Dividend Growth Stocks

Johnson & Johnson (JNJ) Dividend Stock Analysis

2013-05-20T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Johnson & Johnson (JNJ). Below are some highlights from the above linked analysis:

Company Description: Johnson & Johnson is a leader in the pharmaceutical, medical device and consumer products industries.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

JNJ is trading at a premium to all four valuations above. The stock is trading at a 47.4% premium to its calculated fair value of $58.16. JNJ did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

JNJ earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. JNJ earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 51 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

JNJ earned a Star in this section for its NPV MMA Diff. of the $1,137. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as JNJ has. The stock's current yield of 3.02% exceeds the 2.71% estimated 20-year average MMA rate.

Memberships and Peers: JNJ is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: The AbbVie Inc. (ABBV) with a 3.5% yield, Eli Lilly & Co. (LLY) with a 3.5% yield and Bristol-Myers Squibb Company (BMY) with a 3.5% yield.

Conclusion: JNJ did not earn any Stars in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of three Stars. This quantitatively ranks JNJ as a 3-Star Hold stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $117.37 before JNJ's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 51 years of consecutive dividend increases. At that price the stock would yield 2.2%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 4.2%. This dividend growth rate is below the 7.3% used in this analysis, thus providing a significant margin of safety. JNJ has a risk rating of 1.75 which classifies it as a Medium risk stock.

JNJ is uniquely situated in the Healthcare industry enjoying a diverse revenue base and an excellent research pipeline. The company's many advantages include: products that are largely immune from economic cycles, minimal reliance on any single product category (or customer), substantial financial resources and a significant global presence.

In June 2012, JNJ acquired Synthes (a Swiss company that makes skeletal fixation implants and instruments) for $19.7 billion. This deal should provide important operating synergies, drive gains in medical devices and is projected to be EPS accretive EPS by $0.10-$0.15 in 2013. In addition, new drugs such as Xarelto and Zytiga should provided needed growth in the pharmaceuticals sector.

JNJ is currently trading well above my calculated fair value of $58.16. Also, its free cash flow payout of 71% is slightly above my target maximum of 70%. As such, I will likely wait for a more opportune time before adding to my position.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in JNJ (5.0% of my Dividend Growth Portfolio) and long in ABBV. See a list of all my dividend growth holdings here.

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Tags: [JNJ] [ABBV] [LLY] [BMY]

Weekly Links: May 19, 2013

2013-05-19T02:30:00.000-05:00

Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it's where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al. Below are the carnivals that I participated in this week, along with a link to my article:

The Wealth Builder Carnival published: PepsiCo, IBM and 7 Other Dividend Stocks Raising Their Payouts

Articles I enjoyed reading included (in no particular order):

- The Dividend Guy presented Hasbro – Made For Fun? or Getting Tired of the Same Toys?
- Disciplined Approach to Investing presented A Tired Bull Market
- Dividend Growth Stocks Investing presented Reinvesting Dividends

The DIV-Net Featured Articles

Articles from D4L-News:

High Dividends Are Tempting, But Don't Overpay
The downside of such an influx of investor interest is that many of Wall Street’s more ubiquitous dividend payers are sitting at relatively high valuations — in many cases, despite showing lagging revenue and earnings growth rates. The following 10 dividend-paying giants who might be getting a little ahead of themselves...

3 Safe Divdend Stocks
If you’re searching for dividend yields greater than 5%, you’re probably going to need to wade into the deeper end of the pool. Companies with those kinds of yields are usually in sectors that have fallen on hard times (like shipping) or investments that are inherently more volatile, like mREITs. These riskier plays may not be the best bet for income investors at or nearing retirement, but they’re not necessarily bad for everyone. Here’s a look at three possible winners...

Top BDCs Dividend Stocks
Business development companies -- or BDCs -- will be marching in the earnings season parade next week. What makes BDCs so attractive? Well, let's start with the model. The typical BDC will provide financing to small- and medium-sized businesses that often can't line up conventional funding through major commercial banks. In return for taking on the risk, BDCs can ask for reasonably high interest payments and even some equity exposure. A recent Barron's article claims that the annual loan-loss rate for BDCs is just 0.7%. Here are some of the BDCs...

Cheapest Healthcare Dividend Stocks
My major screening focus goes to cheap stocks, stocks with a low price to earnings ratio. Below is a list of the 20 cheapest healthcare dividend stocks with a forward P/E of less than 15. Health care plans companies are currently the cheapest choice in the list. Two high-yields are part of the results and fifteen companies are recommended to buy. Here are my favorite stocks...

Buffett's Long-Term, High-Dividend
Although sitting on positions for long time periods can have some negative underlying drivers (i.e. a stock has turned into a loser and is now being held with hopes it will come in the black again), long-term holdings in a fund manager's portfolio can show great conviction and belief in the growth prospects of a company and its stock price. Let's look at five of Warren Buffett's holdings that have stayed in his portfolio for at least a year and offer substantially high dividend yields...

Click Here More Dividend News

There are some really good articles here, please take time and read a few of them.

D4L-Premium Services Updated:
The D4L-Dashboard, Analytical Reports, D4L-Data, and The D4L-Newsletter (May edition) have been updated and are available at the D4L-Premium Services web site at: [Click Here] Not a subscriber? [Click Here] for for more information on the benefits of these services, sample reports, pricing and subscription information.

(Photo: Sachin Ghodke)

13 Dividend Stocks Delivering What's Important

2013-05-17T02:30:00.000-05:00

For many investors, there is no clear conviction as to how they should invest. Today’s investments are guided by what was read yesterday, and the popular media is constantly churning out new and different ideas. Granted it makes for some “interesting” reads, but it certainty is no way to run a portfolio. Time has proven the positive correlation between consistently raising dividends and stock performance.

Below are some companies that understand the importance of growing their cash dividends:

United-Guardian, Inc. (UG) researches, develops, manufactures, and markets cosmetic ingredients, personal care products, pharmaceuticals, medical and health care products, and specialty industrial products. May 16th the company increased its semi-annual dividend 12% to $0.47 per share. The yield based on the new payout is 3.8%.

ACE Limited (ACE) provides a range of insurance and reinsurance products to insureds worldwide. May 16th the company increased its quarterly dividend 4% to $0.51 per share. The dividend is payable August 13, 2013 to shareholders of record July 23, 2013. The yield based on the new payout is 2.2%.

KeyCorp (KEY) operates as the holding company for KeyBank National Association that provides various banking services in the United States. May 16th the company increased its quarterly dividend 10% to $0.055 per share. The dividend is payable June 14, 2013 to holders of record of common shares as of the close of business on May 28, 2013. The yield based on the new payout is 2.1%.

Republic Bancorp, Inc. (RBCAA) provides banking services to individuals and businesses in the United States. May 15th the company increased its quarterly dividend 7% to $0.176 per share of Class A Common Stock. The dividend is payable July 19, 2013 to shareholders of record as of June 21, 2013. The yield based on the new payout is 3.2%.

Macy's, Inc. (M) operates stores and Internet Websites in the United States. It operates Macy's and Bloomingdale's stores and Websites that sell a range of merchandise. May 15th the company increased its quarterly dividend 25% to $0.25 per share. The dividend is payable July 1, 2013, to shareholders of record at the close of business on June 14, 2013. The yield based on the new payout is 2.1%.

Northrop Grumman Corporation (NOC) provides systems, products, and solutions in aerospace, electronics, information systems, and technical service areas to government and commercial customers worldwide. May 15th the company increased its quarterly dividend 11% to $0.61 per share. The dividend is payable June 12, 2013, to shareholders of record as of the close of business May 28, 2013. The yield based on the new payout is 3.1%.

United Fire Group, Inc. (UFCS) engages in writing property, casualty, and life insurance products; and selling fixed annuities in the United States. May 15th the company increased its quarterly dividend 20% to $0.18 per share. The dividend is payable June 14, 2013, for shareholders of record as of May 31, 2013. The yield based on the new payout is 2.4%.

Packaging Corporation of America (PKG) engages in the manufacture and sale of containerboard and corrugated packaging products for industrial and consumer markets in the United States. May 15th the company increased its quarterly dividend 28% to $0.40 per share. The dividend is payable July 15, 2013 to shareholders of record as of June 14, 2013. The yield based on the new payout is 3.2%.

Safeway Inc. (SWY) operates as a food and drug retailer in North America. May 14th the company increased its quarterly dividend 14% to $0.20 per share. The dividend is payable July 11, 2013 to stockholders of record at the close of business on June 20, 2013. The yield based on the new payout is 3.1%.

NiSource Inc. (NI) through its subsidiaries, provides natural gas, electricity, and other products and services. May 14th the company increased its quarterly dividend 4.2% to $0.25 per share. The dividend is payable Aug. 20, 2013, to stockholders of record at the close of business July 31, 2013. The yield based on the new payout is 3.3%.

The Clorox Company (CLX) manufactures and markets consumer and professional products worldwide. May 13th the company increased its quarterly dividend 11% to $0.71 per share. The dividend is payable on Aug. 9, 2013, to stockholders of record as of July 24, 2013. The yield based on the new payout is 3.4%.

Protective Life Corporation (PL) provides financial services primarily in the United States. May 13th the company increased its quarterly dividend 11% to $0.20 per share. The dividend is payable June 10, 2013 to share owners of record at the close of business on May 24, 2013. The yield based on the new payout is 2.0%.

Questar Corporation (STR) operates as an integrated natural gas company in the United States. May 10th the company increased its quarterly dividend 6% to $0.18 per share. The dividend is payable June 10, 2013, to shareholders of record on May 24, 2013. Questar has increased the dividend for the last 41 consecutive years. The yield based on the new payout is 2.9%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: No position in the aforementioned securities. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [NOC] [M] [CLX] [SWY] [NI] [KEY] [RBCAA] [UG] [ACE] [UFCS] [PKG] [PL] [STR]

T. Rowe Price Group Inc. (TROW) Dividend Stock Analysis

2013-05-16T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of T. Rowe Price Group Inc. (TROW). Below are some highlights from the above linked analysis:

Company Description: T. Rowe Price Group Inc. operates one of the largest no-load mutual fund complexes in the United States.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

TROW is trading at a premium to all four valuations above. The stock is trading at a 8.9% premium to its calculated fair value of $69.03. TROW did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

TROW earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. TROW earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1986 and has increased its dividend payments for 26 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

TROW earned a Star in this section for its NPV MMA Diff. of the $1,045. This amount is in excess of the $900 target I look for in a stock that has increased dividends as long as TROW has. If TROW grows its dividend at 10.7% per year, it will take 4 years to equal a MMA yielding an estimated 20-year average rate of 2.71%. TROW earned a check for the Key Metric 'Years to >MMA' since its 4 years is less than the 5 year target.

Memberships and Peers: TROW is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: The Federated Investors (FII) with a 4.0% yield, Eaton Vance (EV) with a 1.9% yield and BlackRock Inc. (BLK) with a 2.4% yield.

Conclusion: TROW did not earn any Stars in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks TROW as a 4-Star Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $79.87 before TROW's NPV MMA Differential increased to the $900 minimum that I look for in a stock with 26 years of consecutive dividend increases. At that price the stock would yield 2.0%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $900 NPV MMA Differential, the calculated rate is 10.2%. This dividend growth rate is below the 10.7% used in this analysis, thus providing a margin of safety. TROW has a risk rating of 1.00 which classifies it as a Low risk stock.

With a well-respected brand and a strong market share, TROW is well-positioned as an asset manager. It consistently produces net client inflows based on the relative performance of its funds. TROW's target-date retirement funds should continue to be an attractive option with baby boomers now that they have reached retirement age.

The company has been able to generate more stable results than its peers with significant invested assets in retirement accounts and variable-annuities. This focus provides a much more stable investment base with lower turnover. The stock's current valuation is 9% above my calculated fair value of $69.03. I am watching this stock closely, but unwilling to buy at the current yield.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in TROW (0.0% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

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Tags: [TROW] [FII] [EV] [BLK]

8 Industrial Strength Stocks With Dividend Growth

2013-05-14T02:30:00.000-05:00

The Industrials Sector consists of companies that manufacture products or provide business services. The products are often inputs or raw materials into another manufacturing process, such as steel producer.

Many of these companies are often referred to as members of the “smokestack industry” and are classified as cyclical stocks. A cyclical stock is one that rises and falls in step with the economy.

Timing is important when buying an industrial stock. If you buy when business is booming you will likely pay too much, which means a very low yield. Most stocks in this sector are currently overpriced. The average yield on the Industrial Sector stocks that I follow is only 2.0%, with just 5 stocks yielding over 3%.

The Industrials Sector is one of the largest sectors in my dividend growth database. Of the 231 stocks that I track, it currently is represented by 40 stocks (17%). As noted above, this is not a sector I am in a position to buy often, but when the time is right, I plan on taking full advantage of the opportunity.

This week week, I screened my dividend growth stocks database for Industrials with a yield at or above 2.4% and have increased their dividends for at least 9 consecutive years. The results are presented below:

Stanley Black & Decker Inc. (SWK) is a diversified global provider of hand tools, power tools and related accessories and systems the resulted from the March 2010 merger of StanleyWorks and Black & Decker. The company has paid a cash dividend to shareholders every year since 1877 and has increased its dividend payments for 46 consecutive years. Yield: 2.5%

Norfolk Southern Corp. (NSC) operates 20,000 route miles serving 22 eastern states, the District of Columbia, and Ontario, Canada. The company has paid a cash dividend to shareholders every year since 1901 and has increased its dividend payments for 12 consecutive years. Yield: 2.5%

Emerson Electric Co. (EMR) designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial and consumer markets around the world. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 57 consecutive years. Yield: 2.8%

General Dynamics (GD) is the world's fourth largest military contractor and also one of the world's biggest makers of corporate jets. The company has paid a cash dividend to shareholders every year since 1979 and has increased its dividend payments for 22 consecutive years. Yield: 3.0%

McGrath RentCorp (MGRC) rents and sells modular buildings, electronic test and measurement equipment, and liquid and solid containment tanks and boxes. The company has paid a cash dividend to shareholders every year since 1990 and has increased its dividend payments for 21 consecutive years. Yield: 3.1%

Waste Management Inc. (WM) is the largest U.S. trash hauling/disposal concern. The company has paid a cash dividend to shareholders every year since 1998 and has increased its dividend payments for 9 consecutive years. Yield: 3.5%

Raytheon Company (RTN), the world's sixth largest military contractor, specializes in making high-tech missiles, advanced radar systems and sensors, defense electronics, and missile-defense systems. The company has paid a cash dividend to shareholders every year since 1964 and has increased its dividend payments for 9 consecutive years. Yield: 3.4%

Lockheed Martin Corp. (LMT), the world's largest military weapons manufacturer, is also a significant supplier to NASA and other non-defense government agencies. LMT receives about 93% of its revenues from global defense sales. The company has paid a cash dividend to shareholders every year since 1995 and has increased its dividend payments for 11 consecutive years. Yield: 4.5%

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 230+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long NSC, EMR, GD, RTN, LMT. See a list of all my dividend growth holdings here.

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(Photo: Steve Woods)

Tags: [SWK] [NSC] [EMR] [GD] [MGRC] [WM] [RTN] [LMT]

Occidental Petroleum Corporation (OXY) Dividend Stock Analysis

2013-05-13T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Occidental Petroleum Corporation (OXY). Below are some highlights from the above linked analysis:

Company Description: Occidental Petroleum Corporation is one of the largest oil and gas companies in the U.S., OXY has global exploration and production operations. Its subsidiary, OxyChem, is one of the largest U.S. merchant marketers of chlorine and caustic soda.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

OXY is trading at a discount to only 1.) above. The stock is trading at a 15.5% discount to its calculated fair value of $102.57. OXY earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

OXY earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. OXY earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1975 and has increased its dividend payments for 11 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

OXY earned a Star in this section for its NPV MMA Diff. of the $19,282. This amount is in excess of the $2,400 target I look for in a stock that has increased dividends as long as OXY has. The stock's current yield of 2.95% exceeds the 2.71% estimated 20-year average MMA rate.

Memberships and Peers: OXY is a member of the S&P 500 and a member of the Broad Dividend Achievers™ Index. The company's peer group includes: E. I. du Pont de Nemours and Company (DD) with a 3.5% yield, Exxon Mobil Corporation (XOM) with a 2.6% yield and Royal Dutch Shell plc (RDS.A) with a 4.7% yield.

Conclusion: OXY earned one Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks OXY as a 4-Star Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $190.09 before OXY's NPV MMA Differential decreased to the $2,400 minimum that I look for in a stock with 11 years of consecutive dividend increases. At that price the stock would yield 1.4%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,400 NPV MMA Differential, the calculated rate is 10.5%. This dividend growth rate is significantly lower than the 17.5% used in this analysis, thus providing a margin of safety. OXY has a risk rating of 2.00 which classifies it as a Medium risk stock.

OXY possesses a large and geographically diverse reserve base. The company built its business around finding and acquiring proven properties to drive its future production growth. It should benefit from higher production and oil prices, with domestic growth being driven by reserve prospects in California and the Permian Basin. International growth could come from Bahrain, Oman, Libya and Iraq.

The company is enjoying cost savings from drilling efficiencies. It debt to total capital is at an enviable 16% and the stock is trading at a discount to its $102.57 calculated fair value. However, OXY's cash flow payout of 190% prevents me from seriously considering the stock at this time.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in OXY (0.0% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Genuine Parts Company (GPC) Dividend Stock Analysis
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Tags: [OXY] [DD] [XOM] [RDS.A]

Weekly Links: May 12, 2013

2013-05-12T02:30:00.000-05:00

The Wealth Builder Carnival published: 4 Big-Name Stocks With Double-Digit Dividend Increases

Articles I enjoyed reading included (in no particular order):

- Dividend Growth Investor presented Procter & Gamble (PG) - A dividend stock to hold forever
- Dividend Monk presented Colgate-Palmolive (CL) Dividend Stock Analysis
- The Dividend Guy presented Sell in May and Go Away? Worst Investing Advice or Sound Investment Choice?

The DIV-Net Featured Articles

Articles from D4L-News:

Cheap Dividend Stocks For A Rich Market
Are there any bargains left in these sectors? Health care, consumer staples and utilities — sectors known for providing steady but slower growth — have led the U.S. market to record highs. As of April 25, the Standard & Poor’s 500 Healthcare Index was up 19% so far this year, while the S&P Consumer Staples Index and Utilities Index had each gained around 17%. These steady-Eddie...

Must-Own Dividend Stocks
These companies operate businesses that are so fundamentally wrapped into the human experience that if they went bankrupt, the apocalypse would be right behind … and thus we would have more things to worry about than not receiving their dividends anymore. That’s why I would buy them, by the way: because they will always pay dividends. Here’s a look at these three must-own dividend stocks...

Overvalued Dividend Growth Stocks
As a result of the recent run-up in the market, many of my holdings have, by the strictest of definitions, become overvalued. This prompts the general question: What do I do now? Moreover, additional questions pop up such as: If I do sell, should I sell a part of my position, or all of it? When should I pull the trigger, or put another way, how much overvaluation (risk) should I accept before I sell? Since the market is overheated, should I go to cash or look for alternative investments at better valuations to invest in? Answering these and other important questions correctly could have a major impact on...

Why You Should Stick With Dividend Stocks
Look at what happens each year like clockwork once you set aside some capital to acquire ownership in one of these companies: you receive a raise each year that is well above the 3-4% historical rate of inflation in the United States. It is hard to find assets that not only act like ATM machines four days out of the year, but will dispense even more cash your way each year thereafter. That's par for the course with...

Best Dividend Stocks In America
I'd bet most income investors know about the S&P Dividend Aristocrats Index. To be included in this index, an S&P 500 company must have raised its dividend annually for at least the past 25 years. This is an index of the bluest of blue-chip dividend stocks. But I've found a little-known "sister" index that income investors might find even more interesting -- and profitable. In a variety of market conditions, this little-known index has been able to match -- and usually beat -- the broader markets, while also paying a significantly higher yield. How can you improve on an index that contains some of the best dividend-payers in history...

Click Here More Dividend News

There are some really good articles here, please take time and read a few of them.

D4L-Premium Services Updated:
The D4L-Dashboard, Analytical Reports, D4L-Data, and The D4L-Newsletter (April edition) have been updated and are available at the D4L-Premium Services web site at: [Click Here] Not a subscriber? [Click Here] for for more information on the benefits of these services, sample reports, pricing and subscription information.

(Photo: Sachin Ghodke)

Dividend Income Progress Update - April 2013

2013-05-11T02:30:00.000-05:00

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in April, extending the streak to 34 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 63 of the last 65 months.

My goals were defined in this December 1, 2007 Investing Goals post and last updated in my 2013 Investing Goals post. Below is an updated version of the table found in the original post.

Description	Dividend Income Annualized	Yield on Cost
2027 Goal	110,000	n/a
2017 Goal	30,000	n/a
2013 Goal	25,000	n/a
December/2012	21,650	4.47%
Purchases YTD	1,756	-0.04%
Div. Changes YTD	622	0.01%
Sales YTD	-972	0.04%
April/2013	23,056	4.48%
Purchases	367	-0.02%
Div. Changes	97	0.02%
Sales	-119	-0.01%
March/2013	22,711	4.49%

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $345, and Yield on Cost (YOC) decreased 0.01%. This month's changes were a net of new purchases, dividend changes and sales during the month. Let's examine each of the these categories:

Purchases: Purchases this month increased my annual dividend income by $367 and decreased yield on cost 0.02%. As noted in earlier updates, I generally expect YOC to drop in most months since new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset the decline.

Dividend Changes: The $97 increase in annual dividend income and 0.02% increase in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

- $54 Genuine Parts Company (GPC) $0.495q>$0.5375q
- $32 Wal-Mart Stores Inc. (WMT) $0.3975q>$0.47q
- $28 Owens & Minor Inc. (OMI) $0.22q>$0.24q
- $40 The Coca-Cola Company (KO) $0.255q>$0.28q
- $28 Kimberly-Clark Corporation (KMB) $0.74q>$0.81q
- ($102) U.S. Preferred Stock Index (PFF) $0.1838m>$0.1554m
- $17 Piedmont Natural Gas Co. Inc. (PNY) $0.30q>$0.31q

Sales: During April, , I sold 15% of my PFF shares at a gain. PFF's dividend has been extremely volatile and does not fit well in my Dividend Growth Portfolio. I plan to continue trimming my position in the future

That's it for this time. The next monthly progress update will be early June.

Full Disclosure: Long all the aforementioned securities, except ABT. See a list of all my dividend growth holdings here.

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(Photo: sanja gjenero)

Tags: [GPC] [WMT] [OMI] [KO] [KMB] [PFF] [PNY]

7 Dividend Stocks Sending More Cash To Shareholders

2013-05-10T02:30:00.000-05:00

We all are looking for the perfect dividend stock. In an utopian world, the perfect dividend stock would be one that is both high-yield and provide a high dividend growth rate. Its share price would appreciate ratable with its increasing dividend. All of this would be driven by increasing earnings and cash flow.

Though they are not perfect, the stocks below did recently reward their investors with higher cash dividends:

El Paso Electric Company (EE), a public utility company, engages in the generation, transmission, and distribution of electricity in west Texas and southern New Mexico. May 9th the company increased its quarterly dividend 6% to $0.265 per share. The dividend is payable June 28, 2013 to shareholders of record on June 13, 2013. The yield based on the new payout is 2.8%.

Aqua America, Inc. (WTR) operates regulated utilities that provide water or wastewater services in the United States. May 9th the company increased its quarterly dividend 9% to $0.19 per share. The dividend is payable September 1, 2013 to shareholders of record on August 16, 2013. The yield based on the new payout is 2.4%.

National HealthCare Corporation (NHC) operates and manages long-term health care, retirement, and associated assisted living centers, as well as provides home health care programs. May 8th the company increased its quarterly dividend 6.7% to $0.32 share. The dividend is payable August 30, 2013 to shareholders of record on June 28, 2013. The yield based on the new payout is 2.7%.

Mine Safety Appliances Company (MSA) develops, manufactures, and supplies products that protect peoples health and safety worldwide. May 7th the company increased its quarterly dividend 7% to $0.30 per share. The dividend is payable June 10, 2013 to shareholders of record on May 20, 2013. The yield based on the new payout is 2.4%.

Baxter International Inc. (BAX) develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. May 6th the company increased its quarterly dividend 9% to $0.49 per share. The dividend is payable on July 1, 2013 to shareholders of record as of the close of business on June 7, 2013. The yield based on the new payout is 2.8%.

American Water Works Company, Inc. (AWK) provides water and waste-water services in the United States and Canada. May 6th the company increased its quarterly dividend 12% to $0.28 per share. The dividend is payable June 3, 2013 to all shareholders of record as of May 24, 2013. The yield based on the new payout is 2.7%.

Kimberly-Clark Corporation (KMB) manufactures and markets personal care, consumer tissue, and health care products worldwide. May 2nd the company increased its quarterly dividend 9.5% to $0.81 per share. The dividend is payable July 2, 2013 to stockholders of record on June 7, 2013. The yield based on the new payout is 3.1%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long KMB in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

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- The Secret Ingredient of Dividend Growth Stocks
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(Photo Credit)

Tags: [KMB] [BAX] [WTR] [EE] [NHC] [MSA] [AWK]

Nike, Inc. (NKE) Dividend Stock Analysis

2013-05-09T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Nike, Inc. (NKE). Below are some highlights from the above linked analysis:

Company Description: Nike, Inc. is the world's leading designer and marketer of high-quality athletic footwear, athletic apparel and accessories.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

NKE is trading at a premium to all four valuations above. The stock is trading at a 79.0% premium to its calculated fair value of $36.06. NKE did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

NKE earned two Stars in this section for 1.) and 2.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 11 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

The NPV MMA Diff. of the $676 is below the $2,400 target I look for in a stock that has increased dividends as long as NKE has. If NKE grows its dividend at 16.1% per year, it will take 8 years to equal a MMA yielding an estimated 20-year average rate of 2.71%.

Memberships and Peers: NKE is a member of the S&P 500 a member of the Broad Dividend Achievers™ Index. The company's peer group includes: Crocs, Inc. (CROX) with a 0.0% yield, Deckers Outdoor Corporation (DECK) with a 0.0% yield and Wolverine World Wide, Inc. (WWW) with a 1.0% yield.

Conclusion: NKE did not earn any Stars in the Fair Value section, earned two Stars in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of two Stars. This quantitatively ranks NKE as a 2-Star Weak stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $38.21 before NKE's NPV MMA Differential increased to the $2,400 minimum that I look for in a stock with 11 years of consecutive dividend increases. At that price the stock would yield 1.6%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,400 NPV MMA Differential, the calculated rate is 20.6%. This dividend growth rate is well above the 16.1% used in this analysis, thus providing no margin of safety. NKE has a risk rating of 2.00 which classifies it as a Medium risk stock.

NKE is the largest and most dominant player in the athletic footwear and apparel category. Despite increasing global competition and weak consumer spending in the U.S. and Europe, the company enjoys strong financial and operating metrics largely the result of its dominant brand.

Near-term results will be hampered by excess retail inventories in China along with merchandising changes as the company learns to market its products in China. NKE is currently trading above my calculated fair value of $36.06 and its yield is below my minimum, so I will remain on the sidelines for now.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position NKE (0.0% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

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Tags: [NKE] [CROX] [DECK] [WWW]

Take Charge of Your Future

2013-05-08T02:30:00.000-05:00

When it come to managing your money and ensuring there is enough for the kid's education and a comfortable retirement, financial advisers aren't losing sleep over your future. Make no mistake about it - no one cares more about your future than you. So what's a person to do to make sure his or her future doesn't become a bad "learning experience" or a textbook example of what not to do?

Here are a few items to consider:

1. Take Charge of Your Future.
If you are investing your own money, become a student and constantly study how to be a better investor. If someone else invests your money, take an active role - monitor the progress, ask questions, be sure you know what they are doing with YOUR money.

2. Select a Appropriate Investment Strategy
If you are a conservative investor, penny stocks are probably not the way to go. A dividend growth strategy is what best fits my profile. I enjoy watching my annualized dividend income grow steadily each month, while not worrying about the day to day movements in my portfolio or the market.

3. Make Informed Decisions
Don't buy or sell on a whim. There is a lot of information (and noise) out there. Things change quickly and you need to be prepared to act. If you don't have the time or inclination to do this, find an independent third-party you trust, such as D4L-Premium Services.

D4L-Premium Services is designed to provide the busy dividend growth investor with a wealth of relevant information. Each week the D4L-Premium Services publishes pertinent data on 230+ of the best dividend stocks. It consists of:

D4L-Dashboard: An easy to read, color-coded, dashboard that sorts the 230+ stocks by Stars and yield.
Analytical Reports: A detailed analytical report is available for all 230+ stocks tracked.
D4L-Data: A LibreOffice (OpenOffice) spreadsheet containing a significant amount of data on each of the 230+ dividend stocks tracked. The data is sortable and has built-in buttons and macros to make it easy to use.
D4L-Alerts: Subscribers get an email alert when relevant news breaks, when content has been updated, or when I make a trade in my income portfolios.
D4L-Forums: Have you ever looked for a place where you can intelligently discuss dividend growth stocks with like-minded people? D4L-Forums is the place where serious dividend investors gather.

You can get all this for less than $0.25 per day - by far the best bargain on the internet. The D4L Premium Services are designed for the serious dividend investor. If you have not yet subscribed, please see the Overview and Subscribe page for more information on the benefits of these services, sample reports, pricing and subscription information. The premium section can always be accessed via the Premium menu option on the top-left of the menu bar.

6 Dividend Stocks To Beat The Wall Street Giants

2013-05-07T02:30:00.000-05:00

Driven by computers that cost more than the average person will earn in their lifetime the investment markets move at light speed. To keep pace hedge funds, mutual funds, institutional investors and multi-billion dollar money managers spend large sums of money on high-tech tools to give them an edge. Throw in some illegal insider trading from big names in the industry and it leaves you wondering what chance does a small individual investor have?

Not much of a chance if you let the Wall Street players define the rules. However, you might just slay the giant if you define the rules. In an October 2009 Wall Street Journal article, Jason Zweig noted that:

From the point of view of an investor, all this frantic trading is just noise. In 1976, the great financial analyst Benjamin Graham declared that "the stock market resembles a huge laundry in which institutions take in large blocks of each other's washing ... without rhyme or reason." Mr. Graham died that year, but today he would laugh at the speed of the spin cycle. He would then ignore the momentary vibrations in a company's stock price and go right back to analyzing the value of its business.

As an investor, you are free to choose your own time horizon. If other people want to try earning a few fractions of a penny a few thousand times a day, you should wish them well -- and refuse to join them.

Contrary to what many are now saying, buy-and-hold and investing in quality blue chip stocks is not dead. Consider the following stocks:

Emerson Electric Co. (EMR) designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial and consumer markets around the world. The company owns a broad portfolio of industrial businesses and has a reputation for providing consistent returns to investors. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 57 consecutive years. Yield: 2.9%

Genuine Parts Company (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. The company has an extensive distribution network and has developed strong customer relationships over the years. The company has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 57 consecutive years. Yield: 2.8%

Johnson & Johnson (JNJ) is a leader in the pharmaceutical, medical device and consumer products industries. The company enjoys competitive advantages and has products that are largely immune from economic cycles. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 51 consecutive years. Yield: 3.1%

McDonald's Corporation (MCD) is the largest fast-food restaurant company in the world, with about 33,700 restaurants in 119 countries. The company enjoys unrivaled scale advantages, a strong brand, a cohesive franchisee system and ample international growth opportunities. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 36 consecutive years. Yield: 3.0%

3M Co. (MMM) is a diversified global company that provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives, and other chemical additives. The company has invented some of the world's greatest products. It has a leading position in many of the markets it serves and a strong balance sheet with a relatively little debt. The company has paid a cash dividend to shareholders every year since 1916 and has increased its dividend payments for 54 consecutive years. Yield: 2.4%

Wal-Mart Stores, Inc. (WMT) is the largest retailer in the world, Wal-Mart operates a chain of over 10,000 discount department stores, wholesale clubs, supermarkets and supercenters. The company enjoys dominant market share positions, price leadership, strong cash flows and relatively little debt. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 39 consecutive years. Yield: 2.4%

If your goal is to build an ever-increasing revenue stream from income investments, the above seven dividend stocks will give your income a boost over time. The key is to wait for the right entry point and let time take care of the rest.

Full Disclosure: Long EMR, GPC, JNJ, MCD, MMM, WMT. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [EMR] [GPC] [JNJ] [MCD] [MMM] [WMT]

Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis

2013-05-06T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Wal-Mart Stores, Inc. (WMT). Below are some highlights from the above linked analysis:

Company Description: Wal-Mart Stores, Inc. is the largest retailer in the world, Wal-Mart operates a chain of over 10,000 discount department stores, wholesale clubs, supermarkets and supercenters.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

WMT is trading at a premium to all four valuations above. The stock is trading at a slight premium to its calculated fair value of $76.86. WMT did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

WMT earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. WMT earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 39 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

WMT earned a Star in this section for its NPV MMA Diff. of the $3,220. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as WMT has. If WMT grows its dividend at 13.5% per year, it will take 1 years to equal a MMA yielding an estimated 20-year average rate of 2.71%. WMT earned a check for the Key Metric 'Years to >MMA' since its 1 years is less than the 5 year target.

Memberships and Peers: WMT is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Costco Wholesale Corporation (COST) with a 1.0% yield, Target Corp. (TGT) with a 2.1% yield and PriceSmart Inc. (PSMT) with a 0.7% yield.

Conclusion: WMT did not earn any Stars in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks WMT as a 4-Star Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $166.65 before WMT's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 39 years of consecutive dividend increases. At that price the stock would yield 1.1%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 6.5%. This dividend growth rate is significantly lower than the 13.5% used in this analysis, thus providing a margin of safety. WMT has a risk rating of 1.00 which classifies it as a Low risk stock.

After wandering through the wilderness, WMT has returned to its everyday-low-price strategy roots. In addition to major price cuts, the company is focusing new capital on higher-return domestic small stores with less expansion at lower-return international stores.

WMT enjoys dominant positions in most markets where it competes. The weak economic environment favors the company with price-conscience consumers looking for bargains when shopping for staples and basic discretionary items. The company's unmatched scale leads to favorable terms on everything from the products it sells to store leases and distribution agreements.

Going forward, WMT will face fierce competition from Costco, Amazon, dollar stores and other such retailers. These competitors operate with with lower fixed assets and target lower profit margins. With its share price increase, the stock is now trading near my fair value price of $78.29. However, its low yield has led me to continue trimming my position over the last six months.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in WMT (1.3% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Microsoft Corporation (MSFT) Dividend Stock Analysis
- Monsanto Co. (MON) Dividend Stock Analysis
- Monsanto Co. (MON) Dividend Stock Analysis
- Kimberly-Clark Co. (KMB) Dividend Stock Analysis
- More Stock Analysis

Tags: [WMT] [COST] [TGT] [PSMT]

Weekly Links: May 5, 2013

2013-05-05T02:30:00.002-05:00

Carnival of Personal Finance published: A Disciplined Approach To Dividend Stocks
The Wealth Builder Carnival published: 8 Dividend Stocks Growing Future Yield

Articles I enjoyed reading included (in no particular order):

- The Dividend Guy presented I Don’t Need More Than Four Ratios To Buy A Stock
- Disciplined Approach to Investing presented Investors' Continued Search For Yield
- Dividend Growth Stocks Investing presented Notable Dividend Increases: April 2013

The DIV-Net Featured Articles

Articles from D4L-News:

Are Dividend Stocks the Market's Riskiest Investment?
The conversation about a "dividend bubble" began in earnest at the beginning of last year. As my colleague Morgan Housel said in February 2012, "there's an argument to make that, just as investors ran blindly into subprime bonds five years ago in search of yield, they're running blindly, carelessly into dividend stocks today." So where are we now? Has the bubble popped? Has it deflated? Was it much ado about nothing? According to Seth Masters, the chief investment officer of Bernstein Global Wealth Management, things have gotten...

Soaring Small Caps With 5%-Plus Yield
So if you believe in the current bull market and economic recovery, you’ll want to consider staking out a claim in small caps. That’s not to say you always have to settle for wild swings and big risks in these little guys, though. There are a number of small-cap stocks that have substantial dividend payouts that add a bit of security and stability to your portfolio. And when you add up the potential share appreciation with a 5% dividend, the total returns can be very impressive. Here are five such small caps to consider right now...

Retire In Luxury With Dividend Growth Stocks
It goes without saying that young investors like myself can afford to invest more aggressively than individuals closer to retirement. Our friends in their 50s and 60s might be more comfortable investing in extremely defensive positions in well-established companies that are going to turn a profit no matter what the macroeconomic conditions might be, while collecting a stable dividend four times a year. There is certainly nothing wrong with...

Dividend Stocks with Over 100 Years of Dividend Payments
The longest investment categories I cover are Dividend Kings. Those stocks have increased their payments over a period of more than 50 years without an interruption. Today I top all these lists with a compilation of stocks that have paid dividends over more than 100 years. I discovered U.S. stocks as well as Canadian companies. Here are my favorite stocks...

Fight Inflation With Dividend Stocks
Owning the stocks of companies that pay dividends, have regularly increased their dividend payments, and look capable of continuing to raise their dividend payments just might be the best inflation fighter available to your arsenal. There are three key reasons to believe that successful companies can continue to raise their dividends at least as fast as inflation...

Click Here More Dividend News

There are some really good articles here, please take time and read a few of them.

D4L-Premium Services Updated:
The D4L-Dashboard, Analytical Reports, D4L-Data, and The D4L-Newsletter (May edition) have been updated and are available at the D4L-Premium Services web site at: [Click Here] Not a subscriber? [Click Here] for for more information on the benefits of these services, sample reports, pricing and subscription information.

(Photo: Sachin Ghodke)

PepsiCo, IBM and 7 Other Dividend Stocks Raising Their Payouts

2013-05-03T02:30:00.000-05:00

When you purchase individual stocks, risk is inherent. Sometimes bad things happen to good stocks. Eventually, every investor will hold a stock that falls out of favor and endures a double-digit decline. Understanding this from the onset makes it easier to deal with. To minimize the risk of significant declines, your core portfolio should focus on blue-chip dividend growth stocks.

Listed below are select companies that have recently elected to raise their payout and yield by increasing their cash dividends to shareholders:

American Campus Communities, Inc. (ACC) is an independent equity real estate investment trust. May 2nd the company increased its quarterly dividend 6.7% to $0.36 per share. The dividend is payable May 30, 2013, to shareholders of record at the close of business on May 16, 2013. The yield based on the new payout is 3.3%.

Chesapeake Utilities Corporation (CPK), a diversified utility company, engages in the regulated and unregulated energy, and information services businesses. May 2nd the company increased its quarterly dividend 5.5% to $0.385 per share. The dividend is payable July 5, 2013 to all shareholders of record at the close of business on June 17, 2013. The yield based on the new payout is 2.9%.

Airgas, Inc. (ARG) engages in the distribution of industrial, medical, and specialty gases in the United States. May 2nd the company increased its quarterly dividend 20% to $0.48 per share. The dividend is payable June 28, 2013 to shareholders of record as of June 14, 2013. The yield based on the new payout is 2.0%.

DTE Energy Company (DTE) operates as an energy company. May 1st the company increased its quarterly dividend 5.6% to $0.655 per share. The dividend is payable July 15, 2013, to shareholders of record at the close of business June 17, 2013. The yield based on the new payout is 3.6%.

PepsiCo, Inc. (PEP) operates as a food and beverage company worldwide. April 30th the company increased its quarterly dividend 5.6% to $0.5675 per share. The dividend is payable June 28, 2013, to shareholders of record as of June 7, 2013. The yield based on the new payout is 2.8%.

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. April 30th the company increased its quarterly dividend 12% to $0.95 per share. The dividend is payable June 10, 2013 to stockholders of record May 10, 2013. The yield based on the new payout is 1.9%.

Spectra Energy Partners, LP (SEP) engages in the transportation of natural gas through interstate pipeline systems. April 29th the partnership increased its quarterly distribution 1.3% to $0.50125. The distribution is payable May 15, 2013, to unitholders of record at the close of business on May 9, 2013. The yield based on the new payout is 5.3%.

Artesian Resources Corporation (ARTNA) provides water, wastewater, and other services on the Delmarva Peninsula. April 26th the company increased its quarterly dividend 1.5% to $0.2057 per share. The dividend is payable May 22, 2013, to shareholders of record at the close of business on May 10, 2013. The yield based on the new payout is 3.5%.

National Health Investors, Inc. (NHI), a real estate investment trust (REIT), invests in health care properties, primarily in the long-term care industry in the United States. April 26th the company increased its quarterly dividend 5.8% to $0.735 per share. The dividend is payable August 9, 2013 to shareholders of record on June 28, 2013. The yield based on the new payout is 4.5%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long PEP in my Dividend Growth Portfolio, and long NHI in my High-Yield Portfolio. See a list of all my dividend growth holdings here.

Related Posts
- 12 Dividend Stocks For A Powerful Income Stream
- 10 Dividend Stocks With A 10% Yield In 10 Years
- Free Cash Flow Payout vs. Dividend Payout
- 9 Dividend Stocks Trading at a Double-Digit Discount
- 6 High-Dividend, Low P/E Value Stocks

(Photo Credit)

Tags: [PEP] [IBM] [ARG] [CPK] [NHI] [ACC] [DTE] [SEP] [ARTNA]

Verizon Communications Inc. (VZ) Dividend Stock Analysis

2013-05-02T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Verizon Communications Inc. (VZ). Below are some highlights from the above linked analysis:

Company Description: Verizon Communications Inc. is the largest U.S. wireless carrier, Verizon also offers wireline and broadband services primarily in the northeastern U.S.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

VZ is trading at a premium to all four valuations above. Since VZ's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 130.1% premium to its calculated fair value of $23.31. VZ did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

VZ earned one Star in this section for 1.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 9 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

The NPV MMA Diff. of the $582 is below the $2,600 target I look for in a stock that has increased dividends as long as VZ has. The stock's current yield of 3.84% exceeds the 2.71% estimated 20-year average MMA rate.

Memberships and Peers: VZ is a member of the S&P 500. The company’s peer group includes: AT&T Inc. (T) with a 4.9% yield, CenturyLink, Inc. (CTL) with a 5.8% yield and Sprint Nextel Corp. (S) with a 0.0%.

Conclusion: VZ did not earn any Stars in the Fair Value section, earned one Star in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of one Star. This quantitatively ranks VZ as a 1-Star Very Weak stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $28.82 before VZ's NPV MMA Differential increased to the $2,600 minimum that I look for in a stock with 9 years of consecutive dividend increases. At that price the stock would yield 7.2%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,600 NPV MMA Differential, the calculated rate is 8.4%. This dividend growth rate is higher than the 2.2% used in this analysis, thus providing no margin of safety. VZ has a risk rating of 2.25 which classifies it as a Medium risk stock.

As the Communication Services sector moves more toward wireless products, VZ is well-positioned to maintain its position as the market leader. The company continues to grow its market share despite premium pricing compared to its major rivals. 2013 should bring benefits from new wireless data plans and FiOS success, in addition to short-term impacts from new smartphone launches. Risks include Verizon Communications Inc possible $100 billion bid to take full control of Verizon Wireless from its partner Vodafone Group Plc.

The company enjoys strong cash flow generation, a low debt position, a perception of network quality and pricing power over its suppliers. VZ's low dividend growth rate of 2.2%, short history of consecutive dividend increases and valuation, keep me from adding the stock to my Dividend Growth Portfolio. However, I do hold the stock in my high-yield portfolio.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in VZ (5.6% of my High Yield Portfolio) and long in T in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

Related Articles:
- Genuine Parts Company (GPC) Dividend Stock Analysis
- Raytheon Company (RTN) Dividend Stock Analysis
- Monsanto Co. (MON) Dividend Stock Analysis
- Kimberly-Clark Co. (KMB) Dividend Stock Analysis
- More Stock Analysis

Tags: [VZ] [T] [S] [CTL]

First Quarter 2013: Top And Bottom Performing Dividend Stocks

2013-04-30T02:30:00.000-05:00

Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don't have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system.

My normal practice is to refresh my analytical spreadsheets each Friday with updated price information on the 220+ stocks that I follow. Even then, I don't normally look at the value of my portfolio or the performance of individual stocks.

However, each quarter I update my income portfolio's performance and benchmark it against the S&P 500 and other portfolios. At that time I will look at performance of individual stocks to understand the overall performance the portfolio.

Recently, I updated my Income Portfolio's performance for the first quarter. Building on that, here are my income portfolio's top and bottom 5 performers year-to-date through March 31, 2013, with their annualized returns:

Top Performers

#5. Johnson & Johnson (JNJ)
Johnson & Johnson is a leader in the pharmaceutical, medical device and consumer products industries. JNJ has enjoyed significant price appreciation this year from around $70 at the beginning of the year to nearly $82 at the end of March.
Yield: 2.9% | Return: 93.17%

#4. Cincinnati Financial Corp. (CINF)
Cincinnati Financial Corp. is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations. With its stock moving from around $39 at the beginning of the year to over $47 on March 31st, CINF has built on it strong 2012 performance.
Yield: 3.4% | Return: 126.65%

#3. Genuine Parts Company (GPC)
Genuine Parts Co is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. Like the companies above, GPC has enjoyed significant price appreciation this year from around $64 to $78 at the end of March. The stock has benefited from investors looking for yield.
Yield: 2.9% | Return: 141.11%

#2. Leggett & Platt, Inc. (LEG)
Leggett & Platt Inc. makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as products for non-furnishings markets. O is another stock that has benefited from investors looking for yield. It started the year around $27 and closed March nearly $34.
Yield: 3.6% | Return: 144.87%

#1. Norfolk Southern Corp. (NSC)
Norfolk Southern Corp. operates 20,000 route miles serving 22 eastern states, the District of Columbia, and Ontario, Canada. After a tough 2012, NSC started 2013 around $62 and finished the quarter around $77.
Yield: 2.6% | Return: 156.46%

Bottom Performers

#5 Community Trust Bank Corp. (CTBI)
Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company. It is a good thing when a stoct on your 5 worse performers has a double-digit positive return (annualized). CTBI started the year around $33 and closed March a little over $34.
Yield: 3.7% | Return: 16.99%

#4. General Dynamics Corp. (GD)
General Dynamics is the world's fourth largest military contractor and also one of the world's biggest makers of corporate jets. Like CTBI, GD produced a double-digit positive return (annualized). It started the year around $69 and closed Q1 up a little over a dollar around $70.
Yield: 3.1% | Return: 13.24%

#3. Illinois Tool Works Inc. (ITW)
Illinois Tool Works Inc. is a diversified manufacturer that operates a portfolio of 60 business units that serve industrial and consumer markets globally. ITW's price close the quarter virtually flat to where it began the year.
Yield: 2.4% | Return: 0.89%

#2. Northwest Natural Gas Company (NWN)
Northwest Natural Gas Co. is a natural gas utility that provides service to some 611,000 residential, 62,000 commercial and 1,000 industrial customers in Oregon and southwestern Washington. NWN was down about $1.50 and closed the quarter at $43.82.
Yield: 4.1% | Return: -5.19%

#1. AFLAC Inc. (AFL)
Aflac Incorporated provides supplemental health and life insurance in Japan (80% of earnings) and the U.S. Products are marketed at work sites and help fill gaps in primary coverage. AFL is down a little over a dollar for the quarter, closing March at $52.02. I still like AFL, but I will like it more if it continues to decline.
Yield: 2.6% | Return: -5.74%

To avoid short-term anomalies, I excluded stocks that I did not own on January 1, 2013 from the above lists. Investing in dividend growth stocks is a long-term proposition, but sometimes it is nice to see that our portfolio is performing well, in addition to collecting higher dividends each month.

Full Disclosure: Long JNJ, CINF, GPC, LEG, NSC, CTBI, GD, ITW, NWN, AFL in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

Related Articles
- 10 Dividend Stocks With A 10% Yield In 10 Years
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- How Much Money Will You Need Before Retiring?

(Photo Credit)

Tags: [JNJ] [CINF] [GPC] [LEG] [NSC] [CTBI] [GD] [ITW] [NWN] [AFL]

Microsoft Corporation (MSFT) Dividend Stock Analysis

2013-04-29T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Microsoft Corporation (MSFT). Below are some highlights from the above linked analysis:

Company Description: Microsoft, the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

MSFT is trading at a discount to only 1.) above. The stock is trading at a slight discount to its calculated fair value of $29.81. MSFT earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

MSFT earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. MSFT earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 2003 and has increased its dividend payments for 10 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

MSFT earned a Star in this section for its NPV MMA Diff. of the $10,534. This amount is in excess of the $2,500 target I look for in a stock that has increased dividends as long as MSFT has. The stock's current yield of 3.2% exceeds the 2.71% estimated 20-year average MMA rate.

Memberships and Peers: MSFT is a member of the S&P 500. The company's peer group includes: Apple Inc. (AAPL) with a 2.5% yield, Oracle Corp. (ORCL) with a 0.7% yield and Google Inc. (GOOG) with a 0.0% yield.

Conclusion: MSFT earned one Star in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of five Stars. This quantitatively ranks MSFT as a 5-Star Very Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $50.67 before MSFT's NPV MMA Differential decreased to the $2,500 minimum that I look for in a stock with 10 years of consecutive dividend increases. At that price the stock would yield 1.8%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,500 NPV MMA Differential, the calculated rate is 9.9%. This dividend growth rate is lower than the 15.0% used in this analysis, thus providing a margin of safety. MSFT has a risk rating of 1.50 which classifies it as a Low risk stock.

Though initial sales of Windows 8 fell short of some analysts' expectations, MSFT's shift to a mobile strategy and their persistence should eventually lead to long-term success. Office 2013 should provide good growth prospects. The company's hardware expansion (Surface tablets) will provide an additional distribution channel which should improve future results.

With strong free cash flow and very low debt, MSFT in an enviably strong financial position. Not to be overlooked, the company ended fiscal 2012 with 9 times its dividend in cash and short-term investments sitting on its balance sheet. With its most recent dividend increase, MSFT is a buy below its calculated fair value price of $29.81. I will continue to add to my position in the stock as market conditions and my allocation allows.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in MSFT (2.2% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Target Corporation (TGT) Dividend Stock Analysis
- International Business Machines Corp. (IBM) Dividend Stock Analysis
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Tags: [MSFT] [AAPL] [ORCL] [GOOG]

Weekly Links: April 28, 2013

2013-04-28T02:30:00.000-05:00

Carnival of Personal Finance published: Characteristics of Great Dividend Growth Stocks
The Wealth Builder Carnival published: 5 Dividend Stocks Acting Like a Money Machine

Articles I enjoyed reading included (in no particular order):

- The Dividend Guy presented 17 Dividend Stocks with Both EPS & Sales Growth on Fire
- Dividend Mantra presented Why I Love Dividend Growth Investing
- Dividend Growth Stocks Investing presented The Rich Keep Getting Richer, How About You?

The DIV-Net Featured Articles

Articles from D4L-News:

Soaring Small Caps With 5%-Plus Yield
There are a number of small-cap stocks that have substantial dividend payouts that add a bit of security and stability to your portfolio. And when you add up the potential share appreciation with a 5% dividend, the total returns can be very impressive. Here are five such small caps to consider right now...

Retire In Luxury With Dividend Growth Stocks
While there is no magic number to determine which stocks best fit in any individual's portfolio, there are many different factors to help investors make educated decisions. Younger investors should look beyond dividend yield when choosing stocks for their retirement portfolios. Dividend growth and payout ratio, as well as where the stock stands with regards to valuation should be taken into account, as well. Capital appreciation from undervalued stocks, along with share appreciation from reinvesting dividends will mean that today's young investors will have plenty of money to buy income stocks when they're ready to retire...

Dividend Stocks with Over 100 Years of Dividend Payments
The longest investment categories I cover are Dividend Kings. Those stocks have increased their payments over a period of more than 50 years without an interruption. Today I top all these lists with a compilation of stocks that have paid dividends over more than 100 years. I discovered U.S. stocks as well as Canadian companies. Here are my favorite stocks...

Highest Dividend-Paying Consumer Stocks
Thankfully, there are a few dividend paying stocks that still yield over 3% -- despite the big rally in their shares. I prefer consumer stocks as income investments because they tend to be steady, mature businesses that can generate plenty of cash, even through a recession. With that in mind, here are four of the highest dividend-paying consumer stocks around...

Dividend Stocks for the Next 5 Years
There is no one-size-fits-all when it comes to stock recommendations. In fact, an investor's time horizon alone often makes or breaks an investment. Fortunately, the exceptionally Foolish, long-term investor has the unique privilege of being able to focus on excellent businesses, and not having to bow to the unpredictable ups and downs that characterize the markets in the short term. Why? Because over the long haul, the market price typically follows business fundamentals. If you count yourself among the Foolishly patient, here are two excellent dividend stocks for the next half-decade...

Click Here More Dividend News

There are some really good articles here, please take time and read a few of them.

D4L-Premium Services Updated:
The D4L-Dashboard, Analytical Reports, D4L-Data, and The D4L-Newsletter (April edition) have been updated and are available at the D4L-Premium Services web site at: [Click Here] Not a subscriber? [Click Here] for for more information on the benefits of these services, sample reports, pricing and subscription information.

(Photo: Sachin Ghodke)

4 Big-Name Stocks With Double-Digit Dividend Increases

2013-04-26T02:30:00.000-05:00

To succeed as a dividend growth investor you must identify and purchase stocks with sustainable dividend growth. Inertia is powerful force. Once a company has established a track record of growing its dividend over the decades and developed a shareholder base that expects higher dividends each year, it becomes increasing difficult for management to cut or fail to raise their dividend. No CEO of this type of company wants a dividend cut to occur on his or her watch.

Here are several big-name companies that have recently increased their cash dividends by double-digits:

Chevron Corporation (CVX) engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. The company operates in two segments, Upstream and Downstream. April 24th the company increased its quarterly dividend 11.1% to $1.00 per share. The dividend is payable June 10, 2013, to holders of common stock as shown on the transfer records of the Corporation at the close of business on May 17, 2013. The yield based on the new payout is 3.4%.

Exxon Mobil Corporation (XOM) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products. April 24th the company increased its quarterly dividend 10.5% to $0.63 per share. The dividend is payable June 10, 2013 to shareholders of record at the close of business on May 13, 2013. The yield based on the new payout is 2.8%.

Apple Inc. (AAPL) designs, manufactures, and markets mobile communication and media devices, personal computing products, and portable digital music players worldwide. April 23rd the company increased its quarterly dividend 15% to $3.05 per common share. The dividend is payable on May 16, 2013 to shareholders of record as of the close of business on May 13, 2013. The yield based on the new payout is 3.0%.

Wells Fargo & Company (WFC) provides retail, commercial, and corporate banking services. April 23rd the company increased its quarterly dividend 20% to $0.30 per share. The dividend is payable June 1, 2013, to stockholders of record on May 10, 2013. The yield based on the new payout is 3.2%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long CVX in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

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- 9 Stocks Delivering The Dividend Dream
- 10 Quality Dividend Stocks Trading Below Their Fair Value
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- 10 Stocks That Have Paid Uninterrupted Dividends Since 1899

(Photo Credit)

Tags: [CVX] [XOM] [AAPL] [WFC]

Genuine Parts Company (GPC) Dividend Stock Analysis

2013-04-25T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Genuine Parts Company (GPC). Below are some highlights from the above linked analysis:

Company Description: Genuine Parts Co is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

GPC is trading at a premium to all four valuations above. The stock is trading at a 38.5% premium to its calculated fair value of $53.17. GPC did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

GPC earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. GPC earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 57 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

GPC earned a Star in this section for its NPV MMA Diff. of the $782. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as GPC has. The stock's current yield of 2.92% exceeds the 2.71% estimated 20-year average MMA rate.

Memberships and Peers: GPC is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Advance Auto Parts Inc. (AAP) with a 0.3% yield, AutoZone Inc. (AZO) with a 0.0% yield and W.W. Grainger, Inc. (GWW) with a 1.3% yield.

Conclusion: GPC did not earn any Stars in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks GPC as a 4-Star Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $86.68 before GPC's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 57 years of consecutive dividend increases. At that price the stock would yield 2.5%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 4.5%. This dividend growth rate is below the 6.2% used in this analysis, thus providing a margin of safety. GPC has a risk rating of 1.50 which classifies it as a Low risk stock.

GPC’s long string of dividend increases are supported by its strong underlying fundamentals of sales, earnings and free cash flow. From an operating standpoint, GPC has an extensive distribution network and it has built a loyal customer following over the years. The company maintains wide-ranging inventories and efficiently delivers products in minimal time.

The company is one of my larger holdings, with much of its value coming through capital appreciation. The stock price has more than doubled since I started buying it back in 2009 at $32.50. As an investment, it has generated a compound annual return of over 27% since I first purchased it.

GPC has strong financials stable earnings and an above-average dividend yield for its industry. In spite of the stock trading above my calculated fair value of $53.17, I will continue to look for opportunities to moderately add to my position, as my allocation allows.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in GPC (3.6% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Monsanto Co. (MON) Dividend Stock Analysis
- Kimberly-Clark Co. (KMB) Dividend Stock Analysis
- International Business Machines Corp. (IBM) Dividend Stock Analysis
- Walgreen Co. (WAG) Dividend Stock Analysis
- More Stock Analysis

Tags: [GPC] [AAP] [AZO] [GWW]

A Disciplined Approach To Dividend Stocks

2013-04-23T02:30:00.000-05:00

Those that have read this space for any period of time are well aware of my enthusiasm for using dividend growth stocks as a vehicle for building long-term wealth and income. However, with that said, a successful investor must do more than just buy stocks that pay a growing dividend, or do more that focusing on a single metric such as dividend yield. Not all dividend stocks are created equal - there is a discipline to selecting good dividend growth stocks.

Understand Your Goal

What is your portfolio trying to accomplish? As odd is it may seem, many investors never define this and their overall goal. Are you buying stocks like Box Ships Inc. (TEU) with a 19% yield, Western Asset Mortgage Capital Corporation (WMC) with a 17% yield, Annaly Capital Management, Inc. (NLY) with a 11% yield or Apollo Investment Corp. (AINV) with a 10% yield? If your goal is short-term income these might work, and then again they might not.

Before buying any stock you should write down your investing goal and determine if purchasing that stock will bring you closer to your goal or take you further away. My goal is to generate an ever-increasing income stream from dividends. Thus, I will sacrifice some current income in favor of future growth and income sustainability.

Understand and Measure the Risk

No stock is 100% safe. Each stock has its own set of risks that need to be considered. The stocks listed above are considered high risk. In exchange for above average current income, you may encounter above average dividend cuts and/or loss of capital.

Gauging the relative risk of one stock compared to another is important when deciding which stock to buy or how much to weight a stock within your portfolio. I prefer lower risk stocks such as Johnson & Johnson (JNJ), Procter & Gamble Co. (PG) and McDonald's Corp. (MCD).

A Disciplined Approach

For me and my income portfolio, I have have chosen to follow a conservative and disciplined approach. This means I will seek out dividend stocks with a proven track record and good future prospects. These stocks will have a long history (10 or more years) of consecutive dividend increases, low debt, low free cash flow payout and excellent other dividend metrics. In addition, I will follow time proven valuation techniques to select an entry point that will provide a good long-term value.

Stay The Coarse

There is always a temptation to stray from a disciplined approach of selecting good dividend stocks. Often I receive questions like, Apple (AAPL) is making a fortune off the iPhone and iPads, why aren't you buying it?' or 'Kraft Foods Inc. (KRFT) is a great consumer staple, why aren't you buying it?' The short answer is that neither currently can pass the entry exam to gain access to my income portfolio.

It is easy to become caught up with the current hot stock that everyone loves. The key to success is to buy before everyone else falls in love with it. Selecting good dividend growth stocks is not difficult, but being disciplined enough to do it is difficult for many investors.

Full Disclosure: Long MCD, PG, JNJ. See a list of all my dividend growth holdings here.

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Raytheon Company (RTN) Dividend Stock Analysis

2013-04-22T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Raytheon Company (RTN). Below are some highlights from the above linked analysis:

Company Description: Raytheon Company, the world's sixth largest military contractor, specializes in making high-tech missiles, advanced radar systems and sensors, defense electronics, and missile-defense systems.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

RTN is trading at a discount to only 1.) above. Since RTN's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a slight premium to its calculated fair value of $55.91. RTN did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

RTN earned two Stars in this section for 1.) and 2.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. The company has paid a cash dividend to shareholders every year since 1964 and has increased its dividend payments for 9 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

RTN earned a Star in this section for its NPV MMA Diff. of the $3,807. This amount is in excess of the $2,600 target I look for in a stock that has increased dividends as long as RTN has. The stock's current yield of 3.78% exceeds the 2.71% estimated 20-year average MMA rate.

Memberships and Peers: RTN is a member of the S&P 500. The company's peer group includes: The Boeing Company (BA) with a 2.3% yield, Lockheed Martin Corporation (LMT) with a 4.8% yield and Northrop Grumman Corporation (NOC) with a 3.2% yield.

Conclusion: RTN did not earn any Stars in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of three Stars. This quantitatively ranks RTN as a 3-Star Hold stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $68.27 before RTN's NPV MMA Differential decreased to the $2,600 minimum that I look for in a stock with 9 years of consecutive dividend increases. At that price the stock would yield 3.2%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,600 NPV MMA Differential, the calculated rate is 10.0%. This dividend growth rate is the same as the 10.0% used in this analysis, thus providing a margin of safety. RTN has a risk rating of 1.50 which classifies it as a Low risk stock.

Like most defense contractors, RTN is facing lower spending from governments around the world, most notably in Europe and the U.S. Much of this bad news has already been factored in RTN's price. On the positive side, increased aggression in Asia and the Middle East could fuel higher demand for certain high tech solutions offered RTN. This could lead to near double-digit international growth for missile defense and defense electronics. The company currently has a large project backlog. With relatively low debt, a low free cash flow payout and trading close to my $55.91 calculated fair value price, RTN is a stock that is definitely on my radar.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in RTN (2.9% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

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Tags: [RTN] [BA] [LMT] [NOC]

Weekly Links: April 21, 2013

2013-04-21T02:30:00.000-05:00

Carnival of Personal Finance published: 6 High-Yield REITs With Growing Dividends
The Wealth Builder Carnival published: 6 Stocks Building Wealth Through Higher Dividends

Articles I enjoyed reading included (in no particular order):

- Dividend Growth Investor presented High Yield Dividend Investing Misconceptions
- The Dividend Guy presented To Buy or Not To Buy Are We Heading Towards a Market Correction?
- Disciplined Approach to Investing presented Expect An Equity Market Correction

The DIV-Net Featured Articles

Articles from D4L-News:

My Favorite Dividend Growth Stocks
In total, 26 stocks and fund vehicles increased its dividend payments last week of which six are High-Yields and ten are currently recommended to buy. The average dividend growth amounts to 16.83%. Here are my favorite dividend growth stocks...

Dividend-Paying Stocks a “Good Alternative” to Bonds?
Knowledge@Wharton shared some of Jeremy Siegel’s thoughts on dividend investing. While sharing those thoughts, Siegel, perhaps best known for his book, “Stocks for the Long Run,” also revealed his current feelings toward bonds. “Siegel believes dividends are a good alternative for a portion of the typical investor’s fixed-income holdings. Investors can find generous dividend-paying stocks and mutual funds, and Siegel suggests that...

"Safe" Dividend Stocks Aren't As Safe As You Think
They say there is safety in numbers. That may be true heading into battle, but it's not necessarily true in the investment world. Whether it's tulips, dot-comstocks or houses, popularity can push the short-term price of assets past their true long-term value. But while bubbles can build over time, price corrections can be swift. Lots of investors get trampled in the stampede when the herd decides a popular asset is no longer worth the money. The latest example of a "crowded" investment comes from one a sector you might least expect. We're not in "bubble" territory yet, but buying these stocks now could be risky...

Dividend Stocks For The Long Haul
When a company makes ongoing regular cash distributions, it sends a positive message about the fundamentals, performance and prospects of the business, and indicates that management is more concerned about returning value to shareholders than using excess cash to bolster executive pay. Stocks that consistently pay dividends tend to be less volatile than those that don't. Investors believe that dividends are a far more predictable thing, based on a company's track record than share price. Over the last 82 years, dividends have...

Solid Dividends From Well-Known Brands
Long-term investors know two important things: Dividends are excellent and good companies are built to last. In a rapidly changing marketplace, those two factors can be difficult to find in the same company. Some high-yielding dividends are high simply because the companies are slowly sinking. On the other hand, some good, rock-steady brands pay horrible dividends. But that doesn't mean that you can't find a diamond in the rough every now and then. Here are three companies with solid dividends that aren't going anywhere...

Click Here More Dividend News

There are some really good articles here, please take time and read a few of them.

D4L-Premium Services Updated:
The D4L-Dashboard, Analytical Reports, D4L-Data, and The D4L-Newsletter (April edition) have been updated and are available at the D4L-Premium Services web site at: [Click Here] Not a subscriber? [Click Here] for for more information on the benefits of these services, sample reports, pricing and subscription information.

(Photo: Sachin Ghodke)

2013-Q1 Performance Review

2013-04-20T02:30:00.000-05:00

After each quarter-end, I review my asset allocation and year-to-date total returns by category. The attached PDF contains my actual asset allocation as of 2013-Q1. Below is a high-level summary of the information contained in the PDF:

Asset Allocation		Actual	Target	Diff.

Cash/Fixed Income		17.30%	17.30%	0.00%
Equities-Domestic		54.58%	53.42%	1.17%
Equities-International		23.83%	25.00%	-1.17%
Employer Equity		4.40%	4.40%	0.00%

	Total	100.00%	100.0%

Cash/Fixed Income		17.30%	17.30%	0.00%
Large Cap.		57.87%	58.42%	-0.55%
Small/Mid Cap.		20.55%	20.00%	0.55%
Employer Equity		4.40%	4.40%	0.0%

	Total	100.00%	100.00%

Asset Allocation

Given the unsustainable low interest rates, and the associated future price pressure, I continued to look for ways to lower my overall bond allocation in the first quarter. When rates move up bond prices will be negatively impacted.

At the end of the first quarter my asset allocation was reasonably close to my target. My philosophy is to buy the best dividend stocks available and adjust my allocation using my 401(k) and other investments, when needed. I will make needed adjusts with future purchases.

2013-Q1 Performance

After under-performing in 2012, my Dividend Growth Portfolio outperformed and the Pocket-Change-Portfolio slightly under-performed the S&P year-to-date through March. Both portfolios underperformed Berkshire Hathaway (BRK.B) during the same time period. Below are the YTD performances of various categories along with my S&P 500 (VFINX) and Berkshire Hathaway (BRK.B) benchmarks:

Portfolio	Lifetime Wtd. Avg.	'13 YTD
Div. Growth Stocks	10.1%	13.3%
Pocket Change (9/08)	10.6%	12.3%
S&P 500 (VFINX)	3.5%	12.6%
BRK.B	1.2%	20.9%

Div. Growth vs S&P	6.6%	0.7%
Div. Growth vs BRK	8.9%	-7.6%

When weighted with results from 2008 forward, my income portfolios out-performed the S&P and BRK. As I have previously stated, it is my desire to beat the S&P over the long-run, so I don't pay a lot of attention to short-term performance either positive or negative. For more details on the performance of my income portfolios, including year-by-year performance and cumulative chart, please click here.

Passive Income

For Q1/2013 my passive income averaged $2,157/month, down from the $2,616/month in Q4/2012. The decrease resulted from several companies paying their Q1/2013 dividends in Q4/2012 due to the uncertainty of the 2013 dividend tax rates. The above amounts include all sources of passive income in my taxable accounts, primarily interest and dividends. It excludes my Roth IRA, 401(k) and blog income (which is not passive).

The next update will be in late-July. As always, thanks for reading! See a list of all my dividend growth holdings here.

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(Photo: sanja gjenero)

Tags: [BRK.B] [VINF]