Thursday, January 31, 2013

Ka-Ching! Phillips 66 just gave me (another) 25% raise

Another week and another big raise, but this came from an unexpected stock, Phillips 66 (PSX). Why was it unexpected? Well because they already gave me a 25% raise three months ago!

PSX has been on an impressive run since it split away from its parent company ConocoPhillips (COP). Not only has it raised its dividend three straight quarters and over 50% since it began trading earlier this year, its stock price has also increased by more than 75%. Those would be impressive numbers for a stock over several years, let alone several months. So how has PSX managed to do this in such a short time?

Thursday, January 24, 2013

Ka-Ching! Realty Income just gave me a 19% raise

Realty Income Corp. (O) announced last week that it will be increasing its monthly dividend from  $0.15175 per share to $0.1809167  (yeah, that's a lot of numbers beyond the decimal). This is a whopping increase of 19.2% and gives Realty an effective annual yield of 5%, up from 4.2%.

So how did a company with a 5 year average dividend growth rate of under 3% manage to make such a large increase? Realty's recent successful bid to acquire American Realty Capital Trust (ARCT) allowed them to make such a move. The buyout was announced this past summer, but shareholders of ARCT were not happy with the initial offer. It took some sweetening on Realty's end to get the job done, including a one-time cash payment of $0.35 / share to ARCT investors, but the overall deal looks like a good one for Realty shareholders.

Tuesday, January 22, 2013

The Best Investment Advice You'll Never Take

Some of you may have heard of or even subscribe to the daily emails from the folks at Although some of their stuff can be a little too "doom and gloom" or politically focused for my taste, they do have some good insights into the market.  They are also big proponents of dividend reinvestment and have written about it on many occasions. I found a recent article rather interesting, with the headline "The Best Investment Advice You'll Never Take".  Well, hopefully you're not one of those.

I guarantee you won't take my advice...

Over the past two weeks, I've shown you how to use the single greatest investment secret ever discovered. I've shown you how to buy capital-efficient companies and compound your wealth at double-digit rates – safely – for decades.

I've described exactly how to measure capital efficiency (it's easy) and explained the pitfalls to avoid (even smart investors fall into these traps).

Using just the information contained in these two essays, a little bit of common sense, and a little bit of discipline, you can become a world-class investor using this strategy. And yet... very, very few people will pursue this approach.  READ MORE

Wednesday, January 9, 2013

A Potential Dividend Growth Future Star

As a dividend growth investor, one of the primary stats I look at when evaluating a stock is the number of annual dividend increases. The longer a stock has been increasing its dividend payment, the more that becomes part of the corporate identity. Typically, it takes a major event within the company (or industry) to prevent the board of directors from continuing to raise its dividend after a long history has been established. This adds a layer of safety that helps me sleep better at night. I am quite certain that Kimberly-Clark (KMB) - 38 years of increases, Wal-Mart (WMT) - 37 years of increases, and AFLAC (AFL) - 30 years of increases, will provide me with a raise once again this year. Companies like these should be at the core of any dividend growth portfolio.  READ MORE


Thursday, January 3, 2013

No New Taxes! ... For Most of Us

If you haven't yet sifted through all the noise and political B.S. about the recently agreed upon "Fiscal Cliff" deal you may have missed some fantastic news for dividends. The taxes on dividends did not increase as much as expected, and for many of us not at all!

The new deal permanently sets the top tax rate for dividend (and capital gains) at 20% for couples earning more than $450,000 ($400,000 for single filers). For anyone earning below this, dividends and capital gains will continue to be taxed at the current rates. So many of us will continue to pay 15% on dividend income. This is way better than I had expected.

This means that dividend income will continue to be one of the lowest taxed sources of income. Investors who previously dumped dividend paying stocks before the end of the year will likely be jumping back in. This may cause a temporary bubble in the prices of some dividend stocks, but I fully expect the upcoming debt ceiling bickering to create another buying opportunity.

I couldn't be happier with this decision. Of course, this development still has no bearing on my Roth IRA. I continue to get paid tax free income in my Roth and reinvesting those tax free payments into more shares, creating the beautiful compounding affect that is going to allow me to retire in style. Tax season is coming up, so when you see that large sum of cash going to Uncle Sam remember that there is a way around it.

Speaking of my Roth, I just made a recent buy in my account.  Its an early dividend payer that I feel could become a dividend growth star over time. I'm putting together an article on it now and plan to publish it early next week.

Related Articles: Roth IRA + Dividend Stocks = Awesome!