7 Banking Stocks To Buy For Current Yield And Future Dividend Growth

In 2007 the financial sector was responsible for $51 billion in dividend payments to shareholders. By 2010, that amount had decreased to just $19 billion. The mortgage crisis forced many banks to cut or even suspend dividend payments. Returning the clock to present day, it is hard not to get excited about the potential for bank stocks in the current market. The Financial Sector ETF (XLF) has gained nearly 20% since the beginning of the year. The majority of banks are passing the government mandated "stress tests" and dividend payments are increasing on a regular basis once again. READ MORE



TAGS: [BMO] [BNS] [FLIC] [JPM] [SASR] [TD] [WFC] [PNC]

A Reminder Of Why You Stick With Dividend Stocks

Sorry for the long delay since my last post. I've been very busy and I've had little time to dedicate to original posts of my own. I'm slowly working on analyzing additional banking stocks to consider for my dividend growth portfolio and hope to have that completed soon. In the meantime, here is a Seeking Alpha article from an author I've enjoyed reading.

One of the unfortunate side effects of buying an overvalued stock is that, almost by definition, there will be a period of time in which the total return rate that the investor enjoys will likely trail the growth rate of the firm (provided prices are rational and do not transition from "overvalued" to "more overvalued"). This fact can make it worthwhile to pose the following question: If I currently own a stock that is trading above a price that I would be willing to pay to purchase additional shares, what is the point of continuing to hold it? READ MORE

Disclosure: I have no position in the stocks mentioned in this article

TAGS: [CVX] [JNJ] [PG] [XOM]

Banking Stocks Continue to Improve

Back in late 2011 I decided it was time to invest in banks again. The affects of the mortgage crisis had finally took a turn for the better and banks' financials were improving. TARP funds were being paid back, lending was opening back up, and most importantly dividend payments were increasing again. I wrote about four bank stocks with future dividend potential, and due to the research from that article I decided to take a chance on PNC Financial Services Group, Inc. (PNC).

Since then, PNC hasn't rewarded me much in price appreciation, but it has rewarded me in dividend increases. Last year PNC gave investors a 14% raise. This past week it increased its dividend payment again by 10%. The new payout gives PNC a yield around 2.7%.

Phillips 66 Upcoming MLP: How It Will Affect PSX

Phillips 66 (PSX) has been on a tear since splitting from ConocoPhillips (COP) last year. Aside from its run-up in price, it has also raised its dividend for three straight quarters as well as announced plans to spin-off certain assets into a Master Limited Partnership (MLP).

All of this of course was great news, but I wanted to know about the details of the MLP spin-off. What assets were going to be included in the new company? Will existing shareholders receive shares of this new company, or will it benefit through holding stock in PSX? Well PSX recently shed some light on these questions.

2 Big Dividends to Avoid (and 1 to Embrace)

The following post comes from the Motley Fool. It serves as a nice reminder that bigger is not always better when looking at dividend yield.

With yields on ultra-safe debt stuck in the gutter, many investors are reaching for higher income through dividend-paying stocks. That's a fine strategy -- as long as you're comfortable with the extra risks involved.

To minimize those risks, you won't want to reach too high. Dividend yields that are more than about 4%, for example, are usually worth extra research. You'll also want to screen for dividends that are backed up by strong earnings and sales growth. Ideally, those dividends will have a good chance of rising -- or at least staying put.  READ MORE

My Annual Roth IRA Rant

It's tax time. Time for everyone to get a fresh reminder that Uncle Sam is a greedy old fart who takes away a lot of your money. Oh, and next year most of you will be paying even more. Are you ok with that? I should hope not, but don't fret there is a way to fight back. Invest your money in a Roth IRA.

Those of you who have followed me know I'm a huge proponent of Roth IRAs and dividend stocks. It gives me great pleasure to receive dividend payments in my Roth IRA account, reinvest those dividends to utilize the compounding affect, and not have to worry about paying a cent to the IRS.

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.

Ka-Ching! Hasbro just gave me an 11% raise

Yep, another one. Three straight weeks of double digit dividend increases. Getting tired of these? I know I'm not! 

Hasbro (HAS) announced last week that it would be increasing its quarterly dividend by 11% from $.36 to $.40. The size of this increase is likely a surprise to many since the company reported a decrease in full-year revenue and earnings for 2012 vs 2011. Despite the drop management still had no problems with making such a large increase which I believe should be viewed as a positive for 2013 and beyond.

When I first analyzed Hasbro last June and decided to buy I was able to get in just before the stock price popped. Many investors would have been thrilled at the immediate price increase, but honestly I was hoping for the price to come back down so I could buy more on the cheap. My original buy price was under $33 which now gives me a yield on cost of almost 5.0% for my original investment. My only other purchases since then has been the automatic dividend reinvestments.

2013 Dividend Aristocrats

The Dividend Aristocrats list is an excellent starting point for dividend growth investors to begin their research.  In order to make this list a company needs to be in the S&P 500 (top 500 publicly listed companies by market capitalization) AND it needs to have increased its dividend payout for at least 25 consecutive years. You won't find the likes of Apple (AAPL), Google (GOOG), or General Electric (GE) on this list as they have yet to prove themselves worthy.  Actually, GE was on the list until it had to cut its dividend in 2009.

These are the elite dividend payers, the cream of the crop. Investors who have been fortunate enough to hold these companies over the long-term are significantly wealthier and will likely be enjoying future dividend increases yet again this year.

There are three new inductees to this prestigious club in 2013 thanks to their 25th consecutive dividend increase.

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?