Tuesday, February 3, 2015

Agrium: Significant Dividend Growth Expected For This Agricultural Company

Agrium Inc. (NYSE:AGU), an agricultural products and services company, recently caught our eye when the company announced several shareholder friendly initiatives. These included raising its dividend payout ratio to 40-50% of free cash flow from its earlier targeted payout of 25-35%, and plans to repurchase up to 5% (around 7.2 million) of its current outstanding shares over the next 12 months. Both of these actions not only increase shareholder value, but also demonstrate management’s optimism for the company’s future.
Based on the most recent quarterly dividend payment of $0.78, Agrium has an annual dividend payment of $3.12 which translates to a current dividend yield of around 3%. Although the most recent $0.78 dividend payment was just increased from $0.75, that figure represents the payout target of 25-35% and not the newly announced 40-50%. Even assuming the payout ratio moves from the high end of the old (35%) to the low end of the new (40%), investors should be able to expect at minimum an increase of 14% in its quarterly dividend payment. Although that is a solid dividend increase, there is another more powerful dividend growth driver coming in the near future… READ MORE

Wednesday, October 15, 2014

Why Dividends Are The Best Source For Retirement Income

Are you currently planning for retirement and wondering what are the best investment options for generating retirement income in your golden years? If you are doing your own investment research you are likely overwhelmed with options and opinions on what is the best way to invest your nest egg. If you are asking your 401k provider or financial adviser for advice then you are probably left with limited mutual fund options that will quietly hit you with fees and expenses and provide you with minimal annual income without resulting in you selling part of your position each year.
What you won’t hear from the investment community, at least not the investment community that earns a living providing investment advice, is that dividend stocks are king when investing for retirement. There are several reasons why compiling a diversified portfolio of dividend paying stocks is a highly rewarding and low stress option for retirement investing. READ MORE

Thursday, August 14, 2014

Transocean Dividend Safety Analysis: High Yield, High Risk

Dividend income investors have been taking notice of offshore drillers in the current market as depressed prices in the industry have inflated yields. One of the largest in the industry, Transocean (NYSE:RIG), has felt the downward pressure of its stock price as it recently touched on 52 week lows. This drop in price also pushed the current annual yield of the stock above 7%.
There is great deal of bullish and bearish sentiment surrounding offshore drillers. Bears primarily point to decreasing demand for underwater rigs, increased competition, and significant drops in day rates as compared to their peak levels. Bulls note that this industry is typically cyclical, that many companies still have a strong backlog for their rigs, and that current stock prices present a good value.
To continue reading this article on Seeking Alpha, please click here.
Click here to see all of the Dividend Safety Analyses that have been performed.

Thursday, November 7, 2013

Dividend Safety Analysis: Tobacco Stocks

For anyone looking for income from higher yielding tobacco stocks, the following is a dividend safety analysis I posted on my 4% Portfolio website that covered  Lorillard, Altria, British American Tobacco, and Reynolds.

In a previous dividend safety analysis we took a look at Philip Morris International (PM). Based on feedback from that article, several readers requested that a current dividend safety analysis be done for other tobacco companies as well. In particular, Altria Group Inc. (MO), Reynolds American Inc. (RAI), Lorillard, Inc. (LO), and British American Tobacco plc (BTI). Instead of doing these individually I thought it would be good to see them compared side-by-side in one analysis. READ MORE

Thursday, October 10, 2013

Analyzing the Safety of a Dividend

safeThe term “safe” is a relative one. Most people feel safer in their car than on an airplane even though statistics clearly prove the plane is a safer way to travel. Some people don’t feel safe sleeping in an isolated cabin in the woods but have no problems walking down a city street at night. A person’s feeling of safety is defined by their past experiences and observations which determines their own personal comfort within a situation. The same goes for a person’s definition of safe when deciding on making an investment.

My Grandmother was a child of the Great Depression. She has led a sheltered life and is very careful with her money. I have had no luck trying to convince her that CDs are not a very good investment for generating income. She doesn’t care, she knows they are “safe” as they are FDIC insured. She does not understand that her one year CD earning 1% is actually losing money when you include the effect that the current rate of inflation has on her investment.
Dividend Safety Analysis

Friday, September 27, 2013

Inflation Insurance For Your Retirement

inflation insurance retirement portfolioInflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” -Ronald Reagan
When approaching retirement the main question a retiree will try to answer is “How much money do I need to cover my annual expenses“.  While this is certainly a question that has to be answered, there is another one that must be considered as well – “What will my annual expenses be in 10, 20, or 30 years?
The term “fixed income” is used far too often when discussing retirement investing and planning. Fixed income suggests you should be able to decide today how much income you are going to need each year of retirement. But because of inflation we know that our expenses are not going to be fixed, so we should not plan for our income to be either. If you plan to withdraw the same amount from your retirement account annually then you will be losing purchasing power each year due to inflation. And many people underestimate the effect inflation has on their retirement plans. While we have seen wide swings of the inflation rate with highs above 10% in the late 70′s and early 80′s, the general rule of thumb is to plan for an annual rate of 3%. So how does that 3% affect your spending power over time?  READ MORE

Tuesday, September 17, 2013

Ka-Ching! Microsoft Just Gave Me a 22% Raise

Microsoft (MSFT) today announced a 22% increase of its quarterly dividend from $0.22 to $0.28 which now gives the stock a 3.4% dividend yield. They also announced a $40 billion stock buyback program that replaces a previous buyback program that was set to expire. Both of these actions demonstrate MSFT's determination to return value to shareholders through other means than price appreciation.

This increase more than doubles an investors Yield on Cost for those who were invested in 2010 when the company was paying a quarterly dividend of $0.13. That is an impressive feat in such small amount of time.

Tuesday, September 10, 2013

5 Safe Dividend Stocks When Using The 4% Rule

The 4% Rule

The 4% rule is a general rule of thumb used by financial experts to determine how much individuals should be withdrawing from their retirement account each year. This is considered a safe and sustainable rate for a retiree with a long life expectancy.

In a high interest rate environment, generating 4% of income from your retirement nest egg could be achieved. With today’s low bond, Treasury Bill, CD, and money market rates, retirees have been forced to use other alternatives. These alternatives typically require investors to reduce their retirement savings each year. Or they rely on mutual fund investments to attempt to increase their portfolio and provide income and yet, they are not aware of the fees being accrued no matter the rate of success or failure of the mutual fund. Although the 401(k) and mutual funds were created to benefit the investor, financial companies are the ones who have truly been rewarded.

In the past decade retired investors have had to weather two economic recessions, a mortgage crisis, and a highly volatile stock market. Those planning for an upcoming retirement have likely heard the horror stories of retirement accounts getting wiped out during this time causing many retirees to re-enter the workforce in order to get by.  This has created a great deal of timid investors wary of risking their life savings in the stock market, but still searching for a way to generate a safe and reliable income stream. READ MORE

Tuesday, August 27, 2013

Introducing The 4% Portfolio

I have been working very hard the past six months on a new site that is designed to help retirees build a retirement portfolio for themselves. This website provides a more intelligent way for retirees to follow the 4% Rule without having to sell stock or reduce their overall retirement savings each year. I am very proud to introduce to you The 4% Portfolio

The 4% Portfolio allows individual investors to take control of their retirement accounts. The 4% Portfolio provides a smarter, simpler and less stressful solution to retirement investing and is designed around the following ideals.
  • Earn at least 4% in income each year through dividend payments without having to reduce your portfolio balance.
  • Invest only in safe, established companies with strong financial histories.
  • Increase the investor’s income each year through dividend raises.
  • Reduce volatility within your portfolio.
  • Reduce or eliminate worries about price fluctuations.
  • Eliminate the reliance on price appreciation to fund your retirement.
  • Eliminate paying high fees to the big financial corporations.

Tuesday, July 30, 2013

Forget Yield -- Dividend Growth Is The Metric That Matters For Retirement Income

Income investors had a little scare in May and June. Bond prices took a tumble and dragged down assets that have come to be viewed as bond substitutes—including popular dividend-paying stocks, MLPs and REITs.

Now that the dust has settled and the income markets have regained some semblance of normalcy, let’s take a step back and review the case for income stocks.  With the Fed’s quantitative easing eventually coming to an end and with bond yields likely to rise in the years ahead, does it still make sense to look to the stock market for income?  Or might investors be better off buying and rolling over a bond ladder to meet their income needs? READ MORE

Disclosure: Long O, WMT