VGR looks great and its yield is big and consistent over more than a decade. But I do not like tobacco stocks. Any such sustainable yields from stocks in other sectors?
I am thinking about selling my VGR too . However, the VGR chart has been going up. Still I'm thinking of selling today ,then adding to my ALDW holdings.
A few you may want to look over.
ARLP @ 6.10%
ALDW @ 18.10% This one is a new holding for me.
CLMT @ 9.10%
FUN @ 5.70%
SPH @ 7.20%
AROW @ 3.70% cash and a 2% stock split per year.
Well do your own homework.
Best of luck to you.
Check out AWLCF Awilco Drilling.
Fairly new issue, but they are projecting $4 a share in divs for the next 3 years and possibly more.
Comes out to roughly a 22% yield at current price of $18.40 a share.
You could look at MLPs, BDC, or closed End Funds (CEFS) which offer similar yields and the payout ratios will not be over 100% like it is with VGR. I know this has been discussed many times but VGR is paying out in dividends more than the company earns... How they do is by acquiring long term corporate dept at a lower payment % because of historical low lending rates right now. The issue as many people brought up is the rate to borrow money is going up as the Govt will eventually get out of the Federal Reserve $85-billion-a-month bond-buying program designed to help stimulate the economy which will cause a huge increase in the cost of borrowing money.
Again - I am just retelling what others have posted... There is a good chance the dividend will be cut when the cost of borrowing is not so cheap like it now. Paying out over 100% of earnings is also not sustainable... Although VGR has a history of paying the high yield... in this case past performance might not foretell what will happen in the future which I suspect in the next 2 years or less the dividend will be cut.
This is all good... and true. But let's say they cut the Div 50% to .8 Now it's 5%. Then the shares drop, which brings Yield back up... and in any other stock, we'd call 5% a "damn good divvy" so... ?
Again, I inherently agree with everything you've said, but if we play the chess game out a little, this is still not a bad scenario to be in. (I think.) Granted, those who bought at (Appx. $17.00 plus), may feel a squeeze, and if you just get in at the end and your divs haven't worked for you yet, then you're feeling it, but... I don't see a horrendous outcome here. Please correct me where I'm wrong.
Or another alternative is too look at low current yield but high dividend growth rate. Something like Walgreens yields 2.20%, but every year the dividend goes up by 21%+.... so one can buy a stock with a high yield with no div growth but the yield is high or buy a stock with a low yield which keeps increasing the dividend amount every year by 15-21%+.... Just something to think about when buying dividend paying stocks.