Travelers Companies (TRV) Dividend Stock Analysis

The Travelers Companies, Inc., through its subsidiaries, provides a range of commercial and personal property, and casualty insurance products and services to businesses, government units, associations, and individuals in the United states and internationally. The company operates through three segments: Business and International Insurance, Bond & Specialty Insurance, and Personal Insurance. The company is a dividend achiever, which has increased distributions for 13 years in a row.

Back in April 2017 the Board of Directors approved a 7.50% increase in the quarterly dividend to 72 cents/share. The largest competitors for Traveler’s Companies include Allstate (ALL), Progressive Corp (PGR) and Cincinnati Financial (CINF).

Over the past decade, this dividend growth stock has delivered an annualized total return of 8.60% to its shareholders.

The Real Risk With Dividend Growth Investing

There are risks to many strategies. Some risks include permanent impairment of capital, due to an investment that ends up going to zero. Some companies would usually cut or eliminate dividends a long time prior to going under. This usually serves as a last warning sign to long-term investors like myself that something is broken in the business. But dividend cuts are not the biggest risk to dividend growth investing. This is not the risk I will discuss today.

The other risk includes mistakes of omission, where you fail to pull the trigger on a company because of fear. Then another risk is that you have identified an asset that has potential, purchased it at the right price, and it ends up meeting or exceeding your projections. However, you are not around to enjoy the full benefits of your analysis. While many cite dividend cuts as one of the biggest risks behind dividend growth investing, I believe that getting my shares acquired to be a much larger long-term risk to investment returns.

One way this could happen is if you sell a perfectly fine company. Some end up selling due to fear of the unknown. Ironically, share prices fluctuate much more than the changes in underlying fundamentals. This is why I try to focus mostly on companies that have stable earnings streams. A cyclical company with more volatile earnings streams is much tougher to value, and therefore I might be expected to receive more price volatility for each dollar of potential earnings power ( which in itself is a moving target). If you are good at timing your purchases, you may make a lot of money. If you are like almost everyone else however, chances are that exposure to cyclicals is best to be taken in a way that encourages doing nothing.

Merrill Edge Offers Commission Free Trades for Dividend Investors

I have reviewed a lot of brokerages throughout the years. All of the reviews have been based on my personal experience with the services. The personal experience and ideas is a main point of what I write about on this site too. I try to spread out my assets between several brokerage accounts, for additional diversification and peace of mind.

Over the past few years, I have opened and maintained an account with Merrill Edge. After a few years of contributions, the balance is set to exceed $50,000 for the first time. Why is that important?

Well for starters, Merrill Edge will provide me with 30 free trades per month, provided that I have at least a $50,000 combined balance between my Merrill Edge brokerage account and my Bank of America checking account. You need to have a Bank of America checking account, in order to take advantage of this bundled deal. When you have a checking account, the fees are waived, as long as you still have at least $50,000 in combined assets. Once you reach $50,000 in assets for three months in a row, you become part of their platinum preferred rewards tier. The value of your stocks, bonds and ETFs/funds counts towards that combined balance calculation.

Three REITs Approaching Value Territory

There are several REITs which seem to be punished excessively as of lately. A few, which have caught my eye are listed in more detail in the article.

There is a risk that retail is going down the drain, which would result in bankruptcies and vacancies for landlords. Depending on your beliefs, real estate investment trusts are either bargains today or they are value traps which are destined for mediocrity. Rather than fall for broad generalization, I decided to look at top tenants for each REIT I analyzed in this article, in order to determine the degree to which the business is subject to destruction from online. I also believe that while many retailers will have a harder time earning profits, the landlords that own the real estate have some margin of safety due to the long-term lease contracts. In addition, those landlords could always sell or repurpose those locations.

The other risk for retailers includes potentially higher interest rates, which would make many projects more expensive. Higher interest rates will reduce FFO and cash available to pay dividends to shareholders. The contra-argument to the rising interest rates thesis has been that rising rates are an indication of increased economic activity, which should bode well for landlords. The other contra-argument is that most of the REITs below have staggered maturities, and are mostly capitalized by equity rather than debt. The third contra-argument is that existing debt is already taken at low fixed interest rates. Rising interest rates should affect debt refinancing and profitability spread for new properties. Of course, everyone has been expecting rising interest rates for almost a decade now. Noone can predict the future.

As I mentioned before, I analyze REITs using the guidelines listed in this post. The guidelines include focusing on:

Five Dividend Paying Companies Rewarding Shareholders With A Raise

I review the list of dividend increases every week, as part of an effort to monitor my holdings and review promising companies in action. I usually focus on the companies with a minimum ten years of annual dividend increases. I then narrow the list down to companies which are raising distributions by more than a token amount. After that, I review the trends in earnings, dividends/distributions, and decide whether a company is worth it for further research or not. Reasons for not recommending myself to do further research on a company also involves high valuations. This exercise is helpful for my monitoring process, since it provides me with the discipline to go out and do the monitoring work.

Over the past week, there were five of companies that met the above mentioned requirements and raised dividends last week. The companies, along with my commentary are listed below:

The Clorox Company (CLX) manufactures and markets consumer and professional products worldwide. It operates through four segments: Cleaning, Household, Lifestyle, and International. The company raised its quarterly dividend by 5% to 84 cents/share. This marked the 40th consecutive annual dividend increase for this dividend champion. Over the past decade, Clorox has managed to raise dividends at a rate of 10.50%/year.

The rate of dividend growth has been slowing down over the past decade however, as the payout ratio increased from 37% in 2007 to 63% in 2016.

Why Magellan Midstream Partners Is the Best Dividend Growth Opportunity for 2017

Energy output has boomed across the country, and this little-known dividend stock could make investors a fortune.

New technologies have unlocked billions of barrels of oil and gas, even at prices that were once unthinkable. Traders betting the farm on drilling stocks over the past few months earned themselves overnight windfalls.

But when it comes to energy investing, the real money isn’t always in the firms doing the grunt work. “Pick-and-shovel” businesses provide the vital tools and services to a booming industry. Rather than taking the “all-or-nothing” route of searching for the next big strike, selling rigs, gear, and equipment can be a safer (and more lucrative) way to profit.

One of my favorites? Magellan Midstream Partners, L.P. (NYSE:MMP). This partnership owns pipelines, terminals, and processing plants across the country. And while it doesn’t get a lot of interest in the press, it’s one of my top dividend growth stocks for a couple of reasons.

PepsiCo (PEP) Dividend Stocks Analysis for 2017

PepsiCo, Inc. (NYSE:PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). The company is a dividend champion, which has increased distributions for 45 years in a row.

Last week, the Board of Directors approved a 7% increase in the quarterly dividend to 80.50 cents/share. PepsiCo's largest competitors include Coca Cola (NYSE:KO) and Dr Pepper Snapple Group (NYSE:DPS).

Over the past decade, this dividend growth stock has delivered an annualized total return of 5.20% to its shareholders.

Robinhood Offers Free Stock Trading for Dividend Investors

Robinhood is a new broker, who lets customers purchase US stocks for no commission. Yes, that is true, customers pay no commissions when they purchase stocks using Robinhood.

The service is available for customers with iPhone's or Android phones. But starting in 2018, the service will also be available on the web too. I am very excited about where this broker is going next.

I believe Robinhood could provide much lower fees to many beginning investors. To me, it would be much nicer to be able to allocate $2,000 - $3,000 into shares of 10 – 15 companies every month without paying commissions, rather than be limited to 2 – 3 investments for that month. Long-time readers know that I do not want to pay more than 0.50% in commissions on my purchase amount, and I also rarely sell. Your assets at Robinhood  are also SIPC insured, meaning that your assets are protected for amounts under $500,000.

There are several appealing factors behind Robinhood:

- Zero commissions on US Stocks
- No account minimums
- No Inactivity Fees
- No Deposit/Withdrawal fees
- Trades are executed right away at good prices
- Investor assets under $500,000 are insured by the SIPC

The items I don’t like are:

- Only available for a limited number of people
- Has not existed long enough
- Only available using an app ( though next year, this will change)
- Does not allow opening IRA accounts
- Does not allow automatic dividend reinvestment
- Does not allow purchasing fractional shares

Twelve Dividend Growth Stocks Rewarding Shareholders With A Raise

As part of my monitoring process, I look at the list of dividend increases every single week. I then narrow the list down by focusing on companies that have raised distributions for at least ten years in a row. The next step of the process includes a quick evaluation of company fundamentals, along with valuation and a brief comment about my current take on the company.

There were twelve companies that met the above criteria, and raised distributions over the past week. The companies include:

Johnson & Johnson (JNJ) researches and develops, manufactures, and sells various products in the health care field worldwide. It operates through three segments: Consumer, Pharmaceutical, and Medical Devices. This dividend king raised its quarterly dividend by 5% to 84 cents/share. This marked the 55th consecutive annual dividend increase for Johnson & Johnson. Over the past decade, the company has managed to raise annual dividends at a rate of 8%/year. Earnings per share rose from $3.63 in 2007 to $5.93 in 2016. The company is expected to earn $7.10/share in 2017. Currently the stock is attractively valued at 17.40 times forward earnings and yields 2.70%. If you are a more conservative investor, the company would be a decent idea on dips below $119/share, which is equivalent to 20 times last year’s earnings. Check my analysis of Johnson & Johnson for more information about the company.