Most dividend investors require consistency from their stock positions. As a result companies which are able to generate rising dividend income over time are viewed more favorably in comparison to companies such as Pfizer (GE) or General Electric (GE), which have followed an inconsistent dividend policy over the past two years.
Just last week General Electric (GE) forecasted that there is a high chance for a dividend increase in 2011, coupled with a resumption of the company’s stock buyback plan and retirement of the company’s preferred stock. General Electric (GE) has had a pretty terrible timing of its share buyback plan over the past decade. The company spent billions between 2005 and 2007 repurchasing 513 million shares when prices were high. By 2009 the company had issued 517 million shares at much lower prices, in order to obtain liquidity in the wake of the global financial crisis. If the company does start increasing dividends in 2011 however, this could be a bullish sign. It would take at least a decade of consistent dividend raises however in order for the dividend to reach its previous levels of 31 cents/share.
Compare this to the consistency of PepsiCo, Inc. (PEP), which manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. Last week the company announced a 7% increase in its quarterly dividend to 48 cents/share. This is the thirty-eight consecutive annual dividend increase for this dividend aristocrat. The company's Board of Directors also authorized the repurchase of up to $15 billion of PepsiCo common stock through June 2013. The stock currently yields 2.90%. Check my analysis of the stock. Dividend author Dave Van Knapp has included the company in his most recent book "The Top 40 Dividend Stocks for 2010". The company is also one of the Best Dividends Stocks for the Long Run.
PepsiCo (PEP) is a reliable dividend stock, which is attractively priced at the moment despite its forward yield of 2.90% being a tad lower than my entry requirement of 3%. My ideal entry price at PepsiCo would be $64, for those investors waiting for better prices. Investors have to weigh in the risks of waiting for a better price, versus the risk of missing out completely on any upside action if the company doesn’t go below $64/share.
Full Disclosure: Long PEP
Relevant Articles:
- Dividend Aristocrats List for 2010
- The right time to buy dividend stocks
- Dividends versus Share Buybacks/Stock repurchases
- PepsiCo (PEP) Dividend Stock Analysis
Popular Posts
-
The S&P Dividend Aristocrats index tracks companies in the S&P 500 that have increased dividends every year for at least 25 years ...
-
A lot of people would tell you that receiving a dividend is the same as selling stock That's deceptive at best, and an outright lie at ...
-
Today marks the 18th year of the Dividend Growth Investor blog. I started it on my kitchen table 18 years ago, as a way to share my throught...
-
As a dividend investor, I do not really look at stock price charts. The things I look for are trends in earnings and dividends, catalysts f...
-
Visa Inc. (V) operates as a payments technology company worldwide. The company facilitates commerce through the transfer of value and inform...
-
Anne Scheiber worked as an auditor for the IRS. She retired at the age of 51 in 1944, and focused on managing her portfolio for the next 51 ...
-
The goal of every dividend investor is to generate a sufficient stream of passive dividend income, that would adequately cover their expens...
-
As part of my monitoring process , I review the list of dividend increases every week. I believe that this exercise provides a quick snapsho...
-
Charlie Munger is Warren Buffett’s business partner at Berkshire Hathaway. He is a successful lawyer, and investor, who was instrumental i...
-
The Procter & Gamble Company (PG) provides branded consumer packaged goods to consumers in North and Latin America, Europe, the Asia Pac...
