Dividend Growth Stocks

Weekly Links: February 12, 2012

2012-02-12T10:30:00.000-06:00

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:

Carnival of Personal Finance published: Why Dividends Matter
Carnival of Financial Planning published: 26 Confident and Secure Companies Boosting Dividends

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

- The Dividend Guy presented 18 Stock Picks for 2012 Using My Crystal Ball
- Planned Freedom presented Gold, bonds or stocks?

The DIV-Net Featured Articles

Articles from D4L-News:

Low interest rates may be good for dividend stocks
With near-zero interest rates likely to persist for two more years, some investors are bullish on gold and high-yielding stocks, while shares of some solid companies out of favor with the market are still relatively cheap, Barron's reported Sunday. In the third installment covering the magazine's 2012 investors roundtable, T. Rowe Price Chairman and investment chief Brian Rogers said he seeks companies that have performed well but are ignored, including...

The Best Dividend Stocks for 2012
2012′s rally has so far been very impressive, but a lot of investors are nervous it is running out of steam. If so, 2012 might see investors playing the same strategy so popular in 2011: Dividend stocks. Indeed, dividend income was a popular choice in 2011, and the heavy demand for it sent stock prices up for more of the higher-yield companies. So we were wondering what companies might shape up to be the best dividend stock picks for 2012. For ideas, we took a look at...

Stocks With A 10%+ Yield And A 'Buy' Rating
I researched the capital market by stocks with a market capitalization of more than USD2 billion, a dividend yield of more than 10 percent as well as a "buy" or better recommendation. Ten stocks fulfilled my criteria, of which two have a "strong buy" rating. Stocks with very high yields are very interesting because in the cause of a double digit yield, your investment amounts paid off in less than 10 years. Take care that your stocks is healthy enough to pay dividends in the same amount all the time. Here are my favorite stocks...

The 40 Best Dividend Stocks
In this worrisome global macro backdrop, many are pointing to dividend paying stocks as a way to generate income while waiting for capital gains. Societe Generale is out with its report of the top 40 dividend payers across the globe. The latest list includes...

Dividend Rich, Deal Ready Utility Stocks
U.S. utility stocks were a safe way to escape a worsening economy last year with many utility sector funds. The sector was boosted by its stable revenues and high dividends, which attracted safety-minded investors as the yield on U.S. Treasury bonds plunged. In 2011, mega-mergers also led a continued utilities recovery from a 2009 lows as companies looked at consolidation as a way to wrench out cost synergies and lower pressure on operating margins. While $10 billion deals may not be as common in 2012, Fitch Ratings expects continued utilities M&A and gives 10 companies to watch...

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 (January edition) have been updated and are available at the NEW 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 - January 2012

2012-02-11T02:30:00.000-06:00

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in January, extending the streak to 19 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 48 of the last 50 months.

My goals were defined in this December 1, 2007 Investing Goals post and last updated in my 2012 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
2012 Goal	21,000	n/a
December/2011	16,161	4.38%
Purchases YTD	287	-0.02%
Div. Changes YTD	20	0.00%
Sales YTD	0	0.00%
January/2012	16,468	4.36%
Purchases	287	-0.02%
Div. Changes	20	0.00%
Sales	0	0.00%
December/2011	16,161	4.38%

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 $307, and Yield on Cost (YOC) was down 0.02%. This month's changes were a net of new purchases and dividend changes (no sales during the month). Let's examine each of the these categories:

Purchases: Purchases this month increased my annual dividend income by $287 and decreased my yield on cost by -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 $20 increase in annual dividend income and 0.00% no change in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

- ($11) U.S. Preferred Stock Index (PFF) $2.52a>$2.49a
- $08 Automatic Data Processing, Inc. (ADP) $0.36q>$0.395q
- $11 USB Alerian MLP Infrastructure Index (MLPI) $1.57a>$1.59a
- $12 Sysco Corporation (SYY) $0.26q>$0.27q

Sales: There were no sales in the month of January.

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

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

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(Photo: sanja gjenero)

Tags: [ADP] [SYY] [PFF] [MLPI]

20 Dividend Stocks Giving Shareholders A Raise

2012-02-10T02:30:00.000-06:00

Dividend stocks are sometimes referred to as defensive stocks since many investors flee to them in an economic downturn. Their dividends, if sustainable, provide a minimum level of positive return. This cushions the downward pressure from the market. Better yet, great dividend companies not only sustain their dividends in a downturn - they actually raise them.

Below are several stocks displaying confidence in the future by increasing their cash dividends:

United Parcel Service, Inc. (UPS), a package delivery company, provides transportation, logistics, and financial services in the United States and internationally. February 9th the company increased its quarterly dividend 9.6% to $0.57 per share. The dividend is payable March 7, 2012, to shareholders of record on Feb. 21, 2012. The yield based on the new payout is 3.0%.

Occidental Petroleum Corporation (OXY) operates as an oil and gas exploration and production company primarily in the United States. February 9th the company increased its quarterly dividend 17% to $0.54 per share. The dividend is payable on April 15, 2012, to stockholders of record as of March 9, 2012. The yield based on the new payout is 2.1%.

3M Company (MMM) operates as a diversified technology company worldwide. February 9th the company increased its quarterly dividend 7% to $0.59 per share. The dividend is payable on March 12, 2012, to shareholders of record at the close of business on February 17, 2012. 3M has paid dividends to its shareholders without interruption for more than 95 years. The yield based on the new payout is 2.7%.

Lorillard, Inc. (LO) engages in the manufacture and sale of cigarettes in the United States. February 9th the company increased its quarterly dividend 19% to $1.55 per share. The dividend is payable on March 9, 2012 to stockholders of record as of March 1, 2012. The yield based on the new payout is 5.0%.

Dr Pepper Snapple Group, Inc. (DPS), an integrated brand owner, engages in the manufacture and distribution of non-alcoholic beverages in the United States, Canada, and Mexico. February 8th the company increased its quarterly dividend 6.3% to $0.34 per share. The dividend is payable on April 6, 2012, to shareholders of record as of close of business on March 19, 2012. The yield based on the new payout is 3.6%.

Omnicom Group Inc. (OMC) and its subsidiaries provide advertising, marketing, and corporate communications services. February 8th the company increased its quarterly dividend 20% to $0.30 per share. The dividend is payable on April 2, 2012 to shareholders of record at the close of business on March 5, 2012. The yield based on the new payout is 2.5%.

Fidelity National Financial, Inc. (FNF) provides title insurance, mortgage services, specialty insurance, and information services in the United States. February 8th the company increased its quarterly dividend 17% to $0.14 per share. The dividend is payable March 30, 2012, to stockholders of record as of March 16, 2012. The yield based on the new payout is 3.1%.

Six Flags Entertainment Corporation (SIX) owns and operates regional theme, water, and zoological parks in North America. February 8th the company increased its quarterly dividend from $0.06 per share to $0.60 per share. The dividend is payable March 12, 2012 to shareholders of record as of March 1, 2012. The yield based on the new payout is 5.2%.

Chesapeake Lodging Trust (CHSP) is a self-advised lodging real estate investment trust (REIT) focused on investments primarily in upper-upscale hotels in major business and convention markets. February 8th the company increased its quarterly dividend 10% to $0.22 per share. The dividend is payable on April 13, 2012 to shareholders of record as of March 31, 2012. The yield based on the new payout is 5.1%.

Diebold, Incorporated (DBD) provides integrated self-service delivery and security systems and services primarily to the financial, commercial, government, and retail markets worldwide. February 8th the company increased its quarterly 1.8% to $0.28 per share. The dividend is payable on Monday, March 5, to shareholders of record at the close of business on Monday, Feb. 20. The yield based on the new payout is 3.2%.

Time Warner Inc. (TWX) operates as a media and entertainment company in the United States and internationally. February 8th the company increased its quarterly dividend 11% to $0.26 per share of Common Stock, payable in cash on March 15, 2012 to stockholders of record at the close of business on February 29, 2012. The yield based on the new payout is 2.7%.

L-3 Communications Holdings, Inc. (LLL) provides command, control, communications, intelligence, surveillance, and reconnaissance systems. February 7th the company increased its quarterly dividend 11% to $0.50 per share. The board has also declared the next dividend payable on March 15, 2012 to shareholders of record at the close of business on March 1, 2012. The yield based on the new payout is 2.8%.

Freeport-McMoRan Copper & Gold Inc. (FCX) engages in the exploration, mining, and production of mineral resources. February 7th the company increased its quarterly dividend $0.3125 per share. The yield based on the new payout is 2.7%.

The Western Union Company (WU) provides money transfer and payment services worldwide. February 7th the company increased its quarterly dividend 25% to $0.10 per share. The dividend is payable payable March 30, 2012 to shareholders of record at the close of business on March 16, 2010. The yield based on the new payout is 2.0%.

Coca-Cola Enterprises Inc. (CCE) engages in the production, distribution, and marketing of non-alcoholic beverages of The Coca-Cola Company in western Europe. February 7th the company increased its quarterly dividend 23% to $0.16 per share. The dividend is payable March 22, 2012 to shareowners of record on March 9, 2012. The yield based on the new payout is 2.3%.

Owens & Minor, Inc. (OMI) provides distribution, third-party logistics, and other supply-chain management services to healthcare providers and suppliers of medical and surgical products. February 6th the company increased its quarterly dividend 10% to $0.22 per share. The dividend is payable on March 30, 2012, to shareholders of record as of March 15, 2012. The yield based on the new payout is 2.9%.

Home Properties, Inc. (HME), a real estate investment trust (REIT), engages in the ownership, operation, acquisition, development, and rehabilitation of apartment communities in the United States. February 6th the company increased its quarterly dividend 6.5% to $0.66 per share. The dividend is payable on February 28, 2012 to shareholders of record on February 16, 2012. The yield based on the new payout is 4.3%.

R.G. Barry Corporation (DFZ) engages in designing, sourcing, marketing, and distributing consumer products in the retail accessories category primarily in North America. February 6th the company increased its quarterly dividend 14% to $0.08 per share. The dividend is payable March 5, 2012 to common shareholders of record on February 20, 2012. The yield based on the new payout is 2.4%.

Avista Corporation (AVA), an energy company, engages in the generation, transmission, and distribution of energy and other energy-related businesses in the United States and Canada. February 3rd the company increased its quarterly dividend 5.5% to $0.29 per share. The dividend is payable March 15, 2012, to shareholders of record at the close of business on Feb. 24, 2012. The yield based on the new payout is 4.5%.

Simon Property Group, Inc. (SPG) is an independent equity real estate investment trust. It engages in investment, ownership, and management of properties. February 3rd the company increased its quarterly dividend 5.6% to $0.95 per share. The dividend is payable on February 29, 2012 to stockholders of record on February 15, 2012. The yield based on the new payout is 2.8%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends and those expected to in 2012; 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 MMM, OMI in my Dividend Growth Portfolio, AVA in my High-Yield Portfolio. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [MMM] [UPS] [OXY] [TWX] [DPS] [OMI] [AVA] [CCE] [WU] [SPG] [HME] [DBD] [HME] [LLL] [FCX] [SIX] [CHSP] [LO] [OMC] [FNF]

6 High-Yield Financial Services Stocks With Rising Dividends

2012-02-09T02:30:00.000-06:00

Before the 2008 financial meltdown, names like Bank of America (BAC), Citigroup, Inc. (C), U.S. Bancorp (USB) and Wells Fargo & Company (WFC) were held in many dividend growth portfolios. And why not? They paid a good yield and grew their dividend on a regular basis. Now their yields range between 0.5% and 1.7%. There is a lesson to be learned here.

Investors should never over-allocate in one sector and certainty should never stop monitoring their investments. During the 2008-2009 time period many banks were making questionable loans, while investment firms were creating and peddling exotic financial instruments. In effect, were operating under an unsustainable model - it was destined to come tumbling down, and did it ever.

The banks that were able to sustain their dividend during this dark period were usually small and locally managed. They were able to avoid the government's "help" and all the strings that came along with it.

Insurance companies are another prominent member of the Financial Services sector. They operate under the ultimate model. The companies charge premiums to protect you, invest the premiums, earn a return and find ways to minimize what they actually pay you when a claim is filed. Finally, they will raise your rates for filing a claim.

This week, I screened my dividend growth stocks database for Financial Services companies with a yield above 3.5% and those that have increased their dividends for at least 10 consecutive years. The results are presented below:

Community Bank System (CBU)
Yield: 3.6% | Years of Dividend Growth: 18
Community Bank System provides financial services in upstate New York, and in northeastern Pennsylvania as First Liberty Bank & Trust.

Community Trust Bank Corp. (CTBI)
Yield: 3.8% | Years of Dividend Growth: 31
Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky andWest Virginia; and a trust company.

Cincinnati Financial Corp. (CINF)
Yield: 4.8% | Years of Dividend Growth: 51
Cincinnati Financial Corp. is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations.

People's United Financial Inc. (PBCT)
Yield: 5.0% | Years of Dividend Growth: 14
People's United Financial Inc. provides a full range of banking and financial service products to individuals, corporations and municipal customers in the U.S. Northeast.

Mercury General Corp. (MCY)
Yield: 5.4% | Years of Dividend Growth: 24
Mercury General Corp. is an insurance holding company, operating primarily in California, that writes a full line of automobile coverage for all classifications of risk.

Old Republic International (ORI)
Yield: 6.7% | Years of Dividend Growth: 30
Old Republic Intl writes property and liability, mortgage guaranty, title and life, and disability insurance.

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 210+ 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 CINF, CTBI. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [BAC] [C] [USB] [WFC] [ORI] [MCY] [PBCT] [CINF] [CTBI] [CBU]

Lockheed Martin Corp. (LMT) Dividend Stock Analysis

2012-02-08T02:30:00.000-06:00

Linked here is a detailed quantitative analysis of Lockheed Martin Corp. (LMT). Below are some highlights from the above linked analysis:

Company Description: Lockheed Martin Corp. is the world's largest military weapons manufacturer, and is also a significant supplier to NASA and other non-defense government agencies. LMT receives about 93% of its revenues from global defense sales.

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

LMT is trading at a discount to 1.) and 3.) above. Since LMT's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 22.9% discount to its calculated fair value of $109.33. LMT 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%

LMT earned two Stars in this section for 1.) 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. LMT earned a Star for having an acceptable score in at least two of the four Key Metrics measured.

Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (2001-2004, 2002-2005, 2003-2006, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. The company has paid a cash dividend to shareholders every year since 1995 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

LMT earned a Star in this section for its NPV MMA Diff. of the $53,640. This amount is in excess of the $2,600 target I look for in a stock that has increased dividends as long as LMT has. The stock's current yield of 3.85% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: LMT is a member of the S&P 500. The company's peer group includes: Boeing Co. (BA) with a 2.3% yield, Northrop Grumman Corporation (NOC) with a 3.4% yield and United Technologies Corp. (UTX) with a 2.4% yield.

Conclusion: LMT 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 LMT as a 4-Star Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $233.71 before LMT'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 1.39%.

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 8.7%. This dividend growth rate is well below the 17.9% used in this analysis, thus providing a margin of safety. LMT has a risk rating of 2.25 which classifies it as a Medium risk stock.

LMT is the largest defense contractor in the world and dominates next-generation defense platforms. It owns supply contracts for key programs such as the F-35, which assure multiple years of revenue. However, U.S. budgetary concerns and the requirement for the U.S. Department of Defense to reduce spending by $350 billion over 10 years (possibly expanded to $950 billion) could negatively affect LMT's ability to increase its dividend.

I am also concerned with the company's recent increase in its debt to total capital. As a mitigating factor, its net debt is only $2.5 billion when subtracting out the $4.5 billion of cash. Given these concerns, I will not add to my position at this time even though LMT trades below its calculated fair value of $109.33.

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 LMT (0.6% of my Dividend Growth Portfolio) and long in UTX. See a list of all my dividend growth holdings my income holdings here.

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Tags: [LMT] [BA] [NOC] [UTX]

The 2012 Dividend Achievers

2012-02-07T02:30:00.000-06:00

For investors in dividend growth stocks, The Broad Dividend Achievers™ Index is one of the most widely used resources. With 201 stocks on the 2012 list, it is certainty one of the largest lists and contains most stocks listed on other similar lists. In addition, to the mainstream dividend growth stocks, The Broad Dividend Achievers lists many up and coming stocks that could one day find a place in our portfolios.

The Broad Dividend Achievers™ Index is comprised of companies:

1. Incorporated in the United States or its territories
2. Trade on the NYSE, NASDAQ or AMEX
3. Have increased dividends 10 or more consecutive years
4. Have an average daily trading volume $500,000 per day

Companies are weighted based on their market capitalization as of the last trading date in December. No constituent may weight more than 5% of the index on the annual reconstitution date or quarterly rebalance date. The index is reconstituted annually on the last trading date in January.

The 2012 edition of The Broad Dividend Achievers™ was recently released. The increase to 201 companies was made up of these additions and deletions:

Companies Added To The Index

Southern Company (SO) | Yield: 4.2%
Monsanto Company (MON) | Yield: 1.4%
Nike, Inc. (NKE) | Yield: 1.4%
Norfolk Southern Corp. (NSC) | Yield: 2.6%
Magellan Midstream Partners L.P. (MMP) | Yield: 4.8%
W.R. Berkley Corporation (WRB) | Yield: 0.9%
Harris Corporation (HRS) | Yield: 2.7%
Nustar Energy L.P. (NS) | Yield: 7.4%
Royal Gold, Inc. (RGLD) | Yield: 0.8%
Senior Housing Properties Trust (SNH) | Yield: 6.6%
Nu Skin Enterprises, Inc. (NUS) | Yield: 1.3%
Inergy, L.P. (NRGY) | Yield: 15.1%
Delphi Financial Group, Inc. (DFG) | Yield: 1.1%
Valmont Industries, Inc. (VMI) | Yield: 0.7%
Watsco, Inc. (WSO) | Yield: 5.5%
Sanderson Farms, Inc. (SAFM) | Yield: 1.4%
1st Source Corporation (SRCE) | Yield: 2.5%
Tompkins Financial Corporation (TMP) | Yield: 3.5%
Republic Bancorp, Inc. (RBCAA) | Yield: 2.4%
Cass Information Systems, Inc (CASS) | Yield: 1.7%
Arrow Financial Corporation (AROW) | Yield: 3.7%
Connecticut Water Service, Inc. (CTWS) | Yield: 3.0%

Companies Removed From The Index

CenturyLink, Inc. (CTL) | Yield: 7.7%
Getty Realty Corporation (GTY) | Yield: 5.8%
Hudson City Bancorp, Inc. (HCBK) | Yield: 4.8%
Harleysville Group Inc. (HGIC) | Yield: 2.7%
Harsco Corporation (HSC) | Yield: 3.6%
Investors Real Estate Trust (IRET) | Yield: 6.8%
NSTAR Common Stock (NST) | Yield: 2.5%
Shenandoah Telecommunications (SHEN) | Yield: 3.3%
Universal Forest Products, Inc. (UFPI) | Yield: 1.2%
Meridian Bioscience Inc. (VIVO) | Yield: 4.3%

There are some new names on the addition list that I will be looking at in the coming weeks to determine if they are a good fit for my portfolio. Unfortunately, I will be removing several names on the deletion list from my Ideas Page.

Full Disclosure: Long CTL in my Dividind Growth Portfolio and long SO, SNH in my High-Yield Portfolio. No position in the aforementioned securities. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [SO] [MON] [NKE] [NSC] [MMP] [WRB] [HRS] [NS] [RGLD] [SNH] [NUS] [NRGY] [DFG] [VMI] [WSO] [SAFM] [SRCE] [TMP] [RBCAA] [CASS] [AROW] [CTWS] [CTL] [GTY] [HCBK] [HGIC] [HSC] [IRET] [NST] [SHEN] [UFPI] [VIVO]

Stanley Black & Decker Inc. (SWK) Dividend Stock Analysis

2012-02-06T02:30:00.000-06:00

This article originally appeared on The DIV-Net January 30, 2012.

Linked here is a detailed quantitative analysis of Stanley Black & Decker Inc. (SWK). Below are some highlights from the above linked analysis:

Company Description: Stanley Black & Decker Inc. is a diversified global provider of hand tools, power tools and related accessories and systems resulted from the March 2010 merger of StanleyWorks and Black & Decker.

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

SWK is trading at a discount to only 3.) above. Since SWK's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 86.9% premium to its calculated fair value of $38.04. SWK 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%

SWK 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 1877 and has increased its dividend payments for 44 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 $123 is below the $500 target I look for in a stock that has increased dividends as long as SWK has. If SWK grows its dividend at 4.7% per year, it will take 8 years to equal a MMA yielding an estimated 20-year average rate of 3.1%.

Memberships and Peers: SWK is a member of the S&P 500 and a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Danaher Corporation (DHR) with a 0.2% yield, Makita Corp. (MKTAY) with a 0.9% yield and Snap-On Incorporated (SNA) with a 2.6% yield.

Conclusion: SWK 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 SWK as a 2-Star Weak stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $52.81 before SWK's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 44 years of consecutive dividend increases. At that price the stock would yield 3.1%.

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 7.7%. This dividend growth rate is higher than the 4.7% used in this analysis, thus providing no margin of safety. SWK has a risk rating of 1.50 which classifies it as a Low risk stock.

The 2010 merger of Stanley and Black & Decker combined two of the most respected names in the industry. The combined company stands to benefit from significant synergies. When the economy recovers, the company is well positioned to gain market share. The company has a good debt and free cash flow payout positions. However its low relatively low yield and dividend growth rate combine produce a low NPV MMA Differential and a low fair value $38.04. For now, I will stay on the sidelines.

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 SWK (0.0% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Universal HealthRealty Income Trust (UHT) Dividend Stock Analysis
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- Teco Energy, Inc. (TE) Dividend Stock Analysis
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- More Stock Analysis

Tags: [SWK] [DHR] [MKTAY] [SNA]

Weekly Links: February 5, 2012

2012-02-05T02:30:00.000-06:00

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

- The Dividend Guy presented TSX Dividend Yield And Ex-Dividend Date
- Disciplined Approach to Investing presented Stock Buybacks Do Not Benefit Future Stock Performance
- Triage Investing Blog presented Developing a Margin of Safety

Articles from D4L-News:

Are Dividend Stocks Still Worth Buying?
Long favored by risk-averse retirees, dividend-paying stocks have been attracting investors of all stripes lately for their high yields and market-trumping returns. But as their popularity grows, even some advisers are starting to ask: Are dividend payers getting too pricey? Investors poured $31.3 billion into mutual funds and exchange-traded funds that invest in dividend payers last year, nearly five times the amount in 2010, according to researcher Lipper Inc. That rush, however, is making many dividend payers more expensive, say advisers. Historically, dividend stocks trade at lower price-to-earnings ratios, with the expectation that they'll grow less quickly than other stocks. While that's still the case, the gap between payers and non-payers is shrinking. To avoid overpaying for income, advisers say investors should...

Investors Pin Hopes On Dividends
Dividends have gone from being an afterthought to one of the top things on many investors' minds. These periodic payments by companies to their investors are taking an oversized role in the markets. Given the stock market's disappointing performance last year and lackluster targets for 2012, investors are...

Dividend Stocks for Investors Worried About Risk
But at least one investment pro is loath to bail on his blue-chips and dividends, preferring the steady, familiar predictability of McDonald's (MCD) - at an all-time high - to chasing the white hot momentum of a Netflix (NFLX) that's gained about 40% in the past month. "We conclude that, while the Europeans may not like McDonald's, it is one of the last places they can afford to eat," says Matt McCormick, VP and portfolio manager at Bahl & Gaynor. For the record, McCormick has been recommending McDonald's since appearing on Breakout last June. In fact, his four picks McDonald's...

High-Yield Dividend Champs With Yields Up To 11%
Our favorite play is Gel (GEL); it sports a quarterly revenue growth of 44%, a strong quarterly earnings growth rate of 276%, a five-year dividend growth rate of 17.74%, a five-year dividend average of 6.60%, has consecutively increased dividends for eight years in a row, has a positive levered free cash flow rate of $81.6 million, and has increased its dividend from 42.75 cents to 44 cents. It also has a three-year total return of 206% and a five-year total return of 82.8%. As it is MLP, the high payout ratio should not be of concern. We cover this in more detail below...

Dogs of the Dow Are Outperforming the Dow
Dogs of the Dow is an investing strategy that buys and holds equal dollar amounts of the 10 best-yielding dividend stocks of the Dow Jones Industrial Average (INDEX: ^DJI ) . The strategy banks on the idea that blue-chip stocks with high yields are near the bottom of their business cycle and should do much better going forward. Investors in the strategy then would not only get large dividends but also gains in the stocks underlying those dividends. Evidence compiled by Tweedy Browne refutes these falsehoods. Research shows that...

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 (February edition) have been updated and are available at the NEW 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)

24 Stocks Growing Their Cash Dividends

2012-02-03T02:30:00.000-06:00

Dividend growth investing in its classic form focuses on identifying solid companies with a long record of growing their dividends each year; and an expectation that they will continue to do so into the future. The focus is not solely on yield but a combination of yield and dividend growth. Often it is the lower yield, higher growth, security that will provide the best return over time.

Here are several stocks living up to shareholders' expectations by raising their cash dividends:

Sunoco, Inc. (SUN) refines and markets petroleum products, and manufactures chemicals in the United States. February 2nd the company increased its quarterly dividend 33% to $0.20 per share. The dividend is payable March 8, 2012 to shareholders of record at the close of business on February 15, 2012. The yield based on the new payout is 3.4%.

CME Group Inc. (CME) operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. February 2nd the company increased its quarterly dividend 59% to $2.23 per share. The dividend is payable on March 26, 2012, to shareholders of record as of March 9, 2012. The yield based on the new payout is 3.4%.

Bemis Company, Inc. (BMS) manufactures and sells flexible packaging products and pressure sensitive materials. February 2nd the company increased its quarterly dividend 4.2% to $0.25 per share compared to the previous quarterly dividend of 24 cents per share. The cash dividend is payable on March 1, 2012, to shareholders of record at the close of business on February 15, 2012. This marks the 29th consecutive year that the Company has increased its dividend payment. The yield based on the new payout is 3.2%.

Microchip Technology Incorporated (MCHP) engages in the design, development, manufacture, and market of semiconductor products for embedded control applications. February 2nd the company increased its quarterly dividend to $0.349 per share. The dividend is payable on March 6, 2012, to stockholders of record on February 21, 2012. Microchip initiated quarterly cash dividend payments in the third quarter of fiscal year 2003. The yield based on the new payout is 3.7%.

Preferred Apartment Communities, Inc. (APTS) is a Maryland corporation formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. February 2nd the company increased its quarterly dividend 4% to $0.13 per share. The dividend is payable April 16, 2012 to all common stockholders of record as of March 30, 2012. The yield based on the new payout is 8.5%.

Hasbro, Inc. (HAS) engages in the design, manufacture, and marketing of games and toys, and other entertainment offerings worldwide.February 2nd the company increased its quarterly dividend 20% to $0.36 per share. The dividend is payable on May 15, 2012 to shareholders of record at the close of business on May 1, 2012. The yield based on the new payout is 4.1%.

TECO Energy, Inc. (TE) an electric and gas utility company engages in the generation, purchase, transmission, distribution, and sale of electric energy. February 2nd the company increased its quarterly dividend 3.5% to $0.22 per share. The dividend is payable Feb. 28 to shareholders of record as of Feb. 13. The yield based on the new payout is 4.9%.

AvalonBay Communities, Inc. (AVB) engages in the development, redevelopment, acquisition, ownership, and operation of multifamily communities in the United States. February 1st the company increased its quarterly dividend 8.7% to $0.97 per share. The dividend is payable on April 16, 2012 to stockholders of record as of March 30, 2012. The yield based on the new payout is 2.8%.

Tupperware Brands Corporation (TUP) operates as a direct seller of various products across a range of brands and categories through an independent sales force. February 1st the company increased its quarterly dividend 20% to $0.36 per share. The dividend is payable on April 6, 2012 to shareholders of record as of March 20, 2012. The yield based on the new payout is 2.3%.

Pitney Bowes Inc. (PBI) provides mail processing equipment and integrated mail solutions worldwide. February 1st the company raised its quarterly dividend 1.4% to $0.375 per share. The dividend is payable March 12, 2012, to stockholders of record on February 17, 2012. The yield based on the new payout is 7.8%.

Neenah Paper, Inc. (NP) engages in the production and sale of technical products and fine papers worldwide. January 31st the company increased its quarterly dividend 9% to $0.12 per share. The dividend is payable on March 2, 2012 to stockholders of record as of close of business on February 10, 2012. The yield based on the new payout is 2.0%.

Access National Corporation (ANCX) operates as the bank holding company for Access National Bank that provides commercial credit, deposit, and mortgage services. January 31st the company increased its quarterly dividend 25% of $0.05 per share, representing the fourth increase over the last year. The dividend is payable on February 24, 2012 to shareholders of record as of February 13, 2012. The yield based on the new payout is 2.0%.

National Instruments Corporation (NATI) manufactures and supplies measurement and automation products. January 31st the company increased its quarterly 40% to $0.14 per share. The dividend is payable on March 5 to shareholders of record on Feb. 13. The yield based on the new payout is 2.1%.

Avery Dennison Corporation (AVY) engages in the manufacture and sale of pressure-sensitive materials; office and consumer products; and various tickets, tags, labels, and other converted products worldwide. January 31st the company increased its quarterly dividend 8% to $0.27 per share. The dividend is payable March 21, 2012 to shareholders of record on March 7, 2012. The yield based on the new payout is 3.8%.

Limited Brands, Inc. (LTD) operates as a retailer of women's intimate and other apparel, beauty and personal care products, and accessories in the United States and Canada. January 30th the company increased its quarterly dividend 25% to $0.25 per share. The dividend is payable on March 9, 2012, to shareholders of record at the close of business on Feb. 24, 2012. The yield based on the new payout is 2.3%.

Ameristar Casinos, Inc. (ASCA) operates as a gaming and entertainment company in the United States. January 30th the company increased its quarterly dividend 19% to $0.125 per share. The dividend is payable March 15, 2012 to stockholders of record as of Feb. 29, 2012. The yield based on the new payout is 2.4%.

Bryn Mawr Bank Corporation (BMTC) operates as the holding company for The Bryn Mawr Trust Company, which provides various commercial and retail banking services. January 30th the company increased its quarterly dividend 6.7% to $0.16 per share. The dividend is payable March 1, 2012 to shareholders of record as of February 13, 2012. The yield based on the new payout is 3.1%.

PetMed Express, Inc. (PETS), doing business as 1-800-PetMeds, operates a pet pharmacy in the United States. January 30th the company increased its quarterly dividend 20% to $0.15 per share. The dividend is payable February 24, 2012, to shareholders of record at the close of business on February 10, 2012. The yield based on the new payout is 4.8%.

Marathon Oil Corporation (MRO) operates as an international energy company with operations in the United States, Canada, Africa, the Middle East, and Europe. January 27th the company increased its quarterly dividend 13% to $0.17 cents per share. The dividend is payable on March 12, 2012, to stockholders of record on Feb. 16, 2012. The yield based on the new payout is 2.2%.

GATX Corporation (GMT) leases, operates, and manages assets in the rail, marine, and industrial equipment markets. January 27th the company increased its quarterly dividend 3.4% to $0.30 per share. The dividend is payable March 31, 2012, to shareholders of record on March 2, 2012. The yield based on the new payout is 2.8%.

CMS Energy Corporation (CMS) operates as an energy company primarily in Michigan. January 27th the company increased its quarterly dividend 14% to $0.24 per share. The dividend is payable Feb. 29, 2012 to shareholders of record on Feb. 10, 2012. The yield based on the new payout is 4.4%.

SLM Corporation (SLM) originates, services, and collects student loans. January 26th the company increased its quarterly dividend 2.5% to $0.125 per share. The dividend is payable on March 16, to shareholders of record at the close of business on March 2. The yield based on the new payout is 3.3%.

Markwest Energy Partners, L.P. (MWE) engages in the gathering, processing, and transportation of natural gas. The company increased its quarterly distribution 4.1% to $0.76 per unit. The distribution is payable February 14, 2012, to unitholders of record on February 6, 2012. The ex-dividend date is February 2, 2012. The yield based on the new payout is 5.2%.

Chesapeake Midstream Partners, L.P. (CHKM) owns, operates, develops, and acquires natural gas gathering systems and other midstream energy assets in the United States. January 26th the company increased its quarterly distribution 4% to $0.39 per unit. The distribution will be payable on February 14, 2012 to all unitholders of record at the close of business on February 7, 2012, together with the distribution to the general partner. The yield based on the new payout is 5.4%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends and those expected to in 2012; 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 TE. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [MRO] [PBI] [HAS] [TUP] [LTD] [AVY] [BMS] [TE] [PETS] [SUN] [CME] [MCHP] [APTS] [AVB] [NP] [ANCX] [NATI] [ASCA] [BMTC] [GMT] [CMS] [SLM] [MWE] [CHKM]

10 High-Yield S&P 500 Dividend Stocks With Growing Dividends

2012-02-02T02:30:00.000-06:00

For many people the S&P 500 and U.S. Stock Market are synonymous terms. While in reality the U.S. stock market is much larger with public companies numbering in the thousands. The S&P 500 Index is owned and maintained by Standard & Poor's, a division of McGraw-Hill. The index was first published in 1957 and is the second most recognized index in the U.S. behind only the Dow Jones Industrial Average.

Stocks included in the S&P 500 are large publicly companies that trade on either the New York Stock Exchange or the NASDAQ. Most of the stocks are U.S. based companies. However, there are a few companies with headquarters in or incorporated outside of the U.S. For many investors, the S&P 500 is used as a benchmark for their portfolios.

Not all stock in the index pay dividends, but many of the best known dividend growth stocks are part of the index. The dividend Aristocrats is a subset of the S&P 500 and is limited to stocks that have increased their dividend for 25 or more years.

This week week, I screened my dividend growth stocks database for stocks that are members of the S&P 500, have a yield greater than 4% and have 10 or more years of dividend growth. The results are presented below:

Southern Company (SO) is an Atlanta-based energy holding company that is one of the largest producers of electricity in the U.S.
Yield: 4.1% | Years of Increases: 10

Scana Corporation (SCG) is an energy-based holding company that provides electric, natural gas, and telecommunications services.
Yield: 4.3% | Years of Increases: 11

HCP, Inc. (HCP) is an equity-oriented real estate investment trust, based in California, that has direct or joint venture investments in health care-related facilities across the U.S.
Yield: 4.6% | Years of Increases: 11

People's United Financial Inc. (PBCT) -provides a full range of banking and financial service products to individuals, corporations and municipal customers in the U.S. Northeast.
Yield: 5.0% | Years of Increases: 14

Avon Products, Inc. (AVP) is the world's leading direct marketer of cosmetics, toiletries, fashion jewelry and fragrances, with about 6.5 million sales representatives worldwide.
Yield: 5.0% | Years of Increases: 21

AT&T Inc. (T) provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). Plans to acquire T Mobile USA were recently scrapped.
Yield: 5.8% | Years of Increases: 28

Pitney Bowes Inc. (PBI) is the world's largest maker of mailing systems, and also provides production and document management equipment and facilities management services.
Yield: 7.6% | Years of Increases: 29

Consolidated Edison, Inc. (ED) is an electric and gas utility holding company that serves parts of New York, New Jersey and Pennsylvania.
Yield: 4.0% | Years of Increases: 38

Leggett & Platt, Inc. (LEG) makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as diversified products for non-furnishings markets.
Yield: 4.7% | Years of Increases: 39

Cincinnati Financial Corp. (CINF) is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations.
Yield: 4.9% | Years of Increases: 51

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 210+ 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 T, ED, CINF, LEG HCP in my Dividend Growth Portfolio and SO in my High-Yield Portfolio. See a list of all my dividend growth holdings here.

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- Finding The Perfect Dividend Stock

(Photo Credit)

Tags: [SO] [T] [ED] [AVP] [CINF] [LEG] [PBI] [PBCT] [HCP] [SCG]

Leggett & Platt, Inc. (LEG) Dividend Stock Analysis

2012-02-01T02:30:00.000-06:00

Linked here is a detailed quantitative analysis of Leggett & Platt, Inc. (LEG). Below are some highlights from the above linked analysis:

Company Description: Leggett & Platt Inc. makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as diversified products for non-furnishings markets.

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

LEG is trading at a discount to only 3.) above. The stock is trading at a 36.4% premium to its calculated fair value of $16.84. LEG 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%

LEG 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%. LEG 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 1939 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

LEG earned a Star in this section for its NPV MMA Diff. of the $769. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as LEG has. The stock's current yield of 4.7% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: LEG is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Hooker Furniture Corp. (HOFT) with a 3.3% yield, Flexsteel Industries Inc. (FLXS) with a 2.9% yield and Ethan Allen Interiors Inc. (ETH) with a 1.2% yield.

Conclusion: LEG 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 LEG as a 4-Star Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $26.54 before LEG'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 4.1%.

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 0.3%. This dividend growth rate is lower than the 1.9% used in this analysis, thus providing a margin of safety. LEG has a risk rating of 1.50 which classifies it as a Low risk stock.

In spite of being a highly cyclical company, LEG has a long history of profitability and generating strong free cash flow. In addition, its low debt to total capital of 36% provides additional flexibility. With its high yield the stock is appealing.

However, slower than expected recovery in the housing market, lower demand for bedding and furniture components, price concessions and higher raw material prices will challenge the company in the near-term. The stock is trading 36% above my calculated fair value of $16.84. I will continue to wait for a more favorable time to add 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 LEG (1.3% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

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Tags: [LEG] [HOFT] [FLXS] [ETH]

Why Dividends Matter

2012-01-31T02:30:00.000-06:00

It seems that every financial adviser or financial publication is proclaiming that you should own dividend stocks. Each are proclaiming the virtues of dividend stocks from their own perspective.

To that I have two questions:

1. What took you so long?
2. Do you really understand why dividend stocks are such a good long-term investment?

"The beatings will continue until morale improves" is a whimsical statement that I first saw many decades ago. The end result of improved morale is a desirable goal, but obtaining it through beatings is not a path most people would want to take.

In much the same same way many "experts" are now recommending dividend stocks based on this investing makeup. Some are recommending dividend stocks as part of their sector rotation, or as the next hot fad, - stay tuned and they will tell you when to jump out. Others are recommending dividend stocks as substitutes for bonds since yields on fixed income investments have all but dried up.

Both arrived at what I consider to be the correct conclusion, but do they really understand why dividends matter? Below are 9 reasons why dividends matter in all markets:

1. In a troubled market, dividends provide investment stability

While everyone else is panicked about their portfolio's decline, dividend investors see a downturn as an incredible buying opportunity.

2. Unlike earnings, dividends can't be manipulated or faked

From an accounting standpoint, it is relatively easy through fraud and manipulation to make an income statement look quite impressive. There is no faking the cash that shows up in your brokerage account.

3. Dividends provide continuous feedback

As time passes dividend investors see their income steadily grow. You do not have to wait five to ten years to determine if the strategy is working. Each dividend and dividend increase provides the investor with reassurance that the strategy is working.

4. Reinvested dividends provided a significant portion of the historical equity returns

Performance in any given year is driven by capital appreciation, but long-term returns are largely the result of reinvested dividends.

5. Good dividend companies grow their dividends

You expect your employer to give you a raise periodically. Why wouldn't you expect the same from your investments?

6. Spending dividends in retirement, does not harm your principle investment

In addition, a good dividend portfolio can be left to your children and their children.

7. A dividend portfolio is relatively low maintenance

You may not want to spend your retirement managing and worrying about your portfolio.

8. Dividends help identify well-managed companies

Companies that grow their dividend on a regular basis tend to be those in better off financially and are able to sustain earnings growth.

9. Dividend-paying stocks provide a built-in return

Companies that pay a sustainable and growing dividends, are more resilient in down markets. In the up markets they enjoy capital appreciation as earnings grow to support the increasing dividend.

Below are 11 stocks that have consistently paid dividends through depressions, recessions, world wars, and other political and economic upheavals:

Middlesex Water Co. (MSEX)
Yield: 3.9% | Paid Dividends Since: 1912
MSEX primarily provides regulated water utility service in parts of New Jersey and Delaware, as well as operates wastewater systems and conducts municipal contract operations.

H.J. Heinz Company (HNZ)
Yield: 3.7% | Paid Dividends Since: 1911
HNZ produces a wide variety of food products worldwide, primarily condiments, convenience meals and snacks.

MGE Energy Inc. (MGEE)
Yield: 3.3% | Paid Dividends Since: 1909
MGEE is a public utility holding company that owns Madison Gas & Electric, which generates and distributes electricity and distributes natural gas in Wisconsin.

Teco Energy, Inc. (TE)
Yield: 4.6% | Paid Dividends Since: 1900
TE owns Tampa Electric Co., which serves the Tampa Bay region in west central Florida and has significant diversified operations related to its core business.

Avista Corporation (AVA)
Yield: 4.3% | Paid Dividends Since: 1899
AVA generates, transmits and distributes energy as well as engages in energy-related businesses. The company operates in two business segments.

General Mills, Inc. (GIS)
Yield: 3.0% | Paid Dividends Since: 1898
GIS is a major producer of packaged consumer food products, including Big G cereals and Betty Crocker desserts/baking mixes.

Procter & Gamble (PG)
Yield: 3.2% | Paid Dividends Since: 1891
PG is a leading consumer products company the markets household and personal care products in more than 180 countries.

UGI Corporation (UGI)
Yield: 3.8% | Paid Dividends Since: 1895
UGI operates propane distribution, gas and electric utility, energy marketing and related businesses through subsidiaries.

Consolidated Edison, Inc. (ED)
Yield: 4.0% | Paid Dividends Since: 1895
ED is an electric and gas utility holding company that serves parts of New York, New Jersey and Pennsylvania.

NSTAR (NST)
Yield: 3.7% | Paid Dividends Since: 1879
NST is a Boston-based holding company that serves some 1.4 million electric and natural gas customers in Massachusetts, and has agreed to be acquired by Northeast Utilities.

WGL Holdings Inc. (WGL)
Yield: 3.6% | Paid Dividends Since: 1852
WGL provides natural gas service in the Washington, DC, metropolitan area and surrounding regions, including Maryland and Virginia.

Try telling these companies that dividends don't matter. Or more importantly, try telling these companies' shareholders that dividends don't matter. A healthy and wealthy retirement comes from building a secure portfolio, not watching for the next fad.

Full Disclosure: Long PG, ED in my Dividend Growth Portfolio and TE, AVA in my High-Yield Portfolio. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [PG] [GIS] [HNZ] [ED] [MSEX] [MGEE] [TE] [AVA] [UGI] [NST] [WGL]

3M Company (MMM) Dividend Stock Analysis

2012-01-30T02:30:00.000-06:00

This article originally appeared on The DIV-Net January 23, 2012.

Linked here is a detailed quantitative analysis of 3M Company (MMM). Below are some highlights from the above linked analysis:

Company Description: 3M Co. 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.

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

MMM is trading at a discount to only 3.) above. The stock is trading at a 34.4% premium to its calculated fair value of $62.19. MMM 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%

MMM 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 1916 and has increased its dividend payments for 53 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 $115 is below the $500 target I look for in a stock that has increased dividends as long as MMM has. If MMM grows its dividend at 3.3% per year, it will take 6 years to equal a MMA yielding an estimated 20-year average rate of 3.1%.

Memberships and Peers: MMM is a member of the S&P 500 and a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: General Electric Co. (GE) with a 3.6% yield, Raven Industries Inc. (RAVN) with a 1.1% yield and Carlisle Companies Inc. (CSL) with a 1.5% yield.

Conclusion: MMM 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 MMM as a 2-Star Weak stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $61.53 before MMM's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 53 years of consecutive dividend increases. At that price the stock would yield 3.6%.

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 6.4%. This dividend growth rate is higher than the 3.3% used in this analysis, thus providing no margin of safety. MMM has a risk rating of 1.50 which classifies it as a Low risk stock.

MMM is the leader in many of the markets its serves with a culture that thrives on innovation. Its bottom-line focus and low-cost manufacturing have built a moat around its core businesses. The company has enjoyed strong historical earnings, dividend growth and free cash flow. In addition, the company has relatively low debt and a strong balance sheet. MMM’s has demonstrated the ability to generate strong returns on capital and free cash flows, and will likely continue to do so. MMM is a great company with an excellent future, but with a fair value of $62.19, it is not a great time to buy it.

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 MMM (0.4% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Teco Energy, Inc. (TE) Dividend Stock Analysis
- McDonald's Corporation (MCD) Dividend Stock Analysis
- J.M. Smucker Comp. (SJM) Dividend Stock Analysis
- W.W. Grainger, Inc. (GWW) Dividend Stock Analysis
- More Stock Analysis

Tags: [MMM] [GE] [RAVN] [CSL]

Weekly Links: January 29, 2012

2012-01-29T02:30:00.000-06:00

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

- The Dividend Guy presented 4 Top Canadian REITs For 2012
- Compounding Returns presented Financing a Small Business as an Investment

The DIV-Net Featured Articles

Articles from D4L-News:

How Long Will The Dividend Stock Craze Last?
There's no free lunch, as they say, and that holds true in investing. At least most of the time. If there is anything close to a free lunch in investing, it might be the dividend. In 2011, investors embraced the dividend en masse. Stocks that were once unheralded, like Eli Lilly (NYSE:LLY), were acting like some of the most exciting names. Hold on, Eli Lilly? If you're a student of the stock market, you know that Eli Lilly is hardly considered a growth stock. Since the 2008 and 2009 recession, Eli Lilly has hovered around $35 per share, but the approximate 4% dividend has kept investors in a stock that showed little capital appreciation for years. All of that changed in the middle of 2011, when...

Dividend Stocks to Put Money in Your Pocket
Anxiety over the European debt crisis and distrust in the markets drove volatility in global stock markets to dizzying heights in 2011. The intense level of chaos, and record low bond yields, sent investors scrambling for stocks that deliver steady returns in the form of dividends. Dividend stocks have long been regarded as "widow-and-orphan" stocks because they provide steady payouts and tend to fall less than others when times are tough. And when stock prices fall, dividend yields actually rise because they reflect a percentage of a stock's price. Meanwhile, some investors tapped into dividend yields of more than 4% -- more than double the feeble yields of 10-year Treasuries -- on the stocks of utilities, manufacturers, and telecom companies. The problem with going for capital growth is...

It's all about the dividends
Dividends have gone from being an afterthought to one of the top things on many investors' minds. These periodic payments by companies to their investors are taking an oversized role in the markets. Given the stock market's disappointing performance last year and lackluster targets for 2012, investors are happy taking what they see as a safer bet. That craving for dependable, albeit not guaranteed, dividend income could continue, given that interest rates remain low, analysts say. "People are throwing in the towel on the horse race," says Jack Ablin of Harris Private Bank. "They want a dividend program that can...

Best Dividend Challengers to Buy
We have long believed that investing in dividend-paying stocks, especially blue chips with a legacy of increasing their dividend consistently year after year, has always been an attractive and sound idea. Common sense would dictate that if the company is able to increase their dividend every year, then it would logically follow that their earnings must also be increasing every year. Dividends are paid out of earnings and therefore a company that is constantly increasing their dividends is likely to also be constantly increasing its earnings. On the other hand, there are many different levels and rates of growth. We believe that total return is important. We also believe, however, that exceptional total returns can be achieved...

The Safest Dow Dividends
Dividend stocks have realized a resurgence of investor interest the past few years, and with good reason. With the markets continuing their unpredictable and volatile swings, who wouldn't want a little extra guaranteed return? Evidence continues to show that dividend-paying equities are among the best wealth-building vehicles out there. To test each company's dividend safety and quality, I looked at...

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:

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Not a subscriber? [Click Here] for for more information on the benefits of these services, sample reports, pricing and subscription information.

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Introducing The New D4L-Premium Services Website

2012-01-28T02:30:00.000-06:00

I am pleased to introduce an all-new website for D4L-Premium Services subscribers. When D4L-Premium Services first started back in July 2009, it only offered a weekly Dashboard and was very easily integrated into my free websites. As the features and number of services grew (see below for what's currently offered), the integration became somewhat confusing to existing subscribers, and almost impossible for new subscribers.

To solve this problem, the D4L-Premium Services website was introduced. It is a one stop portal to provide subscribes easy access to all the features and available 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 210+ of the best dividend stocks. It consists of:

D4L-Dashboard: An easy to read, color-coded, dashboard that sorts the 210+ stocks by Stars and yield.
Analytical Reports: A detailed analytical report is available for all 210+ stocks tracked.
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Current subscribers can click here to access the new website. 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.

Hundreds of subscribers have found D4L-Premium Services a valuable source of relevant investment information. Don't be left behind, join them today by clicking here.

26 Confident and Secure Companies Boosting Dividends

2012-01-27T02:30:00.000-06:00

Dividend growth investing is a long-term strategy. A growing dividend is a sign that the company is becoming more valuable. Companies that consistently increase dividends tend to have steadily rising share prices and the best way to benefit from this is to buy and hold the stocks. Diversification and a focus on blue-chip stocks provides insurance for the few companies that don't pan out.

Below are several companies that are increasing shareholder wealth by raising their cash dividends:

Peoples Bancorp Inc. (PEBO) operates as a holding company for Peoples Bank, National Association that provides financial products and services. January 26th the company increased its quarterly dividend 10% to $0.11 per share. The dividend is payable February 21, 2012, to shareholders of record on February 6, 2012. The yield based on the new payout is 2.9%.

Washington Banking Company (WBCO) operates as the bank holding company for Whidbey Island Bank that provides community commercial banking services in northwestern Washington. January 26th the company increased its quarterly dividend 20% to $0.06 per share. The dividend is payable on February 22, 2012 to shareholder of record on February 6th. The yield based on the new payout is 2.0%.

Arthur J. Gallagher & Co. (AJG) and its subsidiaries provide insurance brokerage and risk management services to various commercial, industrial, institutional, and governmental organizations. January 26th the company increased its quarterly dividend 3% to $0.34 per share. The dividend is payable on April 13, 2012 to stockholders of record as of March 30, 2012. The yield based on the new payout is 4.1%.

HCP, Inc. (HCP) is a real estate investment trust that invests in properties serving the healthcare industry. January 26th the company increased its quarterly dividend 4.2% to $0.50 per share. The dividend is payable February 22, 2012 to stockholders of record as of the close of business on February 6, 2012. The yield based on the new payout is 4.8%.

Seagate Technology Public Limited Company (STX) designs, manufactures, markets, and sells hard disk drives for enterprise, client compute, and client non-compute market applications worldwide. January 26th the company increased its quarterly dividend 39% to $0.25 per share, an increase of 39%. The dividend is payable on March 1 to shareholders of record on February 15. The yield based on the new payout is 5.1%.

Parker Hannifin Corporation (PH) manufactures fluid power systems, electromechanical controls, and related components worldwide. January 26th the company increased its quarterly dividend 5% to $0.39 per share. The dividend is dividend payable March 2, 2012 to shareholders of record as of February 10, 2012. The yield based on the new payout is 1.9%.

Old National Bancorp (ONB) operates as a holding company for Old National Bank, which provides financial services to individuals and commercial customers primarily in Indiana, eastern and southeastern Illinois, and central and western Kentucky. January 26th the company increased its quarterly dividend 28.6% to $0.09 per share. The dividend is payable March 15, 2012, to shareholders of record on March 1, 2012. The ex-date of the cash dividend is February 28, 2012. The yield based on the new payout is 3.0%.

ALLETE, Inc. (ALE) primarily engages in the generation, transmission, and distribution of coal-fired, hydro, wind, and biomass co-fired power in the United States. January 26th the company increased its quarterly dividend 3.4% to $0.46 per share. The dividend is payable March 1 to common shareholders of record at the close of business February 15, 2012. The yield based on the new payout is 4.4%.

Eaton Corporation (ETN) operates as a power management company worldwide. January 26th the company increased its quarterly dividend 12% to $0.38 per common share. The dividend is payable February 24, 2012 to shareholders of record at the close of business on February 6, 2012. Eaton has paid dividends on its common shares every year since 1923. The yield based on the new payout is 3.1%.

Home BancShares, Inc. (HOMB) operates as a holding company for the Centennial Bank that provides various commercial and retail banking, and related financial products and services. January 25th the company increased its quarterly dividend 85% to $0.10 per share. The dividend is payable March 7, 2012, to shareholders of record February 15, 2012. The yield based on the new payout is 1.5%.

SJW Corp. (SJW) engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water. January 25th the company increased its quarterly dividend 2.9% to $0.1775 per share. The dividend is payable on March 1, 2012 to shareholders of record at the close of business on February 6, 2012. The yield based on the new payout is 3.0%.

RPC, Inc. (RES) provides a range of oilfield services and equipment primarily to independent oil and gas companies engaged in the exploration, production, and development of oil and gas properties. January 25th the company increased its quarterly dividend 20% to $0.12 per share. The dividend is payable March 9, 2012 to common stockholders of record at the close of business on February 10, 2012. The yield based on the new payout is 2.3%.

Ball Corporation (BLL) supplies metal packaging to the beverage, food, and household products industries worldwide. January 25th the company increased its quarterly dividend 43% to $0.10 per share. The dividend is payable March 15, 2012, to shareholders of record on March 1, 2012. The yield based on the new payout is 1.1%.

Energen Corporation (EGN), an energy holding company, engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in the continental United States. January 25th the company increased its quarterly dividend 3.7% to $0.14 per share. The dividend is payable March 1, 2012, to shareholders of record on February 15, 2012. The yield based on the new payout is 1.0%.

National Penn Bancshares, Inc. (NPBC) operates as the bank holding company for National Penn Bank that provides commercial banking products and services to residents and businesses. January 25th the company increased its quarterly dividend to $0.05 per share. The dividend is payable to shareholders of record as of February 4, 2012 on February 17, 2012. The yield based on the new payout is 2.3%.

Applied Industrial Technologies, Inc. (ATI) distributes industrial products for maintenance, repair, and operational needs of machinery and equipment in the United States, Canada, and Mexico. January 25th the company increased its quarterly dividend 11% to $0.21 per share. The dividend is payable on February 29, 2012, to shareholders of record on February 15, 2012. The yield based on the new payout is 2.2%.

Provident Financial Holdings, Inc. (PROV) operates as the holding company for Provident Savings Bank, F.S.B. that provides community banking and mortgage banking services to consumers and small to mid-sized businesses. January 24th the company increased its quarterly dividend 33% to $0.04 per share. Shareholders of the Company's common stock at the close of business on February 15, 2012 will be entitled to receive the cash dividend. The cash dividend will be payable on March 9, 2012. The yield based on the new payout is 1.7%.

Healthcare Services Group, Inc. (HCSG) provides housekeeping, laundry, linen, facility maintenance, and dietary services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. January 24th the company increased its quarterly dividend 0.8% to $0.16125 per common share, payable on March 16, 2012 to shareholders of record at the close of business February 24, 2012. This represents the 35th consecutive regular quarterly cash dividend payment, as well as the 34th consecutive increase since our initiation of regular quarterly cash dividend payments in 2003. The yield based on the new payout is 3.6%.

Rollins, Inc. (ROL) provides pest and termite control services to residential and commercial customers in North America. January 24th the company increased its quarterly divided 14.3% to $0.08 per share. The dividend is payable March 9, 2012 to stockholders of record at the close of business February 10, 2012. This marks the tenth consecutive year the Board has increased its dividend a minimum of 12% or greater. The yield based on the new payout is 1.4%.

Bar Harbor Bankshares (BHB) operates as the holding company for Bar Harbor Bank & Trust that provides various banking products and services to individuals, businesses, not-for-profit organizations and municipalities. January 24th the company increased its quarterly dividend 3.8% to $0.285 per share. The dividend is payable to shareholders of record as of the close of business February 15, 2012 and will be paid on March 15, 2012. The yield based on the new payout is 3.8%.

Norfolk Southern Corporation (NSC) engages in the rail transportation of raw materials, intermediate products, and finished goods primarily in the United States. January 24th the company increased its quarterly dividend 9.3% to $0.47 per share. The increased dividend is payable on March 10, to stockholders of record on Feb. 3. The yield based on the new payout is 2.5%.

Bassett Furniture Industries, Incorporated (BSET) engages in the manufacture, marketing, and retail of branded home furnishings in the United States. January 24th the company increased its quarterly dividend 43% to $0.05 per share. The dividend is payable on March 1, 2012, to shareholders of record at the close of business February 15, 2012. The yield based on the new payout is 2.6%.

Spectra Energy Partners, LP (SEP) operates as an investment arm of Spectra Energy Corp. Spectra Energy Partners, LP, through its subsidiaries, engages in the transportation of natural gas through interstate pipeline systems, and the storage of natural gas. January 23rd the company increased its quarterly distribution 1.1% to $0.47 per unit. This is the 17th consecutive quarter that Spectra Energy Partners has increased its quarterly cash distribution. The cash distribution is payable on February 14, 2012, to unitholders of record at the close of business on February 2, 2012. The yield based on the new payout is 5.6%.

Twin Disc, Incorporated (TWIN) engages in the design, manufacture, and sale of marine and heavy duty off-highway power transmission equipment. January 23rd the company increased its quarterly dividend 12.5% to $0.09 per share. The dividend is payable payable March 1, 2012, to shareholders of record on February 10, 2012. The yield based on the new payout is 1.1%.

Wisconsin Energy Corporation (WEC) engages in the generation, distribution, and sale of electric energy and steam. January 21st the company increased its quarterly dividend 15.4% to $0.30 per share. The dividend is payable March 1, 2012, to stockholders of record on Feb. 14,2012. The yield based on the new payout is 3.5%.

Dominion Resources, Inc. (D) engages in producing and transporting energy in the United States. January 20th the company increased its quarterly dividend 7.1% to $0.5275 cents per share of common stock. Dividends are payable on March 20, 2012, to shareholders of record March 2, 2012. The yield based on the new payout is 4.2%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends and those expected to in 2012; 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 HCP. See a list of all my dividend growth holdings here.

Related Posts
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- 7 Undervalued, Big-Name Stocks To Consider For Your Dividend Portfolio
- 5 Dividend Stocks In Need Of A Market Correction
- My Top And Bottom Performing Dividend Growth Stocks

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Tags: [D] [NSC] [PH] [HCP] [STX] [ATI] [SEP] [PEBO] [WBCO] [AJG] [ONB] [ALE] [ETN] [HOMB] [SJW] [RES] [BLL] [EGN] [NPBC] [PROV] [HCSG] [ROL] [BHB] [BSET] [TWIN] [WEC]

6 Industrial Strength Stocks With Growing Dividends

2012-01-26T02:30:00.000-06:00

Companies in the Industrial Sector 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. The Industrials Sector consists of companies that manufacture products or provide business services. The products are sometimes inputs into another manufacturing process.

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 2.2%, with just 6 stocks yielding over 3%.

The Industrials Sector is one of the largest sectors in my dividend growth database. Of the 214 stocks that I track, it currently is represented by 37 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 (as defined by Morningstar) with a yield above 2.5% and have increased their dividends for at least 30 consecutive years. The results are presented below:

3M Company (MMM)
Yield: 2.6% | Years of Dividend Growth: 53
3M Co. 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. MMM has paid a dividend every year since 1916.

Illinois Tool Works Inc. (ITW)
Yield: 2.8% | Years of Dividend Growth: 48
Illinois Tool Works Inc. is a diversified manufacturer that operates a portfolio of 60 business units that serve the industrial and consumer markets globally. ITW has paid a dividend every year since 1933.

Automatic Data Processing Inc. (ADP)
Yield: 2.8% | Years of Dividend Growth: 36
Automatic Data Processing Inc. is one of the world's largest independent computing services companies, providing a broad range of data processing services. ADP has paid a dividend every year since 1974.

Genuine Parts Company (GPC)
Yield: 2.8% | Years of Dividend Growth: 55
Genuine Parts Co is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. GPC has paid a dividend every year since 1974.

Emerson Electric Co. (EMR)
Yield: 3.2% | Years of Dividend Growth: 56
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world. EMR has paid a dividend every year since 1947.

Diebold, Inc. (DBD)
Yield: 3.5% | Years of Dividend Growth: 58
Diebold, Inc. provides ATMs and other self-service transaction systems and security products to the financial, commercial, government and retail markets. DBD has paid a dividend every year since 1954.

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 200+ 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 EMR, ITW, MMM, ADP, GPC . See a list of all my income holdings here.

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- Dividend Stocks: A Disciplined Approach

(Photo Credit)

Tags: [EMR] [ITW] [MMM] [ADP] [GPC] [DBD]

Digital Realty Trust, Inc. (DLR) Dividend Stock Analysis

2012-01-25T02:30:00.000-06:00

Linked here is a detailed quantitative analysis of Digital Realty Trust, Inc. (DLR). Below are some highlights from the above linked analysis:

Company Description: Digital Realty Trust, Inc., a real estate investment trust (REIT), that owns, acquires, repositions and manages technology-related real estate.

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

DLR is trading at a discount to only 3.) above. The stock is trading at a 7.9% discount to its calculated fair value of $73.94. DLR 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%

DLR 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%. DLR earned a Star for having an acceptable score in at least two of the four Key Metrics measured.

Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (2001-2004, 2002-2005, 2003-2006, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 8 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

DLR earned a Star in this section for its NPV MMA Diff. of the $49,803. This amount is in excess of the $2,700 target I look for in a stock that has increased dividends as long as DLR has. The stock's current yield of 4.% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: The company's peer group includes: Brandywine Realty Trust (BDN) with a 5.8% yield, CoreSite Realty Corporation (COR) with a 3.7% yield and Dupont Fabros Technology, Inc. (DFT) with a 2.0% yield.

Conclusion: DLR 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 DLR as a 4-Star Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $182.03 before DLR's NPV MMA Differential decreased to the $2,700 minimum that I look for in a stock with 8 years of consecutive dividend increases. At that price the stock would yield 1.5%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,700 NPV MMA Differential, the calculated rate is 8.5%. This dividend growth rate is lower than the 17.4% used in this analysis, thus providing a significant margin of safety. DLR has a risk rating of 1.75 which classifies it as a Medoium risk stock.

DLR has found its niche by focusing on the technology side of the real estate market. A portfolio of highly coveted properties and high switching costs will keep DLR generating steady profits over the long haul. In addition, its relatively low free cash payout and debt to total capital leave room for future dividend increases. I will continue to add to my position while DLR is trading below its calculated fair value price of $73.94, and 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 DLR (4.2% of my High-Yield Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Universal HealthRealty Income Trust (UHT) Dividend Stock Analysis
- AFLAC Incorporated (AFL) Dividend Stock Analysis
- Teco Energy, Inc. (TE) Dividend Stock Analysis
- McDonald's Corporation (MCD) Dividend Stock Analysis
- More Stock Analysis

Tags: [DLR] [BDN] [COR] [DFT]

2011 Was A Great Year For Dividend Stocks

2012-01-24T02:30:00.000-06:00

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 210+ 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.

Saturday, I updated my Income Portfolio's performance for the fourth quarter. Building on that, here are my Dividend Growth Portfolio's top and bottom 5 performers for the year through December 31, 2011:

Top Performers

#5. Consolidated Edison, Inc. (ED)
Consolidated Edison, Inc. is an electric and gas utility holding company that serves parts of New York, New Jersey and Pennsylvania. Utilities had a great year in 2011. ED led the the way for me.
Yield: 4.1% | 2011 Total Return: 30.6%

#4. Chevron Corporation (CVX)
Chevron Corporation is a global integrated oil company (formerly ChevronTexaco) that has interests in exploration, production, refining and marketing, and petrochemicals. I've held a position in this stock since December 2008. It has been very kind to me by returning 23.9% in 2011.
Yield: 3.9% | 2011 Total Return: 31.1%

#3. Genuine Parts Company (GPC)
Genuine Parts Co. is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. I often get the question,"Why do you own GPC." Looking at the long-term performance it is easy to see why.
Yield: 2.8% | 2011 Total Return: 34.7%

#2. McDonald's Corporation (MCD)
McDonald's Corporation is the largest fast-food restaurant company in the world, with about 32,900 restaurants in 117 countries. MCD is one of my strongest long-term performers. I am currently over-allocated in it.
Yield: 2.8% | 2011 Total Return: 39.5%

#1. Harleysville Group Inc. (HGIC)
Harleysville Group Inc. underwrites a broad array of personal and commercial coverages. These insurance coverages are marketed primarily in the Eastern and Midwestern United States. In the June review HGIC was my worst performing stock. Funny how a buyout offer can change things fast. I no longer hold this stock. The is an annualized return below is based on a sale in late September.
Yield: 2.7% | 2011 Total Return: 112.9%

Bottom Performers

#5. General Dynamics (GD)
General Dynamics is the world's fifth largest military contractor and also one of the world's biggest makers of corporate jets. Given the financial issues of the U.S. government, all defense contractors have reason to be concerned, but GD has got some very good dividend fundamentals. I may add to my position when the price is weak.
Yield: 2.6% | 2011 Total Return: -3.0%

#4. Microsoft Corporation (MSFT)
Microsoft, the world's largest software company, develops PC software, including the Windows operating system and the Office application suite. I still like MSFT's dividend fundamentals and will continue to add to my position at appropriate times.
Yield: 2.7% | 2011 Total Return: -3.5%

#3. Owens & Minor, Inc. (OMI)
Owens & Minor Inc. is a leading domestic distributor of medical and surgical supplies to the acute care market, a health care supply chain management company, and a direct-to-consumer (DTC) supplier of testing and monitoring supplies for diabetes. Free cash flow is a concern for OMI and its share price performance reflected it.
Yield: 2.7% | 2011 Total Return: -5.1%

#2. CenturyLink Inc. (CTL)
CenturyLink, Inc. provides voice service to 6.5 million customers and Internet service to 2.4 million customers in rural towns as well as larger cities such as Las Vegas. CTL maintained the #2 slot from the last review. Its free cash flow payout has been rising, so I have drastically cut my position in this stock.
Yield: 7.6% | 2011 Total Return: -16.1%

#1. Emerson Electric Co. (EMR)
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world. Share price peaked early and declined hard.
Yield: 3.2% | 2011 Total Return: -20.5%

To avoid short-term anomalies, I excluded stocks that I did not own on January 1, 2011 from the above lists. As noted above, 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 in all the aforementioned securities, except HGIC. See a list of all my income holdings here.

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- These 11 Dividend Stocks Could Make You Wealthy
- 13 Dividend Stocks Headed In The Right Direction

(Photo Credit)

Tags: [MSFT] [MCD] [CVX] [EMR] [GD] [GPC] [HGIC] [OMI] [CTL] [ED]

Verizon Communications Inc. (VZ) Dividend Stock Analysis

2012-01-23T02:30:00.000-06:00

This article originally appeared on The DIV-Net January 16, 2012.

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. offers wireline, wireless and broadband services primarily in the northeastern United States. It acquired MCI in 2006 and has since sold or spun off non-core assets. Alltel was acquired in early 2009.

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 discount to only 3.) above. Since VZ's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 41.1% premium to its calculated fair value of $27.17. 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 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 7 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 $1,151 is below the $2,800 target I look for in a stock that has increased dividends as long as VZ has. The stock's current yield of 5.12% exceeds the 3.1% 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 5.8% yield, CenturyLink, Inc. (CTL) with a 7.8% yield and Sprint Nextel Corp. (S) with a 0.0%.

Conclusion: VZ 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 VZ as a 2-Star Weak stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $26.60 before VZ's NPV MMA Differential decreased to the $2,800 minimum that I look for in a stock with 7 years of consecutive dividend increases. At that price the stock would yield 7.4%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,800 NPV MMA Differential, the calculated rate is 6.3%. This dividend growth rate is higher than the 2.6% 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 leadership position. With the addition of the iPhone, VZ captured roughly all customer growth in 2011. The company's next-generation network deployment and device sales are ramping up. 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 2.6%, 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 (6.0% of my High Yield Portfolio) and long in T and CTL in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

Related Articles:
- J.M. Smucker Comp. (SJM) Dividend Stock Analysis
- W.W. Grainger, Inc. (GWW) Dividend Stock Analysis
- Cincinnati Financial Corp. (CINF) Dividend Stock Analysis
- Procter & Gamble (PG) Dividend Stock Analysis
- More Stock Analysis

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

Weekly Links: January 22, 2012

2012-01-22T02:30:00.000-06:00

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

- Compounding Returns presented Financing a Small Business as an Investment
- The Dividend Guy presented Dividend Stock Power Ranking
- Dividend Monk presented Chevron Corporation: Good Value or High Risk?

The DIV-Net Featured Articles

Articles from D4L-News:

Bulls And Dividends Were The Winners This Year
Think about it, folks. This market was hit with a tremendous amount of bearish news from all over the world. Europe in terrible shape with many of the Eurozone countries tinkering on bankruptcy. Desperate measures are being taken to try to keep things afloat. Day after day we hear of how dire things are overseas. We know that Japan and China are struggling with their economies, and things are slowing quickly. To understand the way people are thinking about the market here, all you have to do is look at...

High-Yielding Portfolio
Stocks deliver their return as a mix of dividends and appreciation. For the average stock, the mix leans a little toward appreciation. But you could lean the other way. Trade away some of the growth for some current income. The list ranges from blue chips like Abbott and Kimberly-Clark to somewhat unsteadier performers like Federated Investors. High-yield stocks make sense as a component of your tax-deferred account after you...

Kenneth Fisher's Top Dividend Stocks
Ken Fisher is CEO and chief investment officer of Fisher Investments. Also, he has been contributing to the “Portfolio Strategy” column at Forbes. Ken is a prestigious investor thanks to his numerous, accurate market calls, often in direct opposition to Wall Street's expectations. Ken has also written three major finance books, including the 1984 Dow Jones best seller, "Super Stocks." Fisher always says: "To add value it is necessary to...

How to Invest In Dividend Stocks
The аrе hundreds of stocks that pay dividends thаt сan be bought and sold on a variety of security exchanges aсroѕs the world. While there аre plenty of аvаіlablе dividend paying stocks to pick from, mаny оf thеm are асtuаllу bad investments. You may аѕk – How саn thіѕ be? A stock thаt can pay out а dividend muѕt bе а good company. That statement could nоt bе further frоm thе truth. That facts arе thе stocks that pay dividends can...

Dividend Stocks from Bill Nygren
Bill Nygren and his partners are value investors, and they invest in companies that they believe trade at a substantial discount to what they consider to be the true business value. They believe that, over time, the price of a stock will rise to reflect the value of the underlying company. Bill Nygren thinks it is important to...

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 (January edition) have been updated and are available at the NEW 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)

2011-Q4 Performance Review

2012-01-21T02:30:00.000-06:00

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 2011-Q4. Below is a high-level summary of the information contained in the PDF:

Asset Allocation		Actual	Target	Diff.

Cash/Fixed Income		24.3%	24.3%	0.0%
Equities-Domestic		47.5%	45.9%	1.6%
Equities-International		23.4%	25.0%	-1.6%
Employer Equity		4.8%	4.8%	0.0%

	Total	100.0%	100.0%

Cash/Fixed Income		24.3%	24.3%	0.0%
Large Cap.		55.4%	54.9%	0.5%
Small/Mid Cap.		15.5%	16.0%	-0.5%
Employer Equity		4.8%	4.8%	0.0%

	Total	100.0%	100.0%

Asset Allocation

Given the unsustainable low interest rates, and the associated future price pressure, I chose to begin lowering my overall bond allocation in the fourth quarter. When rates move up bond prices will be negatively impacted.

At the end of the fourth 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. None of the variances are above my 2.5% tolerance, so I will adjusted them with future purchases.

2011-Q4 Performance

After under-performing in the first quarter, my income portfolio, pocket-change-portfolio and income ETFs portfolio out-performed the S&P and Berkshire Hathaway (BRK.B) year-to-date through December. 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.	'11 YTD
Income Stocks	10.5%	20.9%
Pocket Change (9/08)	17.1%	17.0%
Income ETFs	2.3%	2.8%
S&P 500 (VFINX)	1.9%	2.4%
BRK.B	-3.2%	-4.8%

Income Stocks vs S&P	8.6%	18.5%
Income Stocks vs BRK	13.7%	25.7%

When weighted with results from 2008 forward, all my income investments also 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 Q4/2011 my passive income averaged $1,605/month, up from the $1,355/month in Q3/2011. The increase resulted from higher dividends in all my portfolios, offset by lower interest income from cash investments. 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-April. As always, thanks for reading! See a list of all my dividend growth holdings here.

(Photo: sanja gjenero)

23 Stocks Increasing Shareholder Wealth With Higher Dividends

2012-01-20T02:30:00.000-06:00

Dividend growth investing is a long-term strategy. A growing dividend is a sign that the company is becoming more valuable. Companies that consistently increase dividends tend to have steadily rising share prices and the best way to benefit from this is to buy and hold the stocks. Diversification and a focus on blue-chip stocks provides insurance for the few companies that don't pan out.

Below are several companies that are increasing shareholder wealth by raising their cash dividends:

The Williams Companies, Inc. (WMB) engages in finding, producing, gathering, processing, and transporting natural gas primarily in the United States. January 19th the company increased its quarterly dividend 3.5% to $0.25875 per share. The dividend is payable March 26, 2012, to holders of record at the close of business on March 9. The yield based on the new payout is 3.8%.

Schlumberger Limited (SLB) supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. January 19th the company increased its quarterly dividend 10% to $0.275 per share. The dividend is payable on April 13, 2012 to stockholders of record at the close of business on February 22, 2012. The yield based on the new payout is 1.5%.

IDACORP, Inc. (IDA) Idaho Power Company, engages in the generation, transmission, distribution, sale, and purchase of electric energy in the United States. January 19th the company increased its quarterly dividend 10% to $0.33 per share. The dividend is payable February 29, 2012 to IDACORP shareholders of record on February 6, 2012. The yield based on the new payout is 3.2%.

The Men's Wearhouse, Inc. (MW) operates as a specialty retailer of men's suits in the United States and Canada. January 19th the company increased its quarterly dividend 50% to $0.18 per share. The dividend is payable on March 23, 2012 to shareholders of record at the close of business on March 13, 2012. The yield based on the new payout is 2.1%.

CenterPoint Energy, Inc. (CNP) operates as a public utility holding company in the United States. January 19th the company increased its quarterly dividend 2.5% to $0.2025 per share. The dividend is payable on March 9, 2012, to shareholders of record as of the close of business on February 16, 2012. The yield based on the new payout is 4.4%.

Pall Corporation (PLL) manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. January 19th the company increased its quarterly dividend 20% to $0.21 cents per share. The dividend is payable on February 21, 2012, to shareholders of record on the close of business on February 7, 2012. This is the 8th consecutive year the company has increased its cash dividend. The yield based on the new payout is 1.4%.

Crosstex Energy, L.P. (XTEX) Crosstex Energy Services, L.P. operates as an independent midstream energy company. January 19th the company increased its quarterly distribution 23% to $0.32 per unit. The distribution is payable February 14 to unitholders of record February 1. The yield based on the new payout is 7.5%.

Crosstex Energy, Inc. (XTXI) engages in the gathering, transmission, processing, and marketing of natural gas and natural gas liquids (NGLs) in the United States. January 19th the company increased its quarterly dividend 38% to $0.11 per share. The dividend is payable February 14 to shareholders of record February 1. The yield based on the new payout is 3.1%.

Family Dollar Stores, Inc. (FDO) operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. January 19th the company increased its quarterly dividend 16.7% to $0.21 per share. The dividend is payable Friday, April 13, 2012, to shareholders of record at the close of business on Thursday, March 15, 2012. The yield based on the new payout is 1.5%.

The McGraw-Hill Companies, Inc. (MHP) provides various information services for financial, educational, and business information markets worldwide. January 18th the company increased its quarterly dividend 2% to $0.255 per share. The dividend is payable March 12, 2012, to shareholders of record on February 27, 2012. The yield based on the new payout is 2.2%.

AmeriGas Partners, L.P. (APU) operates as a retail and wholesale distributor of propane gas in the United States. January 18th the company increased its distribution 3% to $0.7625 per unit. The distribution is payable February 17, 2012 to unitholders of record February 10, 2012. The yield based on the new payout is 7.3%.

Vanguard Natural Resources, LLC (VNR) engages in the acquisition and development of oil and natural gas properties in the United States. January 18th the company increased its quarterly distribution 1.7% to $0.5875 per unit. The distribution is payable payable on February 14, 2012 to unitholders of record on February 7, 2012. The yield based on the new payout is 8.1%.

ONEOK, Inc. (OKE) is a diversified energy company that operates as a natural gas distributor primarily in the United States. January 18th the company increased its quarterly 9% to $0.61 per share. The dividend is payable Feb. 14, 2012, to shareholders of record at the close of business Jan. 31, 2012. The yield based on the new payout is 2.7%.

Crestwood Midstream Partners LP (CMLP) engages in gathering, compressing, treating, processing, and transporting natural gas primarily on the Barnett Shale formation of the Fort Worth Basin in north Texas. January 18th the company increased its quarterly distribution to $0.49 per unit. This distribution is payable on February 10, 2012, to unitholders of record on January 31, 2012. The yield based on the new payout is 6.5%.

Alexander's, Inc. (ALX), a real estate investment trust (REIT), engages in leasing, managing, developing, and redeveloping properties in the greater New York City metropolitan area. January 18th the company increased its quarterly dividend 25% to $3.75 per share. The dividend is payable on February 21, 2012 to stockholders of record on January 30, 2012. The yield based on the new payout is 4.1%.

Banco Latinoamericano de Comercio Exterior, S.A. (BLX) provides trade financing to commercial banks, middle-market companies, and corporations primarily in Latin America. January 17th the company increasedits quarterly dividend 25% to $0.25 per share. The dividend is payable February 9, 2012 to the Bank's stockholders as of the January 31, 2012 record date. The yield based on the new payout is 7.3%.

TransMontaigne Partners L.P. (TLP) operates as a terminaling and transportation company. January 17th the company increased its quarterly distribution 3.3% to $0.63 per share. The distribution is payable on February 7, 2012 to unitholders of record on January 31, 2012. The yield based on the new payout is 7.3%.

Mac-Gray Corporation (TUC) operates as a laundry facilities management contractor in the United States. January 17th the company increased its quarterly dividend 10% to $0.0605 per share. The dividend is payable on April 1, 2012, to stockholders of record at the close of business on March 15, 2012. The yield based on the new payout is 1.8%.

Optical Cable Corporation (OCC) engages in the design, development, manufacture, marketing, and sale of fiber optic and copper data communications cabling and connectivity solutions primarily for the enterprise market. January 17th the company increased its quarterly dividend 50% to $0.015 per share. January 13, 2012. The dividend is payable on or about February 15, 2012 to shareholders of record on January 27, 2012. The yield based on the new payout is 1.7%.

Homeowners Choice, Inc. (HCII) provides property and casualty insurance in Florida. January 16th the company increased its quarterly dividend 20% to $0.15 per share. The dividend is payable Mar. 16, 2012 to shareholders of record on the close of business Feb. 17, 2012. The yield based on the new payout is 6.7%.

Omega Healthcare Investors, Inc. (OHI) operates as a real estate investment trust (REIT) in the United States. January 13th the company increased its quarterly dividend 2.5% to $0.41 per share. The common stock dividend is payable February 15, 2012 to common stockholders of record as of the close of business on January 31, 2012. The yield based on the new payout is 8.1%.

Kaiser Aluminum Corporation (KALU) produces and sells semi-fabricated specialty aluminum products primarily in the United States and Canada. January 13th the company increased its quarterly dividend 4.2% to $0.25 per share. The dividend is payable on February 15, 2012 to shareholders of record as of the close of business on January 24, 2012. The yield based on the new payout is 2.0%.

Core Laboratories N.V. (CLB) provides reservoir description, production enhancement, and reservoir management services to the oil and gas industry worldwide. January 13th the company increased its quarterly dividend 12% to $0.28 per share. The dividend is payable on 24 February 2012 to shareholders of record on 24 January 2012. The yield based on the new payout is 1.0%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends and those expected to in 2012; 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 OHI in my High-Yield Portfolio. See a list of all my dividend growth holdings here.

Related Posts
- Finding The Perfect Dividend Stock
- The Greatest Asset For Building Wealth
- 10 Stocks With A Strong Cash To Dividend Coverage
- 15 Dividend Stocks Trading Below Their Calculated Fair Value
- The Most Important Thing To Consider When Selecting A Dividend Stock

(Photo Credit)

Tags: [MHP] [SLB] [FDO] [KALU] [WMB] [IDA] [MW] [CNP] [PLL] [XTEX] [XTXI] [APU] [VNR] [OKE] [CMLP] [ALX] [BLX] [TLP] [TUC] [OCC] [HCII] [OHI] [CLB]

5 High-Yield REITs With Growing Dividends

2012-01-19T02:30:00.000-06:00

Have you ever looked at your pay stub, sighed, and wished you didn't have to pay taxes? After the government gets a hold of out paycheck, what's left seems so small compared to the pretax annual salary quoted to us by our employers. The good news is some don't have to pay taxes, and it is legal. Consider this...

Way back in the 1960's the U.S. Congress created Real Estate Investment Trusts (REITs) as a way to make investing in large-scale, income-producing real estate accessible to all investors.

To qualify as a REIT, the trust must comply with IRS rules. These rules include:

1. Distribute annually 90%+ of its taxable income as dividends
2. Invest 75%+ of its total assets in real estate and
3. Derive 75%+ of gross income from real estate

So what does the trust get in return for doing all this? It doesn't have to pay income taxes. The 90% distribution requirement along with no corporate income taxes are among the reasons REITs yields are often above average.

However, it is important to note that because REITs pay no income tax, they are not eligible for the special treatment as a "qualified dividends", which are normally taxed at 15%. When comparing REIT yields to investments with qualified dividends, you must always look at them on an after-tax basis.

This week week, I screened my dividend growth stocks database for REITs with a yield at or above 5% and have increased their dividends for at least 10 consecutive years. The results are presented below:

National Health Investors (NHI)
Yield: 5.8% | Years of Dividend Growth: 11
National Health Investors is a real estate investment trust that invests in income-producing health care properties primarily in the long-term care industry. The company has paid a cash dividend to shareholders every year since 2002.

Urstadt Biddle Properties (UBA)
Yield: 5.6% | Years of Dividend Growth: 17
Urstadt Biddle Properties is a real estate investment trust that acquires, owns and manages commercial real estate properties primarily in the northeastern United States. The company has paid a cash dividend to shareholders every year since 1999.

National Retail Properties, Inc. (NNN)
Yield: 5.8% | Years of Dividend Growth: 20
National Retail Properties, Inc. is an equity real estate investment trust that invests in high-quality, freestanding retail properties subject to long-term net leases with major retail tenants. The company has paid a cash dividend to shareholders every year since 1985.

Universal Health Realty Income Trust (UHT)
Yield: 6.3% | Years of Dividend Growth: 25
Universal Health Realty Income Trust is a real estate investment trust (REIT) that invests in healthcare and human service related facilities. The company has paid a cash dividend to shareholders every year since 1987.

Senior Housing Properties Trust (SNH)
Yield: 6.9% | Years of Dividend Growth: 10
Senior Housing Properties Trust, a real estate investment trust (REIT), primarily invests in senior housing properties. The company has paid a cash dividend to shareholders every year since 2000.

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 210+ 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 SNH, UBA, NHI in my High-Yield Portfolio and UHT, NNN in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

Related Posts
- 5 Higher-Yielding Healthcare Stocks With Increasing Dividends
- 7 High Quality, Low Beta Dividend Stocks
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- How To Manage Your Dividend Portfolio In A Downturn
- The Current Financial Situation Should Concern Us All

(Photo Credit)

Tags: [SNH] [UHT] [NNN] [UBA] [NHI]

Universal HealthRealty Income Trust (UHT) Dividend Stock Analysis

2012-01-18T02:30:00.000-06:00

Linked here is a detailed quantitative analysis of Universal HealthRealty Income Trust (UHT). Below are some highlights from the above linked analysis:

Company Description: Universal Health Realty Income Trust is a real estate investment trust (REIT) that invests in healthcare and human service related facilities.

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

UHT is trading at a premium to all four valuations above. The stock is trading at a 36.3% premium to its calculated fair value of $28.61. UHT 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%

UHT 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%. UHT 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 1987 and has increased its dividend payments for 25 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

UHT earned a Star in this section for its NPV MMA Diff. of the $1,124. This amount is in excess of the $1,000 target I look for in a stock that has increased dividends as long as UHT has. The stock's current yield of 6.22% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: UHT is a member of the Broad Dividend Achievers™ Index. The company's peer group includes: Hersha Hospitality Trust (HT) with a 4.8% yield, Cogdell Spencer Inc. (CSA) with a 9.4% yield and LTC Properties Inc. (LTC) with a 5.5% yield.

Conclusion: UHT 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 UHT as a 3-Star Hold stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $40.83 before UHT's NPV MMA Differential decreased to the $1,000 minimum that I look for in a stock with 25 years of consecutive dividend increases. At that price the stock would yield 5.9%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,000 NPV MMA Differential, the calculated rate is -0.1%. This dividend growth rate is lower than the 0.4% used in this analysis, thus providing a margin of safety. UHT has a risk rating of 2.25 which classifies it as a Medium risk stock.

UHT's property portfolio includes hospitals, medical office buildings, and child-care centers with mare than half of the firm's square footage located in Arizona, Nevada, and Texas. At 3 Stars UHT is the highest ranked REIT that I hold in my Dividend Growth Portfolio. It's dividend fundamentals, including debt to total capital of 44% are good.

As a REIT, its free cash flow payout is high due to legal requirements of the structure. However, the company had no negative free cash flows over the last 10 years, which is highly unusual for a REIT. I would consider adding to my position when the stock is trading closer to my $28.61 calculated fair value, and 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 UHT (2.9% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

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Tags: [UHT] [HT] [CSA] [LTC]