As part of my monitoring process, I review the list of dividend increases every week. This process is helpful in observing how my investments are performing. This process is also helpful in monitoring companies on my watchlist for a potential addition to the portfolio.
I start by focusing my attention on companies that have managed to boost distributions for at least a decade. The next step includes reviewing each company, in order to compare the latest dividend increase against the ten year performance in terms of annual dividend growth. It is helpful to see if a company is accelerating or decelerating its rate of annual dividend growth from year to year.
The next step involves reviewing trends in earnings per share. In an ideal world, we would want earnings and dividends to be rising in tandem. While there will be some differences from a period to period due to one-time items, we want those two indicators to be growing in sync. Otherwise, a growth in dividends that is not supported by growth in earnings per share would show the investor that the dividend streak may be in jeopardy. Reviewing the payout ratio is helpful, in order to determine dividend safety. I review the payout ratio as an absolute number, and also by reviewing ten year trends in this ratio.
The last step to consider involves looking at valuation. I believe that even the best company in the world is not worth overpaying for. You want to have an adequate margin of safety when investing in a solid blue chip dividend payer.
The companies that raised dividends last week include:
Monday, April 30, 2018
Saturday, April 28, 2018
Best Dividend Investing Articles For April
For your reading enjoyment, I have highlighted several articles that the readers found of particular interest this month. I have included the article title, as well as a short description.
How to Generate a 15% Yield on Cost in Ten Years
I highlighted the real story of one investor who put some money to work in a popular REIT a decade ago. After that, they automatically reinvested dividends for a decade, and they left their investment alone. After a decade of dividend growth and patient dividend reinvestment, this investment is generating an yield on cost of 15%.
Four Dividend Growth Stocks Rewarding Shareholders With A Raise
I highlighted several dividend growth stocks which rewarded their shareholders with a raise in April. There are some prominent and widely held companies on that list. It is important to keep monitoring investments for changes in fundamentals.
Are you ready for the next bear market?
After a 9 year bull market, it is hard to imagine share prices declining and staying low for more than a few months. Despite the fact that we are long-term investors we have to be prepared for the eventual bear markets. This is where focusing on company fundamentals such as earnings and dividends can be helpful in staying the course. The beauty of dividend investing is that in retirement you are living off dividends, and do not have to sell shares. This means that investors in the accumulation phase should be praying for lower prices, while retired investors should largely ignore stock prices and focus on the stability of their dividend income stream. This is why we focus so much on analyzing what we own, and making sure that the dividends are safe and that the assets we own are acquired at an attractive value.
Three Cheap Dividend Stocks To Consider
I highlighted three dividend paying companies, which sell at bargain prices today. Fears of Amazon entering the drug distribution market have plagued the share prices for these companies. According to recent reports I have read, Amazon has shelved plans to sells drugs to hospitals. That’s because these companies may have some competitive advantages that would take quite a few obstacles for a new incumbent such as Amazon. Selling drugs online is a different business from selling books online.
Thank you for reading!
Relevant Articles:
- 2018 Dividend Kings List
How to Generate a 15% Yield on Cost in Ten Years
I highlighted the real story of one investor who put some money to work in a popular REIT a decade ago. After that, they automatically reinvested dividends for a decade, and they left their investment alone. After a decade of dividend growth and patient dividend reinvestment, this investment is generating an yield on cost of 15%.
Four Dividend Growth Stocks Rewarding Shareholders With A Raise
I highlighted several dividend growth stocks which rewarded their shareholders with a raise in April. There are some prominent and widely held companies on that list. It is important to keep monitoring investments for changes in fundamentals.
Are you ready for the next bear market?
After a 9 year bull market, it is hard to imagine share prices declining and staying low for more than a few months. Despite the fact that we are long-term investors we have to be prepared for the eventual bear markets. This is where focusing on company fundamentals such as earnings and dividends can be helpful in staying the course. The beauty of dividend investing is that in retirement you are living off dividends, and do not have to sell shares. This means that investors in the accumulation phase should be praying for lower prices, while retired investors should largely ignore stock prices and focus on the stability of their dividend income stream. This is why we focus so much on analyzing what we own, and making sure that the dividends are safe and that the assets we own are acquired at an attractive value.
Three Cheap Dividend Stocks To Consider
I highlighted three dividend paying companies, which sell at bargain prices today. Fears of Amazon entering the drug distribution market have plagued the share prices for these companies. According to recent reports I have read, Amazon has shelved plans to sells drugs to hospitals. That’s because these companies may have some competitive advantages that would take quite a few obstacles for a new incumbent such as Amazon. Selling drugs online is a different business from selling books online.
Thank you for reading!
Relevant Articles:
- 2018 Dividend Kings List
Friday, April 27, 2018
Johnson & Johnson: My Favorite Dividend King For Reliable Dividend Growth And Income
Johnson & Johnson (JNJ), together with its subsidiaries, is engaged in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices & Diagnostics. This dividend king has paid dividends since 1944 and has managed to increase them for 56 years in a row. Dividend increases have been like clockwork every year for decades.
The company's latest dividend increase was announced in April 2018 when the Board of Directors approved a 7.10% increase in the quarterly dividend to 90 cents /share.
Over the past decade this dividend growth stock has delivered an annualized total return of 9.80% to its shareholders.
The company has managed to deliver 4.10% average increase in annual EPS over the past decade, which was slower than the rate of dividend growth. Johnson & Johnson is expected to earn $8.12 per share in 2018 and $8.57 per share in 2019. In comparison, the company earned $5.41/share in 2017 ( adjusted for the provisional amount of $4.94/share associated with the recent enactment of tax legislation)
The company's latest dividend increase was announced in April 2018 when the Board of Directors approved a 7.10% increase in the quarterly dividend to 90 cents /share.
Over the past decade this dividend growth stock has delivered an annualized total return of 9.80% to its shareholders.
The company has managed to deliver 4.10% average increase in annual EPS over the past decade, which was slower than the rate of dividend growth. Johnson & Johnson is expected to earn $8.12 per share in 2018 and $8.57 per share in 2019. In comparison, the company earned $5.41/share in 2017 ( adjusted for the provisional amount of $4.94/share associated with the recent enactment of tax legislation)
Wednesday, April 25, 2018
Kimberly Clark (KMB) Dividend Stock Analysis
Kimberly-Clark Corporation (KMB), manufactures and markets personal care, consumer tissue, and health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional, and Health Care. This dividend champion has paid dividends since 1935 and has increased them for 46 years in a row. The company’s peer group includes Procter & Gamble (PG), Colgate-Palmolive (CL), and Clorox (CLX).
The company’s last dividend increase was in January 2018 when the Board of Directors approved a 3.10% increase in the quarterly annual dividend to $1/share.
Over the past decade this dividend growth stock has delivered an annualized total return of 9.50% to its shareholders.
The company’s last dividend increase was in January 2018 when the Board of Directors approved a 3.10% increase in the quarterly annual dividend to $1/share.
Over the past decade this dividend growth stock has delivered an annualized total return of 9.50% to its shareholders.
Monday, April 23, 2018
Five Dividend Growth Stocks Boosting Shareholder Distributions
I review the list of dividend increases every single week as part of my portfolio monitoring process. It is helpful to see dividend growth in action for companies I own, and also for companies I may consider owning at the right valuation. I usually focus my attention on companies which have rewarded shareholders with a raise for at least ten years in a row. I ignore the rest for a few years ( until they meet the required dividend streak)
In the past week, there were five dividend paying companies that raised dividends to their shareholders that met the criteria stated above. I reviewed every company, outlining their dividend track record in terms of length and rate of change. I also reviewed the changes in fundamentals, in order to determine if the dividend growth is sustainable. Last, but not least, I also review the valuation for attractiveness. All of these points should be viewed all at once, in order to get the best picture of investment reality.
The companies include:
In the past week, there were five dividend paying companies that raised dividends to their shareholders that met the criteria stated above. I reviewed every company, outlining their dividend track record in terms of length and rate of change. I also reviewed the changes in fundamentals, in order to determine if the dividend growth is sustainable. Last, but not least, I also review the valuation for attractiveness. All of these points should be viewed all at once, in order to get the best picture of investment reality.
The companies include:
Thursday, April 19, 2018
Tobacco Companies Offer An Opportunity For Income Investors
I was reviewing my portfolio today, and noticed that tobacco companies are getting smoked this morning. Phillip Morris International is down 16% as of the time of this writing, while Altria is down 8%.
Altria yields close to 5% today, and sells at a forward P/E of 14.20. PMI also yields 5% and sells at a forward P/E of 16.20.
Altria yields close to 5% today, and sells at a forward P/E of 14.20. PMI also yields 5% and sells at a forward P/E of 16.20.
I believe that this is an overreaction to the slight revenue miss by Phillip Morris International this morning. I also believe that these stocks could get lower today too. As a result, I believe that there is some opportunity to start reviewing tobacco companies for further research. I am going to look closely into adding more shares on the way down.
I already own too much Phillip Morris International (PM), but I do want to add some more to Altria (MO).
You may check my last analysis of Altria here:
That being said, it is better to slowly add to positions over time, and not put everything at once. This is a risk management technique I learned during the 2007 - 2009 bear market.
Thank you for reading!
Wednesday, April 18, 2018
Three Cheap Dividend Stocks To Consider
I wanted to send in a quick note to readers about an interesting recent development. According to recent reports I have read, Amazon has shelved plans to sells drugs to hospitals. Fears of Amazon have plagued the share prices for companies such as Cardinal Health (CAH), CVS Health (CVS) and Walgreen's (WBA).
Selling pharmaceuticals is a different business from selling books online. You cannot simply ship them using Fedex or UPS. Amazon would need to build a more sophisticated logistics network that can handle temperature-sensitive pharmaceutical products. Before that however, it needs to build the trust of big hospitals first.
In addition, Amazon is not able to sell products, such as pacemakers, which are directly implanted in the human body. As a result, it does not have the ability to become a vendor that offers complete solutions to hospitals.
Amazon had found it difficult to sell and distribute pharmaceutical products.Amazon has not been able to convince big hospitals to change their traditional purchasing process, which typically involves a number of middlemen and loyal relationships.
The health-care supply chain is well-entrenched and will be hard to break into. The hospital and health-care systems have entangling alliances with their existing purchasing and supply chain partners.
Selling pharmaceuticals is a different business from selling books online. You cannot simply ship them using Fedex or UPS. Amazon would need to build a more sophisticated logistics network that can handle temperature-sensitive pharmaceutical products. Before that however, it needs to build the trust of big hospitals first.
In addition, Amazon is not able to sell products, such as pacemakers, which are directly implanted in the human body. As a result, it does not have the ability to become a vendor that offers complete solutions to hospitals.
Amazon had found it difficult to sell and distribute pharmaceutical products.Amazon has not been able to convince big hospitals to change their traditional purchasing process, which typically involves a number of middlemen and loyal relationships.
The health-care supply chain is well-entrenched and will be hard to break into. The hospital and health-care systems have entangling alliances with their existing purchasing and supply chain partners.
Monday, April 16, 2018
Four Dividend Growth Stocks Rewarding Shareholders With A Raise
As part of my monitoring process I review the list of dividend increases every single week. I use this exercise to check on the health of companies I own. I also check the list of dividend increases as part of my overall monitoring of companies I am reviewing for potential addition to my dividend portfolio.
I do find it helpful to narrow the list down by focusing only on the companies that have raised distributions every single year for at least a decade. Next, I tried to discuss each company and provide some helpful stats in order to determine if they look promising under certain circumstances.
The fact that a company that has raised dividends for a decade is just the first step in the process for further research. Making sure that those dividend increases are as a result of improving fundamentals is important. Equally important is making sure that the dividend company in question is also attractively valued.
Over the past week, there were four companies that raised dividends to their shareholders. Each one of those companies has managed to boost distributions for at least ten years in a row. The companies include:
I do find it helpful to narrow the list down by focusing only on the companies that have raised distributions every single year for at least a decade. Next, I tried to discuss each company and provide some helpful stats in order to determine if they look promising under certain circumstances.
The fact that a company that has raised dividends for a decade is just the first step in the process for further research. Making sure that those dividend increases are as a result of improving fundamentals is important. Equally important is making sure that the dividend company in question is also attractively valued.
Over the past week, there were four companies that raised dividends to their shareholders. Each one of those companies has managed to boost distributions for at least ten years in a row. The companies include:
Thursday, April 12, 2018
McCormick & Company (MKC) Dividend Stock Analysis
McCormick & Company (MKC) engages in the manufacture, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates in two segments, Consumer and Industrial. This dividend aristocrat has paid dividends since 1925 and has increased them for 32 years in a row.
The company’s latest dividend increase was announced in November 2017 when the Board of Directors approved a 10.60% increase in the quarterly annual dividend to 52 cents /share.
Over the past decade this dividend growth stock has delivered an annualized total return of 13.40% to its shareholders.
The company’s latest dividend increase was announced in November 2017 when the Board of Directors approved a 10.60% increase in the quarterly annual dividend to 52 cents /share.
Over the past decade this dividend growth stock has delivered an annualized total return of 13.40% to its shareholders.
Monday, April 9, 2018
How to Generate a 15% Yield on Cost in Ten Years
A few years ago I shared the story of one small investment of a beginner income investor I met at the beginning of my own dividend journey. This story shows that anyone can start learning investing, no matter what age, level of money they can set aside. All that truly matters is having the right attitude that you can achieve anything you set your mind to, through hard work, persistence, patience and determination. Of course, the most important thing about dividend investing is to get started.
You do not need a lot of money to get started with dividend investing. One should never despise the days of small beginnings, and think that they need a large pike of cash before starting dividend investing. If you start slowly, even with an investment of a few dollars, you are years ahead of most other individuals. Unless you are drowning in debt, you do not have any excuse to avoid investing in some of the strongest dividend paying blue chips today. With brokerages like Robinhood, it is possible to purchase shares in companies you like without paying any commission. Of course, you should increase the amounts you put to work for you as your level of income increases over time. Otherwise, you would need to spend a higher amount of time working prior to accumulating a sufficient nest egg.
So back in May 2008, my young friend opened an account with Sharebuilder with $40 that he had to his name. He paid a steep $4 commission, but managed to purchase 1.4196 shares of Realty Income (O) at 25.36/share. Being a poor college student, he was low on cash so he took advantage of a brokerage deal at Sharebuilder. As part of the deal, he received a $50 cash bonus for opening an account and making one investment. So after he made the investment, he essentially started playing with the house’s money, as he had no funds at risk after the rebate.
You do not need a lot of money to get started with dividend investing. One should never despise the days of small beginnings, and think that they need a large pike of cash before starting dividend investing. If you start slowly, even with an investment of a few dollars, you are years ahead of most other individuals. Unless you are drowning in debt, you do not have any excuse to avoid investing in some of the strongest dividend paying blue chips today. With brokerages like Robinhood, it is possible to purchase shares in companies you like without paying any commission. Of course, you should increase the amounts you put to work for you as your level of income increases over time. Otherwise, you would need to spend a higher amount of time working prior to accumulating a sufficient nest egg.
So back in May 2008, my young friend opened an account with Sharebuilder with $40 that he had to his name. He paid a steep $4 commission, but managed to purchase 1.4196 shares of Realty Income (O) at 25.36/share. Being a poor college student, he was low on cash so he took advantage of a brokerage deal at Sharebuilder. As part of the deal, he received a $50 cash bonus for opening an account and making one investment. So after he made the investment, he essentially started playing with the house’s money, as he had no funds at risk after the rebate.
Thursday, April 5, 2018
Aflac (AFL) Dividend Stock Analysis
Aflac Incorporated (AFL), through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance. The company is a member of the dividend aristocrats’ index, has paid dividends since 1973 and increased them for 36 years in a row.
The company’s last dividend increase was in February 2018 when the Board of Directors approved a 15.60% increase in the company’s quarterly dividend to 26 cents/share. The company’s stock recently split 2:1 as well. The company’s largest competitors include Nippon Life Insurance Company, Asahi Mutual Life Insurance Company and American fidelity Assurance Company.
Over the past decade this dividend growth stock has delivered an annualized total return of 5.40% to its shareholders.
The company’s last dividend increase was in February 2018 when the Board of Directors approved a 15.60% increase in the company’s quarterly dividend to 26 cents/share. The company’s stock recently split 2:1 as well. The company’s largest competitors include Nippon Life Insurance Company, Asahi Mutual Life Insurance Company and American fidelity Assurance Company.
Over the past decade this dividend growth stock has delivered an annualized total return of 5.40% to its shareholders.
Tuesday, April 3, 2018
Are you ready for the next bear market?
It is not a secret that stock prices have been rising for 8 - 9 years in a row now. This makes it easy to hold on to stocks, and believe that we will have smooth sailing until we reach our goals and objectives.
In my investing, I do like to think about different scenarios. What if my quoted portfolio goes down by 50% in 2018?
I know a lot of investors who are focusing only on total returns would be unhappy. Imagine if you saved for 20 years, and accumulated a net worth of $1 million. Then boom – in one year, half of your net worth, blood,sweat and tears – gone. Would you panic?
I myself would likely be indifferent to a 50% stock price drop. As a dividend investor, I am somewhat insulated from stock price fluctuations. This is because I focus on the earnings power of the business, and the dividend payments that the businesses in my portfolio generates. It is very comforting to keep receiving cash, even when the quoted value of investments throughout the world is falling. When everyone else is hurting, I have the luxury of generating cash from my investments, which I can then deploy at ridiculously low valuations. As long as the underlying fundamentals of the businesses I own are intact, I can ignore stock price fluctuations. This is one of the most important traits of successful dividend investors. Those who do not understand that, are usually the ones that have not made any money in stocks to begin with.
In my investing, I do like to think about different scenarios. What if my quoted portfolio goes down by 50% in 2018?
I know a lot of investors who are focusing only on total returns would be unhappy. Imagine if you saved for 20 years, and accumulated a net worth of $1 million. Then boom – in one year, half of your net worth, blood,sweat and tears – gone. Would you panic?
I myself would likely be indifferent to a 50% stock price drop. As a dividend investor, I am somewhat insulated from stock price fluctuations. This is because I focus on the earnings power of the business, and the dividend payments that the businesses in my portfolio generates. It is very comforting to keep receiving cash, even when the quoted value of investments throughout the world is falling. When everyone else is hurting, I have the luxury of generating cash from my investments, which I can then deploy at ridiculously low valuations. As long as the underlying fundamentals of the businesses I own are intact, I can ignore stock price fluctuations. This is one of the most important traits of successful dividend investors. Those who do not understand that, are usually the ones that have not made any money in stocks to begin with.