Tuesday, March 3, 2015

Four Dividend Stocks for the Long Run

I believe that success is achieved one step at a time. My overall goal is to be able to one day live off dividend income, produced by my portfolios. However, in order to get there, I need to keep working and saving money. To get more money to invest, I should cut expenses, increase income, or use a combination of both. That money is then invested every month into attractively valued dividend stocks, which I believe have good prospects for further growth in earnings and dividends. Thus, with each small step I take on a regular basis, I try to consciously live my life in a way that would allow me to get where I want to be. I believe acquiring shares of dividend growth stocks is that step, which will deliver growing dividends for years for come.

In the past week, I managed to purchase shares in the following companies:

T. Rowe Price Group, Inc. (TROW) is a publicly owned asset management holding company. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. I like the business model of asset managers, which have a lot of tailwinds going in their favor. Those include organic increase in assets under management due to price increasing over time, reinvestment of dividends. This dividend champion has raised distributions for 28 years in a row. The company has managed to boost annual dividends by 16.60%/year over the past decade. Currently, the stock sells for 17 times forward earnings and yields 2.50%. I will be posting my analysis of the company shortly.

General Electric Company (GE) operates as an infrastructure and financial services company worldwide. The company has raised dividends for 5 years in a row. General Electric has managed to boost annual dividends by 1%/year over the past decade. This of course included the massive dividend cut during the financial crisis. Currently, the stock sells for 15 times forward earnings and yields 3.50%. Check my analysis of General Electric for more details.

Baxter International Inc. (BAX), develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. Baxter has raised dividends for 8 years in a row. The company has managed to boost annual dividends by 13.20%/year over the past decade. Currently, the stock sells for 16.50 times earnings and yields 3%. Check my analysis of Baxter for more details.

The Chubb Corporation (CB), through its subsidiaries, provides property and casualty insurance to businesses and individuals. This dividend champion has managed to increase distributions to shareholders for 33 years in a row. The company has managed to boost annual dividends by 9.80%/year over the past decade. Currently, the stock sells for 13.10 times forward earnings and yields 2.30%. I added some shares to my small position in Chubb. I would be more excited about this company if it sells for less than $91/share. Check my analysis of Chubb for more details.

With those purchases, I have now maxed out my Roth IRA for 2015 and SEP IRA contribution for 2014. I am in the process of maxing out the 401 (k) and Health Savings Account (HSA), which would all save me a tremendous amount in taxes. As I mentioned in my post on goals for 2015, putting investments in a tax deferred accounts can deliver better results, and potentially speed up the process towards reaching financial goals.

How are you progressing towards your goals?

Full Disclosure: Long TROW, GE, BAX, CB

Relevant Articles:

My dividend crossover point
How long does it take to manage a dividend portfolio?
How to increase your dividend income
How to never run out of money in retirement
Will the dividend grow?

7 comments:

  1. I own both GE and BAX and I'm looking pretty closely at both TROW and CB. I'd like to add a couple more financials to my portfolio because it's been a while since I've added to that sector.

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  2. Some great buys here DGI. I like all four companies, with TROW, GE, and BAX being a notch above CB for me. Good to see you leveraging those retirement accounts as well.

    Thanks for sharing, you're getting closer and closer to the end goal.

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  3. I also recently purchased TROW, and suggest you research BLK as another possibility. I already own GE, BAX and CB. (Sneaker4404)

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  4. Rebuilding my savings is the goal for the year. That will go better once I get my tax refund. If I do have any money left over it will go into a Roth (I should have been maxing that out years ago). Good buys btw.
    DFG

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  5. I am very interested in TROW. Will do more research on it. Looking forward to your analysis too.

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  6. These are all nice purchases DGI! Good job on your contributions too! Done on my side as well :-D

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  7. BAX is probably going to cut the dividend after they are done with the spin, no (i.e., combined dividend of parent and spin-co will be lower than parent dividend prior to spin)?

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