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Will Dividend Stocks be a Great Bet in 2012?

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    S&P Index Analyst Howard Silverblatt on investing in dividend-paying stocks.

  • Duration 4:29
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On the hook for all -- what -- market volatility the new norm investors hungry for income.

Been flocking to dividend paying stocks after what has been a record year -- dividend paying shares still be a good place to put your money in 2011 let's bring.

And Howard silver Platt senior index analyst at S&P.

If if I had a dime for every time somebody came modern recommended Eli Lilly -- Pfizer or -- drill because of incredible dividend producers and for these companies.

It -- been very hot used to there's more room to run for dividend paying companies.

Definitely more that several reasons one the companies -- not paying out that much is.

Doing a little bit less than 30% of their earnings as compared to have to 52%.

Dividends also trail earnings and earnings did say a -- it on the third quarter as compared to second quarter which is also -- They had enormous -- cash on their books to do this.

Investors all he had cut dividends -- had a very good year this year and we -- it's gonna continue.

Into 2012.

Look at those averages by the way OK let's let's drill down get specific here you like consumer stocks like -- entry Coca-Cola Philip Morris correct yeah.

The consumer Staples.

Doesn't get a lot of head points they did not go down as much in 20072008.

-- dividends or the united to actually only declined earnings wants.

So on the way up.

You not seeing a lot of double digit 203040.

Cent dividend increases the way you -- I think discretionary.

Which decreased a lot.

They've been very stable no pun intended.

And they've carried on so they -- -- biggest pay out dividends in the index as well as on the in.

The new York and American Stock Exchange.

And they have state under the radar to some degree they've also increased our buyback significantly.

Howard.

You know you don't want to advise people simply to go into a stock because it pays a healthy dividend bright -- elf yeah do you look at when you're looking at the finance listed.

All of their numbers that they do put out publicly traded companies do what is the number went -- you pick out in addition to the fact that they pay good dividends.

Well we like -- -- with the fact that the company has paid dividends for several years and -- police.

Eight to ten years -- -- a culture and a part of the company that they understand that dividends have have been paid.

-- paid in that they've been increasing its part of it it discipline their cash flow.

We then we'll protect earnings and cash flow that they -- -- sufficient money to pay the dividends and vote the business cash -- is.

Very important the actual money exchanging hands with the dividend is a careful -- -- send me -- I will.

I guarantee you I will catch -- and expect another one coming.

So you need to know that the cash flow with positive unlike 20062007.

We saw a lot of companies having good earnings -- the cash -- wasn't.

So we're seeing investors going into those companies have a good coverage ratios earnings divided by dividends.

So let me just talk about one stock if I may AT&T we did they just found out they're gonna have to pay this.

This fee of about four billion dollars is as a as a result of regulators not allowing them to go ahead -- What their purchases some of that -- That that bandwidth of T-Mobile.

And you still big on AT&T even after this disaster.

AT&T.

We just lazy in December -- hits the other is the law does dividend paid in the world -- point seven billion dollars is also very high yield at six over 6%.

Indicating more of -- than the average issue.

And that's part of it.

The the chart that they're taking does come down to that of one point five billion dollars after tax not all that -- can't cash flow because his rights and but they they a big dividend -- and again it's a risk but what scenario they are paying more -- -- 6% yield is very -- you don't go after -- -- the dividend right honey but if you look at you look at what happened I mean they are getting kicked in there in -- pants with by the regulators and assess the costs a lot of money.

It is at one point five billion dollar that's been it to take Danny as reported earnings for the fourth quarter we put out warnings on that.

The tell -- in general he's more Telecom utilities ought to be used -- is that stocks you don't move.

-- down as much or more interest sensitive they would get oriented.

But they -- -- be yield is for those willing to global risk in there.

Good to see you Howard thank you so much thank you -- -- appreciated it terrific stuff thanks Eric ditch.

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