Dividend Growth Stocks
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  • Colgate-Palmolive (CL) Dividend Stock Analysis
    Linked here is a detailed quantitative analysis of Colgate-Palmolive (CL). Below are some highlights from the above linked analysis:

    Company Description: Colgate-Palmolive Company (Colgate) is a major consumer products company markets oral, personal and household care and pet nutrition products in more than 200 countries and territories.

    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

    CL is trading at a premium to all four valuations above. Since CL's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 110.8% premium to its calculated fair value of $32.98. CL 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%

    CL 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 1895 and has increased its dividend payments for 51 consecutive years.

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

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

    The negative NPV MMA Diff. means that on a NPV basis the dividend earnings from an investment in CL would be less than a similar amount invested in MMA earning a 20-year average rate of 3.08%. If CL grows its dividend at 1.4% per year, it will never equal a MMA yielding an estimated 20-year average rate of 3.08%.

    Memberships and Peers: CL 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: Procter & Gamble Co. (PG) with a 3.2% yield, Kimberly-Clark Corporation (KMB) with a 3.0% yield and Clorox Corporation (CLX) with a 3.2% yield.

    Conclusion: CL 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 CL as a 1-Star Very Weak stock.

    Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $33.99 before CL's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 51 years of consecutive dividend increases. At that price the stock would yield 4.2%.

    Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 8.6%. This dividend growth rate is higher than the 1.4% used in this analysis, thus providing no margin of safety. CL has a risk rating of 1.75 which classifies it as a Medium risk stock.

    Demand for household and personal care products is generally stable and not affected by changes in the economy. A significant portion of CL's sales comes from emerging markets. This presents the company with more growth opportunity, but also more risk. Its continued focus on product innovation, along with globally recognized brands and presence in both developed and emerging markets will boost its long-term profitability.

    CL's first-quarter 2014 adjusted earnings per share came in at $0.68, a 3% increase year over year. First quarter earnings translated to $820 million of cash from operations. The company follows a disciplined capital allocation strategy that focuses on making investments to develop business while using the excess cash to enhance shareholder returns through dividend payouts and share buybacks. CL has paid a dividend of $316 million and bought back shares worth $453 million. CL has been increasing its dividend every year since 2001.

    Debt to total capital has risen since my January 2013 review to 80% from 75%. Free cash flow payout at 53% (up from 46%) is well below my maximum. With a calculated fair value of $32.98, CL is trading at a significant premium. When I combine the above with a current yield that is well below my minimum, I will not materially add to my position in the near-term.

    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 CL (0.4% of my Dividend Growth Portfolio). I also hold positions in PG and KMB. See a list of all my dividend growth holdings here.

    Related Articles:
    - Nucor Corporation (NUE) Dividend Stock Analysis
    - Cisco Systems, Inc. (CSCO) Dividend Stock Analysis
    - Community Trust Bank Corp. (CTBI) Dividend Stock Analysis
    - Procter & Gamble (PG) Dividend Stock Analysis
    - More Stock Analysis


    Tags: [CL] [PG] [KMB] [CLX]


  • Weekly Links: July 27, 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:

    - 4 Reasons to Keep Buying Stocks Now, in a Big Bullish Market
    - Weekly Purchases – 07/15 & 07/22
    - Stocks of Interest - Comcast
    - Portfolio overview KW 29
    - Valuation in the Aerospace and Defense Sector

    The DIV-Net Featured Articles:

    - Why Dividend Growth Investing Is Such A Robust Investment Strategy
    - Dividend Stocks With A Low P/B Ratio
    - Dividend Achievers With A Strong Buy Rating
    - Is Dow 17,000 Dangerously High? This Comprehensive Review May Surprise You!
    - A 0% Allocation to Fixed Income?


    Articles from D4L-News:

    Monthly Dividend Stocks: 3 Lists To Buy And Hold In July
    Quarterly, Semi-Annual and Annual dividend stockholders anxiously await announcements from a firm, fund, or analyst to learn if their next dividend will be higher, lower, or paid at all. Monthly pay stocks, funds, trusts, and partnerships inform the holder every four and one third weeks by check and/or statement. If the entity reduces or suspends a payment, the holder can sell out of the investment immediately to cut future losses. This advantage has been countered when...

    Why Dividend Stocks Have Become Dangerous
    Over the past five years the stocks in the SPDR S&P Dividend ETF (SDY) have posted average earnings growth of nearly 7%. Meanwhile, the stocks in the SPDR S&P 500 ETF (SPY) had annualized earnings growth of 8.7%. Yet right now you’re paying a higher price for the lower growth rate: The SPDR Dividend ETF’s trailing price earnings multiple of 18.9 is significantly higher than the 17.4 for the SPDR S&P 500 ETF. And while it makes perfect sense to pay up for a solid blue chip dividend payer, right now the price seems especially high for companies such as...

    3 Dividend Stocks Delivering Income for 50-Plus Years
    What’s the worst thing that can happen to dividend stocks? Is it the CEO leaving for “personal reasons”? No. Is it two bad quarters in a row? No. Is it some kind of crisis that requires it to hire a top-notch crisis PR firm? No. The worst thing that can happen to dividend stocks is a reduction in its regular payout. These Dependable Dividend Stocks have all been paying out dividends for at least 50 years...

    The Best Dividend Stocks For International Investing
    Assuming investors can look past the negative headlines related to the Iraqi conflict and Russian-Ukraine standoff, there are plenty of great international investments. Dividends are another great way to help control risk when investing in international markets. International dividend stocks yielding 4% are also very enticing at a time when the S&P 500 yields an average of 2%. The top 4 international dividend stocks all yield over 4%...

    4 Businesses With 5%+ Yields And 25+ Years Of Consecutive Dividend Increases
    The rising stock market has created fewer opportunities to find high yielding dividend stocks that are likely to continue increasing dividend payments. There are only 4 businesses that have dividend yields greater than 5% combined with 25+ years of consecutive dividend increases...

    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 (July 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)
     



  • 5 Stocks Building Long-Term Wealth With Increased Dividends
    Forget about those 'Make 534% On Every Trade' ads that you see on many financial websites. Real wealth is built with sweat equity and a sound financial plan. 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.

    Below are several companies building long-term wealth for their shareholders with increased dividends:

    E. I. du Pont de Nemours and Company (DD) operates as a science and technology based company worldwide. July 22nd the company increased its quarterly dividend 4.4% to $0.47 per share. The dividend is payable September 12, 2014 to stockholders of record on August 15, 2014. The yield based on the new payout is 2.9%.

    Norfolk Southern Corporation (NSC) is engaged in the rail transportation of raw materials, intermediate products, and finished goods. July 22nd the company increased its quarterly dividend 5.5% to $0.57 per share. The dividend is payable September 10, 2014 to stockholders of record on August 1, 2014. The yield based on the new payout is 2.1%.

    Williams Partners L.P. (WPZ), an energy infrastructure company, focuses on connecting North America's hydrocarbon resource plays to growing markets for natural gas and natural gas liquids. July 21st the company increased its quarterly dividend 1.3% to $0.9165 per share. The dividend is payable August 8, 2014 to stockholders of record on August 1, 2014. The yield based on the new payout is 6.8%.

    HealthSouth Corporation (HLS) owns and operates inpatient rehabilitation hospitals in the United States. July 17th the company increased its quarterly dividend 17% to $0.21 per share. The dividend is payable October 15, 2014 to stockholders of record on October 1, 2014. The yield based on the new payout is 2.3%.

    The Blackstone Group L.P. (BX) is a publicly owned investment manager that also provides financial advisory services to public and corporate pension funds, academic, cultural, and charitable organizations. July 17th the company increased its quarterly dividend 57% to $0.55 per share. The dividend is payable August 4, 2014 to stockholders of record on July 28, 2014. The yield based on the new payout is 6.2%.

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

    Related Posts
    - The 2013 Elite Dividend Stocks List
    - 6 High-Yield Dividend Achievers With 25 Years of Increases
    - Investments That Pay Monthly Dividends
    - 12 Higher Yielding Stocks With A Low Dividend Payout Ratio
    - Early Warning Signs of a Dividend Cut

    (Photo Credit)

    Tags: [DD] [NSC] [WPZ] [HLS] [BX]


  • Hormel Foods Corp. (HRL) Dividend Stock Analysis
    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. is a multinational manufacturer and marketer of consumer-branded food and meat 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

    HRL is trading at a premium to all four valuations above. The stock is trading at a 12.0% discount to its calculated fair value of $55.15. 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 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%. 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 48 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 $1,083. 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 13.2% per year, it will take 6 years to equal a MMA yielding an estimated 20-year average rate of 3.08%.

    Memberships and Peers: HRL 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: Cal-Maine Foods, Inc. (CALM) with a 3.2% yield, Mondelez International, Inc. (MDLZ) with a 1.5% yield and ConAgra Foods, Inc. (CAG) with a 3.5% yield.

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

    Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $63.60 before HRL's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 48 years of consecutive dividend increases. At that price the stock would yield 1.3%.

    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 10.8%. This dividend growth rate is below the 13.2% used in this analysis, thus providing a margin of safety. HRL has a risk rating of 1.25 which classifies it as a low risk stock.

    HRL's brands include Hormel, Spam, Jennie-O, Country Crock, Lloyd's, and Chi-Chi's. In addition, HRL has expanded into a non-meat category with the acquisition of the Skippy brand from Unilever. 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 July 2014 the company agreed to acquire CytoSport Holding Inc. for $450 million. It produces the largest brand in the ready-to-drink protein beverage category. HRL recorded an increase in contribution from the Skippy peanut butter line acquired in Jan 2013, along with its China operations, which were acquired in first-quarter fiscal 2014. These acquisitions should contribute significantly to the revenue growth in the coming quarters as well.

    The company 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 company should enjoy above average long-term growth and stability of earnings and dividends, with HRL's non-U.S. sales taking a more prominent role. The stock is currently trading at a 12.0% discount to my calculated fair value price of $55.15. However, its dividend yield is below my desired minimum, so I will continue to watch this stock from the sidelines.

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

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

    Related Articles:
    - Nucor Corporation (NUE) Dividend Stock Analysis
    - Cisco Systems, Inc. (CSCO) Dividend Stock Analysis
    - Community Trust Bank Corp. (CTBI) Dividend Stock Analysis
    - Procter & Gamble (PG) Dividend Stock Analysis
    - More Stock Analysis


    Tags: [HRL] [CALM] [MDLZ] [CAG]


  • Mid-Year 2014 Top And Bottom Performing Dividend Stocks
    Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don't have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system.

    My normal practice is to refresh my analytical spreadsheets each Friday with updated price information on the 230+ stocks that I follow. Even then, I don't normally look at the value of my portfolio or the performance of individual stocks.

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

    Saturday, I updated my Income Portfolio's performance for the second quarter. Building on that, here are my income portfolio's top and bottom 5 performers for the year, through June 30, 2014:

    Top Performers

    #5. Intel Corporation (INTC)
    Intel Corporation is the world's largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products.
    Yield: 3.0% | 6-Month Return: 46.7%

    #4. Cisco Systems, Inc. (CSCO)
    Cisco Systems, Inc. offers a complete line of routers and switching products that connect and manage communications among local and wide area computer networks employing a variety of protocols.
    Yield: 3.1% | 6-Month Return: 49.1%

    #3. General Dynamics (GD)
    General Dynamics is the world's fourth largest military contractor and also one of the world's biggest makers of corporate jets.
    Yield: 2.1% | 6-Month Return: 51.8%

    #2. ConocoPhillips Co. (COP)
    ConocoPhillips Co. is one of the largest independent oil and gas exploration and production (E&P) companies in the world, COP spun off its downstream assets in May 2012.
    Yield: 3.2% | 6-Month Return: 53.0%

    #1. National Retail Properties, Inc. (NNN)
    National Retail Properties, Inc. is an equity real estate investment trust that invests in high-quality, freestanding retail properties subject to long-term net leases with major retail tenants.
    Yield: 4.3% | 6-Month Return: 48.4%

    Bottom Performers

    #5 Emerson Electric Co. (EMR)
    Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial and consumer markets around the world.
    Yield: 2.5% | 6-Month Return: -8.4%

    #4. AFLAC Incorporated (AFL)
    Aflac Incorporated provides supplemental health and life insurance in Japan (78% of pretax operating profits) and the U.S. Products are marketed at work sites and help fill gaps in primary coverage.
    Yield: 2.3% | 6-Month Return: -11.2%

    #3. Owens & Minor, Inc. (OMI)
    Owens & Minor Inc. is a leading domestic distributor of medical and surgical supplies to the acute care market, a health care supply chain management company, and a direct-to-consumer (DTC) supplier of testing and monitoring supplies for diabetes.
    Yield: 2.9% | 6-Month Return: -11.8%


    #2. Cincinnati Financial Corp. (CINF)
    Cincinnati Financial Corp. is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations.
    Yield: 3.6% | 6-Month Return: -12.7%

    #1. Community Trust Bank Corp. (CTBI)
    Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company.
    Yield: 3.3% | 6-Month Return: -28.6%

    To avoid short-term anomalies, I excluded stocks that I did not own on January 1, 2014 from the above lists. Investing in dividend growth stocks is a long-term proposition, but sometimes it is nice to see that our portfolio is performing well, in addition to collecting higher dividends each month.

    Full Disclosure: Long INTC, CSCO, GD, COP, NNN, EMR, AFL, OMI, CINF, CTBI in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

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    - If Only I Had Known About These Dividend Stocks...
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    (Photo Credit)


    Tags: [INTC] [CSCO] [GD] [COP] [NNN] [EMR] [AFL] [OMI] [CINF] [CTBI]






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