A Blizzard of Dividend Cash Coming

 | Dec 09, 2013 | 11:00 AM EST  | Comments
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Stock quotes in this article:

hot

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wmb

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afg

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rai

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dis

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grmn

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mrk

How did your Christmas shopping go this weekend? If you did not knock enough items off your list, or are still looking for good ideas for that special someone, what about dividends?

This week comes with one of those periodic blasts of cash, a blizzard of income, what I call a "Dividend D-Day". December 11 and 12 will see a long list of interesting dividend ideas go ex-div, so you need to get your trading done today or Tuesday. The 12th will be an especially fruitful day for dividend traders. I have several positions open, as well as my coffers to catch the jingle as it pours into my account.

On the 11th I am playing the huge dividend from Starwood Hotels (HOT). At 1.82%, it borders on being too risky, but they are a good name so I am not so concerned that I won't open a position. (Usually at 10% annual yield I stay away. That level of yield indicates idiosyncratic risk.) The Williams Companies (WMB) will also pay a respectable 1.05%. Income in the energy space is mostly supplied through MLPs nowadays, which are fine for buy-and-hold but not for dividend trades. Therefore, I try to play as many C-corp energy dividends that I can find.

The 12th is a highly diversified dividend day. On the consumer side, perennial tobacco favorite Reynolds American (RAI) will pay 1.23%, while Disney (DIS) has snuck into the list of higher yielders with a 1.20% payment coming. Disney is attractive but demands more caution, since it is levered to the holidays through retail, the box office, and theme park attendance. Garmin (GRMN) is also a tech-cum-consumer play, as GPS systems are often found under the tree. They have struggled over the years, but have never failed to be a cash flow machine with a good payout. On Thursday they will offer us 0.93%.

I also like Merck (MRK) and American Financial Group (AFG) on the 12th, to round out our industry exposure. These days are the best for dividend capture, since you are not making a heavy bet on any one industry, and can rotate through the usual sector cycling that investors do, with a better chance of getting out of the positions over the next few weeks.

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