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

  • 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.

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    (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.

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    - 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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    (Photo Credit)


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


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

    Company Description: Sysco Corporation is a large distributor of food and related products, primarily to the foodservice or food-away-from-home industry.

    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

    SYY is trading at a premium to all four valuations above. The stock is trading at a 23.1% premium to its calculated fair value of $30.04. SYY 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%

    SYY 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%. SYY 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 1970 and has increased its dividend payments for 43 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 $348 is below the $500 target I look for in a stock that has increased dividends as long as SYY has. The stock's current yield of 3.11% exceeds the 3.08% estimated 20-year average MMA rate.

    Memberships and Peers: SYY 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: G. Willi Food-International Ltd. (WILC) with a 0.0% yield, Spartan Stores Inc. (SPTN) with a 2.3% yield, and United Natural Foods, Inc. (UNFI) with a 0.0% yield.

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

    Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $33.36 before SYY's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 43 years of consecutive dividend increases. At that price the stock would yield 3.5%.

    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 4.7%. This dividend growth rate is higher than the 3.6% used in this analysis, thus providing no margin of safety. SYY has a risk rating of 1.75 which classifies it as a Medium risk stock.

    SYY operates in a relatively stable industry and has the largest market share in the United States and Canada. Over the last 40 years, SYY has developed an extensive distribution network that no other competitor has been able to replicate. SYY consults with its customers on how they can drive sales and minimize costs.

    In December 2013, SYY agreed to acquire US Foods, the second largest food distributor, for $8.2 billion. The combined company should gain significant synergies in purchasing power, supply chain efficiencies and the overhead consolidation. Also, the refinancing of US Foods $4.7 billion debt could boost the combined EPS.

    The challenging macroeconomic environment, including rising costs due to fuel price hikes and other inputs, will likely hurt margins in the near-term. However, the company’s long term fundamentals are solid.

    SYY is trading above my fair value price of $30.04. In addition, its free cash flow payout of 63% (down from 70% in the last review) is above my maximum level. The company has improved its FCF payout over the last several quarters. I will continue to wait until the SYY's dividend fundamentals improve before adding to my position.

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

    Full Disclosure: At the time of this writing, I was long in SYY (1.2% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

    Related Articles:
    - Community Trust Bank Corp. (CTBI) Dividend Stock Analysis
    - Procter & Gamble (PG) Dividend Stock Analysis
    - Kellogg Company (K) Dividend Stock Analysis
    - Cardinal Health, Inc. (CAH) Dividend Stock Analysis
    - Darden Restaurant Inc. (DRI) Dividend Stock Analysis
    - More Stock Analysis


    Tags: [SYY] [WILC] [SPTN] [UNFI]


  • Weekly Links: July 20, 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:

    - Can Johnson & Johnson Cure What Ails Your Portfolio?
    - June 2014 Cash Flow Statement
    - Trade exit – AAPL long call for a loss (-24%)
    - My Dividend Portfolio: Q2 2014
    - What Will Visa's Dividend Look Like in Five Years?

    The DIV-Net Featured Articles:

    - Two Stocks On My Watch List For A July Purchase
    - Are Storm Clouds Gathering For These 5 High-Yielding Securities?
    - The Importance of Diversification - Part 1
    - Dividend Growers With The Best Price For Earnings Growth Ratio
    - Why Dividend Mantra Purchased Visa (V)?
    - ConocoPhillips Increases Dividends to Shareholders

    Articles from D4L-News:

    Is It Time To Buy These Dividend Stocks With High Cash Flows?
    a Barron's article argued that an expected increase in Treasury bond yields could lead investors to ditch dividend stocks for bonds. Yields on 10-year Treasury bonds were at 2.61% at 11:30 a.m. Monday morning, but Sam Stovall of S&P Capital IQ told Barron's that the research firm expects the yield to reach 2.9% by the end of the year and 3.3% by the end of 2015. With this in mind, we ran a screen for investors intent on keeping dividend stocks on hand. We began with a group of stocks that are going ex-dividend this week. Next, we narrowed down that group to high dividend stocks with yields of 2% or greater...

    Buy These Dividend Stocks on the Pullback
    Over the last few years, investors have piled into high-quality dividend stocks in search of yield. With bonds paying abysmal yields, dividend stocks became an attractive alternative. This popularity pushed prices up and yields down, and many dividend stocks became overvalued. Many dividend stocks which have been overvalued for some time are falling back to earth, and an opportunity may arise to buy them at a discount. It's a good idea to keep a watchlist of high-quality dividend stocks which you'd like to buy and the price which you'd be willing to pay...

    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)
     







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