Monday, April 28, 2014

Two Dividend Kings Extending Their Dividend Growth Streaks in April

My strategy for financial independence is called dividend growth investing. I constantly monitor the group of dividend champions and dividend achievers for companies which are attractively priced. I then analyze them in detail, in order to determine if the business can continue earning more, in order to pay me rising dividend checks in the future. I have managed to build my dividend freedom portfolio one stock at a time over the past six years. I am incredibly patient, which is why I hold on to any quality company I bought, as long as the dividend is not cut or eliminated.

One part of my monitoring process is regularly checking the list of companies that have recently announced increases in their dividend rates. Company management only approves increasing dividends if they expect earnings to improve over the next several years. That is why dividend increases are typically a bullish sign for investors who hold dividend growth investments. Over the past month, there were a couple dividend kings, which extended their streak of regular dividend increases.

The Procter & Gamble Company (PG), together with its subsidiaries, manufactures and sells branded consumer packaged goods. The company’s board of Directors approved a 7% hike in quarterly dividends to 64.36 cents/share. This marked the 58th consecutive dividend increase for this dividend king. Over the past decade, Procter & Gamble has managed to increase dividends by 10.60%/year. This was fueled by a 7.60% increase in annual earnings per share over the same period. Analysts expect the company to earn $4.21/share in 2014 and $4.54/share in 2015. In comparison, Procter & Gamble earned $3.86/share in 2013. Currently, the stock is fairly valued at 19.30 times forward earnings and yields a very sustainable 3.10%. I would plan on adding to my position in the company, unless of course there are other more attractive investments available. Check my analysis of Procter & Gamble.

Johnson & Johnson (JNJ), together with its subsidiaries, is engaged in the research and development, manufacture, and sale of various products in the health care field worldwide. The company’s board of Directors approved a 6.10% hike in quarterly dividends to 70 cents/share. This marked the 52nd consecutive dividend increase for this dividend king. Over the past decade, Johnson & Johnson has managed to increase dividends by 10.80%/year. This was fueled by a 7.20% increase in annual earnings per share over the same period. Analysts expect the company to earn $5.88/share in 2014 and $6.33/share in 2015. In comparison, Johnson & Johnson earned $4.81/share in 2013. Currently, the stock is attractively valued at 17 times forward earnings and yields a very sustainable 2.80%. I plan on adding to the company this year, subject to availability of funds. Check my analysis of Johnson & Johnson.

Those companies have managed to accomplish their dividend streaks, because they had strong business models, and diversified streams of earnings that kept growing through good and bad years. This is the type of quality income security that every dividend investor worth their salt should study.

Full Disclosure: Long JNJ and PG

Relevant Articles:

How to read my weekly dividend increase reports
Procter & Gamble (PG) - A dividend stock to hold forever
Johnson & Johnson (JNJ) - A must own dividend stock
The Dividend Kings List Keeps Expanding
My dividend crossover point


  1. You're repeating the same old claptrap time after time. The same tired old stocks. The same as the tired old company names. It's time you got yourself a different scam.

    1. Scam: - what's a scam here?
      And if you are not interested in the same old companies "handing out" more and more money then what are you doing looking at a dividend growth investing blog?

    2. Hey Barry Tomkins,

      You are a moron who doesn't know preferred stock from livestock. How about you go and take a hike? You are a cancer that doesn't add anything valuable to anyone

    3. Barry Tompkins,

      You can keep posting your hateful comments every day. You are not hurting me one bit however, as I ignore your BS.

      So bite me

  2. Love these two companies. The yield on JnJ seems a bit low for my preference, but I expect that this stock has big upside potential in the coming decade due to the aging population it caters to so well. PG is also fantastic, with great dividend and slow and steady uprise!

  3. How exactly are dividend paying stocks a scam?

    The same tried and true dividend paying stocks sell goods or services people need every day, keep earning more, keep sharing more of the profits as dividends to shareholders and quietly compound shareholder capital in the process. Of course I would keep focusing on the same companies that make me money – you would have to be a fool to ignore companies that make you money.
    Of course, based on the pattern of your comments, you are the same internet troll who posts here under various nicknames, who tries to pick fights with me. You are a useless member of society, who doesn’t contribute to others well being.

  4. Barry Tompkins, try adding something of value.

    Do you have a better way of doing things? Share it.

    Are you a better investor? Tell us how to be like you.

    If you can't do those things, shut the hell up and leave people be. DGI's advice is solid, end of story.

  5. While I agree there's a troll in the comments section I must admit I'm a bit tired of reading about this particular pair of stocks on dividend blogs :-) ..might be because they are so expensive and I'm bitter that I missed the train ofc.

  6. Appreciate your work as always DGI. Long time fan - keep it up! Do you think the future of these stocks is mid single digit dividend increases - in line with earnings - or do you think a return to double digit increases (averaged over time) is more likely?


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