Weekly Links: March 2, 2014
Each Sunday I highlight any notable articles that I came across over the past week, along with any Carnivals I participated in. 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.
Articles you might find interesting:
- March 2014 10-Year YOC CCC Rankings
- Successful Investors Demonstrate Patience
- Dividend Update - February 2014
- Why Do You Limit Your Own Potential?
- Trade exit – Safeway (SWY) closing trade (9.73% profit), merger with Albertsons and options effect
The DIV-Net Featured Articles:
- If Only I Had Known About These Dividend Stocks...
- 6 Dividend Champ's Expected To Grow Earnings By Over 15% For The Next Half Decade
- PepsiCo Dividend: Refreshing The Investor World
- The Power Of Pennies
- Stock Analysis of Colgate-Palmolive
- Separating Company Performance From Stock Performance
Articles from D4L-News:
Are Dividend Stocks a Good Bet?
The toughest problem retirees face in today’s financial markets is how to get a decent yield on our savings. In the old days we could put money in the bank, draw 5 percent interest, and live off the proceeds. Not anymore. Interest rates have actually gone up a little in the past year. But still, a 5-year Treasury bill pays only 1.6 percent interest. A 5-year bank CD offers less than 2 percent. An intermediate-term corporate bond or bond mutual fund might yield 3 percent, but bonds leave you helpless against inflation. Other investments can provide better paybacks, but there's always...
Dependable Dividend Stocks That Are Crushing the Market
A number of dividend stocks have really earned their keep in this down year for stocks — and that makes them worth watching when there’s more volatility to come. Dependable dividend stocks that are performing well in a down market have some especially attractive attributes for this uncertain investing environment. These dividend stocks tend to be more stable, for one thing. That will help your portfolio if the market keeps this up. Here are the three dependable dividend stocks that are up at least 10% year-to-date...
Ultimate Guide To Building A High-Yield Dividend Portfolio
High-yield investments are "in" more than ever before. Why? Partially it's because dividend investing is a proven method to generate good returns but also because in this era of very low interest rates, the traditional retirement investment doesn't work so well. If you were planning on investing in stocks over your working years and eventually moving to a fixed income portfolio only in order to live off of it, I've got some bad news. You'll need millions in order to survive off of 1% interest rates. So yes, dividend stocks are very popular not only by individuals but also by pension funds, institutional investors, etc. The problem is...
Top-Yielding Dividend Stocks To Combat Low Interest Rates
With interest rates near zero, short-term bonds, certificates of deposit (CDs), and other traditional income-generating investment sources are paying investors next to nothing. Case in point: 10-year government bonds currently provide an annual yield of 2.6% and 30-year Treasuries yield 3.6%. While individual high-dividend-yielding stocks do not provide the same kind of exposure or diversification as “high-dividend-yielding” ETFs do, they will provide a better annual dividend yield...
3 REIT Plays to Buy for the Dividend Yield
REITs could see even better performance given new Federal Reserve Chair Janet Yellen’s assertion on Tuesday that low interest rates make sense in the current, still-weak, economy. Yellen’s remarks indicate that while the Fed is still pursuing a policy of “quantitative easing”, it is unwilling to risk sending the economy into an interest rate shock. Here are three REIT plays to buy for the dividend yield...
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 (March edition) have been updated and are available at the D4L-Premium Services web site at: [Click Here] Not a subscriber? [Click Here] for for more information on the benefits of these services, sample reports, pricing and subscription information.
(Photo: Sachin Ghodke)
Dividend Income Progress Update - February 2014
Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in January, extending the streak to 44 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 73 of the last 75 months.
My goals were defined in this December 1, 2007 Investing Goals post and last updated in my 2014 Investing Goals post. Below is an updated version of the table found in the original post.
|Description ||Dividend |
|2027 Goal ||110,000 ||n/a |
|2017 Goal ||42,000 ||n/a |
|2014 Goal ||30,000 ||n/a |
|December/2013 ||26,580 ||4.54% |
|Purchases YTD ||1,424 ||-0.01% |
|Div. Changes YTD ||102 ||0.03% |
|Sales YTD ||-642 ||0.01% |
|February/2014 ||27,422 ||4.55% |
|Purchases ||961 ||0.00% |
|Div. Changes ||78 ||0.02% |
|Sales ||-426 ||0.00% |
|January/2013 ||26,809 ||4.53% |
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 $613, 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 $961 and did not change yield on cost 0.00%. 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 normally be sufficient to offset the decline.
Dividend Changes: The $78 increase in annual dividend income and 0.02% increase in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):
- $21 AT&T, Inc. (T) $0.45q>$0.46q
- $22 ALPS Alerian MLP ETF (AMLP) $0.274q>$0.278q
- $35 HCP, Inc. (HCP) $0.525q>$0.545q
Sales: In February, I liquidated my position in Norfolk Southern Corporation (NSC) with a significant gain. With a 2.2% yield, NSC was one my lowest yielding stocks; and with 0 stars, it also was my lowest ranked stock.
That's it for this time. The next monthly progress update will be early April.
Full Disclosure: Long, all the aforementioned securities, except NSC. See a list of all my dividend growth holdings here.
- 12 Higher Yielding Stocks With A Low Dividend Payout Ratio
- Early Warning Signs of a Dividend Cut
- Income Annuities vs. Dividend Stocks
- 7 Tech Stocks With A History of Growing Their Dividends
- Here's Where To Find Great Dividend Stocks
(Photo: sanja gjenero)
Tags: [T] [AMLP] [HCP]
13 Companies Providing Shareholders More Cash Through Increased Dividends
In the U.S. and Canada, most companies pay dividends quarterly. In other parts of the world, it is not uncommon for companies to pay an annual or a semi-annual dividend. That is not to say that North American companies sometimes choose not to pay quarterly dividends. For many years McDonald’s (MCD) paid an annual dividend. Since 2000, Walt Disney Co. (DIS) has paid an annual dividend and Ruby Tuesday, Inc. (RT) pays a semi-annual dividend. Going in the other direction, Realty Income Corp. (O) and Gas Natural Inc. (EGAS) pay monthly dividends.
Though I prefer quarterly dividends, there is something more important than frequency -- dividend increases. Below are several companies satisfying their shareholders desire for more cash by increasing their dividends:
WGL Holdings, Inc. (WGL) sells and delivers natural gas, and provides energy-related products and services. March 6th the company increased its quarterly dividend 4.8% to $0.44 per share. The dividend is payable May 1, 2014 to stockholders of record on April 10, 2014. The yield based on the new payout is 4.5%.
Horace Mann Educators Corporation (HMN) operates as a multiline insurance company in the United States. March 6th the company increased its quarterly dividend 17.9% to $0.23 per share. The dividend is payable March 31, 2014 to stockholders of record on March 17, 2014. The yield based on the new payout is 3.2%.
Taubman Centers, Inc. (TCO) operates as a real estate investment trust. March 6th the company increased its quarterly dividend 8% to $0.54 per share. The dividend is payable March 31, 2014 to stockholders of record on March 17, 2014. The yield based on the new payout is 3.1%.
Piedmont Natural Gas Company, Inc. (PNY), an energy services company, distributes natural gas in the United States. It operates in two segments, Regulated Utility and Non-Utility Activities. March 6th the company increased its quarterly dividend 3.2% to $0.32 per share. The dividend is payable April 15, 2014 to stockholders of record on March 25, 2014. The yield based on the new payout is 3.8%.
General Dynamics Corporation (GD), an aerospace and defense company, provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services. March 5th the company increased its quarterly dividend 10.7% to $0.62 per share. The dividend is payable payable on May 9, 2014 to stockholders of record on April 11, 2014. The yield based on the new payout is 2.2%.
Miller Industries, Inc. (MLR) manufactures and sells vehicle towing and recovery equipment. March 5th the company increased its quarterly dividend 7.1% to $0.15 per share. The dividend is payable March 24, 2014 to stockholders of record on March 17, 2014. The yield based on the new payout is 3.2%.
Symetra Financial Corporation (SYA) provides group and life insurance products and retirement products in the United States and the District of Columbia. March 5th the company increased its quarterly dividend 11.1% to $0.10 per share. The dividend is payable March 28, 2014, to stockholders of record on March 18, 2014. The yield based on the new payout is 2.0%.
Saul Centers Inc. (BFS) is an equity real estate investment trust. March 4th the company increased its quarterly dividend 11.1% to $0.40 per share. The dividend is payable April 30, 2014 to stockholders of record on April 16, 2014. The yield based on the new payout is 3.4%.
GameStop Corp. (GME) operates as a video game retailer. March 4th the company increased its quarterly dividend 20% to $0.33 per share. The dividend is payable March 25, 2014 to stockholders of record on March 17, 2014. The yield based on the new payout is 3.5%.
Agree Realty Corporation (ADC), a real estate investment trust (REIT), engages in the ownership, development, acquisition, and management of retail properties, which are primarily leased to national and regional retail companies. March 4th the company increased its quarterly dividend 4.9% to $0.43 per share. The dividend is payable April 8, 2014 to stockholders of record on March 31, 2014. The yield based on the new payout is 5.4%.
QUALCOMM Incorporated (QCOM) designs, develops, manufactures, and markets digital communications products and services based on code division multiple access (CDMA), orthogonal frequency division multiple access (OFDMA), and other technologies. March 4th the company increased its quarterly dividend 20% to $0.42 per share. The yield based on the new payout is 2.2%.
Simmons First National Corporation (SFNC) provides a range of banking products and services to individual and corporate customers. February 28th the company increased its quarterly dividend 4.8% to $0.22 per share. The dividend is payable April 1, 2014, to stockholders of record on March 14, 2014. The yield based on the new payout is 2.5%.
NorthStar Realty Finance Corp. (NRF), a real estate investment trust (REIT), operates as a commercial real estate (CRE) investment and asset management company. February 28th the company increased its quarterly dividend 19% to $0.25 per share. The dividend is payable March 14, 2014, to stockholders of record on March 10, 2014. The yield based on the new payout is 6.7%.
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 MCD, GD, PNY, O in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.
- 9 Dividend Stocks Beating The 4% Rule
- How To Buy Dividend Stocks At The Bottom
- 8 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends
- Three Keys For Successful Dividend Growth Investing
- 12 Dividend Stocks With A Quick Payback
Tags: [MCD] [GD] [O] [DIS] [RT] [EGAS] [MLR] [SYA] [BFS] [GME] [ADC] [QCOM] [SFNC] [NRF] [WGL] [HMN] [TCO] [PNY]
Verizon Communications Inc. (VZ) Dividend Stock Analysis
Linked here is a detailed quantitative analysis of Verizon Communications Inc. (VZ). Below are some highlights from the above linked analysis:
Company Description: Verizon Communications Inc. is the largest U.S. wireless carrier, Verizon also offers wireline and broadband services primarily in the northeastern U.S.
Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:
1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number
VZ is trading at a discount to only 3.) above. Since VZ's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 75.8% premium to its calculated fair value of $27.06. VZ did not earn any Stars in this section.
Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:
1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%
VZ earned one Star in this section for 1.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 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
The NPV MMA Diff. of the $519 is below the $2,500 target I look for in a stock that has increased dividends as long as VZ has. The stock's current yield of 4.46% exceeds the 3.68% estimated 20-year average MMA rate.
Memberships and Peers: VZ is a member of the S&P 500. The company’s peer group includes: AT&T Inc. (T) with a 5.8% yield, CenturyLink, Inc. (CTL) with a 6.9% yield and Sprint Nextel Corp. (S) with a 0.0%.
Conclusion: VZ did not earn any Stars in the Fair Value section, earned one Star in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of one Star. This quantitatively ranks VZ as a 1-Star Very Weak stock.
Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $27.33 before VZ's NPV MMA Differential increased 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 7.8%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $2,500 NPV MMA Differential, the calculated rate is 7.7%. This dividend growth rate is higher than the 2.2% used in this analysis, thus providing no margin of safety. VZ has a risk rating of 2.25 which classifies it as a Medium risk stock.
As the Communication Services sector moves more toward wireless products, VZ is well-positioned to maintain its position as the market leader. The company continues to grow its market share despite premium pricing compared to its major rivals. The company has reportedly ruled out share repurchase for the next two to three years. Its focus is on lowering the debt level resulting from the $130 billion buyout of Vodafone Group plc’s 45% interest in Verizon Wireless. The buyout will also provide a competitive advantage over peers and greater financial synergies. 2014 should provide benefits from new wireless data plans and FiOS success.
The company enjoys strong cash flow generation and a perception of network quality and pricing power over its suppliers. VZ's low dividend growth rate of 2.2%, short history of consecutive dividend increases and valuation, keep me from adding the stock to my Dividend Growth Portfolio. However, I do hold the stock in my high-yield portfolio.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I was long in VZ (5.9% of my High Yield Portfolio) and long in T in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.
- Archer Daniels Midland Company (ADM) Dividend Stock Analysis
- McDonald's Corporation (MCD) Dividend Stock Analysis
- Lockheed Martin Corp. (LMT) Dividend Stock Analysis
- ConocoPhillips Co. (COP) Dividend Stock Analysis
- More Stock Analysis
Tags: [VZ] [T] [S] [CTL]
Dividend Stocks vs. Dividend ETFs
In 1993, State Street Global Advisors launched the first exchange-traded fund (ETF). Now there are literally hundreds of ETFs out there covering sectors, countries, popular indexes and various strategies, including income investing. A frequent question that I get is 'Why do you invest in individual dividend stocks instead of income-based ETFs?' On the surface this seems like a reasonable question since most ETFs are indexed, tax efficient, easily traded, passive and have low expense ratios. However, as we look beyond the ETFs luster, there are several significant reasons why many income investors prefer owning individual stocks...
I Tax EfficiencyETFs tax efficiency is only in comparison to traditional mutual funds. Consider, when you redeem your mutual fund shares and the fund does not have cash on hand, it must sell some of the underlying securities for cash to pay you. The sale will generate a taxable event (positive or negative) for all shareholders, even if you didn't redeem any shares. Since an ETF's can be sold on the open market its liquidity is not tied to selling the underlying investments; thus, not creating a taxable event to those that own the fund, but didn't sell. Individual dividend stocks are exactly the same - no taxable event until you sell your shares.
II Low ExpensesAgain, compared to traditional mutual funds, ETFs generally have lower management fees. However, if you manage your own portfolio of dividend stock, there are no management fees.
III. Income VolatilityAs an income investor, my primary goal is to create an ever-increasing income stream from my portfolio. To do this, I look for stocks with a long track record of increasing their dividends and the ability to sustain dividend increases in the future. Indexed ETFs are forced to buy the bad stocks along with the good stocks. This will inherently increase the volatility of the fund's dividend payments as underlying companies that are poor performers are forced to cut or eliminate their dividends.
IV. PerformanceNot surprising, individually selected Dividend Growth Stocks stand a very good chance of out performing an indexed ETF over the long-term. Again, since Indexed ETFs are forced to buy the bad stocks along with the good stocks often the yield and the performance suffers.
Consider the SPDR S&P Dividend ETF (SDY). The fund holds all the stocks in the S&P 1500 that have raised their dividends every year for the past 20 years. A very small group of less than 100 out of 1,500 names qualify to be included. See SDY's performance data below, along with some popular dividend growth stocks:
SPDR S&P Dividend ETF (SDY)
- Current Yield: 2.3%
- Annual Dividends: 2013 $1.64, 2012 $1.91, 2011 $1.74, 2010 $1.64, 2009 $1.73, 2008 $2.21
- Cumulative Dividend Adjusted Return 01/2008-12/2013: 65.1%
The Coca-Cola Company (KO)
- Current Yield: 2.8%
- Annual Dividends: 2013 $1.22, 2012 $1.12, 2011 $1.02, 2010 $0.94, 2009 $1.64, 2008 $1.52
- Cumulative Dividend Adjusted Return 01/2008-12/2013: 69.4%
Johnson & Johnson (JNJ)
- Current Yield: 3.4%
- Annual Dividends: 2013 $2.59, 2012 $2.40, 2011 $2.25, 2010 $2.11, 2009 $1.93, 2008 $1.795
- Cumulative Dividend Adjusted Return 01/2008-12/2013: 70.6%
Wal-Mart Stores Inc. (WMT)
- Current Yield: 2.2%
- Annual Dividends: 2013 $1.88, 2012 $1.59, 2011 $1.46, 2010 $1.21, 2009 $0.952, 2008 $0.88
- Cumulative Dividend Adjusted Return 01/2008-12/2013: 92.4%
McDonald's Corp. (MCD)
- Current Yield: 3.1%
- Annual Dividends: 2013 $3.12, 2012 $2.87, 2011 $2.53, 2010 $2.26, 2009 $2.05, 2008 $1.625
- Cumulative Dividend Adjusted Return 01/2008-12/2013: 103.4%
ConclusionGood dividend stocks raise their dividends each and every year. SDY lowered its dividend in 2009, 2010 and 2013. I want investments that will not only meet my goals in good times, but also in the bad. ETFs have their place in my overall portfolio as strategic investments, but not a prominent place in my income portfolio.
Full Disclosure: Long KO, JNJ, WMT, MCD in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.
- 6 Stocks With a Sustainable Dividend
- 5 Dividend Stocks Building A Growing Cash Stream
- 9 Dividend Stocks Beating The 4% Rule
- How To Buy Dividend Stocks At The Bottom
- 8 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends
Tags: [KO] [JNJ] [WMT] [MCD] [SDY]