These 8 Dividend Stocks Bubbling Cash Like Lava Gold Mines (Part II)

If you like to make money on the stock market like me, you need a clear vision and strategy about how to make money. 

Are you an income investor who likes to receive dividends or are you a short-term orientated trader with focus on quick profits?

I'm focused on long-term growth with growing income. In my view, only over a long period of time, stocks can double and develop their full asset potential.

I've recently published a small article about stocks with high free cash flows, companies that earn so much money from its operations and they have no need or desire to invest this money. 

I love those companies but the source of income should also be reliable. Only cash that comes over years and decades will deliver a good return for you.

In my first article about Cash Cows that produce money like milk, I've compiled some of the top yielding stocks with low reinvestment rates. 

Most of the top yielding stocks come from the technology sector and they also plan to buyback a significant amount of own shares which is also very good for the stock price.

Today I like to go forward and introduce the rest of my research results. They have in average a smaller yield but should be also attractive. A big part of the results come from the financial sector. Asset Managers and Stock Exchange Operators are top.

Flood of money should come into your pocket

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8 latest stocks with strong cash income sources are...

I Bought Coke And Sold NYSE Euronext Yesterday

Stocks I Bought and Sold Yesterday

Yesterday was an active trading day for me. I sold 90 share of the diversified investment group NYSE Euronext (NYX) at $36.50 and bought 100 shares of Coca Cola (KO).

No further fantasy for NYSE Euronext Shares

I sold NYX shares because the stock price is around 10% over the takeover price announced by the IntercontinentalExchange (ICE). I believe that it could be possible that another exchange could start a second offer and overbid the current price. So my sell-off was only a part of my full position. With the rest I could benefit from a higher offer. However, fantasy with the NYX is over. I don’t see any growth perspectives if the deal passes through. ICE, CME and BOCE are more interesting now.

My whole NYX stake was up around 40% and I like to hedge these gains. Now, everything is nearly safe and my big risk in this position is off.

In addition, I bought some shares of Coca Cola and increased my stake by a significant number. KO was the best performing of my core holdings over the recent years but compared to the other stocks I own, it is still an underperformer.

Cocal Cola is down, but long-term still a buy

KO was down 2.72% yesterday. The earnings results were solid but the market expected more. I don’t really care about the current price levels and quarter reports. They change too fast. I am a long-term investor. I bought several times KO shares and increased my position every time at a higher rate. That’s not a good choice but if my portfolio grows, I need to increase the total amount of my safe heaven core holdings.

I love stocks with very long dividend growth, a trustful managements and solid market positions in several markets worldwide. KO is definitely not cheap. The EV/EBITDA ratio is at 14! The yield is still acceptable at 2.72%. I expect that the yield should climb over 3% with the next dividend hike.

I have several beverage stocks and they all have a very high valuation. I don’t know why but in the market is a huge fight about big companies with strong brands and distribution power.

Companhia de Bebidas Das Americas offers a higher risk

Companhia de Bebidas Das Americas (ABV) is an aggressively buying company in the brewing industry. They lend huge amounts of debt to buy the biggest brewers in the world. I don’t like those offensive strategies, especially when they pay prices at 14x of the EBITDA, but they are somehow successful and the stock price explode. Coke is not cheap but solid. I believe that it should be possible to realize a yearly long-term return of 8% or more.

NYSE Takeover By ICE | How Profitable Stock Investments Could Be

Today one of my investments the NYSE Euronext stock exchange received a takeover offer announcement by the ICE. ICE evaluates stock exchange from New York at $8.2 billion which represents an upside of 33%.

I have not much money invested in this company, only around 1% of my net worth. I bought the position a few years before and needed to increase my stake two times because the stock price declined after a few months. Within the recent weeks my stock position turned into a loss position. 

I'm a long-term investor and I like to stay by my investments for several years if nothing changes. I'm glad to receive this offer because my current investment could be closed with 30% gain and not to forget I received a yearly dividend of around 4%. So my total return is around 40%. Not bad for a three-year investment.

I cannot say if I like to invest the free cash into the new stock exchange leaded by the ICE. It mainly depends on the fact how much dividend the ICE will pay in the future. ICE doesn’t pay dividends for the time being. The yield from NYSE was around 4% and the yield from CME Group is at 3.5%.

As you know I bought recently CME shares because growth and price ratios were attractive for me. 

I like companies from the financial sector that come not directly from the banking industry. I cannot identify what kind of assets banks own and what they do with their assets. The banking industry is a very fast acting industry. You can sell assets or buy them in only a few seconds and you can place millions in seconds. I have no big picture about what's happening in this industry.

This is one of the major points why I dislike the whole industry. Stock exchanges and all service provider are a little bit different. Stock exchanges are somehow like a bridge. If you have saved some money from your hard work and you like to invest this money, you need to use this bridge. You could not use it for free, you must pay a fee. You need to pay a commission for investing your money.

The established stock exchanges got more and more pressure from new created companies like BATS or CHI-X. They offered cheaper prices for trades.

It's a process from which I benefit too because my commission rates declined from five bucks per trade to one buck per trade. You don't know how much money I save every year.

The second burden on stock exchanges is that they don't have enough companies which wanted to get listed. Major equities go public in China. That's were growth comes from. External growth via takeover activity is nearly impossible as we have seen by the takeover try from NYSE Euronext at Deutsche Boerse.

Earlier, the ICE tried to take over the NYSE Euronext with help by Nasdaq. The offer was forbidden because the market share of NASDAQ and NYSE were too big. So the current constellation could be allowed. To finance the deal, the Euronext will be sold via listing.

What do you think about the deal? Would you buy shares from ICE? Now or in near future? Let me know in the comments area below!