As a dividend investor my goal is to generate a sufficient stream of sustainable dividends from my income portfolio. I focus on dividends because this method is much less volatile than relying on capital gains and also is a more sustainable method to pay for expenses when compared to selling off shares. This was evident over the past week, when stocks dropped for the first time in several weeks.
At the same time, one of my core holdings, Procter & Gamble (PG), raised quarterly dividends by 7% to 60.15 cents/share. This marked the 57 consecutive annual dividend increase for the company. To put things in perspective, when the company started raising dividends, the US president was Eisenhower. The company has managed to boost dividends during nine recessions, several wars, a few oil price shocks, and nine bear markets. There are only fifteen companies in the world which have managed to boost dividends for over 50 years in a row. Check my analysis of the stock.
Over the past decade, P&G has enjoyed an increase in earnings per share from $1.95 in 2003 to $3.82 in 2012. The ten year dividend growth is 10.80%/annually. Currently the stock is trading at 17.90 times earnings, and yields 3%. The stock is close to being fully valued at the moment, based on FY 2013 expected earnings. I would consider adding to the stock on dips, although judging by the negative sentiment in the dividend community, I am not expecting any sizeable corrections.
As a dividend investor, I am not at all worried about stock market fluctuations, as long as I keep receiving my dividend income. In fact, if the market dropped by 50% tomorrow, or it was closed for the next five years, I would be relatively unaffected as long as my companies are fundamentally sound.
Full Disclosure: Long PG
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I'd hate for the market to be closed for 5 years, although that's because there's so many companies that I want to be a part owner of. I wouldn't be selling though.
ReplyDeletePG's little dividend has grown up to be a nice little baby boomer. It's crazy to think of some of the dividend increase streaks out there.