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Top 3 Dividend Stocks for Passive Income - Materials Sector - Dividend Stocks for 2020 - YouTube
Channel: Learn to Invest - Investors Grow
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Hi, I'm Jimmy in this video,
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I'm going to walk through my top
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three dividend stocks from
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the materials sector that
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could help give us the passive
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income that could help us get
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to towards our goal of financial
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independence.
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Now, since this is a global platform
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and diversifying our portfolio
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with dividend stocks from other
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countries could be helpful
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to almost all of our portfolios.
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Well, I thought it makes sense to
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include three dividend stocks from
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the US and three dividend stocks
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from Europe to help get more
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opportunity or more options in there
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for each of us to go out and
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research.
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Now, this video is part of a new
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passive income from dividend series
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where we're putting together the top
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three dividend stocks from each
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of the 11 Global Investment
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Classification Standards.
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This video focuses on the material
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sector and then we're gonna go right
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down the line cover in each of them.
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Now, in this particular video, like
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I mentioned, we're testing out
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adding three European stocks.
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Let me know in the comments below if
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you think that's a good idea.
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Should we go further with that or
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just leave it with us stocks?
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Please let me know what you think of
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the comments below.
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OK. So to make this list,
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obviously we want to stocks that
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paid good dividends, ideally
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dividends that have the potential to
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grow or at least be maintained
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over the next couple of years.
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And I also look for companies
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that could continue to afford
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to pay their dividend.
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And for that, what we used
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was the dividend coverage ratio.
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A dividend coverage ratio is when
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we take the profits of the company
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and we compare that to the to
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the amount of dividends that that
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company paid.
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The more the company earned relative
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to the amount of dividends that they
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paid while the higher the dividend
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coverage ratio, clearly the higher
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is better. So we made sure that
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companies looked like they can
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afford to continue to pay their
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dividends.
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Okay. Let's jump in with the first
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dividend paying stock.
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Our first US company is the
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International Flavors and Fragrances
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Company ticker symbol IFF.
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Basically what they do is they
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create, manufacture and supply
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flavors and fragrances
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for food,
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beverages, personal care products,
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household products, things along
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those lines.
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Their products are used in things
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like perfume, soaps, some
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food, some beverages and a long
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list of products.
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But I'm sure we'll get the point of
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basically what they do.
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They provide the fragrances and the
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flavors to companies to manufacture
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their products.
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Now, I like IFF because
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it seems that they have some
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defensive nature
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to their business, which could
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ultimately be quite useful if we're
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worried at all about a stock market
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crash.
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Plus, when we look at their
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dividend, well, we can see that
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dividends have grown nicely
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over the past few years and as
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we could see with analyst estimates.
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Those are the green bars.
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Well, it seems that dividends are
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expected to continue to grow
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over the next couple of years,
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according to analysts.
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Right now, their dividend yield is
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just short of two and a half
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percent.
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Now, when we add earnings per share
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to this chart, that's the orange
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lines. Well, clearly, earnings per
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share is much larger than the blue
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bars, which is dividends.
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So clearly they look somewhat
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capable of paying their dividends,
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using nothing more than just the
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profits that they're currently
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earning. So that's a good thing
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for almost any dividend stock.
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Now, I also want to point out that
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here I use adjusted earnings per
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share. Adjusted earnings per share
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can be much more useful than
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stated numbers because adjusted
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numbers either add back or take
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away certain profit
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or expenses.
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Maybe they sold a piece of real
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estate or in the case of this
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company, they had fees from
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an acquisition that
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that they had made last year.
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Well, since that was true and
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clearly those numbers are outside
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the normal course of business,
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unless they make a new acquisition,
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those fees won't exist.
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So you add back those fees, you end
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up with a higher earnings per share.
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If they had sold real estate and
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look like a profit, you would deduct
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that either way.
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That's what we have there. That's
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all we're using through throughout
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all of the charts that we're using
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adjusted earnings per share.
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Okay. Our next company jumps over
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the London Stock Exchange and it's
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a company called Johnson Matthew
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Ticker Symbol JMAT.
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JMAT
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is one of the leaders in
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the refining and distribution
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of the gold, silver and platinum
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metal groups among a whole host
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of other things that they're pushing
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for now.
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They've been around since the early
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eighteen hundreds.
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And as we could see with their
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dividend chart, clearly they've
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been fairly consistent.
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And when we jump in and add earnings
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per share to this chart, well here,
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just like all the other companies on
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this list, it seems that Johnson is
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doing a nice job of covering their
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distributions.
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So it seems that they're two and a
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half percent or so dividend yield
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is quite safe.
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We'll come back to them in a second.
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But for now, let's jump over to the
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third company on the list.
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Back to the U.S.
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and that's this, the dividend stock
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that has a slightly higher dividend
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yield. Up next, we have
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Lyondellbasell Industries ticker
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symbol, LYB.
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LYB has a dividend yield of almost
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four and a half percent.
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And what they do is they manufacture
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plastic, chemical and fuel
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products. And like I said, they have
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a. Great dividend right now.
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And when we look at their dividend
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per share chart.
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Well, the company, after they drop
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their dividends per share back in
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2013, well, they've been growing
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it fairly nicely ever since then.
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And then when we add the earnings
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per share to the chart, well, it
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makes sense that they would have
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lowered the distributions from the
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2012 level since back in
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2012.
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Well, the dividends were getting
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relatively high compared to how much
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profits they had.
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So clearly the drop in dividends
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gave them more breathing room.
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And I wouldn't be surprised if
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they're able to at least maintain
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their current dividend growth rate
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for the next couple of years.
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So I like that one.
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OK. Back over the London exchange
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for a company called Anglo American
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Ticker Symbol AAL.
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Now, Anglo American is a global
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mining company, which includes
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mining for things like iron
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ore, copper, nickel.
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Things along those lines.
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Now, this company is actually
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closely tied to
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the last London exchange company
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that I mentioned, Johnson Matthew.
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And because Johnson Matthew
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is the sole marketing arm
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of Anglo American's platinum
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division. Now, we might ask why
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include two companies that are so
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closely related?
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And the real reason I did this is
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that this company has a higher
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dividend yield at almost it's about
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four point four percent compared to
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Johnson's two point four percent.
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So I know we're thinking
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if Anglo has a higher dividend
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yield, why include the other one at
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all? Well, for that we have
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a AAL's dividend chart.
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And as we could see, it's been a
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bit less consistent than all the
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other companies that we've looked at
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so far. And going forward
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now, when we add earnings per share
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to this chart, we can see that
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the volatility of their profits or
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their earnings is closely tied
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to the volatility of their
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dividends.
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But ultimately, I actually like this
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business because I think that this
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business should do fairly well over
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the next couple of years.
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And I think that Anglo has the
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possibility of meeting or
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at least following closely in line
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with what analysts are estimating on
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both the profit and on the dividend
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side. And if that happens?
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Well, it seems that their dividend
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is likely safe over the next few
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years and the four point four
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percent could add a nice diversified
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to our whole portfolio.
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Okay. Skipping back to the next U.S.
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stock here, we have Eastman
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Chemical Ticker symbol
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EMN now Eastman Chemicals
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and International Chemical Company
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that produces fibers, plastics
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and chemicals.
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They have a dividend yield of about
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3 percent.
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And when we pull up their dividend
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per share chart, well, we can see
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clearly they've been growing quite
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nicely over the past few years
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and we mix in earnings per share
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into this whole thing.
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What we can see that their 3
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percent dividend yield seems quite
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safe. In fact, I could easily
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see them ramping up the pace
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that they're increasing their
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dividends by.
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So with that in mind, I think that
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this seems like a fairly stable
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dividend stock.
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Okay. Now we have one of the more
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dynamic companies from
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a trading perspective on our
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list, and that's Rio Tinto
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ticker symbol RIO.
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Now, Rio Tinto is available on the
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London Stock Exchange.
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It's also available in the US under
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the same ticker.
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And Rio Tinto Ltd
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is listed in Australia as well.
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So we can get this company from a
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whole different angles.
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Now, in London, Rio
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has a dividend yield of about six
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point three percent in the US
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to have a dividend yield of about
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five point seven.
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And in Australia, it's slightly over
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7 percent.
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So clearly it pays a good dividend.
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So Rio is an international mining
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company and they have interests
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in mines that mine everything
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from aluminum, coal,
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copper, gold, iron ore,
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diamonds, uranium,
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silver, zinc.
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And the list goes on and on.
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So this is what their dividends look
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like going back to 2012.
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And here I'm focusing on the London
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stock or the other stock
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exchanges. They look similar.
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Neither one is there's no particular
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exchange that was significantly
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better or worse.
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So when we add earnings per share,
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well, broadly speaking,
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it seems that Rio Tinto has done a
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good job of covering their dividends
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outside of the one year.
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But going forward, I would expect
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for them to continue to at least
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maintain their dividend.
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So once again, this is one of those
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high dividend stocks that could make
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a good addition to most dividend
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portfolios.
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Now, if you're interested in more
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high dividend stocks, real estate
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investment trusts or rates
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for short, well, they can be a great
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place for many of us to start.
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So if you're interested in learning
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more about rates and she did a great
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primer video and that could
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be a great next video for you to
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watch. There's a link in the
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description below and you can link
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right here. So feel free to check
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that out if that's interesting to
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you. Besides that.
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Thank you so much for stick with me
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all the way to the end of the video.
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I really appreciate it.
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And we're gonna do more dividend
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stocks for all the other sectors
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coming up soon.
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So don't forget, hit the subscribe
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button, hit the thumbs up.
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Thanks for sticking with me.
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I'll see you in the next video.
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