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.

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.  

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

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

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


TAGS: [UPS]

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.

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]

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.

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

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.