, but I think someone who studied the SEC’s predatory behavior could make a substantial fortune predicting outcomes. It’s full of young hotshot attorneys looking to make their bones by attacking guys like Raj. Then they can join a law firm, and charge $1000 an hour to defend clients against the next crop of hotshot young SEC attorneys, who will do the same thing. It’s a very corrupt system.

L: You’ve said things like that several times. It occurs to me to ask what speculators would do in a true free-market economy, where there are no such distortions?

Doug: We’d all have to find another line of work. In a free-market economy there would be very few speculators, because there would be very few distortions in the way the world works.

L: I think I’d become a venture capitalist. It’s the next best thing – plenty of volatility and speculative upside… but it is riskier, because you’re betting on specific innovations, not trends that have to play out sooner or later.

Doug: Perhaps I’d invest in nanotech research, to hasten the day when they can rejuvenate my body and I can play polo properly again. But for now, I really want to urge people who agree with us about the SEC to think long and hard about the issues. They should be crystal clear in their minds, so they can raise their voices in opposition when others around them mindlessly parrot the party line on insider trading. Hope may be scant of changing the system, but that’s no reason to hesitate to debunk erroneous conventional wisdom. It should be debunked because it’s the right thing to do, and because falsehoods and lies are everyone’s enemy. The current corrupt system will go the way of the dodo eventually, on its own. But the more people there are reminding everyone that one just can’t escape the “caveat emptor” dictum, the sooner and the easier the transition will be.

But most of all – the most practical advice I can give investors now – is not to be taken in themselves by the SEC con. There are more sharks than ever in the water, and nothing the SEC does reduces that number. Always, always keep your guard up, and do your homework. Start with researching the people in any given play. That’s what we do at Casey Research: People is the first of our eight Ps of resource speculation.

L: Great – words to the wise. Thanks, Doug.

Doug: My pleasure, as always. Until next week.

L: Next week.


Spotting an emerging trend and capitalizing on it is every investor’s dream. But it’s hard for a single person to do all that research. LetThe Casey Report guide you to powerful opportunities – a three-month trial is risk-free. Details here.

      May 27, 2011

      Doug Casey (send him mailis a best-selling author and chairman of Casey Research, LLC., publishers of Casey’s International Speculator.

      Copyright © 2001 Casey and Associates

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    Published in: on May 28, 2011 at 7:53 am  Leave a Comment  

    TIP OF THE WEEK – Find potential value/contrarian stocks using a “Map of the Market”

    Find potential value/contrarian stocks using a “Map of the Market”

    Jason Brizic

    May 27, 2011

    I sometimes use market visualization tools to spot potential value stocks that I miss using stock screeners.

    I look for beat down stocks headed for value territory.  Stocks that are down 30% or more during a bull market deserve at least a quick valuation to see if they have any redeeming qualities overlooked by growth investors.

    SmartMoney.com’s “Map of the Market” tool is an excellent visualization of the S&P 500’s ups and downs.  This tool really helps you see sector rotation over a period of time also.  The bad news is that it doesn’t incorporate total return.  That means that it doesn’t include dividends paid into the return on a stock.  But I don’t use it to find dividend stocks.  I’m looking for contrarian investment opportunities.

    Go to www.smartmoney.com.  Click on the Tools tab and then find Map of the Market under Featured Tools.  Or follow this link: http://www.smartmoney.com/map-of-the-market/?link=SM_topnav_tools .  I choose the following settings in the legend/control panel area:

    Show Change since: 52 weeks

    Highlight Top 5: Losers 

    Image001

    My eye was drawn to the Basic Materials sector.  What is that big red company amongst all that green?  It turned out to be Weyerhaeuser (WY).  I hadn’t heard of them before.  They are a paper and timber company.  Their stock price is in the dumps because of the housing depression.  I did a quick valuation on the company and it has a lackluster dividend and very little earning power.  Its balance sheet looks okay.  I didn’t find a diamond today, but now you have another method to find some contrarian stocks.

    For more tips, go here:

    http://www.myhighdividendstocks.com/category/tip-of-the-week

    Published in: on May 27, 2011 at 12:09 pm  Leave a Comment  

    What will it take for Philip Morris (PM) to become a high dividend stock?

    Philip Morris International (PM) just bought the global rights to nicotine aerosol technology.  This move could help protect revenues and profits.  This dividend stock is currently yielding 3.68%.  I’m going to run PM through my quick valuation checks to see what will it take to make PM a high dividend stock?

    Philip Morris International (PM)

    Market price: $70.30

    Shares: 1.78 billion

    Dividend record: dividend increases every year for the past three years

    Dividend: $0.64 quarterly

    Dividend yield: 3.68%

    Dividend payout ratio: $2.56 dividend divided by $4.08 most recent EPS = 62%

    Stock price necessary for 6% dividend yield: $42.67

    Earning power: a very stable $3.67 five year average earnings

    Earnings yield: 5.9%

    (Earnings adjusted for changes in capitalization)

                EPS     Net. Inc.          Adj. EPS

    2006    $2.91   $6,130 M         $3.44

    2007    $2.86   $6,038 M         $3.39

    2008    $3.31   $6,890 M         $3.87

    2009    $3.24   $6,342 M         $3.56

    2010    $3.92   $7,259 M         $4.08

    5 year average earning power per share: $3.67

    Value territory @ below 12 times average earnings = $44.04 (it was near this price as recently as May 2010)

    Speculative territory @ above 20 times average earnings = $73.40.  PM’s price is approaching speculative territory at 19.2 times it five year average earnings.

    Balance sheet – huge hits to shareholder equity need to be investigated

    Book value: $1.90 (what? Where did all the equity go?)

    Image003


    Price to book value: 37 (this is horrendous)

    Current ratio: 1.07 (above 2.0 is good.  PM will be strained to pay some short term debts coming due)

    Quick ratio: 0.37 (above 1.0 is good)

    Conclusion: If you want to own it, then put PM on your watch list for a target price of $44.04.  I will consider performing detailed analysis on PM if the price drops considerably toward the $44.04 target.  If you own it, then consider selling it at $73.40 and above.  The balance sheet scares me.

    Disclosure: I don’t own Philip Morris (PM), or plan to until it yields 6% and improves its balance sheet

    Subscribe today for free at www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets.

    Be seeing you!

    * * * * * * *

    Philip Morris International Buys Nicotine Aerosol Technology

    By Melissa Korn

       Of DOW JONES NEWSWIRES

     

    NEW YORK (Dow Jones)–Philip Morris International Inc. (PM) bought the global rights to technology that creates nicotine in the form of an aerosol as the company seeks smokeless and potentially less harmful alternatives to traditional cigarettes.

    The world’s biggest tobacco company by revenue, which sells cigarettes such as Marlboro and L&M outside the U.S., bought the patent from inventors including Jed Rose, director of Duke University’s Duke Center for Nicotine and Smoking Cessation Research. Terms of the deal weren’t disclosed.

    It’s too early to say what form a product might eventually take or whether it will contain tobacco, Philip Morris spokesman Peter Nixon said. He said translating the technology into a product could take "a few years."

    Nicotine itself isn’t believed to cause many common smoking-related diseases. Explaining that the ailments are often linked instead to combustion, Philip Morris said the new, non-burning technology "has the potential to reduce the harm of smoking."

    A number of companies have expanded their smokeless tobacco offerings in recent years amid increasing bans on indoor smoking and continued concerns over the harmful effects of cigarettes. Philip Morris is in a partnership with Swedish Match AB (SWMA.SK), which makes moist snuff products called snus, for international marketing of smokeless tobacco. British American Tobacco PLC (BATS.LN, BTI), one of Philip Morris’s major competitors, launched a startup in April to develop new nicotine-based, non-tobacco products.

    Meanwhile, in the U.S., Altria Group Inc. (MO) recently began testing spit-free, tobacco-coated sticks that resemble toothpicks and Reynolds American Inc. (RAI) launched an advertising campaign this week for its Camel Snus product to coincide with an expanded smoking ban in New York City.

    -By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

    Link to original article: http://online.wsj.com/article/BT-CO-20110526-712786.html

    Image001

    Published in: on May 26, 2011 at 6:07 pm  Leave a Comment  

    AGNC 2010 annual report and millions of more shares next year.

    American Capital Agency Corp. (AGNC) issued a press release today that focuses on the rescheduling of its annual meeting of stockholders.  The press release failed to mention the inclusion of its 2010 annual report available from the link to the proxy materials.  Follow this link to download the annual report:

    www.AGNC.com/2011proxymaterials

    The annual report can be downloaded in PDF format.  I will read through it and begin blogging on new information that could jeopardize AGNC’s high dividend yield.

    Why did AGNC delay the stockholders meeting?  According to them they wanted to give stockholders additional time to consider and vote on the amended proposal.  What is special about the amended proposal?

                “… and to modify the requested increase in the Company’s authorized shares of common stock.  The amended proposal now only requests an increase in the authorized number of shares of the Company’s common stock to 300,000,000 instead of 500,000,000. “

    AGNC has 128.83 million shares currently outstanding.  It is currently paying a $1.40 quarterly dividend on those shares.  That totals $180.36 million dollars per quarter in dividend payments.  The company must periodically issue new shares of common stocks, to bring in capital, in order to leverage around 8x, to buy the agency securities yielding an average of 3.44% with repurchase agreements costing an average of 1.02%, to keep the difference, and to pay a whopping dividend of $1.40 per share per quarter.

    It is a Catch 22 situation.  The trouble is that each additional outstanding share comes with an expectation of a large cash dividend.  The huge 18% dividend yield is the main reason that investors speculators are purchasing shares of AGNC.  The more shares the harder it is to keep the dividend the same or growing. 

    Let’s assume for a moment that AGNC issues all the shares it can until it hits the 300 million limit proposed.  Will the company be able to sustain its $1.40 quarterly dividend?  Heck no!  300 million shares times $1.40 per share equals $420 million in dividend payments per quarter or $1.6 billion per year.

    AGNC only earned $177 million in net interest income in 2010.  AGNC still wouldn’t have enough income to pay the $1.40 quarterly dividend even if it was able to triple its net interest income in 2011 to $531 million.  Couple this reality with an increasing risk of higher interest rates and AGNC’s current price of $30 per share looks like it has less upside than downside.

    Disclosure: I don’t own AGNC; nor do I ever plan to.  It is a house of misallocated cards.

    American Capital Agency Corp. Reschedules 2011 Annual Meeting of Stockholders

    BETHESDA, Md., May 25, 2011 /PRNewswire/ — American Capital Agency Corp. (Nasdaq: AGNC) ("AGNC" or the "Company") announced today that it has rescheduled its 2011 annual meeting of stockholders, originally scheduled for May 31, 2011. The new meeting date and time is Friday, June 10, 2011 at 9 a.m. (ET). The annual meeting will be held at AGNC, located at 2 Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814.  

    The Company also announced that it has supplemented its proxy statement for the 2011 annual meeting to amend the charter amendment proposal to eliminate the proposed increase in the Company’s authorized shares of preferred stock and to modify the requested increase in the Company’s authorized shares of common stock.  The amended proposal now only requests an increase in the authorized number of shares of the Company’s common stock to 300,000,000 instead of 500,000,000.  The Company rescheduled its annual meeting in order to provide its stockholders with additional time to consider and vote on the amended proposal.

    The annual meeting will be held for the purposes set forth below.

    1.     To elect the Board of Directors, with each director serving a one-year term and until his successor is elected and qualified;

    2.     To approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the total authorized number of shares of common stock from 150,000,000 to 300,000,000;

    3.     To ratify the selection of Ernst & Young LLP to serve as the Company’s independent public accountant for the year ending December 31, 2011; and

    4.     To transact such other business as may properly come before the meeting or any adjournment thereof.

    The Board of Directors of the Company has recommended a vote "FOR" all of the director nominees and "FOR" proposals 2 and 3 above.

    Formal notice of the rescheduled meeting and the supplement to the Company’s proxy statement and revised proxy card are being mailed today to the Company’s stockholders.  More information on the items to be discussed at the meeting can be found in the Company’s proxy statement, which is available at www.AGNC.com/2011proxymaterials.

    Stockholders of record at the close of business on April 11, 2011 are entitled to notice of, and to vote at, the 2011 annual meeting and any adjournment of the meeting. If you wish to vote shares held in your name or attend the annual meeting in person, please register in advance by emailing Investor Relations at IR@AGNC.com or by phone at (301) 968-9300. Attendance at the 2011 annual meeting will be limited to persons presenting proof of stock ownership on the record date and picture identification. If you hold shares directly in your name as the stockholder of record, proof of ownership could include a copy of your account statement or a copy of your stock certificate(s). If you hold shares through an intermediary, such as a broker, bank or other nominee, proof of stock ownership could include a proxy from your broker, bank or other nominee or a copy of your brokerage or bank account statement. Additionally, if you intend to vote your shares at the meeting, you must request a "legal proxy" from your broker, bank or other nominee and bring this legal proxy to the meeting.

    For further information or questions, please do not hesitate to call the Company’s Investor Relations Department at (301) 968-9300 or send an email to IR@AGNC.com.

    Original link to the press release: http://www.prnewswire.com/news-releases/american-capital-agency-corp-reschedules-2011-annual-meeting-of-stockholders-122583503.html

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    Published in: on May 25, 2011 at 2:51 pm  Leave a Comment  

    Is Southern Copper heading north or south from $34.74?

    It is time to take another look at Southern Copper.  Its stock price has declined from its most recent peak of $48.96 at the beginning of 2011 down to $34.74 today.  That is a decline of about 29%.  Has this copper producer entered value territory yet?  I’m going to perform my quick valuation checks to see what is going on with this mega-copper producer.

    Shares outstanding: 850 million (slight buyback or the past five years)

    Dividend record

    Dividend yield: 6.4% projected

    Quarterly dividend: $0.56 ($2.24 annual rate)  This is a two cent cut from the previous quarter.

    Dividend payout ratio: 116% of 5 yr. avg. earnings per share (this means that another dividend cut is possible unless earnings improve enough to bring the dividend payout ratio down to 80%.  Earnings would have to improve to $2.80 per share at the current quarterly dividend rate).

    Earning power

    Last 5 years earnings adjusted for slight changes in capitalization

                EPS     Net inc.           Adj. EPS

    2006    $2.31   $2,038 M         $2.40

    2007    $2.51   $2,216 M         $2.60

    2008    $1.60   $1,407 M         $1.66

    2009    $1.09   $929 M            $1.09

    2010    $1.83   $1,554 M         $1.83

    5 year average earnings per share: $1.92 @ 850 M shares.  SCCO is trading at 18.1 times its 5 year average earnings.  I like value stocks below 12 times earnings.  Above 20 is speculative.

    Balance sheet

    Book value: $4.58

    Price to book value: 7.58 (bad)

    Current ratio: 3.25 (over 2 is good; no short term liquidity problems)

    Quick ratio: 2.65 (over 1 is good; no short term liquidity problems)

    Technicals

    The 3 year chart confirms the beating that SCCO has taken lately.  Its technicals show that there is room to fall further.  http://bit.ly/SCCO3yrChart

    Conclusion

    Wait for the double dip recession to buy Southern Cooper (SCCO) below $23.04.  It would be trading for 12 times its 5 year average earnings per share at that price.  The dividend will likely be cut again and it won’t be a high dividend stock with any sustainability until the market price and the dividend come down.  It traded near $23.00 as recently as May 2010. 

    Demand for copper at today’s high prices of will wane once the global double dip recession become apparent to most investors.  Also, copper demand at today’s prices will also decrease when China’s construction bubble pops.

    Disclosure: I don’t own SCCO or plan to own it above $23.04 per share.

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    Published in: on May 24, 2011 at 4:51 pm  Leave a Comment  

    Safe Bulkers (SB) 7.82% dividend yield remains safe and on sale at $7.80 per share

    Safe Bulkers (SB) remains on sale at $7.80 per share.  The company pays a $0.15 quarterly dividend that is safe.  The dividend yield for this high dividend stock is 7.82%.  The company has a five year average earning power of $1.50 per share.  And its balance sheet is good, but it could be improved upon.  I think it will improve once a few of its new-build ships begin operating over the next year.

    The fundamentals are solid and have not changed.  Follow this link to read many recent articles on Safe Bulkers fundamentals:

    http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb

    The technicals look good for market timing: http://bit.ly/3rySBchart

    ·         The continuous commodity indicator (CCI) is in negative territory.  The CCI tends to bottom at stock bottoms.

    ·         The stock price is barely below the 50 week moving average.  I like buying when the 50 week is below the 200 week moving average, but Safe Bulkers hasn’t been around for 200 weeks yet. 

    ·         The stock price is also sliding down the lower Bollinger Band.  Stock price bottoms tend to happen when the stock price jumps off the bottom Bollinger Band. 

    ·         I use the moving average convergence divergence indicator as a confirming indicator.  The MACD is a momentum oscillator based on the difference between two exponential moving averages.  See http://bit.ly/ChartSchool for a through explanation on each of these technical analysis terms.

    You have a good reason to be concerned if you are only going to make a onetime purchase of SB.  This stock will go down if the S&P 500 goes down in reaction to a global double dip recession.  Dry bulk shipping moves the commodities that are necessary in a booming global economy.  A renewal of the global economic bust will drop dry bulk shipping stocks even though SB has long term contracts in place to whether the economic storm.  That will make it an extreme bargain with a huge dividend yield like in 2008 when the stock went below $3.00 per share temporarily.

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    Published in: on May 23, 2011 at 3:13 pm  Leave a Comment  

    America’s Student Loan Racket: Soaring Default Rates

    Don't go into debt to fund a college degree.  It is a trap.  You can earn a college degree for under $15,000.  Click here for details: http://www.garynorth.com/public/department89.cfm 

    America's Student Loan Racket: Soaring Default Rates

    by Stephen Lendman
    The People's Voice

    Recently by Stephen Lendman: America's Total Surveillance Society

     

       

    An earlier article discussed 'Permanent Debt Bondage from America's Student Loan Racket."

    It explained government/corporate complicity to rip off students for profit, a racket continuing under Obama. His July 2010 Student Aid and Fiscal Responsibility Act perpetuated the scam. It enriches providers, entrapping millions of students permanently in debt, because rising tuition and fee amounts plus interest, service charges, and late payment or collection agency penalties are too onerous to repay.

    It's part of the grand scheme, of course, to transfer maximum public wealth to America's super-rich already with too much. Ongoing for over three decades, it accelerated under Obama, a corrupted Wall Street/war profiteer tool, destroying America for power and profit.

    Millions of Students Permanently Entrapped in Debt

    Many students, whether or not they graduate, have debt burdens approaching or exceeding $100,000. If repaid over 30 years, it's a $500,000 obligation, and if default, much more because debts aren't forgiven. As a result, once entrapped, escape is impossible. Bondage is permanent, and future lives and careers are impaired or ruined.

    Congress ended bankruptcy protections, refinancing rights, statutes of limitations, truth in lending requirements, fair debt collection ones, and state usury laws when applied to federally guaranteed student loans. As a result, lenders may freely garnish wages, income tax refunds, earned income tax credits, as well as Social Security and disability income to assure defaulted loan payments. In addition, defaulting may cause loss of professional licenses, making repayment even harder or impossible.

    Moreover, under a congressionally established default loan fee system, holders may keep 20% of all payments before any portion is applied to principle and interest due. A borrower's only recourse is to request an onerous and expensive "loan rehabilitation" procedure, requiring extended payments (not applied to principle or interest), then arrange a new loan for which additional fees are incurred.

    As a result, for many, permanent debt bondage is assured. In addition, no appeals process allows determinations of default challenges under a process letting lenders rip off borrowers, many in perpetuity.

    At issue is a conspiratorial alliance of lenders, guarantors, servicers, and collection companies enriching themselves hugely at borrowers' expense, thriving from extortionist fees and related schemes. It's a congressionally sanctioned racket, scamming millions of indebted victims.

    Moreover, lenders thrive on bad debts, deriving income from inflated service charges and collection fees. They're more than ever today as default rates soar, lifetime rates now nearly one-third of undergraduate loans, higher than for subprime mortgages. In fact, they're higher than for any other lending instrument and rising.

    Soaring Defaults During Hard Times

    Since America's economic crisis began in late 2007, an April 21, 2009 Wall Street Journal (WSJ) Anne Marie Chaker article highlighted the burden on students headlined, "Student Loans: Default Rates are Soaring," saying:

    The combination of economic weakness, rising tuitions and poor job prospects caused defaults on student loans to skyrocket. According to Department of Education numbers for those federally guaranteed, estimated FY 2007 default rates reached 6.9%, up from 4.6% two years earlier.

    Conditions are now far worse according to a February 4, 2011 Mary Pilon and Melissa Korn WSJ article headlined, "Student-Loan Default Rates Worsen," saying:

    They "rose to 13.8% from 11.8% for students beginning repayment in (FY) 2008 compared with those starting a year earlier," according to new Department of Education data.

    They measure defaults within the first three years of repayment. Over their lifetime, however, they approach two and a half times that level, perhaps heading for 50% if economic conditions keep deteriorating while tuition and fee rates rise.

    Students at for-profit schools fare worst at 25%, but sharp tuition increases at public and private nonprofit universities place greater burdens on their graduates, assuring rising defaults, especially over their lifetime.

    Moreover, rising levels may cause many colleges to become ineligible for government-backed Pell Grants and other student loans. To qualify, they formerly had to show less than 25% of students defaulting within a two year window. If they breached that threshold for three consecutive years, or hit 40% in a single year, they could lose out altogether.

    Now, under the 2008 Higher Education Opportunity Act increasing the default window to three years, the ineligibility threshold rose to 30%, penalties not beginning until 2014.

    On March 15, New York Times writer Tamar Lewin headlined, "Loan Study on Students Goes Beyond Default Rates," saying:

    For every student defaulting, "at least two more fall behind in payments," according to a new study. Conducted for the Institute for Higher Education Policy by Alisa Cunningham and Gregory Kienzl.

    It explains that around 40% of borrowers were delinquent within a five year repayment window. Almost one-fourth of them postponed payments to avoid delinquency. However, doing so made their interest and overall debt burden more onerous because escape is impossible.

    Data from five of the country's largest student loan agencies showed only 37% of borrowers who began repayments in 2005 did so on time, a number now decreasing during hard times.

    On April 11, Lewin headlined, "Burden of College Loans on Graduates Grows," saying:

    "Two-thirds of bachelor's degree recipients graduated with debt in 2008, compared with less than half in 1993." However, rising debt burdens contribute to soaring default rates, especially for private for-profit universities. Moreover, given Pell Grant cuts and rising tuitions, students will be more than ever indebted and strapped to repay during hard times because Congress rigged the system against them.

    As a result, education policy experts expect serious implications for future graduates. According to Lauren Asher, Institute for College Access and Success president:

    "If you have a lot of people finishing or leaving school (entrapped in) debt, their choices may be very different than the generation before them. Things like buying a home, starting a family, starting a business, saving for their own kids' education may not be an option if they're trying to repay student debt."

    Moreover, "(t)here's much more awareness about student borrowing than there was 10 years ago. People either are in debt or know someone in debt."

    Many of them have their own horror stories about how predatory lenders, servicers, guarantors, and collection companies rip them off under an escape-proof system.

    The entire scheme amounts to legalized grand theft, the equivalent of what Wall Street banks do to investors with impunity.

    According to Deanne Loonin, a National Consumer Law Center attorney:

    "About two-thirds of the people I see attended for-profit (universities). Most did not complete their program, and no one I have worked with has ever gotten a job in the field they were supposedly trained for. For them, the negative (debt default) mark on their credit report is the No. 1 barrier to moving ahead in their lives. It doesn't just delay their ability to buy a house, it gets in the way of their employment prospects, finding an apartment, almost anything they try to do."

    A Final Comment

    America today is characterized by a combination of rising poverty, unemployment, home foreclosures, homelessness, hunger, student debt entrapment, and despair, mocking the notion of a fair and equitable society.

    Not at all under a corrupted political duopoly, sucking public wealth to America's super-rich, spurning popular needs, waging permanent war, and heading the nation for tyranny and ruin.

    If that's not just cause to resist, what is? If not now, when? If not us, who? If that future doesn't arouse public anger, what will?

    Reprinted with permission from The People's Voice.

    May 21, 2011

    Stephen Lendman [send him mail] lives in Chicago. Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening. Visit his blog.

    Copyright © 2011 The People's Voice

    Published in: on May 21, 2011 at 5:37 pm  Leave a Comment  

    TIP OF THE WEEK – How to Buy Foreign Currencies in the US; One Way to Guard Against a Dollar Decline ((tip of the week, foreign currencies, Everbank, Chuck Butler))

    How to Buy Foreign Currencies in the US to Guard Against a Dollar Decline

    Jason Brizic

    May 20, 2011

    The dollar is dying as the world’s reserve currency.  The Federal Reserve is debasing the dollar like never before.  You earn your money in dollars, you buy goods in dollars, you save in dollars, and you invest in dollar denominated assets.  This would be no problem if there was sound money in the U.S., but we have a fiat money system that is spiraling out of control.

    You should have some of your liquid savings in investments denominated in something other than dollars.  But you also want FDIC insurance.  How can you do this?

    I have found one U.S. bank so far that allows its customers to invest in foreign currencies without all the complexity of the Foreign Exchange market (FOREX).  That company is Everbank.  I don’t have an account with them yet, but I’m looking into it.  Here is what I found:

    https://www.everbank.com/personal/foreign-currencies.aspx

    P.S. One of the Everbank executives writes a blog called the Daily Pfenig.  Its good.  I suggest you check him out.  His name is Chuck Butler.  I’ve read him for years. http://dailyreckoning.com/author/cbutler-2/

    For more tips, go here:

    http://www.myhighdividendstocks.com/category/tip-of-the-week

    Published in: on May 20, 2011 at 5:49 pm  Leave a Comment  

    Video – Boyden Recommends Safe Bulkers (SB), Diana Shipping, Navios

    You know I liked Safe Bulkers (SB) above $8.00 per share.  I really like it lately because the market participants are knocking the price down for no apparent reason.  There is a sale going on for the high dividend stock Safe Bulkers.  SB closed today at $7.70.  This makes no sense.

    Yes, the Baltic dry index is meandering lower due to tons of new capsize ships entering service.  But all of Safe Bulkers capsizes are on long term contracts.  Only two of their 16 ships are the capsizes.  And they only have two more on the way out of about 11 new ships.  Even their unfinished capsizes are on contract for much higher prices than the low numbers being talked about in the video.

    The dividend is safe and yielding 7.8% and climbing as the stock price goes 1% lower today.  The company has five year average earning power of $1.50 per share (easily enough to cover the $0.15 quarterly dividend).  It also has a good balance sheet.  So, I don’t believe me.  Well watch this video to hear it from someone else who is an analyst for some Wall Street firm.

    Boyden Recommends Safe Bulkers, Diana Shipping, Navios

    May 17 (Bloomberg) — Natasha Boyden, an analyst with Cantor Fitzgerald LP, talks about her investment strategy for shipping industry stocks and her recommendations of Safe Bulkers Inc., Diana Shipping Inc. and Navios Maritime Acquisition Corp. shares. Boyden speaks with Pimm Fox on Bloomberg Television’s "Taking Stock." (Source: Bloomberg) (/Bloomberg)

    http://specials.washingtonpost.com/mv/embed/?title=Boyden%20Recommends%20Safe%20Bulkers%2C%20Diana%20Shipping%2C%20Navios&stillURL=http%3A%2F%2Fwww.washingtonpost.com%2Frf%2Fimage_480x270%2F2010-2019%2FWashingtonPost%2F2011%2F05%2F17%2FBusiness%2FVideos%2F05172011-65v%2F05172011-65v.jpg&flvURL=%2Fmedia%2F2011%2F05%2F17%2F05172011-65v.m4v&width=480&height=270&autoStart=1&clickThru=http%3A%2F%2Fwww.washingtonpost.com%2Fbusiness%2Fboyden-recommends-safe-bulkers-diana-shipping-navios%2F2011%2F05%2F17%2FAF7Z925G_video.html

    Here is the video link in case the embedded video code doesn’t work: http://www.washingtonpost.com/business/boyden-recommends-safe-bulkers-diana-shipping-navios/2011/05/17/AF7Z925G_video.html#

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    Published in: on May 20, 2011 at 8:51 am  Leave a Comment