Wednesday, July 27, 2016

Four Attractively Valued Dividend Growth Stocks For Further Research

Last week I shared with you a list of nine dividend champions, which I believed were attractively valued. Today I am sharing with you a few more companies, which I believe are attractively valued. These companies have managed to boost dividends for at least a decade, have a P/E ratio below 20, and a current yield above 2% which is covered by earnings. These are companies which are good candidates for further research. The companies include:

Abbott Laboratories (ABT) manufactures and sells health care products worldwide. Abbott is a dividend aristocrat, which has managed to boost dividends for 43 years in a row.

The company split into Abbott and Abbvie in early 2013. I bought and held shares of the legacy Abbott for years now, but my last purchase was right before the spin-off. I received plenty of disagreement for this decision of course, but I stayed the course.

Due to the split, analyzing historical data for Abbott is a little bit more challenging. The information prior to 2013 includes results for both Abbvie and Abbott. The only information for Abbott only is for the years since early 2013.

Monday, July 25, 2016

How to become a successful dividend investor

There are several guidelines about becoming a successful dividend investor. They are centered around several key points I am going to be discussing in the next three weeks. I will be updating this post with links to articles on the process of becoming a successful investor.

The series of articles over the next three weeks will be a high level summary of my dividend investment plan today. If I were to start dividend investing today, I would find the collection of posts to be of tremendous value. In other words, the articles I will be posting are similar to a free course on dividend investing.

Continue Reading >>>

Friday, July 22, 2016

The paradox of saving and investing

Right now, many investors are sitting on huge unrealized gains in the companies they have bought years ago. I am in those shoes too. However, I believe that many companies are priced ahead of their fundamentals. This is why it is getting harder and harder to find quality dividend growth stocks available at attractive valuations, without having any issues to justify the low valuation.

When I was starting this blog in early 2008, there were a lot more alternatives for investing my money. At the very worst, I could simply buy Certificates of Deposit that yielded 5%, and sit on them. Equity valuations were beginning to look very appealing, and they continued being appealing through the bottom in late 2008 and early 2009. From there on, I found it easy to find quality companies selling at attractive valuations, which grew earnings and dividends for me. It was easy to run a screen, build a collection of companies that showered me with higher dividends every year, reinvest selectively and let the power of compounding do the heavy lifting for me. This was the state of my investments all the way up until early 2013.

The interesting part is that back in 2008 – 2009, I didn’t have as much money to invest, as I do today. Back in late 2007, my total net worth was slightly higher than the amount of money I can safely generate in dividends from my portfolio. I wasn’t making that much in 2009 either. Yet, valuations were very appealing at the time. For example, if I only had $15,000 to invest per year, I could have bought 750 shares of Realty Income (O) at under $20/share or 1000 shares of Altria (MO) at $15/share. The block of Realty Income would have generated $1,275 in annual dividend income, while the block of Altria shares would have generated $1,280 in annual dividend income from the get go.

Wednesday, July 20, 2016

Use these tools within your control to get rich

The ultimate goals of everyone reading this site is to retire wealthy and to stay retired. Financial independence provides flexibility, freedom and a lot of options in life for you. Getting there is usually the challenging part.

I have been on a quest to reach financial independence ever since I graduated college in 2007. I have spent at least a few hours per day, every day, for almost a decade now dreaming of, planning for and working towards my dividend crossover point. The dividend crossover point is the situation where my dividend income exceeds my expenses. While I am very close to this point today however, I also want to have some margin of safety in order to withstand any future shocks that might come my way.

In the process of thinking about how to reach financial independence, I have spoken to a lot of others who are working towards financial independence. I have come up with a list of a few tools that these people have used to get rich. These are tools that are within their control. While outcomes are never guaranteed in the uncertain world of long-term investing, taking maximum advantage of things within your control tilts the odds of success in your favor.

Monday, July 18, 2016

Six Companies Rewarding Shareholders With Regular Dividend Hikes

As part of my portfolio monitoring process, I evaluate the list of dividend increases every week. It is helpful to monitor how my investments are doing, and whether my investment thesis is paying out higher cash dividends over time. This monitoring is also helpful to observe other companies that raise dividends. This is another tool to uncover hidden dividend gems that few others might be focusing on.

There were six companies that managed to boost dividends last week. Of course, this is not an automatic buy – further analysis on each company needs to be done to determine if it meets the qualitative and quantitative criteria of the investor. The list includes companies that have managed to increase distributions for at least ten years in a row:

Omega Healthcare Investors, Inc. (OHI) is a real estate investment trust, which invests in healthcare facilities, primarily in long-term healthcare facilities. This REIT raised its quarterly dividend to 60 cents/share. This was the fourth consecutive quarterly increase in the past year. Omega Healthcare Investors has rewarded shareholders with a raise for 13 years in a row. The ten year average dividend growth rate is 9.90%/year.  Future dividend growth will likely be around half that rate. This REIT sells at 10.90 times last years AFFO and yields 7.10%. The AFFO is projected to grow to $3.25 - $3.30/share in 2016, up from $3.08 in 2015. The stock looks attractively valued. You may like my previous analysis of Omega Healthcare, which I may refresh for your convenience. You may also enjoy this investor presentation.

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