Naming names
Here are my 10 stocks for this portfolio (with dividend yields as of May 23):
● Bradken (BRKNF), which trades as BKN:ASX in Australia; 9.42% dividend yield. Rather than making the big diggers produced by Caterpillar (CAT) or Joy Global (JOY), Australia's Bradken produces things like spare parts for grinding mills and slurry pump consumables, as well as providing services such as dragline refurbishment. (About 52% of sales are consumables, the company says.) The company, which has been around since 1922, grew revenues by 28% in the first half of its 2012 fiscal year and saw EBITDA (earnings before interest, taxes, depreciation, and amortization) climb by 11%. The company raised its dividend 5% in 2011.
● CorpBanca (BCA); 7.71% yield. Chile's fourth-largest bank by loans took a big step outside that country's borders with its April purchase of the Colombia banking assets of Spain's Banco Santander (STD). I'd let this one settle a bit, since CorpBanca has just announced that it will sell $550 million in new shares to help finance that acquisition.
● GrainCorp (GRCLF), which trades in Australia as GNC.ASX; 4.57% yield. Australia's GrainCorp is one of the last remaining independent grain-trading companies in a sector that is consolidating quickly. I think it's a good candidate for acquisition sometime in the next 18 months. In the meantime, the company is projected to grow earnings per share by 13% in the fiscal year that ends in September.
● Keppel Land (KPPLF), or KPLD.SP in Singapore; 7.09% yield. With Singapore's Keppel Land, you get a piece of high-profile Singapore projects such as Ocean Financial Centre, Marina Bay Financial Centre and One Raffles Quay. You also get commercial and residential projects in Vietnam, Indonesia and China. About 33% of assets are in China, with 18,000 homes sold to date and an additional 43,000 in the pipeline. Keppel Land also owns 400,000 square meters (nearly 100 acres) of commercial space in Vietnam, Indonesia and China. Keppel uses revenues from its property management unit to offset the cyclicality of property development. That 7% yield is a good payout while you're waiting for the eventual turn in China's real-estate market.
● Northern Property Real Estate Investment Trust (NPRUF), or NPR-U.CN in Canada; 5% yield. Northern Property concentrates on residential properties (66% of its holdings) with a big focus on Alberta (31% of properties).That makes this REIT a high-yield, low-risk way to play the boom in Alberta's oil sands region. More development means more workers who, along with their families, need housing. Revenue grew by 13.5% in 2011 from 2010.
● Seadrill (SDRL); 9.31% yield. What you're buying when you invest in Norway's SeaDrill are drilling rigs. Lots and lots of deep-water drilling rigs. The company owned 11 rigs in 2005 and closed 2011 with almost 50. And it has 13 more under construction. As you might imagine, you don't get to be that big that fast without leverage: The company uses debt to finance new rigs and pays out the highest dividend it can. (In crunch times, Seadrill would cut that dividend.) That will work as long as the amount day-rate oil companies are willing to pay keeps increasing. Seadrill went ex-dividend on Tuesday, so you'll have to wait a quarter for the next payout. (The stock is a member of my Jubak's Picks portfolio.)
● SIA Engineering, which trades as SIE.SP in Singapore; 5.28% yield. Somebody has to keep the airplanes flying for Asia's fast-growing airline industry, and that somebody is frequently SIA Engineering. And we're not talking just Singapore. About 50 airlines use that country's Changi airport, but SIA Engineering provides services to 80 airlines around the world
● Svenska Handelsbanken (SVNLY); 4.77%. Svenska Handelsbanken is one of the most conservatively run banks in the conservative Swedish banking sector. (Skirting disaster, as Sweden did in 1991 and 1992 after the country's own real-estate bubble, tends to make a banking sector conservative. At least for a while.) Right now, the bank's United Kingdom unit is taking in more money than it is lending in that market, which has the effect of reducing the bank's low cost of funding even more. By the end of 2014, Svenska Handelsbanken will show a capital ratio (Basel III core equity Tier 1 ratio, to get technical) of 15%, Credit Suisse projects. That would leave the bank overcapitalized and able to increase dividend flow.
● Statoil (STO); 4.85% yield. Norway's Statoil is one of the few big oil companies that I think is almost certain to deliver a steady increase in production over the next decade. In the first quarter, production was up 12% from the first quarter of 2011. (I added the stock to Jubak's Picks on May 10.) Given the company's recent exploration success in the Gulf of Mexico, Tanzania and the Norwegian continental shelf, production seems likely to increase at a faster rate after 2016.
● Westpac Banking (WBK). 8.3% yield. One of four banks that dominate the Australia/New Zealand banking sector, Westpac Banking showed a low bad-debt-to-average-loan ratio of 0.36% in 2011. The AA-rated bank is projected to show essentially flat earnings in 2012 before growth picks up to 5.2% in 2013. (I moved Westpac Banking to my Dividend Income portfolio from my Jubak's Picks portfolio on Feb. 3.)
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