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
Relevant Articles:
- 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
Popular Posts
-
Dollar cost averaging is a process, where the same amount of funds is allocated to preset investment/s at regular intervals of time. It is ...
-
As an investor, I am aware that I have a lot of blind spots. Someone with a glass half full outlook on life might say that I have a lot of r...
-
Warren Buffett’s Berkshire Hathaway just received a dividend check for $194 million dollars from Coca-Cola. Berkshire Hathaway owns 400 mil...
-
I review the list of dividend increases as part of my monitoring process. This exercise helps me monitor existing holdings. It also helps me...
-
The Dow Jones U.S. Dividend 100 Index is designed to measure the performance of high-dividend-yielding stocks in the U.S. with a record of c...
-
The Procter & Gamble Company (PG) provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Groomi...
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps in monitoring existing positions a...
-
One of my favorite charts shows a listing of eleven consumer goods companies, and the brands that they own. It reinforces my belief that str...
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me monitor existing holdings but a...
-
A pattern of steady dividend payments and dividend increases is only possible if a business can generate enough cashflows to support operati...