Thursday, April 19, 2018

Tobacco Companies Offer An Opportunity For Income Investors

I was reviewing my portfolio today, and noticed that tobacco companies are getting smoked this morning. Phillip Morris International is down 16% as of the time of this writing, while Altria is down 8%.

Altria yields close to 5% today, and sells at a forward P/E of 14.20. PMI also yields 5% and sells at a forward P/E of 16.20.

I believe that this is an overreaction to the slight revenue miss by Phillip Morris International this morning. I also believe that these stocks could get lower today too. As a result, I believe that there is some opportunity to start reviewing tobacco companies for further research. I am going to look closely into adding more shares on the way down. 

I already own too much Phillip Morris International (PM), but I do want to add some more to Altria (MO).

You may check my last analysis of Altria here:

That being said, it is better to slowly add to positions over time, and not put everything at once. This is a risk management technique I learned during the 2007 - 2009 bear market.
Thank you for reading!


Wednesday, April 18, 2018

Three Cheap Dividend Stocks To Consider

I wanted to send in a quick note to readers about an interesting recent development. According to recent reports I have read, Amazon has shelved plans to sells drugs to hospitals. Fears of Amazon have plagued the share prices for companies such as Cardinal Health (CAH), CVS Health (CVS) and Walgreen's (WBA).

Selling pharmaceuticals is a different business from selling books online. You cannot simply ship them using Fedex or UPS. Amazon would need to build a more sophisticated logistics network that can handle temperature-sensitive pharmaceutical products. Before that however, it needs to build the trust of big hospitals first.

In addition, Amazon is not able to sell products, such as pacemakers, which are directly implanted in the human body. As a result, it does not have the ability to become a vendor that offers complete solutions to hospitals.

Amazon had found it difficult to sell and distribute pharmaceutical products.Amazon has not been able to convince big hospitals to change their traditional purchasing process, which typically involves a number of middlemen and loyal relationships.

The health-care supply chain is well-entrenched and will be hard to break into. The hospital and health-care systems have entangling alliances with their existing purchasing and supply chain partners.

Monday, April 16, 2018

Four Dividend Growth Stocks 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 check on the health of companies I own. I also check the list of dividend increases as part of my overall monitoring of companies I am reviewing for potential addition to my dividend portfolio.

I do find it helpful to narrow the list down by focusing only on the companies that have raised distributions every single year for at least a decade. Next, I tried to discuss each company and provide some helpful stats in order to determine if they look promising under certain circumstances.

The fact that a company that has raised dividends for a decade is just the first step in the process for further research. Making sure that those dividend increases are as a result of improving fundamentals is important. Equally important is making sure that the dividend company in question is also attractively valued.

Over the past week, there were four companies that raised dividends to their shareholders. Each one of those companies has managed to boost distributions for at least ten years in a row. The companies include:

Thursday, April 12, 2018

McCormick & Company (MKC) Dividend Stock Analysis

McCormick & Company (MKC) engages in the manufacture, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates in two segments, Consumer and Industrial. This dividend aristocrat has paid dividends since 1925 and has increased them for 32 years in a row.

The company’s latest dividend increase was announced in November 2017 when the Board of Directors approved a 10.60% increase in the quarterly annual dividend to 52 cents /share.

Over the past decade this dividend growth stock has delivered an annualized total return of 13.40% to its shareholders.

Monday, April 9, 2018

How to Generate a 15% Yield on Cost in Ten Years

A few years ago I shared the story of one small investment of a beginner income investor I met at the beginning of my own dividend journey. This story shows that anyone can start learning investing, no matter what age, level of money they can set aside. All that truly matters is having the right attitude that you can achieve anything you set your mind to, through hard work, persistence, patience and determination. Of course, the most important thing about dividend investing is to get started.

You do not need a lot of money to get started with dividend investing. One should never despise the days of small beginnings, and think that they need a large pike of cash before starting dividend investing. If you start slowly, even with an investment of a few dollars, you are years ahead of most other individuals. Unless you are drowning in debt, you do not have any excuse to avoid investing in some of the strongest dividend paying blue chips today. With brokerages like Robinhood, it is possible to purchase shares in companies you like without paying any commission. Of course, you should increase the amounts you put to work for you as your level of income increases over time. Otherwise, you would need to spend a higher amount of time working prior to accumulating a sufficient nest egg.

So back in May 2008, my young friend opened an account with Sharebuilder with $40 that he had to his name. He paid a steep $4 commission, but managed to purchase 1.4196 shares of Realty Income (O) at 25.36/share. Being a poor college student, he was low on cash so he took advantage of a brokerage deal at Sharebuilder. As part of the deal, he received a $50 cash bonus for opening an account and making one investment. So after he made the investment, he essentially started playing with the house’s money, as he had no funds at risk after the rebate.

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