I like accumulating things that provide me with something of value to me. Early in life, I accumulated knowledge and paid to it out of pocket by holding multiple part time jobs, earned scholarships, and graduated with a couple of thousand in cash and no debt. I used that knowledge to find employment, and use it to find the necessary capital to invest, and to gain even more knowledge about the opportunities around me. I never liked however the fact that most of my income is derived from a single source, being employment. I prefer to have my income coming from a variety of sources. This is why I like accumulating ownership interests in quality companies that sell at reasonable valuations, and which have long histories of paying and raising dividends. By having a diverse portfolio of businesses from different industries and with operations around the world, my dividend income is not dependent on a single source drying up. The ultimate goal of this exercise is to accumulate enough in income generating assets early in life, in order to enjoy the fruits of my early efforts for decades, while having the opportunity to pursue other interests.
But enough of the mumbo jumbo. The paragraph above describes what most of you are doing as well. Let's get to the point: Over the past week, I added to my positions in those three companies:
Diageo plc (DEO) manufactures and distributes premium drinks such as Johnnie Walker Crown Royal, Baileys, Smirnoff, Captain Morgan, Guinness to name a few. This international dividend achiever has managed to boost dividends in British pounds for 15 years in a row. The ten year dividend growth rate is 5.80%/year. US investors could purchase the ADR’s at 16.90 times forward earnings and a yield of 2.80%. Check my analysis of Diageo.
Baxter International Inc. (BAX) develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney diseases, trauma, and other chronic and acute medical conditions. The company has managed to increase dividends for 8 years in a row. The ten year dividend growth rate is 12.40%/year. The stock is attractively priced at 14.50 times forward earnings and yields 3%. Check my analysis of Baxter.
ConocoPhillips (COP) explores for, develops, and produces crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. This dividend achiever has raised dividends for years in a row. The ten year dividend growth rate is 15.70%/year, but this would likely drop over the next decade. Currently, ConocoPhillips is selling at 11.80 times forward earnings and yields 4.10%. Check my analysis of COP.
Another company that I might add to later in 2014 or early in 2015 is Emerson Electric (EMR), which just recently announced it was increasing its quarterly dividend by 9.30% to 47 cents/share. This marked the 58th consecutive annual dividend increase for this dividend king. In the past decade, this dividend king has managed to boost distributions by 7.70%/year. The stock is attractively valued at 16.20 times forward earnings and a forward yield of 2.90%. I last looked at the company in 2012, so it is on the block for a fresh analysis.
Overall, I find that the person who ends up wealthy is the one who regularly saves money to invest every month, then patiently sits on his pile of businesses for decades, and reinvests the growing stream of dividends into more income producing assets along the way. Even if you make mistakes along the way, a diversified portfolio throwing and ever growing amounts of cash every 90 days will correct them, and make them seem like a rounding error in the grand scheme of things.
Full Disclosure: Long DEO, BAX, COP, EMR
- Dividend Reinvestment is important
- Coca-Cola: A wide-moat dividend growth stock to buy and hold
- The Only Reason for Automatic Dividend Reinvestment
- Why dividends?
- My Strategy
There were several companies over the past week, which raised dividends to shareholders. I isolated six of those companies, which have mana...
My goal is to purchase quality companies that grow earnings and dividends at an attractive price. Most members of the dividend champions li...
The biggest fallacy out there is that each dollar reinvested by companies will automatically translate into more profits. Unfortunately, r...
Every week I go through the list of dividend increases , as part of my monitoring process. I monitor the dividend increases from companies I...
This guest post has been wrote by Mike McNeil, passionate investor, founder of Dividend Stocks Rock and author of The Dividend Guy Blog . ...
Dividend investing is as sexy as watching paint dry on the wall. Defining an entry criteria that selects quality dividend stocks with ris...
Every week, I review the list of dividend increases as part of my monitoring process. I usually focus on companies I already own. However, ...
The most important question that investors ask themselves is how much money do they need to retire . There are several things to consider, i...
Every week, I review the list of dividend increases as part of my monitoring process . I usually focus my attention on companies that have m...
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverages worldwide. This dividend king has paid uninterrupt...