Friday, December 21, 2012

3 Unloved Dividend Stocks to Watch in 2013

I'm in full holiday mode and have been lazy with the articles this month. I've got a few ideas in the works, but currently lack the motivation to complete anything. I've also been in a holding pattern with any purchases until this stupid "fiscal cliff" nonsense gets resolved.  The one good thing that may come from this is that it could create some fantastic buying opportunities if there is panicked selling.  If it does, I'll be waiting to pounce on some stock sales. Speaking of sales, here's an article from that outlines two of my favorite holdings and one potential future holding.  

Three financially sound companies — but where’s the crowd?

McDonald’s Corp., Intel Corp and Microsoft Corp. (US:MSFT) offer a steady dividend and have the cash to increase shareholder payouts, but investors lately have given these blue-chip stocks the cold shoulder.

This year through Dec. 12, Intel (US:INTC)  shares were down 15%, ranking it as the No. 2 percentage decliner on the Dow Jones Industrial Average (US:DJIA) . McDonald’s (US:MCD) had dropped 11%, making it the No. 3 Dow decliner. Only the stock of troubled Hewlett-Packard (US:HPQ)  has fared worse.  READ MORE

Disclosure: I am long INTC and MSFT



Tuesday, December 11, 2012

Searching For A Dividend Growth Utility Stock

I have been a dividend growth investor for over eight years now. Over those years, I have slowly allocated a diverse portfolio that is spread out among the major sectors, except for one. I have yet to invest in any utility stocks. Now this may come as a shock to other dividend growth investors as utility stocks have been a cornerstone for many dividend portfolios.

Utility stocks have a long history of paying dividends to their shareholders. This is because what they provide (electricity, water, gas) are always in need, despite what the economy is doing. These stocks tend to have stable, predictable, and secure cash flows. And their stocks are typically less volatile vs. the overall market (low beta).  READ MORE

TAGS: [D] [ED] [NEE] [PPL] [SO] [UNS] [XEL]

Tuesday, November 27, 2012

3 Reasons Not To Flee Dividend Stocks

I have been asked by many people lately if I am worried about a sell-off in dividend stocks because of the impending Bush Tax Cut expiration.  The potential dividend tax increase certainly sucks, but I'm not concerned about a selloff. In fact, if you look at previous years when Congress increased taxes on dividends, dividend paying companies typically outperformed the market as a whole. I had planned to write an article on this, but I came across one on SeekingAlplha that already explained it well.

The election night parties were barely over last week before investors started selling stocks. While renewed uncertainty over Europe did not help, the source of the volatility was closer to home: The fiscal cliff. Washington now has seven weeks to reach a compromise — a failure to do so will mean the largest fiscal drag in the post-World War II period and a possible recession.

Many investors are particularly worried that dividend stocks are vulnerable given the potential for a near tripling of the tax on dividends.  READ MORE

Tuesday, November 13, 2012

Trading vs Investing

I don't like Jim Cramer. I think he's a terrible person to listen to if your looking for financial advice. He's a great entertainer (which is why he has the job of hosting a television show) but he is not someone you should listen to if you're trying to build wealth. It's likely that the only person Jim Cramer will make wealthy is your stock broker because of all the buy and sell transactions he generates from his Mad Money show.

Of course, I'm not Jim Cramer's target demographic. He's not going to lose sleep at night if I'm not watching. And if you are a dividend growth investor, then he should not appeal to you either. The type of show like Mad Money will appeal to stock market traders. There are major differences between investors and traders.

Thursday, November 1, 2012

MLPs and Retirement Accounts

If you're not familiar with Master Limited Partnerships (MLPs) I suggest reading my Boring Terms post for an overview. In that article I mentioned the pros and cons of MLPs and dividend investing. In short, MLPs are a great investment vehicle for generating dividend income, but because of their tax implications they aren't a great option for dividend reinvestment or retirement accounts. In fact, many brokers won't allow MLPs in retirement accounts. And that's a shame since the way MLPs are structured would make them a great choice for retirement accounts.

Monday, October 29, 2012

Ka-Ching! AFLAC just gave me a 6% raise

Another week, another raise... a guy can really get used to this. AFLAC (AFL), the supplemental health and life insurance company, increased its quarterly dividend 6.1% to $0.35 per share. The dividend is payable on December 3, 2012, to shareholders of record at the close of business on November 14, 2012. The yield based on the new payout is 2.8%

Now I'm not one to look a gift horse in the mouth, but I have to admit I'm a little disappointed in the size of this increase. Based on the very low free cash flow payout ratio of 6% and latest quarter's debt to total capital of only 21%, AFL could have easily increased the dividend by double digit percentages.

Wednesday, October 24, 2012

Pay Yourself to Wealth

It amazes me how many people think they "can't afford" to fund a stock portfolio. Even when I tell people I started with just $50 / month they act like that is too much. Of course these are the same people who don't think twice about spending that on dinner and drinks several times a month. Or they are the type who rush out to buy a newer car once they have their old one paid off.

I understand that it's fun to have new things. The excitement of owning something new is a powerful force and the American economy relies on it. But this force is also what holds a lot of people back from building wealth.

Monday, October 8, 2012

Ka-Ching! Phillips 66 just gave me a 25% raise

Phillips 66 (PSX) announced last week that it was increasing its quarterly dividend by 25% to $0.25 / share.  My position in PSX came from the split of ConocoPhillips (COP) this past April.  PSX now focuses on energy & chemical refining and transportation while COP focuses on the exploration side.

To be honest, I wasn't sure how I felt about PSX and considered selling it as its price increased 50% since May.  This recent increase and statement by their CEO has made me a believer in PSX's dividend growth future.

“This 25 percent increase reinforces our objective to provide competitive and growing dividends,” Phillips 66 Chairman and CEO Greg Garland said in a company statement. “Allocating capital to dividends and repurchases while continuing to invest in the growth of our business is fundamental to our philosophy of delivering shareholder value.”

Monday, October 1, 2012

Payout Appreciation: Some Investors Pile Into Stocks Likely to Keep Raising Dividend

Note: I'm going to be traveling the next couple of weeks so there likely won't be any original posts from me.  I'll be reposting articles I find interesting and applicable during this time though. Below is an article from the Wall Street Journal that points out how money management firms are now focusing on companies that pay and grow their dividends each year.  What an interesting concept!

Call them the new growth stocks.  After rushing into dividend stocks of all stripes this year, some investors are homing in on a more select group: stocks of companies that are likely to keep raising their dividends at a fast clip.

It is all part of the chase for better returns on the heels of the Federal Reserve's announcement last week of another round of bond buying aimed to keep interest rates at rock-bottom levels until the economy improves. As yields on the 10-year Treasury wallow at near-record lows and "junk"-bond yields also are sinking, investors are seeking anything that offers some extra income. READ MORE

Disclosure: I am long VZ, HAS.


Friday, September 21, 2012

Ka-Ching! Microsoft just gave me a 15% raise

Joining its fellow IT sector leaders Intel (INTC) and Cisco (CSCO), Microsoft (MSFT) announced this week that it would reward its shareholders by increasing its annual dividend by 15%, from $0.20 per quarter to $0.23.  Armed with almost $62 billion in cash while generating nearly $30 billion in cash flow, its nice to see Microsoft continue their annual double digit dividend increases.

Microsoft faces a big catalyst in the coming months with the release of Windows 8. This will also be the platform for their latest entry into the mobile market. Despite failing to make much headway thus far in mobile, Windows 8 Phones have had positive reviews.  The main focus will be on their cash cow though, the PC.  Recent softness in the PC market has scared some investors and analysts, but the new release of Windows 8 may be what that market needs.  If successful, that growth will help continue to drive Microsoft's dividend higher in the coming years.

Below are some more companies, including McDonald's (MCD), that are sending more cash to their shareholders.

Tuesday, September 18, 2012

Dividend Income Analysis: Leggett & Platt (LEG)

I always enjoy coming across lesser-known companies who have stellar dividend track records. Although I had heard of Leggett & Platt (LEG) and briefly skimmed over the stock in the past, I did not appreciate its impressive dividend history until doing this analysis. A mid-cap ($3.5 billion) company that has been paying a dividend for 73 years and increasing that dividend for 40 years deserves more attention. Well LEG, you've caught my attention. READ MORE

Related Posts:
MCD Dividend Growth Analysis
HAS Dividend Income Analysis
LLY Dividend Income Analysis
UPS Dividend Growth Analysis


Wednesday, September 5, 2012

Stock Sale: Intel (INTC)

Those of you who have followed me know I'm a big fan of Intel (INTC).  I've made it known on several occasions that it is my biggest dividend growth holding.  I've been allocating Intel off and on since 2008 and was lucky enough to load up during the crash in March 2009.  The main reason it's my biggest holding though is because, despite reporting solid earnings throughout the years and steadily increasing its dividend by double digits each year, the stock price continues to be cheap.  I find it hard to pass up a good deal, and Intel has been a good deal for quite some time.

The stock had a nice run from the beginning of the year and into May touching a 52 week high of $29.  Since then it has bounced around the $26 and $27 level.  But the past couple weeks the stock has dropped to below $25 and has piqued my interest once again. So why did the stock drop nearly 5% in the past couple weeks?

Thursday, August 30, 2012

Delayed Satisfaction Can Be Profitable

I have a confession.  This confession causes me to be made fun of by friends, something that I think causes my wife some embarrassment, and something that I'm oddly proud of.  I am a flip-phone owner.  And this isn't some new flip-phone (assuming they still make them), no, this is the same phone I have owned since 2006.  I love this phone.  It's small so it fits nicely in my pocket, the battery will still outlast most smartphones, and I don't have to have a data plan in order to use it.  And I'll be honest, that last point is the main reason I haven't upgraded.  I'm a techie, I like the latest and greatest toys and would love to have a smartphone but my sensible and maybe somewhat frugal mind always wins out.

Friday, August 17, 2012

Another Technology Dividend Stalwart In The Making?

Its typical for dividend paying stocks to start out as high-growth stocks that reinvest their earnings back into the company to fund future growth.  Over time, the growth slows and a company is left with a steady business that brings in a lot of cash. So instead of adding to the piles of cash they already have, they decide to start paying a dividend.  This is what is happening in the Technology Sector.  Intel (INTC) and Microsoft (MSFT) have been paying a dividend for about a decade.  Earlier this year Apple (AAPL) decided to join the party with its first dividend payment.  And just last year Cisco (CSCO) began giving back to its shareholders with a regular dividend.

Tuesday, August 14, 2012

Dividend Growth Analysis: McDonald's (MCD)

I've wanted to own stock in McDonald's (MCD) for quite some time.  When I first began following a dividend growth investment plan it was one of the last stocks I thought about buying, but I decided against it because I thought it was too expensive at the time.  Ever since then I've watched the stock and dividend go up. Recently thou, there has been a pullback in the stock price, and there's nothing a dividend growth investor likes more than a stock sale on a great dividend paying company.  Before I pull the trigger though, I need to see how MCD stacks up in my dividend growth analysis.  I was surprised to find that there were a couple of places where it misses the mark (just barely) but overall it's a hard buy to pass up at current prices  READ MORE

Related Posts:
HAS Dividend Income Analysis 
LLY Dividend Income Analysis
UPS Dividend Growth Analysis


Monday, August 6, 2012

Stocks Providing Raises For Their Shareholders

Typically I've been posting (bragging) when a stock I own increases its dividend, but this doesn't give you an idea of how many companies out there that are also increasing their dividends.  So I'm going to attempt to do something about that.  I intend to make regular posts with a list of companies that recently increased their dividend. This list won't be a recommendation to buy, but based on information you see on a stock it may entice you to look deeper into a company.  I know looking at lists like these before has led me to buy stock in a particular company.

So hopefully here is the first of many posts like this.  I may tweak how or what data is displayed, but I will always list how much a company increased their dividend and what their current yield is.  And, as always, I will disclose at the bottom of these posts if I have a position in any of the stocks I list.

Thursday, August 2, 2012

The Secret to Successful Dividend Investing

Sorry, it's been a busy few weeks and my posting frequency has suffered.  I've got a few stocks lined up for analysis as I am overdue for another dividend growth analysis.  Hopefully things slow down soon, until then here's a post from the Motely Fool / MSNBC that makes a good point... don't chase yields, chase growth.

There are many lessons in investing that seem counterintuitive at first, only to become glaringly obvious in hindsight. While successful investors grasp this and go on to build fortunes, others don't, and thus miss out on the opportunity to live beyond their previously imagined means.  One such lesson concerns dividend stocks.

By now, it's common knowledge that dividend stocks generally beat their nondividend-paying brethren over the long term. My colleague Morgan Housel offered proof of this by showing that a $1,000 investment in the 10 S&P 500 companies with the highest dividend yields in 1957 would have been worth $1.3 million by 2006. Over the same time period, meanwhile, the same investment in the index overall would have amounted to only $176,000.  READ MORE

Thursday, July 26, 2012

Boring Terms We Need To Know: Master Limited Partnership (MLP)

Master Limited Partnerships (MLPs), it just sounds like a boring term doesn't it.  MLPs, like REITs, are typically strong dividend payers because they pay out most of their generated cash flow to investors, or "unit holders", in lieu of paying taxes.  I've had several readers email me asking me to do a dividend analysis on specific MLP stocks. Since MLP's operate differently than normal stocks though, running them through my current dividend analysis (growth or income) wouldn't be valid.  So I guess I need to add a MLP Dividend Analysis Template to my "to-do list".  Before I do that though, it would be a good idea to educate those of you aren't familiar with this type of stock and what we should consider before investing in them.

Tuesday, July 10, 2012

Roth IRA Move: Sold Some (O) to buy (HAS)

Since doing my analysis on Hasbro I've been digging deeper into the company's financials and continue to like what I see.  On Tuesday I decided to make a purchase in my Roth IRA, the problem was I didn't have cash in that account as I'm fully allocated. Something I have been contemplating though was selling some of my Realty Income (O) stock as it has been on a tear the past few years.

You may recall that Realty is the company I used to show the power of compounding.  It has been a strong performing REIT since it became a public company, and has treated me well for the past several years I have owned it.  In fact, I was lucky enough to purchase the majority of my shares in 2009 when the market was at record lows, so I'm up over 100% on my position and have been collecting monthly dividend payments along the way.

So if its been treating me so well why sell?  Good question, here's why.

Thursday, July 5, 2012

Highlighting Seven Unique Dividend ETFs

Dividend ETFs can be an easy way to diversify your dividend holdings with one purchase.  I have considered dividend ETFs in the past, especially ones focused on international companies, but have yet to invest.  The following is a repost from and discusses several potential dividend focused ETFs. 

Dividend-paying stocks continue to be a popular investment theme in the low rate, high volatility environment. With expectations for record low yields on traditional sources of income expected to continue for the foreseeable future, more and more investors (both large and small) are seeking out dividend payers as a critical component of their portfolios.

While some prefer to focus on evaluating the best dividend stocks, there has also been a surge in interest for dividend-focused ETFs. There are now more than 50 ETFs that specifically target dividend-paying stocks, including variations that focus on yield, consistency, and other characteristics.  READ MORE

Thursday, June 28, 2012

Dividend Income Analysis: Hasbro (HAS)

I was obsessed with G.I. Joe as a kid.  If I had known the company that made Rolling Thunder was publicly traded I probably would have saved up my allowance to buy a share or two.  During a recent stock screen I came across Hasbro, and its dividend numbers made me want to take a closer look.  Since its yield was above 4%, I thought it would be a good stock to run through my dividend income analysis and, I must admit, for a toy company the results were surprising  READ MORE

Related Posts:
LLY Dividend Income Analysis


Wednesday, June 20, 2012

The Patient Millionaire

As I've stated several times, successful dividend growth investing requires investing in strong dividend payers, reinvesting your dividends, and time.  Time is the one that is most often overlooked.  Time requires patience.  An investor has to be patient when others around them are talking about the next big stock that's going to make everyone rich.  You have to be patient during bear markets when you think the sky is falling and you're going to lose all your money.  And the most important reason you have to be patient is because if you are, it will lead to incredible profit.

You can scour the web and find stories about how people got rich quick by investing in a penny stock, in the futures market, or some random Chinese company.  What you don't find much of is the people who slowly built their wealth over time. There are a lot more people who got rich this way, you just don't hear about them... probably because they're not the bragging type.

Thursday, June 14, 2012

5 Buy-Rated Bank Stocks With Safe and Solid Dividends

Repost from

A conservative analysis of bank stocks with "Buy" recommendations from TheStreet Ratings highlights five names easily covering attractive dividend payouts.

TheStreet Ratings takes a very conservative, long-term approach to stock ratings, placing its emphasis on long-term total returns as well as revenue trends and capital strength and dividends. The ratings also consider short-term performance, financial stability and volatility.

After previously covering three mid-cap bank stocks with A (Excellent) ratings and seven small-cap names assigned coveted A-plus ratings, we have isolated the highest-yielding bank stocks with "recommended" ratings of B-plus or higher, whose quarterly payouts are less than 50% of their first-quarter earnings per share. READ MORE

Thursday, June 7, 2012

Boring Terms We Need To Know: Beta

Since I've been referencing Beta in my Dividend Income Analysis template I figured it would be a good term to tackle next in my "Boring Terms" series.  I'm a big fan of the motto - not the band - KISS (keep it simple stupid) so I'm not going to weigh you down with the varying formulas, academic theory, and such.  You can look through Beta's Wikipedia page for that.

Typically when someone references the stock term "Beta" they are talking about a specific stock's volatility as it compares to the S&P 500.  There are other variations where you compare a stock's volatility to its Sector Index, International Index, etc...  but we don't care about those.  And when you are looking at a Stock's Beta on Yahoo Finance, they are using the S&P 500.  So let's get to the details and why we care about it.

Monday, June 4, 2012

Dividend Income Analysis: Eli Lilly (LLY)

Eli Lilly & Co. (LLY) discovers, develops, manufactures, and sells pharmaceutical products worldwide. LLY is the 10th largest pharmaceutical company in the world and operates in the healthcare sector.  LLY used to be a strong dividend grower, but that growth has dried up since it made a large all-cash purchase of the biotechnology company ImClone.  LLY is the first company I put through my dividend income analysis.


Tuesday, May 22, 2012

Rating A Dividend Income Stock

As I stated in my previous post, I've been focused on analyzing dividend growth stocks as that is what I am allocating at my current age.  But many older dividend investors (probably the majority) are looking for stocks that can provide them with income today.  As I'd hate to alienate a large portion of my potential audience, I decided to come up with an analysis format for dividend income stocks.  This template is similar to my dividend growth analysis, but it focuses more on the safety of the dividend and less on the growth.  I will limit my analysis on stocks that are currently yielding 4% or more and have an established history of paying a dividend.  As in my dividend growth analysis, there are three aspects we will be looking at.  Dividend Safety & Reliability, Dividend Growth, and Fair Value of the stock.

Saturday, May 12, 2012

Ka-Ching! Intel Corp. just gave me a 7% raise

On Monday, May 7 Intel Corp. (INTC) said it's increasing its quarterly dividend by 7%. The world's largest chipmaker said shareholders will receive a dividend of 22.5 cents per share every quarter, or 90 cents per share on an annual basis, beginning in the third quarter.

7% is a decent bump, but what makes this special is how frequently INTC has been increasing its dividend.  Typically companies will raise dividends on an annual basis, but INTC has gone above and beyond this norm and has rewarded investors with three payout boosts in the past two years.  And considering INTC's 5 year dividend growth rate is almost 15%, this is likely not the last increase we will see this year.  

Thursday, May 10, 2012

7 Dividend Paying Stocks For A Safe Alternative To CDs

My analysis thus far has been focused mainly on dividend growth stocks. However, many older dividend investors are looking for cash in their pocket right now. Investors who are looking to supplement or even replace their current income are looking for dividend stocks that can give them a 4%+ yield on their investment. They want the increases as well, but they're more concerned with the larger dividend payment now as well as a safe, non-volatile investment. At some point I'll be in their shoes too. I won't be reinvesting my dividends forever, eventually I will be using those dividends as income.  READ MORE

Friday, May 4, 2012

4 Dividend Stalwarts

With the Federal Reserve having kept interest rates at historical lows near 0% for more than three years now, many stocks kick out dividend yields far in excess of what you get in savings accounts, CDs and money market funds.

One thing we can be sure about is the direction interest rates will go next. It has to be up. It's less certain how fast they will move and how long the move will last, but we've seen rates start to move a little bit recently. The yield on 10-year U.S. Treasuries rose from 1.87% at the end of last year to a high of 2.4% last month; it is currently around 2.2%.  READ MORE

Tuesday, April 24, 2012

Dividend Growth Analysis: United Parcel Service (UPS)

What can brown do you for you?  Well, when economic conditions are favorable they can generate increasing dividend payments to its investors.  But the dependency their profit margins have on the cost of gas can put a damper on those payments.  When I break down my analysis on UPS, we can see what previous high gas prices did to their dividend and free cash flow.

United Parcel Service (UPS), a package delivery company, provides transportation, logistics, and financial services in the U.S. and internationally. It operates in three segments: U.S. Domestic Package, International Package, and Supply Chain and Freight. UPS is part of the Services Sector and Air Delivery and Freight Services Industry.  UPS Dividend Analysis


Thursday, April 19, 2012

Boring Terms We Need To Know: REIT

Wouldn't it be nice to own real estate and collect regular payments from renters while the property you own continues to increase in value?  Of course  you typically have to have a lot of money (or debt) to own these rental properties.  You also have to have the knowledge of what properties would make good investments vs what would be a money trap.  Being a landlord is certainly appealing, but I don't have the capital or in-depth real estate knowledge needed to be successful.  That's why I like Real Estate Investment Trusts (REITs).

REITs are corporations that primarily own and usually operate real estate that generates revenue.  These properties can include hotels, commercial office buildings, rental homes, apartment complexes, etc…  The great thing about REITs is that they are required to pay 90% of their annual taxable income to its investors in the form of dividends.  By doing this the corporation reduces or eliminates having to pay taxes.  As you can imagine, paying out 90% of a company's income can lead to large dividend payments and yields.

Thursday, April 12, 2012

Dividend Growth Analysis: Target (TGT)

Sorry, it's been a month since I put together a stock analysis.  I told my mom I'd do an analysis of Target awhile back, better late than never I guess.

Target is another company we should all know well.  What you probably don't know is that Target has been a phenomenal dividend growth stock for over 40 years.  The company is dedicated to rewarding their shareholders with increasing dividend payments each year and has recently projected what they believe they will be paying by year 2017.  A projection that is more than double what they are paying now ($1.20 now vs $3.00 in 2017).  That takes some cojones by management, but so far they appear to be on track.  So here you go mom, sorry it took so long: Target Dividend Analysis

Tags: [TGT]

Thursday, April 5, 2012

Ka-Ching! PNC just gave me a 14% raise

PNC Financial Services (PNC) announced on Thursday that it's raising its quarterly dividend by 14%. The dividend of 40 cents per share, up from 35 cents previously, will be paid May 5 to shareholders of record as of April 17.

This dividend increase follows a 250% increase last year at this time ($0.10 to $0.35).  I wrote about PNC last October and its potential for future dividend increases and on Thursday it did not disappoint.  Last month PNC passed the Federal Reserve's "stress test" which determines if a bank has enough capital to withstand an extreme economic downturn.  This was a big roadblock to pass before being able to make such a sizable dividend increase.

Saturday, March 31, 2012

Taking stock of dividend investing

Many investors have become fans of dividend investing in recent years. If you lived through the tech wreck of 2000, the post-9/11 markets drop and the world financial system's near-collapse in 2008, you have probably come to appreciate the simple pleasure of getting regular dividend payments from boring companies -- especially if they rise regularly.

The fact so many investors seek out dividends has been helpful in persuading more companies to return value to shareholders directly through dividends. This is important. Academic research has shown many companies do a poor job of reinvesting their profits, especially if they try to diversify by purchasing other companies in different industries. A 2003 paper in the Financial Analysts Journal (with a refreshingly non-academic title: Surprise! Higher Dividends Higher Earnings Growth) found companies that paid out more of their profits as dividends had higher growth in profits.

This may explain another interesting fact many investors are not aware of: There is a growing body of research showing you can actually beat the broad stock market by investing for dividends.  READ MORE

Tuesday, March 27, 2012

Roth IRA Backdoor

First of all, having "backdoor" in the title of this post may have not been the best idea.  I'm worried about the type of Google search results this post may end up in. Secondly, yes, I'm writing ANOTHER article about Roth IRAs.  What can I say, if you aren't utilizing them you're missing out.  I can't stress that enough. Also, I'm writing this now because you can still fund an account using 2011 money if you're reading this before April 15.

That being said, this isn't an article where I'm going to keep harping on why you should be funding a Roth.  This article is specifically for those poor souls who make too much money to contribute to a Roth.  There is a catch 22 for IRA's, those who have enough money to max out their contribution aren't allowed to do so due to income limits.

Thursday, March 22, 2012

Apple's Dividend Potential

Sorry for the lack of posts recently, March Madness dominated my time and attention the past week.  Its not like much happened since then... except for the fact that the largest company in the U.S. finally decided to pay a dividend.  I'm sure many of you saw or heard that, starting in September, Apple (AAPL) will begin paying a quarterly dividend of $2.65.  This would equate to $10.60 / year for a current dividend yield of 1.8%.

I received emails from some of you asking what I thought about this and if I believe Apple is a good dividend growth stock to buy.  My initial thought, its about time they paid a dividend!  Apple was sitting on over $97 billion in cash and its pile of money was growing every quarter.  I'm all for them reinvesting money back into the company to continue to innovate and stay ahead of the competition, but that cash hoard is wildly excessive.  Of course part of the problem is that a lot of their cash ($64 billion) is held offshore.  If they were to bring any of that cash back into the U.S to use as a dividend, they would have to pay 35% tax on it (this is a very stupid law, but I won't get into it now).  But they've still got billions here at home and are making billions more every month so its nice to see them giving some back to the stockholders.

Friday, March 9, 2012

Dividend Growth Analysis: Meredith (MDP)

Meredith Corporation (MDP) is a media and marketing company that engages in magazine publishing and related brand licensing, television broadcasting, integrated marketing, interactive media, and video production businesses in the United States. Its more popular print publications include Better Homes and Gardens, Family Circle, and Ladies' Home Journal. It also owns 12 network-affiliated television stations and 30 websites, among other assets. Dividend Analysis

Tuesday, March 6, 2012

Stock Sale: Aflac (AFL)

The Dow dropped just over 200 points on Tuesday, giving Wall Street its worst day in three months.  This drop was attributed to renewed fears of a disorderly default in Greece, concerns that China's slowdown would affect global growth, and the belief that the market is due for a pull-back after a hot start to the year.

We've seen these days before, many many times before really.  They had been quite frequent the past few years, but this is the first one I can recall in 2012.  I think these are fantastic buying opportunities.  When great stocks go on sale because of general, macro economic reasons that have little or no affect on that specific stock, its time to act.  While stocks were on a run since the beginning of the year I have been putting money into my account waiting for an opportunity to add to existing positions or initiate a position in a new stock.  Today was that opportunity.

Friday, March 2, 2012

KA-CHING! Wal-mart just gave me a 9% raise

Wal-mart (WMT) announced on Thursday that it was raising its yearly dividend from $1.46 to $1.59, a 9% increase.  WMT has raised its dividend every year since it first declared a dividend of 5 cents per share in 1974.  Between share buybacks and dividends, WMT returned $11.3 billion to shareholders last year.

This most recent bump follows a dividend increase of over 20% last year.  Although I was expecting a double-digit dividend increase again this year, I am happy with the 9% raise.  WMT decreased prices this past holiday season in order to bring back customers it had previously lost.  The price decrease generated more business, but hurt their profit margins in the near-term.  I believe this decrease in margins is the reason we did not see 10%+ increase.

Wednesday, February 29, 2012

Fun Calculators & Tools

"Fun Calculators"?  Yeah, there is such a thing.  At least I think so.  When calculators can prove how much your money can grow they can certainly be fun.  They can also help motivate you to stick with your investing goals.

In some of my posts I have referenced how money invested over a certain period of time growing at a percentage can grow to a large sum of money.  Some you have asked how I got this number... basically you want me to show my work.  I think this is a good idea, and probably something I should have done awhile ago.  Instead of showing you though I'm going to provide you with my Excel calculators that I use.

Hopefully you'll have "fun" playing with the inputs too so you can see how your own investments can grow if you stick with a dividend growth investment plan.

Tuesday, February 21, 2012

Roth IRA for Kids

In my last article I discussed how I am going to help my son get a head start in investing and how to keep him interested in dividend growth stocks as he gets older. I am excited about the potential of this plan; the only problem is that the government is going to get their share of it as well. If you are reading this then I assume you are not a Communist that enjoys paying taxes, so I'd like to show how you can grow a small amount of money for your child into a very large sum without having to worry about a politician getting their hands on one cent.

For those of you not familiar with a Roth, shame on you, please read this article. Roth IRA's are a powerful retirement tool that is not utilized enough by individuals who have the opportunity to do so. What is utilized even less - and likely unknown to many - is funding a Roth IRA for a child.  READ MORE

Wednesday, February 8, 2012

7 Stocks for Your Child's Retirement

For any of you who are parents, soon-to-be parents, potential parents, grandparents... basically if you have a child or will have a child whose financial independence you care about, this post is for you.

This past September I had a major financial impact that occurred in my life, my son was born. Like most Dads I have since envisioned teaching my son about sports, girls, and of course dividend stocks. What's that? Most Dads don't teach their sons about dividends stocks? Well that's a shame, consider my son a leg up then.

Within a couple of days of receiving his SSN I had opened a 529 plan and custodial brokerage account and set up automatic deposits for each. As I contemplated what his first DRIP stock would be I realized I was approaching this choice as if it was my own portfolio. Or course I wanted to buy a solid dividend growth stock that we could reinvest dividends into for the next 60 years, but I also wanted this to be a great teaching tool for my son. Sure the ALFAC (AFL) duck is funny, but I'm not sure demonstrating DRIP investing to him with a supplemental insurance company was going to grab his attention and get him excited about investing (although I do think it would be a good dividend growth stock to own).  READ MORE

Tags: [MCD] [YUM] [INTC] [XOM] [KMB] [TGT] [PEP]

Friday, February 3, 2012

Boring Terms We Need To Know: PEG Ratio

In our last "boring terms" post we analyzed the common P/E ratio.  Another ratio that ties into P/E that we use in our dividend growth stock analysis is PEG Ratio.  PEG stands for Price/Earnings to Growth.  This ratio demonstrates a stocks current P/E to its expected earnings growth - typically its estimated 5 year growth.

This term was popularized by Peter Lynch, a very successful investor that works for Fidelity Investments. Peter stated in his 1989 book One Up on Wall Street that "The P/E ratio of any company that's fairly priced will equal its growth rate".  So a fairly valued company will have its PEG equal to 1.  The lower the PEG the more undervalued a stock is based on future estimated growth.

Saturday, January 28, 2012

Why Smart Investors Buy Dividend Stocks

Let's get a few things straight. Dividend stocks are not cool. They are not exciting. And they do not make for good conversation topics at parties. They're like the trombone player from high school who never had a date to prom. In fact, come to think of it, the only thing dividend stocks are good for is making money. And potentially lots of it. So if you're not interested in making money, then proceed no further.  READ MORE

Wednesday, January 25, 2012

Dividend Growth Stock Analysis: AFLAC

Supplemental insurance is a boring topic to talk about. Many people have it through their work, but most probably couldn't tell you who their provider is... unless its Aflac (AFL).  Its amazing what a good advertising campaign can do for a company. The Aflac duck has become the face (and sound) for the company and has made Aflac a easily recognized name.  But its not just advertising that Aflac does well, they also dominate their niche insurance business.  I was lucky enough to buy stock in Aflac in 2009 when there were fears of them holding too much toxic European debt.  Those fears have been calmed since then and the future is looking brighter now.  So let's take a look at how Aflac rates in this week's dividend growth analysis*.  READ MORE

* Based on my experience using this analysis model I have decided to make a small change to consecutive dividends paid and consecutive dividend raises. Previously I used > 30 years = 2 points but have changed this to > 25 years. This will be reflected from this analysis forward.

Thursday, January 19, 2012

Boring Terms We Need To Know: P/E Ratio

Price-to-earnings ratio (P/E) is one of the first stock analysis terms people learn about.  It's a very simple calculation that gives you an idea of the current valuation of a company based on its earnings.  Although it is a simple metric and one most people will say they understand, there is more to just knowing that the lower the P/E ratio the cheaper the valuation of the stock.

For those of you who are beginners lets take a quick look at the calculation.  P/E is just as it appears, price divided by earnings.  Typically you will see (TTM) when viewing a P/E ratio, this stands for Trailing Twelve Months.  In other words, it is using the stock's earnings for the most recently reported 12 months.

Friday, January 13, 2012

Dividend Growth Stock Analysis: Wal-mart

Since I live in the city I'm not able to go to Wal-mart (WMT) to do my shopping very often. Of course there are several in the surrounding metropolitan area so I get the opportunity from time-to-time. Honestly I don't like the idea of going to them because the store is always crowded (no matter what time it is) but once I'm inside I'm amazed at the time and money I end up spending. I don't think I've ever come out of a Wal-mart store with only what I went there looking for. When something like that happens you know it's a good business and one that should be around for a very long time. I had this realization a few years back and was lucky enough to purchase shares of Wal-mart for under $50 / share. Let's take a look and see if the company still rates as a good dividend growth buy today:  READ MORE

Thursday, January 5, 2012

Searching for Future Dividend Stars

I was an avid baseball card collector when I was a kid. It was one of the few things that would tempt me to spend my allowance. I loved the smell of a newly opened pack of cards and even the cardboard crunch gum that was in the earlier packs... well at least for the two minutes that it had flavor. Although I loved the game of baseball and reading stats about players, what I really cared most about was the value of the card. Getting a card of my favorite player (Ozzie Smith) was great, but what I most wanted was a rookie card of a potential up-and-coming star because that's where the greatest potential for increased value was.

I remember when Topps brand would release "Future Stars" cards for players they thought were going to be, well, future stars. Of course they were basing this tag on a small sample set of the player's stats. So for every Bo Jackson, there was a Tim Pyznarski. Although I have moved on from collecting baseball cards to "collecting" dividend growth stocks, I'm still in search of those future stars so I can own an earlier and more valuable version of an asset.   READ MORE