Dividend Growth Stocks

3 Dividend Stocks Focusing On Their Shareholders

2012-06-01T02:30:00.000-05:00

(Photo Credit)

Tags: [EE] [EPIQ] [PPS]

Lowe's Companies, Inc. (LOW) Dividend Stock Analysis

2012-05-31T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Lowe's Companies, Inc. (LOW). Below are some highlights from the above linked analysis:

Company Description: Lowe's Companies, Inc. sells retail building materials and supplies, lumber, hardware and appliances through more than 1,700 stores in the U.S. and Canada.

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

LOW is trading at a premium to all four valuations above. The stock is trading at a slight discount to its calculated fair value of $27.6. LOW 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%

LOW 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%. LOW 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 (2003-2006, 2004-2007, 2005-2008, 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 1961 and has increased its dividend payments for 50 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

LOW earned a Star in this section for its NPV MMA Diff. of the $3,048. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as LOW has. If LOW grows its dividend at 15.0% per year, it will take 4 years to equal a MMA yielding an estimated 20-year average rate of 3.1%. LOW earned a check for the Key Metric 'Years to >MMA' since its 4 years is less than the 5 year target.

Memberships and Peers: LOW is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: The Home Depot, Inc. (HD) with a 2.3% yield, KingFisher plc (KGFHY.PK) with a 0.0% yield and Rona Inc. (RON.TO) with a 0.0% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $54.13 before LOW's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 50 years of consecutive dividend increases. At that price the stock would yield 1.0%.

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 8.7%. This dividend growth rate is well below the 15.0% used in this analysis, thus providing a significant margin of safety. LOW has a risk rating of 1.00 which classifies it as a Low risk stock.

As the second-largest home-improvement retailer in the world, LOW enjoys tremendous purchasing power enabling it to provide low prices to its customers. The company is well-managed with a highly automated distribution network. LOW's largest competitor, Home Depot (HD), is playing catch up by aggressively restructuring its distribution network to improve efficiency.

Its strong balance sheet, including a relatively low debt level and impressive free cash flows, has carried LOW through the downturn. The stock is trading below my $27.60 calculated fair value. However, with a yield just over 2%, the stock does not meet my minimum threshold, so I will remain on the sidelines for now.

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

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

Related Articles:
- Monsanto Co. (MON) Dividend Stock Analysis
- Pepsico, Inc. (PEP) Dividend Stock Analysis
- Hormel Foods Corp. (HRL) Dividend Stock Analysis
- Johnson & Johnson (JNJ) Dividend Stock Analysis
- More Stock Analysis

Tags: [LOW] [HD] [KGFHY.PK] [RON.TO]

Wealth is a Journey, Dividend Stocks Can Take You There

2012-05-29T02:30:00.000-05:00

Fad diets and fad investing plans rarely work. They are primarily designed to separate you from your money and make the seller wealthy. Real wealth is built with sweat equity and a sound financial plan. For most people fortunate enough to be born in the U.S., or any other industrialized country, they have access to the two main ingredients to achieve financial success: 1. Opportunity and 2. Time.

Unfortunately, very few people are able to take advantage of the situation enough to even build a secure retirement. The formula to building wealth is rather simple - spend less than you earn and invest the difference. Implementation is where many people come up short. With the right focus and some positive feedback, building wealth can be much easier than shedding the spare tire around your mid-section. Here's how to do it...

Have A Plan

Many people are putting money into various retirement vehicles, but they haven’t taken the time to envision how it is all going to come together and ultimately if it will be enough. We often will spend enormous amounts of time planning every detail of our vacation, but I have no idea what our estimated income or expenses will be when we retire.

As the old adage goes, ‘Everyone has a plan – failing to plan is planning to fail.’ Retirement planning does not have to be complicated, but not doing it will complicate your retirement. To help you start the planning process, take a look these FREE retirement calculators (Retirement-Calculator.xls [Excel] or Retirement-Calculator.ods [Libre/Open Office]).

Use Time To Your Advantage

Time is your most valuable wealth building asset. Everyone is born with it. Few realize its importance until they lose most of it. The asset is so valuable it can’t be bought. As a value/dividend investor, I have learned that time can cure many mistakes and provide enormous investment leverage.

When you are young time is your friend. It allows to recover from mistakes. It educates you and provides you with valuable experiences. However, time is a double-edged sword that can also work against you. It is easy to say, 'I will start investing tomorrow - I have plenty of time.' Time can also create a false sense of urgency -' I held this stock for over a year and its price has gone nowhere.' Use time to your advantage start young and be patient.

Dividend Stocks To Help Grow Your Wealth

A long-term buy-and-hold investing approach focusing on quality dividend growth stocks has provided the means for many investors to enjoy a comfortable retirement. If you start early enough, you will go beyond a comfortable retirement into the realm of building long-term wealth. For starters, you might consider these dividend stocks that have been rewarding their investors with growing dividends for 40 or more consecutive years, all with a yield greater than 3%:

PepsiCo, Inc. (PEP) is a major international producer of branded beverage and snack food products. PEP 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 has paid a cash dividend to shareholders every year since 1952 and has increased its dividend payments for 40 consecutive years. Yield: 3.2%

Genuine Parts Co. (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. GPC 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 has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 56 consecutive years. Yield: 3.2%

The Procter & Gamble Company (PG) is a leading consumer products company the markets household and personal care products in more than 180 countries. PG is a member of the S&P 500, a Dividend Aristocrat, member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 55 consecutive years. Yield: 3.6%

Emerson Electric Co. (EMR) designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world. JNJ is a member of the S&P 500, a Dividend Aristocrat, member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 56 consecutive years. Yield: 3.4%

Johnson & Johnson (JNJ) is a leader in the pharmaceutical, medical device and consumer products industries. JNJ 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 has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 50 consecutive years. Yield: 3.9%

Conclusion

If losing weight and building wealth were easy, there wouldn't be people wanting to sell you the secret. The first step toward success is deciding to take responsibility for our future. With a little planning, effort and the right dividend growth stocks, we can be well on our way to creating long-term wealth and building a secure retirement.

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

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- Holding Bonds Could Push Your Portfolio Into The High Risk Category
- Love People, Use Dividend Stocks
- The 2012 Dividend Achievers
- Why Dividends Matter
- 2011 Was A Great Year For Dividend Stocks

(Photo Credit)

Tags: [PEP] [GPC] [PG] [EMR] [JNJ]

Intel Corporation (INTC) Dividend Stock Analysis

2012-05-28T02:30:00.000-05:00

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

Company Description: Intel Corporation is the world's largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products.

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

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

INTC is trading at a premium to all four valuations above. The stock is trading at a slight discount to its calculated fair value of $28.30. INTC 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%

INTC 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 1992 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

INTC earned a Star in this section for its NPV MMA Diff. of the $3,107. This amount is in excess of the $2,600 target I look for in a stock that has increased dividends as long as INTC has. The stock's current yield of 3.15% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: INTC is a member of the S&P 500. The company's peer group includes: Advanced Micro Devices, Inc. (AMD) with a 0.0% yield, Texas Instruments Inc. (TXN) with a 2.2% yield and STMicroelectronics NV (STM) with a 6.5% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $29.71 before INTC's NPV MMA Differential decreased to the $2,600 minimum that I look for in a stock with 9 years of consecutive dividend increases. At that price the stock would yield 2.9%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,600 NPV MMA Differential, the calculated rate is 10.6%. This dividend growth rate is lower than the 11.3% used in this analysis, thus providing a margin of safety. INTC has a risk rating of 1.50 which classifies it as a Low risk stock.

INTC’s results are tied to the cyclical nature of the semiconductor industry and demand trends for personal computers. PC growth in 2012 is expected to slow, but this will be offset to some extent by the introduction of new products in the marketplace (servers, ultra books, mobile and 22nm). Some observers have speculated that INTC will have trouble competing against the design firm ARM ARMH.

However, the company is in the best competitive position within the the semiconductor industry and its large size provides scale advantage over smaller rivals. INTC has a strong balance sheet including low debt levels compared to peers and generates substantial free cash flow. I will continue share accumulation when INTC is trading below my calculated fair value of $28.30 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 INTC (3.8% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Meredith Corp. (MDP) Dividend Stock Analysis
- Coca-Cola Company (KO) Dividend Stock Analysis
- Becton, Dickinson and Co. (BDX) Dividend Stock Analysis
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis
- More Stock Analysis

Tags: [INTC] [AMD] [TXN] [STM]

Weekly Links: May 27, 2012

2012-05-27T02:30:00.000-05:00

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

Carnival of Personal Finance published: Warning Signs of an Imminent Dividend Cut

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

- Dividend Monk presented 5 Reliable Dividend Payers Boosting Payouts
- The Dividend Guy presented How Dividend Aristocrats Have Done Over The Past 5 Years?
- Sigma Swan presented Disney Gets Revenge

The DIV-Net Featured Articles

Articles from D4L-News:

Simon Property Up 72% In Two Years
Simon Property Group (SPG) continues to deliver better-than-expected results on solid rent growth and improving occupancy rates. Management recently raised its guidance for 2012, prompting analysts to revise their estimates higher. Simon Property Group is the largest real estate company in the world. It owns or has an interest in 337 retail real estate properties in North America and Asia comprising 244 million square feet. The REIT is headquartered in Indianapolis, Indiana and has a market cap of $47 billion. Given Simon Property Group’s strong first quarter results and management’s outlook for the remainder of 2012...

The Risk of Chasing High Dividend Yields
What’s the easiest way to find a stock with a 10% dividend yield? Find a stock yielding 5% and watch its price get cut in half. I say this mostly in jest, but this is precisely what happened to investors in RadioShack (RSH), the iconic electronics and gadgets chain still found in most American shopping malls. At time of writing, RadioShack yields 9.8%, and this is after the company already slashed its dividend. This brings me to the point of this article: an investor should never...

How To Increase Retirement Income
Traditional investments for retirement accounts have emphasized investment grade bonds with a high degree of safety. But low interest rates from the Federal Reserve have forced investment thinking to change for retirement accounts. Treasury rates are at or near record lows, not far above zero. Investment grade bond yields are 2-5%. Today, IBM (IBM) announced that it expects to borrow $1.5 billion worth of 3 year bonds, costing about 0.85% annually and 7 year debt at an annual cost of 1.9%. In addition, when bonds mature, principal is reinvested in new bonds, which could have even lower yields. IBM will use some of the proceeds to pay off debts with higher costs. A better way to increase income in retirement accounts is...

Dividend Stocks That Are Rising In This Market
When stocks go south, it's useful to see what's going north. An investor can get an idea of what's working under tough circumstances and perhaps get a few names worth further research. IBD did a screen of S&P 100 stocks that rose since the May 2 close. The general market came under pressure May 3 and shifted to correction the day after. The S&P 100 index is comprised of established companies, often large caps. This isn't a bad place to look for dividend stocks. Only seven stocks in the S&P 100 have gained ground during the market decline. Five pay dividends...

Morgan Stanley's Favorite Dividend Stocks
Morgan Stanley's equity strategy team led by Adam Parker just published their list of their five favorite sustainable dividend yield stocks based on their "quantamental" model. This model blends both quantitative and fundamental analysis. Parker's team screened 1,500 U.S. stocks to come up with this list. Here they are...

Click Here More Dividend News

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

D4L-Premium Services Updated:

The D4L-Dashboard, Analytical Reports, D4L-Data, and The D4L-Newsletter (May edition) have been updated and are available at the D4L-Premium Services web site at: [Click Here]

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

(Photo: Sachin Ghodke)

April 2012 Pocket Change Portfolio Performance

2012-05-26T02:30:00.000-05:00

The Pocket Change Portfolio (PCP) was first introduced on September 13, 2008 as a real money dividend income portfolio funded by the "pocket change" earned from my various online endeavors. Each month I report on the portfolio's progress and update its holdings.

Dividends Received

Total dividends received during the month were $626.42, consisting of:

- $21.33 Automatic Data Processing Inc. (ADP)
- $86.94 Cincinnati Financial Corp. (CINF)
- $80.60 Community Trust Bank Corp. (CTBI)
- $68.31 Genuine Parts Co. (GPC)
- $48.96 Illinois Tool Works Inc. (ITW)
- $51.80 Kimberly-Clark Corporation (KMB)
- $33.66 The Coca-Cola Company (KO)
- $46.48 Leggett & Platt Inc. (LEG)
- $50.44 Medtronic, Inc. (MDT)
- $49.80 Piedmont Natural Gas (PNY)
- $20.52 Sysco Corp. (SYY)
- $67.58 Wal-Mart Stores, Inc. (WMT)

Annualized Dividend Income

Including new purchases and dividend increases, my annual PCP dividend income is now $7,368.78 at the current dividend rates. This is up $305.50 from last month's $7,063.28 amount. The PCP has never experienced a monthly decline in annualized dividend income.

Portfolio Returns

- Year-to-date: 1.56%
- Life-to-date: 13.71% (annualized)

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

Related Posts
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- Bonds Look Morbid When Compared To These Dividend Stocks

(Photo: Arcelia Vanasse)

Tags: [ADP] [CINF] [CTBI] [GPC] [ITW] [KMB] [KO] [LEG] [MDT] [PNY] [SYY] [WMT]

Heinz Increases Dividend 7.3%, And These 5 Other Stocks Raised Dividends

2012-05-25T02:30:00.000-05:00

(Photo Credit)

Tags: [HNZ] [CATO] [POR] [VIA] [SPAN] [HPQ]

Monsanto Co. (MON) Dividend Stock Analysis

2012-05-24T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Monsanto Co. (MON). Below are some highlights from the above linked analysis:

Company Description: Monsanto Co. is a global provider of agricultural products and integrated solutions for farmers.

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

MON is trading at a discount to 1.) and 3.) above. The stock is trading at a 17.2% discount to its calculated fair value of $84.37. MON 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%

MON 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%. The stock also 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 (2002-2005, 2003-2006, 2004-2007, 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 2001 and has increased its dividend payments for 10 consecutive years.

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

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

MON earned a Star in this section for its NPV MMA Diff. of the $6,303. This amount is in excess of the $2,500 target I look for in a stock that has increased dividends as long as MON has. If MON grows its dividend at 16.7% per year, it will take 3 years to equal a MMA yielding an estimated 20-year average rate of 3.1%. MON earned a check for the Key Metric 'Years to >MMA' since its 3 years is less than the 5 year target.

Memberships and Peers: MON is a member of the S&P 500 a member of the Broad Dividend Achievers™ Index. The company's peer group includes: The Mosaic Company (MOS) with a 1.1% yield, Potash Corp. (POT) with a 1.4% yield and Syngenta AG (SYT) with a 2.3% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $100.68 before MON's NPV MMA Differential decreased to the $2,500 minimum that I look for in a stock with 10 years of consecutive dividend increases. At that price the stock would yield 1.6%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,500 NPV MMA Differential, the calculated rate is 13.4%. This dividend growth rate is lower than the 16.7% used in this analysis, thus providing a significant margin of safety. MON has a risk rating of 1.75 which classifies it as a Medium risk stock.

In recent years, missteps and misfortune that have plagued MON including an overly aggressive pricing strategy for the firm's latest technology which led to weak results and price cuts. In addition, the federal government is looking at MON's business, for antitrust violations.

However, on the positive side, the company owns a promising pipeline of seed products. MON is well positioned to quickly turn things around with the introduction of next-generation seeds and increased penetration of international markets like South America.

With low debt and a low free cash flow payout ratio, MONs dividend fundamentals are desirable. The stock is trading well below my calculated fair value of $84.37, but with a yield of 2.3%, it is currently not a serious contender for any of my income portfolios.

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

Related Articles:
- Hormel Foods Corp. (HRL) Dividend Stock Analysis
- Johnson & Johnson (JNJ) Dividend Stock Analysis
- Meredith Corp. (MDP) Dividend Stock Analysis
- Coca-Cola Company (KO) Dividend Stock Analysis
- More Stock Analysis

Tags: [MON] [MOS] [POT] [SYT]

5 Higher-Yielding, Income Growing Tech Stocks

2012-05-22T02:30:00.000-05:00

When you hear the names Cisco (CSCO), Oracle (ORCL), Apple (AAPL), Microsoft (MSFT) and Intel (INTC), "dividend stocks" is probably not the first thought to enter your mind. It wasn't that long ago that tech companies simply didn't pay dividends. Every penny earned was plowed back into the business. The entire focus was on growth, and investors were looking for capital gains.

Long-considered the domain of momentum or growth investors, many tech stocks have matured and begun paying a reasonable dividend. Granted, the tech sector hasn't garnered the same following from income investors as traditional higher-yielding sectors such as consumer defensive, healthcare and financial services. However, there are several valid tech options to consider that will pay us a growing income stream while diversifying our portfolios.

This week week, I screened my dividend growth stocks database for Technology companies with a yield at or above 2.5% and that have increased their dividends for at least 9 consecutive years. The results are presented below:

Microsoft Corporation (MSFT) the world's largest software company, develops PC software, including the Windows operating system and the Office application suite. The company has paid a cash dividend to shareholders every year since 2003 and has increased its dividend payments for 9 consecutive years. Yield: 2.7%

Intel Corporation (INTC) is the world's largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products. The company has paid a cash dividend to shareholders every year since 1992 and has increased its dividend payments for 9 consecutive years. Yield: 3.2%

Linear Technology Corp. (LLTC) manufactures high-performance linear integrated circuits. The company has paid a cash dividend to shareholders every year since 1992 and has increased its dividend payments for 19 consecutive years. Yield: 3.4%

Harris Corporation (HRS) focuses on communications equipment for voice, data and video applications for commercial and governmental customers. The company has paid a cash dividend to shareholders every year since 1941 and has increased its dividend payments for 11 consecutive years. Yield: 3.4%

Watsco, Inc. (WSO)is the largest U.S. distributor of air-conditioning, heating and refrigeration equipment, and related products. The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 11 consecutive years. Yield: 3.6%

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 30 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 MSFT, INTC. See a list of all my dividend growth holdings here.

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- Are You Patient Enough To Be Wealthy? These 12 Dividend Stocks Will Help You Wait
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(Photo Credit)

Tags: [MSFT] [INTC] [LLTC] [WSO] [HRS]

Pepsico, Inc. (PEP) Dividend Stock Analysis

2012-05-21T02:30:00.000-05:00

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

Company Description: PepsiCo, Inc. is a major international producer of branded beverage and snack food products.

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

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

PEP is trading at a discount to only 3.) above. Since PEP's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a slight premium to its calculated fair value of $62.86. PEP 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%

PEP earned one Star in this section for 3.) above and 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 1952 and has increased its dividend payments for 40 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

PEP earned a Star in this section for its NPV MMA Diff. of the $628. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as PEP has. The stock's current yield of 3.23% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: PEP is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: The Coca-Cola Company (KO) with a 2.6% yield, Dr Pepper Snapple Group, Inc. (DPS) with a 3.3% yield and Fomento Econ (FMX) with a 1.7% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $70.90 before PEP's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 40 years of consecutive dividend increases. At that price the stock would yield 3.0%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 4.3%. This dividend growth rate is below the 5.1% used in this analysis, thus providing a margin of safety. PEP has a risk rating of 1.25 which classifies it as a Low risk stock.

PEP enjoys stable end markets, predictible cash flows and leading global market positions. With soft drink consumption declining is the U.S., PEP has turned to international markets. The company's diverse portfolio can mitigate the impact of poor conditions in any one of its markets. PEP's direct store delivery system allows it to leverage its impressive portfolio of brands.

My concerns are PEP's debt as a percent of total capital and its free cash flow payout. Both have grown since I last reviewed PEP. Debt as a percent of total capital grew from 53% in September 2011 to its current 55%, while free cash flow payout grew from 65% to 71% over the same periods. Each of these are outside of my acceptable level. In addition, PEP is trading above my calculated fair value of $62.86, so I will not add to my position bit will continue to monitor the stock.

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 PEP (1.7% of my Dividend Growth Portfolio) and long in KO. See a list of all my dividend growth holdings here.

Related Articles:
- Becton, Dickinson and Co. (BDX) Dividend Stock Analysis
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis
- Teco Energy, Inc.(TE) Dividend Stock Analysis
- Genuine Parts Company (GPC) Dividend Stock Analysis
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Tags: [PEP] [KO] [DPS] [FMX]

Weekly Links: May 20, 2012

2012-05-20T02:30:00.000-05:00

Carnival of Personal Finance published: 7 Higher-Yielding Consumer Stocks To Build Your Yield

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

- The Dividend Guy presented What I Would Do With $10,000
- Dividend Mantra presented Early Retirement Isn't For Everyone
- Dividend Monk presented Five of the Strongest Companies Raising Dividends

Articles from D4L-News:

The Safest and Best Yielding Dividend Stocks
Stocks with low beta ratios are less volatile than the market. If they pay a good yield, could there a better investment? I made a screen of the best yielding large capitalized stocks (over USD10 billion) with a beta ratio of less than 0.5. The ratio summarizes all stocks with a share price performance that represents not more than the half performance of the market. Exactly 45 companies fulfilled these criteria but only 18 have a yield of more than 4%. Here are my favorite stocks...

Dividend Stocks For All Market Cycles
Fund manager and advisor Dan Genter looks for stocks with high dividends to help investors get through various market conditions. He tells MoneyShow.com about some of his favorites, and discusses his take on earnings season. The philosophy itself is to...

Dividend Stocks You Can't Ignore
2011, a year when the broad market effectively closed flat on the year. That means that dividend companies could have meant the difference between making gains last year or ending things in the red. That's a pretty strong reason not to ignore dividend payers right now. The study I mentioned isn't the first time we've seen evidence that dividends go hand in hand with higher capital gains. In fact, that's been the case historically: Over the last 36 years, dividend stocks have...

The Best Investment That One Can Make TODAY
I was talking with a friend the other day and he asked me a very interesting question: what is the best investment that I can make TODAY? I’m not going to explain the whole context around this discussion but I wanted to mention these thoughts on this blog. Let’s say you have a specific amount (for this article, let’s put it at $10,000) that you can use to make more money. You don’t need this money for a while and are looking for the best investment possible. What would you do...

Attractive 12% Plus Yielding Dividend Stocks
Investors can obtain 15% yields via mortgage real estate investment trusts (mREITs). The key is to focus on the management, review past performances, and identify which mREITs are likely to outperform the sector. I recommend focusing upon book value per share. Secondly, I have an extreme bias 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 (May 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)

Clorox, Northrop Grumman, Tiffany, Safeway and Several Other Stocks Raised Dividends

2012-05-18T02:30:00.000-05:00

Every investor wants to earn more. It is how we define "more" and how we go about earning it that defines the type of investor we are. Income investors want more income. Yield is a significant determinate of income. Instead of buying a current high-yield stock, investors in dividend growth stocks prefer to build their own. Granted, the current yield may never be classified as high-yield, but over time the yield-on-cost can reach epic heights.

This week several companies below chose to build a higher yield for their shareholders with higher cash dividends:

Marsh & McLennan Companies, Inc. (MMC), a professional services company, provides advice and solutions in the areas of risk, strategy, and human capital. May 17th the compay increased its quarterly dividend 5% to $0.23 per share. The dividend is payable August 15 to shareholders of record on July 11. The yield based on the new payout is 2.9%.

The Williams Companies, Inc. (WMB) operates as an energy infrastructure company in the United States. May 17th the company increased its quarterly dividend 15.9% to $0.30 per share. The dividend is payable June 25, 2012, to holders of record at the close of business on June 8. The yield based on the new payout is 4.0%.

Tiffany & Co. (TIF) engages in the design, manufacture, and retail of fine jewelry worldwide. May 17th the company increased is dividend 10% ro $0.32 per share. The dividend is payable July 10, 2012 to stockholders of record on June 20, 2012. The yield based on the new payout is 2.1%.

Northrop Grumman Corporation (NOC) provides products, services, and solutions in aerospace, electronics, information systems, and technical service sectors to government and commercial customers worldwide. May 16th the company increased its quarterly dividend 10% to $0.55 per share. The dividend is payable June 13, 2012, to shareholders of record as of the close of business on May 28, 2012. The yield based on the new payout is 3.7%.

Pennsylvania Real Estate Investment Trust (PEI) is a publicly owned equity real estate investment trust that owns, manages, develops, acquires, and leases mall and power and strip centers primarily in the Eastern United States. May 16th the company increased its quarterly dividend 6.7% to 0.16 per share. The dividend will be paid on June 15, 2012 to common shareholders of record on June 1, 2012. The yield based on the new payout is 4.8%.

Republic Bancorp, Inc. (RBCAA) provides banking, tax refund solutions, and mortgage banking services to individuals and businesses in the United States. May 16th the company increased its quarterly dividend 7% to $0.165 per share. The dividend is payable July 20, 2012 to shareholders of record as of June 15, 2012. The yield based on the new payout is 3.1%.

Xcel Energy Inc. (XEL) engages in the generation, purchase, transmission, distribution, and sale of electricity in the United States. May 16th the company increased its quarterly dividend 3.8% to $0.27 per share. The dividend is payable July 20, 2012 to shareholders of record on June 21, 2012. The yield based on the new payout is 3.9%.

STAG Industrial, Inc. (STAG) is a real estate investment trust engaged in investment and management of real estate assets. May 16th the company increased its quarterly dividend 3.8% to $0.27 per share. The dividend is payable July 13, 2012 to all common stockholders of record on June 29, 2012. The yield based on the new payout is 7.7%.

Pacific Continental Corporation (PCBK) operates as the bank holding company for Pacific Continental Bank that provides commercial banking services primarily in Oregon and Washington. May 16th the company increased its quarterly dividend 20% to $0.06 per share. The dividend is payable June 15, 2012, to shareholders of record on June 4, 2012. The yield based on the new payout is 2.7%.

Insperity, Inc. (NSP) provides an array of human resources and business solutions to help enhance business performance for small and medium-sized businesses. May 16th the company increased its quarterly dividend 13% to $0.17 per share. The dividend is payable on June 22, 2012, to all stockholders of record as of June 1, 2012. The yield based on the new payout is 2.6%.

Safeway Inc. (SWY) operates as a food and drug retailer in North America. May 15th the company increased its quarterly dividend 21% to to $0.175 per share. The dividend is payable on July 12, 2012 to stockholders of record at the close of business on June 21, 2012. The yield based on the new payout is 3.7%.

NiSource Inc. (NI) through its subsidiaries, provides natural gas, electricity, and other products and services. May 15th the company increased its quarterly dividend 4.3% to $0.24 per share. The dividend is payable Aug. 20, 2012, to stockholders of record at the close of business July 31, 2012. The yield based on the new payout is 3.8%.

The Clorox Company (CLX) manufactures and markets consumer and institutional products worldwide. May 14th the company increased its quarterly dividend 6.7% to $0.64 per share. The dividend is payable on Aug. 10, 2012, to stockholders of record as of July 25, 2012. The yield based on the new payout is 3.7%.

Protective Life Corporation (PL) engage in the production, distribution, and administration of insurance and investment products in the United States. May 14th the company increased its quarterly dividend 12% to $0.18 per shsre. The dividend is payable June 11, 2012 to share owners of record at the close of business on May 25, 2012. The yield based on the new payout is 2.6%.

Cabot Corporation (CBT) operates as a specialty chemicals and performance materials company. May 11th the company increased its quarterly dividend 11.1% to $0.20 per share. The dividend is payable on June 15, 2012, to stockholders of record at the close of business on June 1, 2012. The yield based on the new payout is 2.0%.

Assurant, Inc. (AIZ) provides specialized insurance products and related services in the North America and internationally. May 11th the company increased its quarterly dividend 17% to $0.21 per share. The dividend is payable on June 12, 2012 to stockholders of record as of the close of business on May 29, 2012. The yield based on the new payout is 2.2%.

American Water Works Company, Inc. (AWK) provides water and wastewater services to residential, commercial, industrial, public, and other customers in the United States and Canada. May 11th the company increased its quarterly dividend 8.7% to $0.25 per share. The dividend is payable on September 3, 2012 to all shareholders of record as of July 6, 2012. The yield based on the new payout is 3.0%.

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

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

Related Posts
- 7 Dividend Stocks To Build Your Future Security
- How To Know When To Sell A Dividend Stock
- 7 Dividend Stocks Delivering The Secret To Successful Investing
- There's Gold In Them Thar Dividend Stocks
- Buy And Hold Is Not Buy And Forget

(Photo Credit)

Tags: [CLX] [NOC] [SWY] [TIF] [MMC] [WMB] [PEI] [RBCAA] [XEL] [STAG] [PCBK] [NSP] [NI] [PL] [CBT] [AIZ] [AWK]

Hormel Foods Corp. (HRL) Dividend Stock Analysis

2012-05-17T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Hormel Foods Corp. (HRL). Below are some highlights from the above linked analysis:

Company Description: Hormel Foods Corp. company is primarily engaged in the production and marketing of meat and food products. Pork and turkey are major raw materials.

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

HRL is trading at a premium to all four valuations above. The stock is trading at a slight discount to its calculated fair value of $29.93. HRL 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%

HRL 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%. HRL 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 1928 and has increased its dividend payments for 46 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

HRL earned a Star in this section for its NPV MMA Diff. of the $1,203. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as HRL has. If HRL grows its dividend at 11.6% per year, it will take 4 years to equal a MMA yielding an estimated 20-year average rate of 3.1%. HRL earned a check for the Key Metric 'Years to >MMA' since its 4 years is less than the 5 year target.

Memberships and Peers: HRL 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: Cal-Maine Foods, Inc. (CALM) with a 3.8% yield, Kraft Foods Inc. (KFT) with a 3.0% yield and ConAgra Foods, Inc. (CAG) with a 3.7% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $39.71 before HRL's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 46 years of consecutive dividend increases. At that price the stock would yield 1.51%.

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 8.7%. This dividend growth rate is well below the 11.6% used in this analysis, thus providing a margin of safety. HRL has a risk rating of 1.00 which classifies it as a low risk stock.

Being from the south, I knew what Spam was well-before Al Gore "invented" the internet. HRL's brands include Hormel, Spam, Jennie-O, Country Crock, Lloyd's, and Chi-Chi's. The company has defined a niche on which it converts commodity meats to value-added packaged products. This has allowed the company to achieve superior results when compared with other meat processors. In the future, Asian markets and other non-U.S. sales should benefit from rising incomes and changing lifestyles in developing markets.

HRL has a relatively strong balance sheet, with minimal debt and generates strong cash flows (even during the recession). Like most in the industry, the company has a high sensitivity to changes in commodity costs. The stock is attractively priced at 2.7% below my calculated fair value price of $29.93. However, its dividend yield is below my desired minimum, so I will continue to wait for a more opportune entry point.

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

Related Articles:
- Meredith Corp. (MDP) Dividend Stock Analysis
- Coca-Cola Company (KO) Dividend Stock Analysis
- Becton, Dickinson and Co. (BDX) Dividend Stock Analysis
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis
- More Stock Analysis

Tags: [HRL] [CALM] [KFT] [CAG]

Warning Signs of an Imminent Dividend Cut

2012-05-15T02:30:00.000-05:00

One important lesson we learned from the 2008-2009 financial crisis was that it didn't matter how long a company had increased its dividend, tough economic times could push it to cut its dividend. In most cases the companies' investors were not surprised because they saw the early warning signs that indicated a dividend cut was imminent. Here are three signs that a company is heading toward a dividend cut:

I. Change In Business Conditions

An abrupt or permanent shift in a company's business model as a result of business conditions could lead to a dividend cut. During the financial crisis, virtually all businesses experienced an adverse change in business conditions. However, the pertinent question is to what degree? Consider these two examples:

Gannett Co. (GCI) publishes about 100 daily U.S. newspapers, more than 500 non-daily publications in the U.S., and more than 200 U.K. titles, and operates 23 TV stations in the U.S. With the mass adoption of the internet, traditional news outlets such as newspapers are experiencing a slow death. After several years of declining earnings, GCI cut its quarterly dividend in March 2009 from $0.40 per share to $0.04 per share. In March 2012, the company was paying $0.20 per share, half of what it was paying 3 years ago prior to the cut.

Pfizer's (PFE) is world's largest pharmaceutical company. However, in Feburary 2009 it wasn't "too big to fail." At that time the company cut its quarterly dividend from $0.32 per share to $0.16 per share. After years of unsuccessful attempts to get approval of a "blockbuster" drug, the cash rich company sought a merger partner with a good drug pipeline. In anticipation of it proposed combination with Wyeth, PFE cut its dividend. Since then, its dividend has increased to $0.22 per share.

II. Dividend Yield Above Historic and Industry Norms

A dividend yield that is higher than average and/or higher than others in the industry are indications, not all is well with the company. The market is adjusting to compensate for the higher risk of holding the company. When dividend yields start creeping up, it is time to start evaluating if the company can continue to pay its dividend.

Consider Bank of America Corp. (BAC). Between 2000 and 2007 the company's dividend yield hovered in the 3%-4% range. In 2008, the dividend yield ranged from around 5% to the teens prior to its dividend cut. The same situation occurred with General Electric (GE) over the same period. GE's dividend yields from 2000-2007 normally were in the range of 1.5%-3.5%. However, in 2008 the dividend yield more than doubled as investors lost confidence in the company. Eventually, BAC and GE cut their dividends.

III. Diminishing Cash Available to Pay Dividends

Ultimately, the ability of a company to pay its dividend is determined by its cash position - both cash on its balance sheet and its ability to generate cash flow. All the companies above had one thing in common - a deterioration of cash flow available for paying dividends.

GCI's free cash flow peaked in 2004 at $1.3 billion. Since then it has declined in 5 of the last 7 years and was at $742 million in 2008. Though GE's free cash flow was increasing, the company was taking on significant debt. GE's debt increased from $201 billion in 2000 to $524 billion in 2008 and it could no longer afford its dividend.

A Look Ahead

Unfortunately, there will be more dividend cuts in the future. It is just part of the business landscape and the ever-changing economic tide.

Two companies currently on my radar for potential dividend cuts are CenturyLink, Inc. (CTL) and Pitney Bowes Inc. (PBI).

CenturyLink, Inc. (CTL) has aggressively grown over the last several years with the acquisitions of Embarq, Qwest and Savvis. This growth has financially challenged the company; so much so, that it has left its quarterly dividend flat at $0.725 since March 2010. Free cash flow could grow to level that would allow the company to sustain its dividend, but it is a risk I was not willing to take at the level I was invested. In 2011 I significantly reduced my holding in CTL to a level I am now comfortable with.

Pitney Bowes Inc. (PBI) is the world's largest maker of mailing systems, also provides production and document management equipment and facilities management services. Like GCI, the industry in which PBI operates has probably seen its best days. The decline in the mailing services industry is forcing PBI to reinvent itself. Unlike CTL, PBI's financial are in decent shape, with my main concern with the level of debt. I wouldn't consider PBI as an appropriate investment in my Dividend Growth Portfolio, but I have given consideration to adding it to my high-yield portfolio to milk the cash cow while seeing if the company can successfully to transform itself.

Conclusion

The above three items will help you determine which companies are at risk of cutting their dividends. Cash is king, so pay special attention to free cash flows and debt levels. Buy and hold is not buy and forget - never take your eyes off your investments.

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

Related Articles
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- The Current Financial Situation Should Concern Us All

(Photo Credit)

Tags: [BAC] [CTL] [GCI] [GE] [PBI] [PFE]

Johnson & Johnson (JNJ) Dividend Stock Analysis

2012-05-14T02:31:00.000-05:00

This article originally appeared on The DIV-Net May 7, 2012.

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

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

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

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

JNJ is trading at a discount to only 1.) above. The stock is trading at a 12.8% premium to its calculated fair value of $57.5. JNJ did not earn any Stars in this section.

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

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

JNJ earned 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%. JNJ earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 50 consecutive years.

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

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

JNJ earned a Star in this section for its NPV MMA Diff. of the $1,389. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as JNJ has. The stock's current yield of 3.7% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: JNJ is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: The Abbott Laboratories (ABT) with a 3.3% yield, Eli Lilly & Co. (LLY) with a 4.8% yield and Bristol-Myers Squibb Company (BMY) with a 4.0% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $93.86 before JNJ's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 50 years of consecutive dividend increases. At that price the stock would yield 2.6%.

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 2.9%. This dividend growth rate is below the 6.7% used in this analysis, thus providing a margin of safety. JNJ has a risk rating of 1.25 which classifies it as a Low risk stock.

JNJ enjoys a diverse revenue base, an excellent research pipeline, a pristine balance sheet and exceptional free cash-flows to cover its dividend. The company's many advantages include: products that are largely immune from economic cycles, minimal reliance on any single product category, substantial financial resources and a significant global business scale.

Its pharma segment should benefit from a number of new products such as Edurant, Xarelto and Zytiga. In addition, the proposed acquisition of Synthes should provide significant synergies. I will continue to add to my position as my allocation allows and when JNJ is trading near or below my calculated fair value price of $57.50.

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

Full Disclosure: At the time of this writing, I was long in JNJ (3.7% of my Dividend Growth Portfolio) and long in ABT. See a list of all my dividend growth holdings here.

Related Articles:
- Teco Energy, Inc.(TE) Dividend Stock Analysis
- Genuine Parts Company (GPC) Dividend Stock Analysis
- Microsoft Corporation (MSFT) Dividend Stock Analysis
- Norfolk Southern Corp. (NSC) Dividend Stock Analysis
- More Stock Analysis

Tags: [JNJ] [ABT] [LLY] [BMY]

Weekly Links: May 13, 2012

2012-05-13T02:30:00.000-05:00

Carnival of Personal Finance published: 2 High-Yield Investments To Increase Income While Waiting On Dividend Growth

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

- The Dividend Guy presented AFL Aflac Dividend Stock Analysis
- Disciplined Approach to Investing presented Dividend Payers Outperform In April
- EPIC INVESTOR presented Berkshire Hathaway's Shareholders Meeting

The DIV-Net Featured Articles

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Winning Gold Dividend Stocks
Over the last several years, the large gold mining companies have produced revenue gains on the back of higher gold prices and not much in the way of mining more ounces of gold. If the price of gold keeps going up, that approach works. However, if the price of gold stabilizes for a while - several years - investors might be more interested in mining companies which can increase revenues and profits without the assistance of higher gold prices. Here are five gold mining companies with strong prospects...

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With the low interest rates provided by the banks, investors have been turning to dividend-paying stocks as a source of investment income. Dividend investing has become increasingly popular among investors, and the resulting demand is driving up stock prices. In 2011, dividend stocks crushed the 2.1% gain for the S&P 500 Index, gaining an average of 8.3%. Howard Silverblatt, S&P's senior index analyst, recently stated that...

Big-Yield Dividend Stocks Under $10
Sometimes investors feel like they have to choose between low-priced stocks and high dividend payers that can often be costly on a per-share basis. Sure, Coca-Cola (NYSE:KO) announced a 2-for-1 split to bring its share price down from almost $80 to under $40 — but not all dividend payers are willing to execute a similar move. And to many investors who have small portfolios and don’t like to buy a handful of shares, even $40 might be a bit pricey. Thankfully, there are a handful of big dividend payers under $10 a share — if you know where to look for them. These companies are...

Dividend ETFs Under The Microscope
This is the second in a series of articles that looks under the hoods of ETFs with "dividend" in their names. This article covers three ETFs whose names (or the names of their underlying indexes) imply "high yield." The ultimate goal is to discover if there is a dividend ETF that closely replicates the strategies, processes, and/or results of the many dividend growth investors who frequently write and comment here at Seeking Alpha. After examining 5 dividend ETFs in two articles, a few individual stocks are starting to emerge as common top-ten holdings...

Dividend Stocks Capitalizing On Natural Gas
Domestic natural gas production has been booming for years now, but equities investors still haven’t gotten the hang of making money on it. The drilling bets backfired, and other sectors touted as gas-rush beneficiaries offered up an awful lot of losers among the winners. The drilling boom, as so many investors already discovered, is not a play that works with simplistic sector analysis. There’s been plenty of money lost already with investments in companies that were supposed to gain on the trend but didn’t. But ignore the generalizations and sift through those sectors carefully, and something interesting emerges...

Click Here More Dividend News

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

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Dividend Income Progress Update - April 2012

2012-05-12T02:30:00.000-05:00

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in March, extending the streak to 22 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 51 of the last 53 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	1,354	-0.05%
Div. Changes YTD	227	0.05%
Sales YTD	-73	-0.01%
April/2012	17,669	4.37%
Purchases	329	-0.02%
Div. Changes	153	0.04%
Sales	0	0.00%
March/2012	17,187	4.35%

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 $482, and Yield on Cost (YOC) was up 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 $329 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 $153 increase in annual dividend income and 0.04% increase in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

- ($07) U.S. Preferred Stock Index (PFF) $2.40a>$2.38a
- $24 The Coca-Cola Company (KO)$0.47q>$0.51q
- $57 Genuine Parts Company (GPC) $0.45q>$0.495q
- $16 Kimberly-Clark Corporation (KMB) $0.70q>$0.74q
- $45 Wal-Mart Stores Inc. (WMT) $0.365q>$0.3975q
- $06 Piedmont Natural Gas Co. Inc. (PNY) $0.29q>$0.30q
- $01 Realty Income Corp. (O) $0.1455m>$0.1458m
- $11 Alerian MLP Infrastrctr ETN (MLPI) $1.59a>$1.61a

Sales: There were no sales in April.

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

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: [PFF] [KO] [GPC] [KMB] [WMT] [PNY] [O] [MLPI]

9 Stocks Compounding Income With Higher Dividends

2012-05-11T02:30:00.000-05:00

When evaluating a company as a potential income investment I look at its calculated fair value, ability to generate cash, debt position and the net present value of its dividend stream compared to alternative “safe” investments. The advantages dividend stocks have over "safe" investments are potential capital appreciation and dividend growth. Not only are your earnings compounding, but the rate of earnings is growing.

Below are several companies compounding their shareholders income with increased cash dividends:

Newell Rubbermaid Inc. (NWL) designs, manufactures, and markets consumer and commercial products. May 10th the company increased its quarterly dividend 25% to $0.10 per share. The dividend is payable June 15, 2012 to common stockholders of record at the close of business on May 31, 2012. The yield based on the new payout is 2.2%.

Costco Wholesale Corporation (COST) operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. May 9th the company increased its quarterly 14.6% dividend to $0.275 per share. The quarterly dividend is payable June 8, 2012, to shareholders of record at the close of business on May 25, 2012. The yield based on the new payout is 1.3%.

Quaker Chemical Corporation (KWR) develops, produces, and markets various formulated chemical specialty products for heavy industrial and manufacturing applications worldwide. May 9th the company increased its quarterly dividend 2.1% to $0.245 per share. The dividend is payable on July 31, 2012, to shareholders of record at the close of business on July 17, The yield based on the new payout is 2.1%.

CSX Corporation (CSX) provides rail-based transportation services, providing traditional rail service and the transport of intermodal containers and trailers. May 9th the company increased its quarterly dividend 7% increase to $0.14 per share. The dividend is payable on June 15, 2012 to shareholders of record at the close of business on May 31, 2012. The yield based on the new payout is 2.2%.

LyondellBasell Industries N.V. (LYB) manufacturers and sells chemicals and polymers, refines crude oil, produces gasoline blending components, and develops and licenses technologies for the production of polymers. May 9th the company increased its quarterly dividend 60% to $0.40 per share. The dividend is payable on June 11, 2012 to shareholders of record as of May 21, 2012. The yield based on the new payout is 4.0%.

Hercules Technology Growth Capital, Inc. (HTGC) is a private equity, venture capital, and venture debt firm specializing in providing debt and equity to privately held venture capital and private equity backed companies and select publicly-traded companies. May 8th the firm increased its quarterly dividend 4% to $0.24 per share, an increase of 4.0%. The dividend is payable on May 25, 2012, to shareholders of record as of May 18, 2012. The yield based on the new payout is 8.4%.

Mine Safety Appliances Company (MSA) engages in the development, manufacture, and supply of products that protect people's health and safety in the fire service, homeland security, oil and gas, construction, and other industries. May 8th the company increased its quarterly dividend 8% to $0.28 per share. The dividend is payable June 10, 2012 to shareholders of record on May 21, 2012. The yield based on the new payout is 2.7%.

NV Energy, Inc. (NVE) engages in the generation, transmission, distribution, and sale of electric energy in Nevada. May 8th the company increased its quarterly dividend 31% to $0.17 per share. The dividend is payable June 20, 2012 to shareholders of record on June 5, 2012. The yield based on the new payout is 4.0%.

Intel Corporation (INTC) designs, manufactures, and sells integrated digital technology platforms primarily in the Asia-Pacific, the Americas, Europe, and Japan. May 7th the company increased its quarterly dividend 7% to $0.225 cents per share. Today's announcement is the third dividend increase in the past 18 months. Intel's dividend has increased every year over the past decade. The yield based on the new payout is 3.2%.

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

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

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(Photo Credit)

Tags: [INTC] [COST] [CSX] [KWR] [NWL] [MSA] [LYB] [HTGC] [NVE]

Meredith Corp. (MDP) Dividend Stock Analysis

2012-05-10T02:30:00.000-05:00

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

Company Description: Meredith Corp. derives its earnings mainly from magazine publishing (primarily Better Homes and Gardens and Ladies' Home Journal) and ownership of 12 TV stations.

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

MDP is trading at a premium to all four valuations above. Since MDP's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 10.2% premium to its calculated fair value of $24.67. MDP 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%

MDP 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%. MDP 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 1930 and has increased its dividend payments for 19 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

MDP earned a Star in this section for its NPV MMA Diff. of the $7,857. This amount is in excess of the $1,600 target I look for in a stock that has increased dividends as long as MDP has. The stock's current yield of 4.69% exceeds the 3.1% estimated 20-year average MMA rate.

Memberships and Peers: MDP is a member of the S&P 500 a member of the Broad Dividend Achievers™ Index. The company's peer group includes: Martha Stewart Living (MSO) with a 0.0% yield, The McGraw-Hill Companies, Inc. (MHP) with a 2.1% yield and Scholastic Corporation (SCHL) with a 1.7% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $50.91 before MDP's NPV MMA Differential decreased to the $1,600 minimum that I look for in a stock with 19 years of consecutive dividend increases. At that price the stock would yield 4.7%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,600 NPV MMA Differential, the calculated rate is 4.9%. This dividend growth rate is lower than the 10.9% used in this analysis, thus providing a significant margin of safety. MDP has a risk rating of 1.5 which classifies it as a Low risk stock.

MDP operates in a highly competitive environment and lacks an economic moat. Licensing deals have allowed the company to leverage its strong brands into incremental and profitable revenue streams. Growth from non-political advertising is expected to slow within its print publications over the next five years. Its outlook does not fit the criteria for my Dividend Growth Portfolio. However, it is currently generating significant cash and will likely do so for the next several years. Thus, I will continue to add it to my High-Yield Portfolio when it is trading near my calculated fair value of $24.67, 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 MDP (4.2% of my High-Yield Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
- Becton, Dickinson and Co. (BDX) Dividend Stock Analysis
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis
- Teco Energy, Inc.(TE) Dividend Stock Analysis
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Tags: [MDP] [MSO] [MHP] [SCHL]

Where To Find The Best Dividend Stocks

2012-05-09T02:30:00.000-05:00

Investing in Dividend Growth Stocks is a time-tested approach used by conservative investors to build a growing income over time. This strategy is not difficult, but it can be time consuming if you try to track all the Dividend Aristocrats, Dividend Achievers, Dividend Champions and other stocks with a long history of increasing their dividends. So what's an investor to do?

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7 Higher-Yielding Consumer Stocks To Build Your Yield

2012-05-08T02:30:00.000-05:00

An investment strategy based on Dividend Growth Stocks focuses on companies that produce predictable results and thus are able to consistently raise their dividends. Demand for household and personal care products is generally stable and not affected by changes in the economy or other factors. If you lose your job, you probably won’t stop bathing, washing your clothes, brushing your teeth or stop buying toilet paper. That's why companies in the Consumer Defensive sector are sought after as desirable dividend growth investments.

For many of these companies, raw material costs is a primary driver of profitability, and the larger more established companies are in a better position to negotiate better terms. Growth comes from a growing population and expanding into emerging markets where the people are starting to earn a wage they can not only life on, but begin to buy things we consider necessities.

The Consumer Defensive sector has been a steady performer over the years for both yield and growth. Given the relatively low price of most consumer goods, people often prefer to pay a few pennies more for a name brand that they are confident with. Investments in the Consumer Defensive sector brings yield stability and potential dividend growth to an income portfolio.

This week week, I screened my dividend growth stocks database for Consumer Defensive companies with a yield above 3.00% and that have increased their dividends for at least 8 consecutive years. The results are presented below:

General Mills, Inc. (GIS) is a major producer of packaged consumer food products, including Big G cereals and Betty Crocker desserts/baking mixes. The company has paid a cash dividend to shareholders every year since 1898 and has increased its dividend payments for 8 consecutive years. Yield: 3.2%

PepsiCo, Inc. (PEP) is a major international producer of branded beverage and snack food products. The company has paid a cash dividend to shareholders every year since 1952 and has increased its dividend payments for 40 consecutive years. Yield: 3.1%

The Procter & Gamble Company (PG) is a leading consumer products company the markets household and personal care products in more than 180 countries. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 55 consecutive years. Yield: 3.5%

The Clorox Company (CLX) is a diversified producer of household cleaning, grocery and specialty food products is also a leading producer of natural personal care products.The company has paid a cash dividend to shareholders every year since 1968 and has increased its dividend payments for 36 consecutive years. Yield: 3.6%

Kimberly Clark Corp. (KMB) is a leading consumer products company's global tissue, personal care and health care brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex and Scott. The company has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 16 consecutive years. Yield: 3.8%

The H.J. Heinz Company (HNZ) produces a wide variety of food products worldwide, primarily condiments, convenience meals and snacks. The company has paid a cash dividend to shareholders every year since 1911 and has increased its dividend payments for 8 consecutive years. Yield: 3.6%

Sysco Corporation (SYY) is a large distributor of food and related products, primarily to the foodservice or food-away-from-home industry. The company has paid a cash dividend to shareholders every year since 1970 and has increased its dividend payments for 41 consecutive years. Yield: 3.9%

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 PEP, PG, CLX, KMB, SYY. See a list of all my dividend growth holdings here.

Related Posts
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- Holding Bonds Could Push Your Portfolio Into The High Risk Category

(Photo Credit: Kellogg Company)

Tags: [GIS] [PEP] [PG] [CLX] [KMB] [HNZ] [SYY]

Coca-Cola Company (KO) Dividend Stock Analysis

2012-05-07T02:31:00.000-05:00

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

Linked here is a detailed quantitative analysis of Coca-Cola Company (KO). Below are some highlights from the above linked analysis:

Company Description: The Coca-Cola Company is the world's largest soft drink company, and it also has a sizable fruit juice business.

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

KO is trading at a premium to all four valuations above. The stock is trading at a 7.5% discount to its calculated fair value of $80.11. KO 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%

KO earned one Star in this section for 3.) above. The stock 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 1893 and has increased its dividend payments for 50 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

KO earned a Star in this section for its NPV MMA Diff. of the $813. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as KO has. If KO grows its dividend at 7.5% per year, it will take 2 years to equal a MMA yielding an estimated 20-year average rate of 3.1%. KO earned a check for the Key Metric 'Years to >MMA' since its 2 years is less than the 5 year target.

Memberships and Peers: KO 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: Dr. Pepper Snapple Group (DPS) with a 3.4% yield, Pepsico, Inc (PEP) with a 3.1% yield and Fomento Economico ADR (FMX) with a 1.8% yield.

Conclusion: KO earned one Star in the Fair Value section, earned one Star 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 KO as a 3-Star Hold stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $87.25 before KO's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 50 years of consecutive dividend increases. At that price the stock would yield 2.3%.

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 5.9%. This dividend growth rate is slightly lower than the 7.5% used in this analysis, thus providing a slight margin of safety. KO has a risk rating of 1.25 which classifies it as a Low risk stock.

Coca-Cola is one of the most recognizable names in the world. KO is able to deliver products to nearly all points on the globe through an extensive direct distribution network that has few peers. Its world presence will be relied on to compensated for declining consumption of carbonated beverages in the North American market. The company's free cash flow payout is above the 60% I look for and it debt to total capital if slightly above my 45% upper limit. However, KO remains a desirable stock and I will continue to give it consideration when it is trading below my fair value price of $80.11.

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 KO (2.3% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Related Articles:
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- Norfolk Southern Corp. (NSC) Dividend Stock Analysis
- Erie Indemnity Co. (ERIE) Dividend Stock Analysis
- Walgreen Co. (WAG) Dividend Stock Analysis
- More Stock Analysis

Tags: [KO] [DPS] [PEP] [FMX]

Weekly Links: May 6, 2012

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

The Wealth Builder Carnival published: 11 Low-Debt, Higher-Yielding Dividend Stocks

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

- The Dividend Guy presented Using Dividend ETF’s In A Dividend Portfolio
- Dividend Monk presented Consolidated Edison Appears Overvalued

The DIV-Net Featured Articles

Articles from D4L-News:

Are Dividend Stocks Too Expensive?
ividend-paying shares have been a hot sell for quite a while. So hot, in fact, that at least one analyst is wondering whether the “dividend trade” has gone too far, too fast. Investors often barrel into dividend-paying stocks when times are rough and volatility is high. The second half of 2011 was a great example. Europe’s debt crisis and global economic worries rocked financial markets. Yet many have touted dividend-paying shares, especially since these stocks tend to...

Dividend Stocks to Buy
Quality Dividend stocks are the only way to play this market. Mastery expects the Talking Heads to zero in on dividend stocks in the coming days as we try to decipher earnings seasons and deal with the EU debt issues. We recommend reviewing these house hold name stocks that big money will be considering as their clients look for safety. Cash in on a dividend and a company with an established business model. Fitting the bill would are...

Dividend Investing In a Bull Market
What makes a dividend stock tick? A high payout, or consistency? If you picked consistency, congratulations. You are likely to make yourself quite rich using a dividend strategy. No matter how blue your blue chip, it can go bankrupt. Dividends can be cut. You might lose everything. So what can you do about that? Given the bond market’s continuing, powerful rally, one might conclude that the reasonable course is to suck it up and buy bonds. But there is a way to balance your relative risk, by closely considering your dividend stock selections. Here are two important questions to yourself when looking at potential dividend picks...

Great Dividends You Can Buy Right Now
Today, and one day each week for the rest of the year, we're going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn't to say these stocks don't share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. Here is last week's selection...

10% Dividend Stocks With Strong Earnings Growth
Stocks with very high yields are interesting because of the high quarter cash payments you could receive but they are also very dangerous and should be treated with a special attention. In order to find some great opportunities, I screened all 10%-yielding stocks with an earnings per share growth of more than 10% yearly for the upcoming five years. Fifteen stocks remained of which ten are currently recommended to buy. Here are my favorite stocks...

Click Here More Dividend News

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

D4L-Premium Services Updated:

The D4L-Dashboard, Analytical Reports, D4L-Data, and The D4L-Newsletter (May edition) have been updated and are available at the 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)

11 Dividend Stocks Giving Shareholders A Raise

2012-05-04T02:30:00.000-05:00

When evaluating a company as a potential income investment you look at its calculated fair value, ability to generate cash, debt position and the net present value of its dividend stream compared to alternative “safe” investments. The advantages dividend stocks have over "safe" investments are potential capital appreciation and dividend growth. Not only are your earnings compounding, but the rate of earnings is growing.

Below are several companies giving their shareholders a raise with increased cash dividends:

Rocky Mountain Chocolate Factory, Inc. (RMCF) operates as a confectionery manufacturer, franchisor, and retail operator in the United States and internationally. May 3rd the company increased its quarterly dividend 10% to $0.11 per share. The dividend is payable June 8, 2012 to shareholders of record at the close of business May 24, 2012. The yield based on the new payout is 4.2%.

Chesapeake Utilities Corporation (CPK) operates as a diversified utility company that primarily engages in regulated energy and unregulated energy businesses. April 3rd the company increased its quarterly dividend 5.8% to $0.365 per share. The dividend is payable July 5, 2012 to all shareholders of record at the close of business on June 15, 2012. The yield based on the new payout is 3.5%.

Reynolds American Inc. (RAI) manufactures and sells cigarette and other tobacco products in the United States. May 3rd the company increased its quarterly dividend 5.4% to $0.59 per share. The dividend is payable on July 2, 2012, to shareholders of record on June 11, 2012. The yield based on the new payout is 5.4%.

PepsiCo, Inc. (PEP) engages in the manufacture and sale of snacks, carbonated and non-carbonated beverages, dairy products, and other foods worldwide. May 2nd the company increased its quarterly dividend 4% to $0.5375 per share. The dividend is payable June 29, 2012, to shareholders of record on June 1, 2012. The yield based on the new payout is 3.2%.

Cardinal Health, Inc. (CAH) operates as a healthcare services company that provides pharmaceutical and medical products and services. May 2nd the company increased its quarterly dividend 10.5% to $0.2375 per share. The dividend is payable July 15 to shareholders of record on July 1. The yield based on the new payout is 2.2%.

Main Street Capital Corporation (MAIN) is a business development company specializing in equity, equity related, and debt investments in small and lower middle market companies. May 2nd the company increased its monthly dividend 3.6% to $0.145. The dividend is payable July 16, 2012, to shareholders of record on June 21, 2012. The yield based on the new payout is 6.7%.

Gold Resource Corporation (GORO), an exploration stage company, engages in the exploration for and production of gold and silver in Mexico. April 30th the company increased its monthly dividend 20% to $0.06 per share. The dividend is payable May 23, 2012 to shareholders of record as of May 10, 2012. The yield based on the new payout is 2.7%.

Alliance Resource Partners, L.P. (ARLP) engages in the production and marketing of coal primarily to utilities and industrial users in the United States. April 30th the partnership increased its quarterly distribution 3.5% to $1.025 per unit. The distribution is payable May 15, 2012 to all unitholders of record as of the close of trading on May 8, 2012. The yield based on the new payout is 6.3%.

Apogee Enterprises, Inc. (APOG) engages in the design and development of glass products, services, and systems. April 27th the company increased its quarterly dividend 10% to $0.09 per share. The dividend is payable payable on June 1, 2012 to shareholders of record on May 17, 2012. The yield based on the new payout is 2.3%.

Simon Property Group, Inc. (SPG) is an independent equity real estate investment trust. It engages in investment, ownership, and management of properties. April 27th the company increased its quarterly dividend 5.3% to $1.00 per share. This dividend is payable May 31, 2012 to stockholders of record on May 17, 2012. The yield based on the new payout is 2.6%.

Chesapeake Midstream Partners, L.P. (CHKM) owns, operates, develops, and acquires natural gas, natural gas liquids, and oil gathering systems, and other midstream energy assets in the United States. April 27th the partnership increased its quarterly distribution 3.8% to $0.405 per unit. The distribution is payable May 15, 2012 to all unitholders of record at the close of business on May 8, 2012. The yield based on the new payout is 6.1%.

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

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

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(Photo Credit)

Tags: [PEP] [CAH] [RAI] [MAIN] [RMCF] [CPK] [GORO] [ARLP] [APOG] [SPG] [CHKM]

Becton, Dickinson and Co. (BDX) Dividend Stock Analysis

2012-05-03T02:30:00.000-05:00

Linked here is a detailed quantitative analysis of Becton, Dickinson and Co. (BDX). Below are some highlights from the above linked analysis:

Company Description: Becton, Dickinson and Co. provides a wide range of medical devices and diagnostic products used in hospitals, doctors' offices, research labs and other settings.

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

BDX is trading at a discount to 1.) and 3.) above. The stock is trading at a 16.3% discount to its calculated fair value of $93.13. BDX 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%

BDX 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. BDX 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 1926 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

BDX earned a Star in this section for its NPV MMA Diff. of the $958. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as BDX has. If BDX grows its dividend at 9.8% per year, it will take 4 years to equal a MMA yielding an estimated 20-year average rate of 3.1%. BDX earned a check for the Key Metric 'Years to >MMA' since its 4 years is less than the 5 year target.

Memberships and Peers: BDX is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: The Abbott Laboratories (ABT) with a 3.3% yield, Eli Lilly & Co. (LLY) with a 4.7% yield and Bristol-Myers Squibb Company (BMY) with a 4.1% yield.

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

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $97.47 before BDX's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 39 years of consecutive dividend increases. At that price the stock would yield 1.9%.

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 7.6%. This dividend growth rate is lower than the 9.8% used in this analysis, thus providing a margin of safety. BDX has a risk rating of 1.5 which classifies it as a Low risk stock.

In spite of operating in the competitive medical equipment market, BDX has enjoyed more favorable demand and pricing than others in the industry. The company’s needle and surgical business has provided investors with robust returns for years. Strong global demand for the company's safety, diabetes care and disease-testing products should be sustainable in the foreseeable future.

As a result of BDX’s innovation and judicial deployment of capital, its business continued to prosper during the economic downturn. The stock is favorably priced below my calculated fair value price of $93.13. However, its 2.3% yield is below my my minimum 2.5% yield. This is a stock I will continue to monitor.

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 BDX (0.0% of my Dividend Growth Portfolio) and was long ABT and MDT in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

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Tags: [BDX] [ABT] [BAX] [MDT]