Monday, December 11, 2017

Nine Dividend Increases For Further Review

As part of our monitoring process, we review the list of dividend increases every week. In this monitoring process I review the rate of dividend increases for companies I own. This is one of the many ways to evaluate if my thesis is still working. I also use this tool as one of the ways to review companies I may be interested in buying at some point in time ( provided the price was good).

I also post these updates on this site to share with you how I quickly evaluate companies and either put them on the list for further research or immediately discard them for the time being. Since our time is limited, we want to focus it on the best opportunities, available at the best prices today, and place the rest of opportunities on hold.

For this weekly review, I focused on the dividend companies whose boards approved a dividend increase over the past week. All of these companies have managed to reward shareholders with an annual raise for at least a decade.

The companies include:

Thursday, December 7, 2017

Don't Be An Arrogant Dividend Growth Investor

There are many risks to investing. One of the major risks that could ruin a portfolio’s chances of generating adequate dividends are purely psychological. Investors who act/are overconfident in their abilities, tend to rush through, and make silly mistakes that could be disastrous. Being cocky might work in certain areas of life, but not in investing on the financial markets.

One of the risks that overconfident investors take is when they create a concentrated dividend portfolio. These concentrated portfolios typically include no more than ten to fifteen individual securities. These cocky investors claim that they create these concentrated portfolios because they are only investing in their best ideas. According to these investors it is much easier to focus all your energy on ten individual stocks and research all there is to them, than to focus on thirty or more companies. The reason why I view these investors as overconfident is because they are forgetting that sometimes, no matter how great you are at analyzing investments, some unknown factor might cause you to still lose money. If just one out of ten companies eliminated dividends and fell substantially in the process, it could mean trouble. Contrast this to a portfolio of 30 companies, which is properly diversified and allocated to different sectors. An unexpected blow to one company would not jeopardize the dividend income stream.

Monday, December 4, 2017

Two dividend growth stocks raising dividends like clockwork

The appealing feature of the best dividend growth stocks is their ability to boost annual dividends like clockwork. This feature is even more appealing when strong dividend increases are supported by underlying growth in earnings.

Two prominent companies raised their dividends to shareholders in the past week. Both companies are high quality ones with wide moats. The companies include:

The Walt Disney Company (DIS) is an entertainment company. The Company operates in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media.

Disney’s incomparable collection of iconic brands and franchises continues to deliver strong returns to shareholders, as the company raised its semi-annual dividend by 7.70% to 84 cents/share. This marked the 8th consecutive annual dividend increase for Disney. The new yield is 1.60%. Over the past decade, the company raised its dividend at an annual rate of 18.80%/year.

The strong dividend growth was supported by the increase in earnings from $2.28/share in 2008 to $5.69/share in 2017. Analysts expect the company to earn $6.23/share in 2018.

The stock is attractively valued at 16.90 times forward earnings. Check my analysis of Walt Disney Company for more information about the company.

McCormick & Company (MKC) is engaged in manufacturing, marketing and distributing spices, seasoning mixes, condiments and other flavorful products to the food industry, including retailers, food manufacturers and foodservice businesses. The Company's segments include consumer and industrial.

The company reiterated its commitment to dividend growth, by raising its quarterly dividend by 10.60% to 52 cents/share. This marked the 32nd consecutive annual dividend increase for McCormick. The new yield is 2%. Over the past decade, this dividend champion managed to grow its dividend at an annual rate of 9.10%/year.

The strong dividend growth was supported by the increase in earnings from $1.73/share in 2007 to $3.69/share in 2016. Analysts expect the company to earn $4.22/share in 2017.

The stock is overvalued at 24.40 times forward earnings. I would consider adding to my position on dips below $85/share.

Relevant Articles:

The predictive value of rising dividends
- How to value dividend stocks
How I Manage to Monitor So Many Companies
The predictive value of rising dividends

Thursday, November 30, 2017

Ten Dividend Growth Stocks For Retirement Income

If you are reading this site, chances are that your goal is to live off dividends in retirement. Dividends are more secure than share prices, which means that retirement income is much easier to project using dividend income. Dividend income is more stable than share prices, and it is easier to forecast. A retiree can easily figure out how much dividends will be generated by a company. On the other hand, no one has any clue whether the stock price will be up or down a year from now. This is the reason why retirees have been focusing their attention on dividend checks for decades. Rather than focusing on whether they stock market is up or down, these retirees focused on identifying companies with dependable dividends, margin of safety in dividend payments, and available at attractive valuations.

I went through my watchlist, and identified several promising dividend companies that have secure dividends. The companies include:

Monday, November 27, 2017

Five Companies Rewarding Shareholders With A Raise

As part of my monitoring process, I review the list of dividend increases every single week. I use this exercise to monitor existing investments, and to monitor the tone of companies I may be researching for potential acquisition. Dividend announcements provide a great glimpse about what management expects the near term business conditions to be.

Factors the boards of directors considers when setting the dividend include future earnings expectations, payout ratio, and dividend yield relative to those at peer companies, as well as returns available on other income oriented investments.

I then take those dividend hikes, and evaluate them against the past record, and look at the valuations to evaluate for potential entry points.

Over the past week, there were four dividend growth companies that announced their intent to reward their long-term investors with a dividend raise. The companies include:

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