Monday, December 21, 2015

Dividend Growth Investing At Work

Dividend growth investing is a wonderful strategy. Most of the work in selecting and purchasing an attractive security is done upfront. After that, the dividend investor is paid a growing dividend for work they may have done years ago. Of course, this dividend investor should regularly monitor his portfolio holdings, and dispose of any companies that no longer fit their goals of providing with a dependable dividend income to live off in retirement.

Over the past week, there were several dividend companies which increased their dividends. The companies include:

AT&T Inc. (T) provides telecommunications services in the United States and internationally. The company operates through two segments, Wireless and Wireline. The company increased its quarterly dividend by 2.10% to 48 cents/share. This dividend champion has managed to boost dividends for 32 years in a row. In the past decade, AT&T has managed to increase dividends by 3.90%/year. The stock is selling for 12.40 times forward earnings and yields 5.70%. Check my analysis of AT&T for more information about the company.


Realty Income Corporation (O) is a publicly traded real estate investment trust. It invests in the real estate markets of the United States. The company increased its quarterly dividend to 19.10 cents/share. This dividend achiever has managed to boost dividends for 21 years in a row. In the past decade, Realty Income has managed to increase dividends by 5.20%/year. The stock is selling for 18.80 times forward adjusted funds from operations and yields 4.50%. Check my analysis of Realty Income for more information about the company.

Franklin Resources, Inc. (BEN) is a publicly owned asset management holding company. It manages equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries that invest in the public equity, fixed income, and alternative markets. The company increased its quarterly dividend by 20% to 18 cents/share. This dividend champion has managed to boost dividends for 36 years in a row. In the past decade, Franklin Resources has managed to increase dividends by 15.50%/year. The stock is selling for 11.50 times forward earnings and yields 2%. Check my analysis of Franklin Resources for additional information about the stock.

CVS Health Corporation (CVS), together with its subsidiaries, provides integrated pharmacy health care services in the United States. The company operates through Pharmacy Services and Retail Pharmacy segments. The company increased its quarterly dividend by 21.40% to 42.50 cents/share. This dividend achiever has managed to boost dividends for 13 years in a row. In the past decade, CVS Health has managed to increase dividends by 23.40%/year. The stock is selling for 18.30 times forward earnings and yields 1.80%.

Amgen Inc. (AMGN), a biotechnology company, discovers, develops, manufactures, and delivers human therapeutics worldwide. The company increased its quarterly dividend by 26.60% to $1/share. This dividend stock has managed to boost dividends for 6 years in a row. The stock is selling for 15.80 times forward earnings and yields 2.40%.

Moody's Corporation (MCO) provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools worldwide. The company operates through Moody’s Investors Service and Moody’s Analytics segments. The company increased its quarterly dividend by 8.80% to 37 cents/share. This dividend paying company has managed to boost dividends for 7 years in a row. In the past decade, Moody's has managed to increase dividends by 22.30%/year. The stock is selling for 21.30 times forward earnings and yields 1.50%.

Abbott Laboratories (ABT) manufactures and sells health care products worldwide. The company increased its quarterly dividend by 8.30% to 26 cents/share. This dividend aristocrat has managed to boost dividends for 44 years in a row. The stock is selling for 20.20 times forward earnings and yields 2.30%.

Pfizer Inc. (PFE), a biopharmaceutical company, discovers, develops, manufactures, and sells healthcare products worldwide. The company increased its quarterly dividend by 7.10% to 30 cents/share. This dividend paying company has managed to boost dividends for 6 years in a row. In the past decade, Pfizer has managed to increase dividends by 4.30%/year. The company used to be a dividend champion up until early 2009, when it cut dividends to shareholders. The current dividend payment is still below the amount of 31 cents/share from 2008. The stock is selling for 14.70 times forward earnings and yields 3.70%.

As someone with stakes in Abbott Laboratories, AT&T and Realty Income, it is nice to learn that my forward dividend income will be increasing in 2016.

Relevant Articles:

Realty Income - A dependable dividend achiever for current income
How to read my weekly dividend increase reports
Buy and Hold means Buy and Monitor
Why am I obsessed with dividend growth stocks?
Dividend Stocks Deliver Returns Whether Market is Open or Not

19 comments:

  1. I've got a decent chunk of T, a small mount of O and AMGN. I agree that the increases are nice to see. In the case of O, we might also see another increase or two as 2016 progresses, which is a wonderful thing, yes?

    ReplyDelete
    Replies
    1. Yes, O's raises have been slow as of lately. T has slow raises as well. I need to learn more about AMGN, though biotechs are outside my circle of competence.

      Delete
    2. I like O for its stability, but I don't expect large raises in the dividend. That just seems to be the way it works for O. I would like to add, but it's way too pricey at the moment IMO. I'll start to watch it again if it drops at least 10%. I am more interested in O as it approaches a 5% current yield.

      As to AMGN, I will admit a lack of competence in biotech stocks. My purchase was based in large part on info obtained from others with far more competence than I. My only healthcare stock was JNJ and I feel the need to broaden that a bit. I started with AMGN because the price was quite excellent ($138). I also need to add a few holdings with nice dividend growth, ala AMGN. Still, I won't likely allow it to grow much beyond 3% of my income in that it's hardly a dividend aristocrat. From what I've read, biotech can be an unpredictable sector, but AMGN is one of the kings. I'm pretty comfortable with it. Happy investing to you, and I hope you enjoy the holidays.

      Delete
  2. Getting a raise is always nice, eh? Merry Christmas!
    Long T, O, AMGN, PFE

    ReplyDelete
    Replies
    1. Happy Holidays Keith! The dividend raises this year will be higher than what I am getting at my day job ( even after KMI).

      DGI

      Delete
  3. Long T, O and PFE -- great to see increased dividends are coming! That's why we're dividend growth investors, right!?

    Cheers
    FerdiS, DivGro

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  4. For such a long list you'd think I'd own more than just one company mentioned. I need to take a better look at AMGN :)

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  5. Thanks for the article. What are your thoughts on CVS? The dividend growth rate appears impressive despite the relatively low yield.

    ReplyDelete
    Replies
    1. I need to review CVS - I own a lot of WBA though. It might make sense to "diversify" the exposure there.

      Delete
  6. DGI - Thanks for the article man, I wish you much success. This comment of mine is copied and pasted from your last article as I believe it was missed (or ignored ha).

    I too am in the situation of only having low cost index funds to choose from in my 401k. Have you ever written an article about what type of funds you recommend for someone my/our age (28). I am investing in 60% S&P 500 and 40% Mid-cap. Maybe you could also tell me what types of index funds you look at when picking your 401k funds.

    Thanks a lot.

    ReplyDelete
    Replies
    1. I am not in the business of providing investment recommendations. You are asking for advice at a site that has a huge disclaimer stating that I am not providing advice through my articles and the content in the site is all my opinion and this is all for educational purposes and not a recommendation for you to act on.

      So this is why I didn't respond to you in the first place. Perhaps I shouldn't have posted your comments at all. By posting your comment, I am encouraging people to just comment for the sake of commenting, without really doing much research on their own.

      Delete
  7. I only own O in that group. I am kinda worried about their dividend growth as well. It has grown 4% year over year but the last three quarters have been very small increments. However, I will take it!

    ReplyDelete
    Replies
    1. It sure is slow. Also, the stock is richly valued as well.

      Delete
  8. DGI - after getting burned on KMI, are you holding O, or adding to it?

    I am not saying its a bad company, but at 43x (current earnings) P/E, and roughly 19x (forward) FFO, it seems like the stock (not the company) is over priced. Is the dividend really going to grow fast enough to justify that multiple?

    How does O (or any REIT) grow its dividend when the real estate market is so richly valued, Sam Zell is reducing his real estate holdings, and the economy (GDP) is barely growing 2%?

    Sorry, but I have to question anyone who talks about a perpetual motion machine. O seems likely to keep its dividend steady (in which case it will get a lower multiple), or else O might succumb to the same slow real estate market that every other company is experiencing.

    At 48x PE and 19x forward P/FFO, seems like there will be a (much?) better entry price

    ReplyDelete
    Replies
    1. You don't value REITs based on P/E ratios.

      You do it based on FFO

      O does look pricey.

      On a side note, I am not ashamed to admit my mistakes, and grow from there. My goal is to grow as an investor.

      But after reading your comment, and the comments of a few others (perhaps it was you posting multiple times), I understand why few are willing to publicly talk about their mistakes - people have short attention spans and will associate them as a loser, no matter what their investing record of the preceding decade was. That faulty public perception is the reason why I don't care what others think about me. And incidentally, is one of the reasons why this blog is the lowest priority project for me. Thank you for helping me in my decision.

      Delete
    2. Other Opinion your comments add no value and appear as some personal vendetta against DGI. DGI is simply LISTING companies that have increased dividends over the past week, which you would have known if you actually read the article. In addition, he already stated that the P/AFFO was almost 19, and it is up to investors to do their own due diligence. If they have, then they would know that it is overvalued. It is not up to DGI to do it for them. He has never provided buy recommendations, and simply provides free information to educate our misinformed investing community. He should be applauded. Everyone is a genius when the market has been on a tear over the past year. This is the number one blog I read and value all of the content on this site. It would be a real loss if he ever stops writing. Merry Christmas.

      Delete
  9. Hey Big D,

    Not everyone has short attention spans. Anyone who has been reading your blog in the long term knows that of the nifty fifty, there were a few bankruptcies and failures, but the successes of the top dragged the whole portfolio value significantly higher. So too with dividend growth stocks, you have listed over 100 stocks in the course of your blogging, if several have cuts it is no reflection on the high quality of your research and investing philosophy. I think cuts are an unfortunate part of the business cycle, even PG cut the dividend (I would be curious to know why) nearly 60 years ago, I guess? Coca Cola did as well, I suppose. GE, BP, BAC, there are sometimes cuts although hopefully they will be few and far between.
    The point is, i hope you don't get scared away by newbies that don't know the difference between FFO, P/E, and FCF! Your die hard readers have high respect for you.
    i have been reading you since '08, my life is much better for it.
    Happy holidays, I hope you keep sharing your journey.
    J

    ReplyDelete

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