Monday, February 25, 2013

My Favorite Thing About Dividend Stocks

Other than the wonderful compounding affect that will make me a wealthier man when I retire, the thing I enjoy most about dividend stocks is that they allow me to be lazy. Granted I do put in a lot of time evaluating a stock before I invest, but once I buy a quality dividend growth company I can relax while that company's employees work hard to put more and more cash in my pocket.

I was on a nice, relaxing vacation last week. I checked in on the market a couple of times out of curiosity and even checked my work email once, but otherwise my mind was elsewhere. I didn't want to think about work and ruin a relaxing moment. I knew I didn't have to worry about my investments because my money was invested in companies who are working hard on my behalf. And wouldn't you know it, when I returned home I discovered that, KA-CHING!, I got two more fat raises.

Wal-Mart (WMT) increased its dividend by a whopping 17.5%. This is one of their largest increases in their impressive dividend history that dates back nearly 40 years. “We are pleased to increase Walmart’s dividend by $0.29 per share, one of the largest increases in our history,” said Mike Duke, Walmart president and chief executive officer. “Our global businesses consistently generate strong free cash flow, providing ample opportunities to fund growth across all our markets and to deliver strong returns to shareholders. In fact, during fiscal year 2013, we returned $13 billion to shareholders in the form of dividends and share repurchases."

WMT's quarterly payout increased from $0.40 to the new $0.47 giving an annual dividend of $1.88. WMT is currently yielding around 2.70%.

Kimberly-Clark (KMB) also provided a nice raise to its investors, increasing its dividend by 9.5%. This marks 41st consecutive year KMB has increased its dividend. "This dividend increase reflects not only the strength of our business but also our commitment to allocate capital in shareholder-friendly ways," said Thomas J. Falk, chairman and chief executive officer. "We continue to provide a top-tier dividend payout among our peer consumer packaged goods companies, and this remains an important component of our plan to deliver strong returns to shareholders."

KMB's quarterly payout increased from $0.74 to $0.81 giving an annual dividend of $3.24. KMB is currently yielding around 3.5%.

In the past month my portfolio has already had five dividend increases, ranging from 9.5% to 25% with an average of 16.4%. That's an impressive start to 2013 and hopefully a sign for my other holdings.

Although WMT and KMB are two core holdings in my portfolio, I don't view them as great buys at current valuations. For those looking for a solid buy, I still consider Intel (INTC) as one of the best values out there and it remains my largest holding. I am also looking to add to my position in Amgen (AMGN) based on my recent analysis.

Disclosure: I am long WMT, KMB, INTC and AMGN

Related Posts:
Ka-Ching! Hasbro just gave me an 11% raise
Ka-Ching! Phillips 66 just gave me (another) 25% raise
Ka-Ching! Realty Income just gave me a 19% raise


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