Dividend Growth Stocks
Your source for finding the best dividend growth stocks...

  • Weekly Links: September 14, 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:

    - Yum! Brands And 5 Other Stocks Just Gave Their Shareholders A BIG Raise
    - TSX60 Ex Dividend Date + Best 2014 Dividend Stocks Update
    - Lockheed Martin Corp. Priced To Buy
    - Risk Versus Volatility
    - The 4% Rule Examined
    - Recent Buy - Nothing Runs Like A Deere
    - August 2014 Cash Flow Statement

    The DIV-Net Featured Articles:

    - Is It Time To Sell Intel?
    - Best Warren Buffett Documentary Ever!
    - Cincinnati Financial Corp. (CINF) Dividend Stock Analysis
    - Dividend Stock Analysis of PepsiCo (PEP)
    - How to Grow Your Dividend Income

    Articles from D4L-News:

    3 ‘Surprising’ Dividend Stocks
    To “volatility-proof” your portfolio, you’re going to want to diversify. The concept of diversifying might sound basic, but doing so without sacrificing yield is not always clear. So, I’m here to show you how diversifying without dropping yields is possible if you know where to look. Here are three dividend stocks based in sectors that you might not have considered as income plays...

    High-Dividend Blue-Chip Stocks to Buy
    A combination of defense and dividend yield is especially attractive these days. Stocks are hitting all-time highs, so of course you want to participate in that. Interest rates are near all-time lows, so generous dividend payers really make the income part of your equity-income portfolio shine. And there’s no telling when this market will correct (or worse), making blue chips with low volatility and other defensive characteristics a good place to be. Here are five high-dividend, blue-chip stocks to buy for this nail-biting market...

    Foreign Blue-Chip Stocks With 4% Dividend Yields to Buy
    The daily volume for each foreign stock above is a fraction of that for its American counterpart despite comparable market capitalization. What makes this even more glaring is how much higher the dividend yield are for the foreign stocks with the lesser amounts of volume. The lower daily volume evinces a reduced degree of investor interest, which results in pricing inefficiencies. From that, investors should be able to buy these income stocks at a lower price, which results in a higher dividend yield...

    Best MLP Stocks Yielding 5% or More
    For the big picture, investors have a lot to gain from investing in MLP stocks. These most energy-focused investments have huge dividends and stable operations that make them powerful income plays. If you’re looking for 5% yield or more, here are five MLP stocks worth investing in right now...

    3 Dividend Stocks With Rock-Solid Brands
    Investing in the best dividend stocks is not only about buying companies with big and growing cash flows. Investors need to understand the competitive strengths in the business producing those cash flows in order to position their portfolio in companies having enough soundness to sustain capital distributions over time. Brand power is a crucial source of competitive strength in the consumer business, and companies such as...

    Click Here For 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 (September 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)
     



  • Medtronic Inc. (MDT) Dividend Stock Analysis
    Linked here is a detailed quantitative analysis of Medtronic Inc. (MDT). Below are some highlights from the above linked analysis:

    Company Description: Medtronic Inc. is a global medical device manufacturer has leadership positions in the pacemaker, defibrillator, orthopedic, diabetes management and other medical markets.

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

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

    MDT is trading at a premium to all four valuations above. The stock is trading at a 34.2% premium to its calculated fair value of $47.91. MDT 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%

    MDT 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 1977 and has increased its dividend payments for 37 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 $256 is below the $500 target I look for in a stock that has increased dividends as long as MDT has. If MDT grows its dividend at 7.8% per year, it will take 8 years to equal a MMA yielding an estimated 20-year average rate of 3.08%.

    Memberships and Peers: MDT 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 Becton, Dickinson and Company (BDX) with a 1.9% yield, Baxter International Inc. (BAX) with a 2.4% yield and CR Bard Inc. (BCR) with a 0.6% yield.

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

    Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $54.01 before MDP's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 37 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 9.5%. This dividend growth rate is above the 7.8% used in this analysis, thus providing no margin of safety. MDT has a risk rating of 1.50 which classifies it as a Low risk stock.

    The company owns a diversified portfolio with a focus on developing products for a wide range of chronic diseases. Although it is exposed to the highly competitive areas of the medical equipment markets, MDT enjoys many competitive advantages including scale (operations and sales), product breadth and financial strength.

    The recent decision to move its tax base overseas through the $43 billion acquisition of Covidien plc (COV) should provide positive results. The deal enables MDT to significantly expand its global markets and product lines. After close the acquisition, the combined company would generate about $27 billion in total revenue. It is should be accretive to cash earnings in 2016 and beyond.

    The company continues to focus on increasing its presence is emerging markets like China and Latin America. The stock is trading above my calculated fair value of $47.91; however, its low yield is what's preventing me from initiating a position at this time.

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

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

    Related Articles:
    - Dividend Stock Analysis: McDonald's Corporation, One To Watch Closely
    - General Dynamics (GD) Dividend Stock Analysis
    - Cincinnati Financial Corp. (CINF) Dividend Stock Analysis
    - Dividend Stock Analysis: Is It Time To Buy ConocoPhillips?
    - Dividend Stock Analysis: Leggett & Platt, A Solid Steady Performer
    - More Stock Analysis


    Tags: [MDP] [BDX] [BAX] [BCR]


  • 6 Rainy Day Dividend Stocks
    A pessimist might say life is a series of bad things happening, then we die. I certainty wouldn't go that far, but life often deals us unfortunate circumstances to work through at what seems to be the most inopportune time. During the 2007-2008 economic downturn, many people lost their jobs at a time when companies weren't hiring. When things like this happen, those with an alternative income, including dividend growth stocks, are in a better position to deal with the circumstances thrust on them.

    Here are some things you can do today to prepare for your financial rainy day:

    Have A Plan

    If you suddenly found yourself unemployed and were unable to immediately replace the lost income, do you know what you would do? I suspect there are few families that have given a lot of thought to this. It is like buying a cemetery plot - it is not high on the list of desirable things to consider. The drive home after receiving a pink slip is too late to start planning; at this point you should be in a position to start executing your plan.

    Prepare to Execute Your Plan

    Schools and businesses have fire drills for a reason. We all know that we need to get out of a burning building, but do we really know how until we practice. Some time back, my employer had a fire drill and too many people were going down the stairs on one side of the building creating a traffic jam. If it had been a real fire many could have lost their lives.

    In the same regard, it would make sense to take your plan and play "what if I lost my job today. " You need to understand the answers to these questions: How long can I go without finding a replacement job? Will my plan permanently damage my financial position? What adverse effect will this have on my family (kids' college, braces, house payments, etc.)? What is the worse case scenario? How will we fare in the worse case scenario?

    Develop Alternative Income Streams

    One of the best ways to ensure financial success is to develop alternative income steams. If one stream dries up, you have others to fall back on. We all have things we are good at, most can be packaged in a way to provide alternative income. Again, this is not something we can quickly develop on the day we are terminated.

    Dividend Growth Stocks

    One of the best alternative income sources are dividend growth stocks. Just like a regular job they can provide you a reliable and growing income. With advance planning, your income portfolio can become the foundation of your contingency plan.

    Consider a stock such as The Coca-Cola Company (KO) that is found in virtually every dividend growth stock portfolio. KO has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 52 consecutive years. Since 2004, the company has averaged 9.8% annual dividend growth.

    Some might say that no one drinks soda's anymore. KO is much more than just sodas. The company is constantly reinventing itself, from the 1960 acquisition of Minute Maid to its 1999 launch of Dasani bottled water. KO has also found ways to make money on non-beverage operations, such as its 1982 purchase of Columbia Pictures for $692 million, which it later sold to Sony for $3 billion in 1989.

    Companies such as KO always find a way to succeed, even when it appears the odds are stacked against them. Here are several other dividend stalwarts to consider when building your income portfolio:

    Colgate-Palmolive Company (CL) is a major consumer products company markets oral, personal and household care and pet nutrition products in more than 200 countries and territories. The company has paid a cash dividend to shareholders every year since 1895 and has increased its dividend payments for 51 consecutive years.  Current yield: 2.3%

    McDonald's Corporation (MCD) is the largest fast-food restaurant company in the world, with about 35,000 restaurants in 119 countries. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 37 consecutive years. Current yield: 3.4%

    The Procter & Gamble Company (PG) is a leading consumer products company that 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 56 consecutive years.  Current yield: 3.2%

    Johnson & Johnson (JNJ) is a leader in the pharmaceutical, medical device and consumer products industries. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 52 consecutive years. Current yield: 2.8%

    AT&T Inc. (T), formerly SBC Communications, provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 31 consecutive years. Current yield: 5.2%

    The Bottom Line

    Even if you never lose your job, one day you will retire and will face a very similar situation. Your salary will go away, replaced by much smaller Social Security payment, and possibly a pension payment (for a shrinking group of employees). More and more retirees have to manage their nest egg to ensure you don't run out of money. A good plan, the ability to execute and multiple revenue streams including blue-chip dividend growth stocks will make the transition much easier.


    Full Disclosure: Long KO, CL, MCD, PG, JNJ, T in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

    Related Articles
    - 10 Dividend Stocks For The Ultimate In Deferred Gratification
    - 6 Healthcare Stocks With Growing Dividends Yielding In Excess of 2%
    - Why We Are Dividend Growth Investors
    - 6 Dividend Growth Stocks With Very Little Debt
    - What Determines A Dividend Stock's Yield

    (Photo Credit)


    Tags: [KO] [CL] [MCD] [PG] [JNJ] [T]


  • Weekly Links: September 7, 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:

    - Dividend Stock Analysis: McDonald's Corporation, One To Watch Closely
    - A Quick Look at Conoco and Occidental
    - Verizon Communications, And 5 Other Companies, Pumping Up Yield With Increased Dividends
    - Kimberly-Clark
    - Passive Income Update – Aug 2014
    - Should I have a minimum yield requirement?

    The DIV-Net Featured Articles:

    - Dividend Stock Analysis of Johnson & Johnson (JNJ)
    - Think Like An Owner
    - Warren Buffett Buys Surprisingly These 8 Dividend Stocks
    - Hot Dividend Growing Incurance Stocks You Must Know
    - 4 Dividend Stocks For A Confident And Secure Future

    Articles from D4L-News:

    Buy These Great Dividend Stocks And Hold Them Forever
    After all… dividends are nice, but if the stock loses more in value than the dividends you are pulling out of the company, then you are better off looking elsewhere. These five stocks in this article are all solid dividend plays on companies with excellent long-term potential...

    2 Signs That Your Dividend Isn’t Safe
    Dividends can be cut, and furthermore companies that pay dividends can lose money and even go bankrupt. So how do you know what to look for before disaster strikes what appears to be a safe and steady dividend-paying investment...

    3 BDCs to Buy for Their Big, Fat Yields
    As banks have stepped away from riskier lending in the aftermath of the credit crisis, BDCs have stepped up and filled the void. It is a huge opportunity and provides income seeking investors an opportunity to join the big private equity funds in profiting from the situation. My favorite BDC for individual investors is...

    Top Dividend Stocks of 2014
    The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Three of the top dividend stocks 2014...

    2 ETFs to Buy Now for Big Income
    ETF managers are drilling down into all of this for you. An investor’s only job is to do the homework and pick the best funds … and that’s where I come in. Here are my top two ETFs that income investors should purchase this week...

    Click Here For 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 (September 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 - August 2014
    Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in August, extending the streak to 50 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 79 of the last 81 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
    Income
    Annualized
    Yield
    on Cost
    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 3,102 -0.15%
    Div. Changes YTD 946 0.15%
    Sales YTD -746 0.01%
    August/2014 29,882 4.58%
    Purchases 174 -0.02%
    Div. Changes 53 0.01%
    Sales 0 0.00%
    July/2014 29,655 4.59%

    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 $227 and Yield on Cost (YOC) was down -0.01%. This month's changes were a net of new purchases, dividend changes and sales. Let's examine each of the these categories:

    Purchases: Purchases this month increased my annual dividend income by $174 and lowered yield on cost -0.02%. As noted in earlier updates, I generally expect YOC to drop in most months since new investments will yield less than my current YOC, and dividend increases will not normally be sufficient to offset the decline, as they were in August.

    Dividend Changes: The $53 increase in annual dividend income and increase of 0.01% in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

    - $28 Alerian MLP ETF (AMLP) $0.279q>$0.284q
    - $25 National Retail Properties, Inc. (NNN) $0.405q>$0.42q

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

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

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

    Related Articles
    - 6 Healthcare Stocks With Growing Dividends Yielding In Excess of 2%
    - Why We Are Dividend Growth Investors
    - 6 Dividend Growth Stocks With Very Little Debt
    - 4 Dividend Stocks For A Confident And Secure Future
    - High-Yield, High-Return Investments To Increase Income While Waiting On Dividend Growth

    (Photo: sanja gjenero)


    Tags: [AMLP] [NNN]






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