Monday, May 4, 2015

Five Companies Showering Investors With More Cash

I expect that sometime around 2018, my forward dividend income will exceed my monthly expenses. I find dividends to be a more stable and dependable source of income, than capital gains. If I choose to live off dividends, and not have a job or other sources of income by the end of this decade, I want to make sure that I do not outlive my nest egg.

I purchase shares in companies that pay me to hold them and will increase those payments over time. When a company I hold rewards me with more cash, this shows me that my strategy works in achieving its expected goals and objectives. The news that a company I own raised dividends serves as a positive reinforcement tool.

In the past week, there were several companies that raised dividends. I have highlighted several which have managed to boost distributions for at least five years in a row. I have also focused only on those I already own, or find interesting for further research. The companies include:

Exxon Mobil Corporation (XOM) explores for and produces crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. The company boosted its quarterly dividend by 5.80% to 73 cents/share. This marked the 33th consecutive annual dividend increase for this dividend champion. The ten year dividend growth rate is 9.80%/year. Shares are slightly overvalued at 22.30 times forward earnings and a yield of 3.30%. I would consider the stock on dips below $80/share. Check my analysis of Exxon Mobil.

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. The company boosted its quarterly dividend by 18.20% to $1.30/share. This marked the 20th consecutive annual dividend increase for this dividend achiever. The ten year dividend growth rate is 19.80%/year. Shares are attractively valued at 10.90 times forward earnings and a yield of 3%. I find the stock attractively valued, and might consider adding shares to my position there. Check my analysis of IBM.

W.W. Grainger, Inc. (GWW) operates as a distributor of maintenance, repair, and operating (MRO) supplies; and other related products and services that are used by businesses and institutions primarily in the United States and Canada. The company boosted its quarterly dividend by 8.30% to $1.17/share. This marked the 44th consecutive annual dividend increase for this dividend champion. The ten year dividend growth rate is 18.20%/year. Shares are attractively valued at 19.80 times forward earnings and a yield of 1.90%. I would be interested in adding to my position in the stock on weakness. Check my analysis of W.W. Grainger.

Wells Fargo & Company (WFC) provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. The company raised its quarterly dividend from 35 to 37.50 cents/share. This marked the fifth consecutive annual dividend increase. The stock is attractively valued at 13.30 times forward earnings and yields 2.70%. Check my analysis of Wells Fargo for more details. Wells Fargo is an example of a situation where my assessment was wrong in May 2013, but I changed my mind after reviewing my analysis a couple of months later. I should refresh my analysis on the company.

American Water Works Company, Inc. (AWK), through its subsidiaries, provides water and wastewater services in the United States and Canada. The company operates through two segments, Regulated Businesses and Market-Based Operations. The company boosted its quarterly dividend by 9.70% to 34 cents/share. This marked the 8th consecutive annual dividend increase for American Water Works. The five year dividend growth rate is 8.10%/year. Currently, the stock is selling at 20.90 times forward earnings and yield 2.50%. The stock seems overvalued at present, and I need to add it to my list for further research.

Full Disclosure: Long XOM, IBM, GWW, WFC

Relevant Articles:

My Dividend Goals for 2015 and after
How to read my weekly dividend increase reports
Buying Quality Companies at a Reasonable Price is Very Important
Successful Dividend Investing Requires Patience
How to analyze dividend stocks

4 comments:

  1. I have been closely watching IBM and XOM that are really attractively valued at the time. Thanks for sharing!

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  2. "I expect that sometime around 2018, my forward dividend income will exceed my monthly expenses." Let me be the first to offer a mighty [w00t!] at your progress. FIRE is in reach for you. I'm saving you a seat at the cool kids table.

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  3. 2018 - that's awesome! I've been doing a dividend growth approach to my investing since late 2011. While my projections show it being a L-O-N-G time before my dividends exceed my expenses...its great to watch monthly and quarterly dividend income increase as time marches on. Thanks for the continued writing efforts.....

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  4. Thanks everyone for commenting. It just shows that when you save a large portion of your income over a 11 - 12 year period, and you reinvest those dividends, good things could happen. The downside for me is that I have succumbed to lifestyle inflation - I had hit my original goals in 2013 - 2014, but had to increase the targets, since my expenses had increased.

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