Wednesday, November 30, 2016

The Walt Disney Company (DIS) Dividend Stock Analysis

The Walt Disney Company (NYSE:DIS) operates as an entertainment company worldwide. The company operates in five segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products, and Interactive. The company is not a typical dividend growth stock, although it has paid dividends since 1957, and has never cut them. Disney is a dividend angel which often raises dividends several years in a row, after which it keeps them unchanged. This is followed by another round of dividend raises again.

The most recent dividend increase was in December 2015, when the Board of Directors approved a 7.60% increase in the semi-annual dividend to 71 cents/share. The largest competitors for Disney include Time Warner (NYSE:TWX), Viacom (NYSE:VIA) and Twenty-First Century Fox (NASDAQ:FOXA).

Over the past decade the stock has delivered an annualized total return of 13.20% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.

Monday, November 28, 2016

Six Dividend Stocks Sending More Cash to Shareholders

Each week I review the list of dividend increases. This is helpful in monitoring existing dividend holdings, and monitoring the breadth of dividend increases across the universe of prominent dividend growth stocks. Dividend increases also provide a proxy for near term expectations for the performance of the underlying businesses. If management continues raising dividends at the same rate as before, without achieving that through increases in the payout ratio, this indicates that they are expecting continued success in the business. If management raises dividends slower than expected, this might be an indication that things are slowing down.

Regular readers know that dividend increases are just one of the things I look for in evaluating companies. I am looking for a company with a strong track record of annual dividend growth, which is supported by growth in earnings per share. If such a company is available at an attractive valuation, it should be analyzed in detail, before being considered for my dividend growth portfolio.

Over the past week, there were six companies that met my minimum requirement for annual dividend increases. The companies include:

Tuesday, November 22, 2016

Six Dividend Stocks Rewarding Shareholders with a Raise

Each week, I go through the list of dividend increases in order to monitor performance of existing holdings, and uncover hidden dividend gems. I then narrow down the list by eliminating companies with a dividend growth streak that is less than a decade. I also look at things like trends in earnings per share, dividends per share, dividend payout ratios, in order to determine the likelihood of future dividend growth and growth in intrinsic value. My basic analysis also focuses on valuation and dividend sustainability.

Over the past week, there were six dividend stocks with a long streak of consecutive annual dividend increases, which raised dividends to shareholders. The companies include:

Brown-Forman Corporation (BF.B) manufactures, bottles, imports, exports, markets, and sells various alcoholic beverages worldwide. It provides spirits, wines, ready-to-drink cocktails, whiskey, vodka, tequilas, champagnes, brandy, and liqueur. Last week, the company raised its quarterly dividend by 7.40% to 18.25 cents/share. This marked the 33th consecutive annual dividend increase for this dividend champion. Over the past decade, Brown-Forman has managed to raise its dividends at a rate of 9.40%/year. Currently, the stock is overvalued at 26.10 times forward earnings and yields 1.60%. Brown-Forman would look more appealing on dips below $36/share. Check my analysis of Brown-Forman for more information about the company.

Monday, November 21, 2016

3 Low Volatility Dividend Stocks To Make Staying The Course Easier

This is a guest post written by Ben Reynolds at Sure Dividend.  Sure Dividend helps individual investors build high quality dividend growth portfolios from Dividend Aristocrats and other dividend stocks with long histories.

The article Dividend Growth Investors: Stay The Course thoughtfully examines the difficulties of investing in dividend growth stocks when stock prices are falling.  

The article discusses how important it is to stay the course and continue building your dividend growth portfolio – even when prices are falling.  See below for an excerpt:

“There is a reason why stocks have done much better than bonds in the long-run – they are riskier. With stocks, there is always the chance that there will be violent fluctuations in the price. You can have steep downturns, which can have many weak hands scrambling for the exits. When stock prices go down, many investors assume that something is wrong, they panic and sell. They forget that your upside potential in terms of dividends and capital gains is virtually unlimited.”

The volatility of dividend stocks is what makes staying the course more difficult.  The larger the price fluctuations, the harder it is to hold onto a stock.

Friday, November 18, 2016

Starbucks (SBUX) Dividend Stock Analysis

Starbucks Corporation (NASDAQ:SBUX) operates as a roaster, marketer, and retailer of specialty coffee worldwide. The company initiated its dividend in 2010 and has been growing distributions rapidly since then. While the company has only managed to increase dividends for four years in a row, I believe that it has the potential to reach dividend achiever status, and has the growth story to become as successful for its dividend growth investors.

The most recent dividend increase was in November 2016, when the Board of Directors approved a 25% increase in the quarterly dividend to 25 cents/share. The company's competitors include McDonald's (NYSE:MCD), Nestle (OTCPK:NSRGY) and Dunkin Brands (NASDAQ:DNKN).

Since the company initiated a dividend payment in 2010, the stock has returned 315%. Future investment returns will be dependent on growth in earnings and dividend yields obtained by shareholders, as well as the initial valuation locked in at the time of investment.

Wednesday, November 16, 2016

CVS Health (CVS) Dividend Stock Analysis

CVS Health Corporation (CVS), together with its subsidiaries, provides integrated pharmacy health care services. It operates through Pharmacy Services and Retail/LTC segments. The Pharmacy Services Segment provides a range of pharmacy benefit management (PBM) solutions. The Retail Pharmacy segment includes retail drugstores, online retail pharmacy Websites and its retail healthcare clinics. This dividend achiever has paid a dividend since 1916 and increased it for 13 years in a row.

The most recent dividend increase was in December 2015, when the Board of Directors approved a 21.40% increase in the quarterly dividend to 42.50 cents/share. The largest competitors for Walgreen include Walgreen Boots Alliance (NYSE:WBA), Wal-Mart (NYSE:WMT) and Rite-Aid (NYSE:RAD).

Over the past decade this dividend growth stock has delivered an annualized total return of 11.40% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.

Monday, November 14, 2016

Twenty Dividend Champions For Further Research

I have built my portfolio of dividend growth stocks over the past 8 – 9 years, by following a disciplined approach to investing. Having an objective approach has helped me immensely in staying the course, and not panicking and selling out when things looked difficult. As a general rule, dividend growth investors buy stocks to hold for years. Success is the result of an enterprise that is purchased at an attractive valuation, which then manages to grow earnings and dividends over time. This allows the investor to compound wealth and income, and ignore short term price fluctuations. The only exception to avoiding the moody Mr Market is when it offers quality companies at a discount. Getting paid to hold on to stocks has been helpful. Seeing the companies I own thrive, and boosting their dividends is helpful as well.

My process included a few simple steps, such as:

Thursday, November 10, 2016

An Investment Plan Helps You Stay The Course

Over the past week, we have seen some crazy turbulence in stock prices.

When I saw S&P 500 futures down by 5% on Election Day, I was not happy. However, I saw it as an opportunity to add to my portfolio. Given the rapid overnight turnaround in stocks by the morning however, I was not able to capitalize on the weakness.

I did absolutely nothing all week, other than to initiate a small position in a few companies the day before. Other than that I didn’t panic on Election Day, and just held to my stocks.

As I have discussed before, I did not panic because I have an investment plan in place. My plan calls for maxing out my retirement accounts every two weeks through my paycheck, and then investing anything that is left over in my taxable portfolios. My investment decisions are mostly driven by availability of fresh capital to put to work, and investment ideas to a certain extent.

Wednesday, November 9, 2016

Building a Core Dividend Growth Portfolio With These Eight Companies

This is a guest post by Mike, aka The Dividend Guy. He authors The Dividend Guy Blog since 2010 and manages portfolios at Dividend Stocks Rock. He is a passionate dividend investor.

I had the chance to start my investment journey at a relatively young age, I was 22 when I made my first trade on the stock market. Back then, I didn’t have a detailed investment process designed. If there is one thing that I have learned since then is that investing success goes through a solid investment process. If I want to build a strong portfolio, I must have a strong methodology to select the right companies. This is the way to go for any investing strategy, and it is also the case for dividend growth investing. 

I’ve noticed that not all dividend investors think the same. To my surprise, there are some important differences between most of us in the manner in which companies are selected. For example, I’m definitely not a yield seeker. In fact, if there is one thing I don’t consider during my investment selecting process, it is the dividend yield! I focus on the dividend growth as a pillar of my investing strategy. I’ve established 7 investing principles around dividend growth to manage my portfolio. 

I wanted to share these principles with you by giving you eight examples of companies that meet my investing criteria and should create a solid base for any dividend growth portfolio.

Tuesday, November 8, 2016

My take on HCP’s Dividend Cut

HCP, Inc. (HCP) is a real estate investment trust that invests in properties serving the healthcare industry including sectors of healthcare such as senior housing, life science, medical office, hospital and skilled nursing.

HCP (HCP) spun-off Quality Care Properties (QCP) unit on October 31. Shareholders received a share of QCP for every five shares of HCP they owned. After the spin-off, the company announced its new dividend of 35 cents/share, which was a decrease from 35.70% from the prior dividend of 57.50 cents/share. This ended the 30 year streak of annual dividend increases for this dividend champion. Of course, we do not know whether QCP will be paying a dividend, and what their dividend rate is going to be. If the new dividend was decreased by 20%, I would have viewed it as a dividend freeze, which is fine as the level of income generating assets is decreasing by 20% due to the spin off. Since the dividend decrease was not proportional to the amount of shares that were spun-off, I view it as a dividend cut.

Monday, November 7, 2016

Three Dividend Kings Raising Dividends For 60+ Years

A dividend king, is a company that has managed to boost dividends to shareholders every single year for at least 50 years in a row. There are 19 dividend kings in the US, which is an increase from the end of 2015, as Tootsie Roll (TR) joined the ranks of this elite list earlier this year. There were only ten dividend kings, when I first intriduced the term in 2010. Being a dividend king is an impressive achievement, because the last 50 years were a pretty turbulent time for business. Being a dividend king is not an automatic buy signal however. I believe that each dividend king should be studied in detail by enterprising dividend investors. This is because these companies have managed to survive the calamities and destruction of the past 50 - 60 years, while growing earnings, dividends and shareholder returns.

Over the past week, there were three dividend kings, which raised dividends to their shareholders. Each of these companies has managed to grow dividends per share for at least 60 years in a row. That is an impressive track record. If these dividend streaks were individuals we were talking about, they would have been eligible for Social Security within an year or so each.

The companies include:

Friday, November 4, 2016

Timing the Market Is Costly, Risky and Difficult

Why Am I Overweight in Fixed Income?

Back in November of 2015, I spoke to you how I am interested in growing my fixed income exposure. I wanted to achieve that, in order to protect myself from deflation. I believe that we are at risk of a deflation, if we continue to get industries disrupted, if economies continue to languish, if we continue to get increased automation that replaces workers and therefore their incomes and demand for goods and services. I also believe that global trade could push prices lower, as global competition pushes producers to compete on a more equal level.

Over the past year I have been investing in Certificates of Deposit, US Agency Bonds and Treasury Inflation Protected Securities. I have also took advantage of a few savings accounts that offer higher yields today like NetSpend ( First $1,000 yields 5%, but used to be $5,000 a few months ago) or Insight Savings. I also keep three months expenses in my savings account, for my emergency fund. My checking account has roughly one to two times monthly expense. Most of the fixed income exposure I have is in taxable accounts. The only exception includes TIPs and a bond market fund I own in my 401 (k). I used to allocate 10% of my paycheck to the bond fund, but I have been gradually increasing that to 20%, and now it is at 30% of my paycheck. I will likely continue doing that either until S&P 500 drops below 20 times earnings or until my fixed income exposure in the 401 (k) exceeds 20% ( currently it is a lot less than 10%).

Wednesday, November 2, 2016

Avoiding High Portfolio Ownership of Successful Investments

I have been investing in dividend growth stocks for the past decade. There have been hundreds of other fellow dividend investors, who have also invested in dividend paying companies over the same period of time. There are some, who have invested for even a longer amount of time. Unfortunately, when you invest for a long time, you may end up with a few very successful positions, which account for a disproportionate amount of your portfolio.  The question I have been getting recently has been what to do in this situation. I would note that this problem generally happens to investors who are not adding money to their portfolios anymore. A few examples cited include Realty Income (O), V.F. Corporation (VFC) and Altria (MO), which have delivered fantastic returns since 2008 - 2009.

This of course is a great problem to have. If you are a long-term investor, it is very much possible that after a decade or two of patient investing, the power of compounding will result in many companies which not only pay more and more in annual dividend income, but also result in large unrealized gains for the stockholder. As a result, there may be several companies in your portfolio, which could end up with a very large portfolio weight. In my opinion, you own too much in an individual security if it accounts for more than 4% - 5% of your portfolio’s value.

This article only deals with individual stocks/securities – it is not relevant to mutual funds or exchange traded funds. In some situations like these, investors end up putting their whole portfolio in just one diversified fund, and this could actually be a prudent move from a diversification perspective.

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