Wednesday, April 25, 2018

Kimberly Clark (KMB) Dividend Stock Analysis

Kimberly-Clark Corporation (KMB), manufactures and markets personal care, consumer tissue, and health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional, and Health Care. This dividend champion has paid dividends since 1935 and has increased them for 46 years in a row. The company’s peer group includes Procter & Gamble (PG), Colgate-Palmolive (CL), and Clorox (CLX).

The company’s last dividend increase was in January 2018 when the Board of Directors approved a 3.10% increase in the quarterly annual dividend to $1/share.

Over the past decade this dividend growth stock has delivered an annualized total return of  9.50% to its shareholders.


Monday, April 23, 2018

Five Dividend Growth Stocks Boosting Shareholder Distributions

I review the list of dividend increases every single week as part of my portfolio monitoring process. It is helpful to see dividend growth in action for companies I own, and also for companies I may consider owning at the right valuation. I usually focus my attention on companies which have rewarded shareholders with a raise for at least ten years in a row. I ignore the rest for a few years ( until they meet the required dividend streak)

In the past week, there were five dividend paying companies that raised dividends to their shareholders that met the criteria stated above. I reviewed every company, outlining their dividend track record in terms of length and rate of change. I also reviewed the changes in fundamentals, in order to determine if the dividend growth is sustainable. Last, but not least, I also review the valuation for attractiveness. All of these points should be viewed all at once, in order to get the best picture of investment reality.

The companies include:

Thursday, April 19, 2018

Tobacco Companies Offer An Opportunity For Income Investors

I was reviewing my portfolio today, and noticed that tobacco companies are getting smoked this morning. Phillip Morris International is down 16% as of the time of this writing, while Altria is down 8%.

Altria yields close to 5% today, and sells at a forward P/E of 14.20. PMI also yields 5% and sells at a forward P/E of 16.20.

I believe that this is an overreaction to the slight revenue miss by Phillip Morris International this morning. I also believe that these stocks could get lower today too. As a result, I believe that there is some opportunity to start reviewing tobacco companies for further research. I am going to look closely into adding more shares on the way down. 

I already own too much Phillip Morris International (PM), but I do want to add some more to Altria (MO).

You may check my last analysis of Altria here:

That being said, it is better to slowly add to positions over time, and not put everything at once. This is a risk management technique I learned during the 2007 - 2009 bear market.
Thank you for reading!


Wednesday, April 18, 2018

Three Cheap Dividend Stocks To Consider

I wanted to send in a quick note to readers about an interesting recent development. According to recent reports I have read, Amazon has shelved plans to sells drugs to hospitals. Fears of Amazon have plagued the share prices for companies such as Cardinal Health (CAH), CVS Health (CVS) and Walgreen's (WBA).

Selling pharmaceuticals is a different business from selling books online. You cannot simply ship them using Fedex or UPS. Amazon would need to build a more sophisticated logistics network that can handle temperature-sensitive pharmaceutical products. Before that however, it needs to build the trust of big hospitals first.

In addition, Amazon is not able to sell products, such as pacemakers, which are directly implanted in the human body. As a result, it does not have the ability to become a vendor that offers complete solutions to hospitals.

Amazon had found it difficult to sell and distribute pharmaceutical products.Amazon has not been able to convince big hospitals to change their traditional purchasing process, which typically involves a number of middlemen and loyal relationships.

The health-care supply chain is well-entrenched and will be hard to break into. The hospital and health-care systems have entangling alliances with their existing purchasing and supply chain partners.

Monday, April 16, 2018

Four Dividend Growth Stocks Rewarding Shareholders With A Raise

As part of my monitoring process I review the list of dividend increases every single week. I use this exercise to check on the health of companies I own. I also check the list of dividend increases as part of my overall monitoring of companies I am reviewing for potential addition to my dividend portfolio.

I do find it helpful to narrow the list down by focusing only on the companies that have raised distributions every single year for at least a decade. Next, I tried to discuss each company and provide some helpful stats in order to determine if they look promising under certain circumstances.

The fact that a company that has raised dividends for a decade is just the first step in the process for further research. Making sure that those dividend increases are as a result of improving fundamentals is important. Equally important is making sure that the dividend company in question is also attractively valued.

Over the past week, there were four companies that raised dividends to their shareholders. Each one of those companies has managed to boost distributions for at least ten years in a row. The companies include:

Thursday, April 12, 2018

McCormick & Company (MKC) Dividend Stock Analysis

McCormick & Company (MKC) engages in the manufacture, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates in two segments, Consumer and Industrial. This dividend aristocrat has paid dividends since 1925 and has increased them for 32 years in a row.

The company’s latest dividend increase was announced in November 2017 when the Board of Directors approved a 10.60% increase in the quarterly annual dividend to 52 cents /share.

Over the past decade this dividend growth stock has delivered an annualized total return of 13.40% to its shareholders.

Monday, April 9, 2018

How to Generate a 15% Yield on Cost in Ten Years

A few years ago I shared the story of one small investment of a beginner income investor I met at the beginning of my own dividend journey. This story shows that anyone can start learning investing, no matter what age, level of money they can set aside. All that truly matters is having the right attitude that you can achieve anything you set your mind to, through hard work, persistence, patience and determination. Of course, the most important thing about dividend investing is to get started.

You do not need a lot of money to get started with dividend investing. One should never despise the days of small beginnings, and think that they need a large pike of cash before starting dividend investing. If you start slowly, even with an investment of a few dollars, you are years ahead of most other individuals. Unless you are drowning in debt, you do not have any excuse to avoid investing in some of the strongest dividend paying blue chips today. With brokerages like Robinhood, it is possible to purchase shares in companies you like without paying any commission. Of course, you should increase the amounts you put to work for you as your level of income increases over time. Otherwise, you would need to spend a higher amount of time working prior to accumulating a sufficient nest egg.

So back in May 2008, my young friend opened an account with Sharebuilder with $40 that he had to his name. He paid a steep $4 commission, but managed to purchase 1.4196 shares of Realty Income (O) at 25.36/share. Being a poor college student, he was low on cash so he took advantage of a brokerage deal at Sharebuilder. As part of the deal, he received a $50 cash bonus for opening an account and making one investment. So after he made the investment, he essentially started playing with the house’s money, as he had no funds at risk after the rebate.

Thursday, April 5, 2018

Aflac (AFL) Dividend Stock Analysis

Aflac Incorporated (AFL), through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance. The company is a member of the dividend aristocrats’ index, has paid dividends since 1973 and increased them for 36 years in a row.

The company’s last dividend increase was in February 2018 when the Board of Directors approved a 15.60% increase in the company’s quarterly dividend to 26 cents/share. The company’s stock recently split 2:1 as well. The company’s largest competitors include Nippon Life Insurance Company, Asahi Mutual Life Insurance Company and American fidelity Assurance Company.

Over the past decade this dividend growth stock has delivered an annualized total return of 5.40% to its shareholders.


Tuesday, April 3, 2018

Are you ready for the next bear market?

It is not a secret that stock prices have been rising for 8 - 9 years in a row now. This makes it easy to hold on to stocks, and believe that we will have smooth sailing until we reach our goals and objectives.

In my investing, I do like to think about different scenarios. What if my quoted portfolio goes down by 50% in 2018?

I know a lot of investors who are focusing only on total returns would be unhappy. Imagine if you saved for 20 years, and accumulated a net worth of $1 million. Then boom – in one year, half of your net worth, blood,sweat and tears – gone. Would you panic?

I myself would likely be indifferent to a 50% stock price drop. As a dividend investor, I am somewhat insulated from stock price fluctuations. This is because I focus on the earnings power of the business, and the dividend payments that the businesses in my portfolio generates. It is very comforting to keep receiving cash, even when the quoted value of investments throughout the world is falling. When everyone else is hurting, I have the luxury of generating cash from my investments, which I can then deploy at ridiculously low valuations. As long as the underlying fundamentals of the businesses I own are intact, I can ignore stock price fluctuations. This is one of the most important traits of successful dividend investors. Those who do not understand that, are usually the ones that have not made any money in stocks to begin with.

Sunday, April 1, 2018

Help! I have a serious spending addiction

I have a serious spending addiction – any time I find myself with some extra cash on hand, I end up spending it. This is particularly troublesome, as I tend to salivate when I see an item that I really want.

Anytime there is a big sale, especially one with large markdowns, my spending problem comes out on the surface and I sometimes go through all of my cash on hand and sometimes even borrow money to spend. The exhilarating feeling of spending my cash is similar to probably what a drug addict feels when they get their daily dose. I look at the list of items I spent my money on, and it provides me with an internal sense of happiness and accomplishment. Sometimes, I even look for ways to save money from recurring expenses in order to have more money to spend. I am often scrambling to find enough cash, as I always have at least 15 – 20 deals on my radar, just waiting to be purchased.

I spend a large portion of my monthly income on dividend paying stocks. I willingly spend my money on dividend stocks because I know that I am contributing towards my retirement goals. I view every dollar that I can invest in a quality dividend stock at attractive valuation such as PepsiCo (PEP), Altria (MO) or Johnson & Johnson (JNJ), will work hard for me and produce several more dollars over their lifetime for me.

Wednesday, March 28, 2018

39 Dividend Champions To Consider

As part of my screening process, I look at the list of dividend champions every month. I have been doing this for a decade.

I believe that investors should focus on tools within their control. These things include their ability to stick to a strategy that will help them reach their goals, and save and invest money regularly. This is the recipe for successful dividend investing in a nutshell – stay the course, keep adding to your dividend machine and reinvest dividends in the accumulation phase.

Over the past two months, prices of many securities have finally started going lower. This is great news for those who are in the accumulation phase. This is because lower prices paid for stocks result in higher dividend yields and higher expected future returns. Therefore, the investors today should be praying for even lower prices. If you are retired, your only concern is the safety of the dividend payments, and enjoying the fruits of your labor.

I applied my entry criteria to the list of dividend champions, and came up with a list of companies worth further research.

My screening criteria include:

1) A company with a minimum 25 year track record of annual dividend increases
2) Forward P/E ratio below 20
3) Forward Dividend payout ratio below 60%
4) Annual dividend growth exceeding inflation over the past 5 and 10 years
5) Dividend growth generated by solid growth in earnings per share

My next step was to briefly review the trends in fundamentals for each of the companies, and taking out those that didn’t seem promising enough.

As a result of this review, I came up with the following list of 39 dividend champions for further research:

Monday, March 26, 2018

Raytheon Rewards Shareholders With Reliable Dividend Raises

Raytheon Company (RTN) develops integrated products, services, and solutions for defense and other government markets worldwide. It operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint.

Last week, the Board of Directors of Raytheon Company (RTN) increased the company's annual dividend payout rate by 8.8 percent, from $3.19 to $3.47 per share.

"With today's announcement, we have increased our annual dividend for 14 consecutive years," said Thomas A. Kennedy, Raytheon Chairman and CEO. "The dividend increase is a key part of our capital deployment strategy, and reflects our confidence in the company's growth outlook and our continued focus on creating value for shareholders."

Over the past decade, this dividend achiever has managed to boost dividends at an annual rate of 12%/year. At a rate of 12%/year, dividends per share double every 6 years, using the rule of 72.


Friday, March 23, 2018

W.P Carey (WPC): A High Dividend Dividend REIT For Current Income

W. P. Carey Inc. (WPC) is an independent equity real estate investment trust. The firm also provides long-term sale-leaseback and build-to-suit financing for companies. It invests in the real estate markets across the globe. The firm primarily invests in commercial properties that are generally triple-net leased to single corporate tenants including office, warehouse, industrial, logistics, retail, hotel, R&D, and self-storage properties.

W.P. Carey is a dividend achiever, which has managed to boost dividends for 20 years in a row.  The most recent dividend increase was just last week, when the Board of Directors increased its quarterly cash dividend to $1.015 per share, equivalent to an annualized dividend rate of $4.06 per share. The attitude towards distributions was summarized quite well by the statement of W. P. Carey's CEO Jason Fox:

"W. P. Carey has delivered consecutive annual dividend increases since going public in 1998. We are proud of our long-standing track record of providing shareholders with stable and recurring income generation across all market cycles,"

In September 2012, this dividend achiever converted from a partnership form into a real estate investment trust. After this transformation, as well as merger with one of its privately managed REIT, dividend growth has been spectacular initially.Subsequently, it to slowed down  and I expect it to be slow for the foreseeable decade.

The company not only invests in triple-net lease properties throughout the world, but it also managed privately held REITs. As a result, its sources of revenues are derived from the stable and recurring rents from those properties, which are usually leased to tenants under long-term leases. Those triple-net leases also allow for rent escalation over time. Under a triple-net lease, the tenant is required to pay all expenditures associated with maintaining and operating the property under lease.

Wednesday, March 21, 2018

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 14 years in a row.

The most recent dividend increase was in December 2016, when the Board of Directors approved a 17.60% increase in the quarterly dividend to 50 cents/share. Pending the company's acquisition of insurer Aetna (AET), the board has stopped the share buybacks and dividend increases. While the company is not going to grow dividends every year, because it will focus on debt repayment, I find its valuation compelling enough to give it preference over Walgreen Boots Alliance (WBA).

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 6.90% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.

Monday, March 19, 2018

Realty Income Delivers High Yields and Dependable Dividend Growth

Realty Income (O) is a real estate investment trust, which invests in commercial properties. The REIT owned 5,172 properties at the end of 2017, most of which were single-tenant ones. Realty Income has a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.50 years. These are triple-net leases, where the tenant pays everything from taxes to maintenance on the property, while the landlord like Realty Income collects rent that escalates over time. It is a pretty sweet deal, provided that you can purchase great locations at attractive valuations.

I analyzed the REIT using the guidelines listed in this post. The guidelines include focusing on:

  • Valuations
  • FFO trends
  • Occupancy
  • Tenant Concentration
  • Streak Consecutive Annual Dividend Increases

Realty Income is a dividend achiever which has raised dividends for 24 years in a row. The REIT has a strong track record of paying dividends monthly, and raising them several times per year. It is the Golden Standard of Triple Net Leases. The company usually raises its monthly dividends every quarter by a little bit, which amounts to a respectable year-over-year raise. The latest raise was just last week, as the monthly distribution was boosted to 21.95 cents/share ( or $2.628/share annualized). This was the 96th dividend increase since Realty Income's listing on the NYSE in 1994. The new dividend is 4% higher than the dividend paid during the same time last year.


Thursday, March 15, 2018

Clorox (CLX) Dividend Stock Analysis

The Clorox Company (CLX) manufactures and markets consumer and professional products worldwide. It operates in four segments - Cleaning, Household, Lifestyle and International. This dividend aristocrat has paid dividends since 1968 and has increased them each year since 1977.

Last month, Clorox hiked its dividend by 14% to 96 cents/share. This was an accelerated declaration of the company's dividend increase, which typically takes place in the month of May.

Over the past decade this dividend growth stock has delivered an annualized total return of 11.70% to its shareholders.


The company has managed to deliver a 5.20% average increase in annual EPS over the past decade. Clorox is expected to earn $6.13 per share in 2018 and $6.51 per share in 2019. In comparison, the company earned $5.35/share in 2017.

Monday, March 12, 2018

Four Dividend Growth Stocks Working Hard For Their Shareholders

As part of my monitoring process, I review the list of dividend increases every week. I use this list to check for dividend increases for companies I own, as well as monitor companies I am interested in researching at the right valuation.

I narrowed the list down to focus only on companies that have rewarded their shareholders with a dividend raise for at least ten years in a row. I want to focus my attention on companies that have managed to grow dividends over a full economic cycle. I also review each company, in order to determine whether past dividend growth was sustainable, and it came mostly from earnings growth. I am not interested in companies that grow dividends by mere expansion of the dividend payout ratio, while their earnings per share stagnate.

Last but not least, I look for an attractive entry valuation. Even the best company in the world is not worth buying at an inflated price. As a result, I try to avoid purchasing companies above 20 times earnings.

The companies that raised dividends over the past week, and met the above criteria include:

Friday, March 9, 2018

Hormel Foods (HRL) Dividend Stock Analysis

Hormel Foods Corporation (HRL) produces and markets various meat and food products worldwide. The company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other.

The company is a dividend king which has managed to increase annual dividends for 52 years in a row. There are only twenty-six dividend kings in the world, which have each managed to boost annual dividends every single year for at least half a century.

Hormel’s last dividend increase was in November 2017 when the Board of Directors approved a 10.30% increase in the quarterly distribution to 18.75 cents/share.

Hormel’s largest competitors include Tyson Foods (TSN), Conagra Foods (CAG), General Mills (GIS), Campbell Soup (CPB) and J.M. Smucker (SJM).

Over the past decade this dividend growth stock has delivered an annualized total return of 14.20% to its shareholders.


Wednesday, March 7, 2018

TJX Companies (TJX) Dividend Stock Analysis

The TJX Companies, Inc. (TJX) operates as an off-price apparel and home fashions retailer in the United States and internationally. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX Europe. TJX Companies is a dividend achiever, which has raised dividends for 22
years in a row.

The most recent dividend increase was in March 2018, when the Board of Directors approved a 25% increase in the quarterly dividend to 39 cents/share.

The company’s largest competitors include Ross Stores (ROST), Kohl’s (KSS) and Target (TGT).

Over the past decade this dividend growth stock has delivered an annualized total return of 19.20% to its shareholders. Future returns will be dependent on growth in earnings and starting dividend yields obtained by shareholders.

Monday, March 5, 2018

Altria Delivers High Dividends and Strong Dividend Growth

Altria Group, Inc. (MO) manufactures and sells cigarettes, smokeless products, and wine in the United States. The company is well known in dividend growth investor circles, and is a common holding for many of us. Altria delivers dependable dividend growth and high total returns, and has been doing that for decades.

Altria raised its quarterly dividend by 6.70% to 70 cents/share just last week. This was the second dividend increase over the past year, after Altria hiked its distributions by 8.20% to 66 cents/share back in August 2017. Altria is a dividend champion, which has rewarded shareholders with a raise for the past 48 years in a row.

The company’s press release really summed it up very well:

Today’s dividend increase reflects Altria’s intention to return a large amount of cash to shareholders in the form of dividends and is consistent with Altria’s dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share. Altria has increased its dividend 52 times in the past 49 years.

The company is hiking the dividends, because its tax rate is going lower. As a result, its earnings per share are increasing faster than expected, which leaves more room for further dividend increases to be shared with long-term shareholders like us.

For some strange reason, Altria was booted from the dividend aristocrats index in 2007, which is why I prefer to focus on the dividend champions list, maintained by David Fish.

The company has managed to almost double dividends per share between 2009 and 2017.

Friday, March 2, 2018

Disney (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 2017, when the Board of Directors approved a 7.70% increase in the semi-annual dividend to 84 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 14.20% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.

Thursday, March 1, 2018

Two Wide Moat Dividend Stocks to Consider on Dips

I like to invest in quality companies, with an established track record of dividend increases. I want to acquire these quality companies at an attractive entry price, and then see earnings per share, dividends per share and intrinsic values grow over time.

The beauty of quality companies is that you need to get one decision right – that is the ability to identify their business model, and then buy those companies in the first place without overpaying for them.

I do not want to worry about buying at a low price, and then selling at a high price. I want to make one decision, and then let these quality companies do the heavy lifting for me. My favorite holding period is forever. While some may fail, I know that by building a diversified portfolio of dividend growth stocks, I will do just fine over time.

Speaking of quality companies, there are two I have my eye on, whenever they start to look attractively valued. The companies include:

Monday, February 26, 2018

Five Dividend Growth Stocks Rewarding Shareholders With A Raise

I review the list of dividend increases every week, as part of my monitoring process. This is a helpful step that helps me check for dividend increases for companies I own. I update my dividend portfolio spreadsheet with the new dividend rates, in order to see if my portfolio’s organic dividend growth rate is increasing above the rate of inflation.

I also use this process in order to identify hidden dividend gems for further research.

I started with the list of all dividend increases for the week, and then narrowed it down by focusing only on those companies that have managed to grow dividends for at least a decade. I came up with a list of five companies for today’s review. The next step involves a brief analysis of each company, analysis of trends in earnings and dividends, followed by a brief take on valuation. The goal is to analyze not only historical dividend growth, but try to determine if it was supported by growth in fundamentals. It is helpful to evaluate the latest dividend hike against the historical dividend growth. We are looking for companies that grow earnings, grow dividends and grow intrinsic values over time. However, we also want to get those companies only if the valuation is right. Even the best company in the world is not worth overpaying for.

The five dividend growth companies which raised dividends over the past week include:

Thursday, February 22, 2018

Dividend Investors: Stay The Course

The past month has been difficult for many investors. It is during times like these that you see who really is a long-term investor, and who is just a pretender. When you are a long-term buy and hold investor, you stand the best chances to take maximum advantage of the power of compounding, and end up with the probability for the highest dividend income and capital gains. These are the times where having a disciplined approach to investing pays off. These are the times when the ability to allocate capital to use in quality dividend stocks would seem stupid in the short-term, but potentially really brilliant 10 – 20 years down the road. When stock prices fall, there is an urge in the investor to protect their nest eggs from further price impairment.

This is a dangerous situation to be in because:

Tuesday, February 20, 2018

Dividend Companies Showering Shareholders With More Cash

As part of my monitoring process, I review the list of dividend increases every week. I usually focus on companies that have managed to boost dividends to shareholders for at least a decade. It looks like this year may be classified as the year of higher dividend growth.

This is because of the new tax law, which went into effect this year. As a result of the lowering of corporate tax rates, companies are increasing the amounts of their regular dividends to shareholders, and are initiating new share buyback programs. Some companies are accelerating their dividend increases schedules, and therefore showering their shareholders with more cash. As shareholders in many prominent blue chips, we can hardly complain of course.

Over the past week, the following companies raised their dividends to shareholders:


The Sherwin-Williams Company (SHW) develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North and South America, the Caribbean, Europe, and Asia. The company operates in four segments: Paint Stores Group, Consumer Group, Global Finishes Group, and Latin America Coatings Group. The company raised its quarterly dividend by 1.20% to 86 cents/share. This is the third dividend increase in a row of a penny per share. This increase follows 39 consecutive years of dividend increases for this dividend aristocrat. The company is prioritizing debt repayment over high dividend hikes, which seems prudent. The company has managed to hike its annual dividends at a rate of 10.40%/year over the past decade. The stock yields 0.90%. The company managed to grow its earnings per share from $4.70/share in 2007 to $15.07/share in 2017. Currently, the stock is overvalued at 26 times earnings and yields 0.90%. I would be interested in Sherwin-Williams on dips below $300/share.


Saturday, February 17, 2018

Annual Market update for 2017

Good Morning,

I wanted to share the market commentary from a dividend growth investor friend of mine, who manages money. This is not a paid post, and I do not receive any compensation from him. Rather, I have interacted with Joe off and on over the past decade. He is one of those readers who have stuck around for a while, who I regularly discuss dividend investing with. Writing about investing can be a lonely pursuit, so it is definitely helpful to have someone and bounce off ideas. 

I am sharing this market commentary, which he shared privately with his clients, because a lot of his points resonate very well with me. While no two investors are alike, his strategy of finding quality dividend payers for the long term really hits home for me. The letter captures current market sentiment, investing strategy, lessons learned and general commentary. If I ever leave blogging to manage money full time, this is the type of letter I would be sharing with clients. 

Without further delay, this is the comment letter from Joe Ferris at Summer Fields Investments LLC: Source Of Letter

Dear Friends,

2017 was a remarkable year in the equity markets. The broader US stock market did not have any negative months in the year, giving it the distinction of being the strongest market, per that metric, in 90 years [1]. Furthermore, there was no correction greater than 3% in the year, which is unusual for equities. The graphic that I included over 6 months ago has proved to be correct, for now, as we have broken out, to the upside, of a long trading channel in the S&P.

There are a number of reasons for this.

Before the presidential election in November 2016, I thought that the Blue Team would win, and that minimum wage would be gradually raised, inflation would creep up, and goods and services would earn more revenues. This would put a higher floor in our companies' earnings, spurring the market to pay a higher multiple for our companies' earnings.

Well, as we all know, the Red Team won, and now, minimum wage is being gradually raised [2], inflation is creeping up, and our company's goods and services are earning more revenues. It's funny how that happens.

There is also the matter of the large corporate tax cut, which gives our companies more after-tax profits. The market has been excited by that.

We have seen a number of US companies either attempt (in the case of Pfizer and Allergan) or execute (Medtronic, Johnson Controls, etc) foreign inversions in the past decade, so it makes sense to me that incentives should be provided for US companies to not pack up and run to lower tax regions. However, they should also have more regulations on tax avoidance, and that is indeed happening, with some companies getting rid of their tax shelters [3].

Thursday, February 15, 2018

The Best Dividend ETF In The Accumulation Phase

My site is read by readers from all walks of life. We have those with no experience investing, to those who have been through the ups and downs of the past half a century (and even longer). We also have a variety of readers, who are interested in the concept of dividend growth investing, but who do not have the time to go through the painful process of screening, monitoring, and assembling portfolios of individual companies.

One of the most frequently asked questions I receive comes from busy investors, who are short on time right now, but want to be able to generate rising dividend income for life. Most of those investors are looking for the best dividend ETF out there. In general I have not been a big fan of dividend ETFs, but I have somewhat reluctantly relaxed my attitude about it. After all, not everyone wants to be like me ( go figure).

What should a busy investor do with their money? How should they invest their hard earned money for their life goals (retirement, kids education etc)?

After thinking out loud for a few years, I have come out with one or two funds for busy dividend investors.

The catch: they are not marketed as dividend growth funds.

When evaluating the dividend ETF I am going to share with you today, I looked for the following traits:

1) A history of dividend increases
2) Low costs
3) Low portfolio turnover
4) A long history of real world performance

Monday, February 12, 2018

Ten Dividend Paying Companies Working Tirelessly For Their Owners

As a dividend growth investor, my goal is to generate a stream of income, which grows above the rate of inflation.

For the past decade that I have been doing that, my annual organic dividend growth has easily outpaced the historical rates inflation by a factor of 2 or more. In fact, the dividend increases by my portfolio have always been higher than the annual raises I receive at work.

I do not have to spend 40 - 60 hours per week placing cover sheets on TPS reports, nor do I need to waste time in pointless meetings that could have been resolved with a single email. Having a dividend portfolio is like having a tireless employee, who works 24 hours/day, seven days/week, 365 days/year, who shares all of their income with me. Their raises are much higher than what I could get for working extremely hard.

It is not wonder that I have fully embraced the power of dividend investing - I love getting paid and receiving regular raises, even if I do not work hard. Most of the work in building a dividend machine is done upfront. If I did my job of security selection well, I could afford to do nothing for years, and simply enjoy a rising stream of income from my diversified list of dividend paying companies. I would be paid for decades, for an investment decision made a long time ago.

As part of my monitoring process, I review the list of dividend increases every single week. I use this exercise to monitor existing holdings, and also to monitor companies I may be interested in down the road.

I isolated the companies which have a ten year track record of annual dividend increases. The companies include:

Thursday, February 8, 2018

Should Dividend Investors Worry About Rising Interest Rates?

If you have followed any news stories over the past year, you might have been exposed to a lot of negative information about dividend paying stocks. I have rebutted some of them, such as the story about the end of the dividend craze. Others include the notion that rising interest rates are somehow so bad for dividend paying stocks, which it would put the end to dividend investing once and for all. The problem with those statements is that while interest rates affect the relative valuation of assets, they are just one input in valuation formulas.

I keep hearing that rising interest rates will mark the end of dividend growth investing. I am actually hoping that this talk results in lower entry prices for those investors like me who are in the accumulation age. But for other long term holders who are living off portfolios, I think that they should ignore this noise, and instead focus on enjoying the fruits of their growing income stream.

There are several reasons why I ignore this non-sense:

1) First of all, few people can predict interest rates with any accuracy. Actually, few people can actually predict anything with a reasonable success rate. I still remember how everyone was expecting hyper inflation in 2008 – 2009. I actually wrote an article about it at the time, and several readers told me how wrong I am, and how they were going to stop reading my website because of that. Before that, everyone was worried about the fall of the US dollar against other currencies, and by the fact that the World were running out of oil. So naturally, while I do agree that interest rates could start increasing over time, I cannot tell you what the timing and amount of this increase is going to be. Therefore the impact of rising interest rates might not affect companies as much as expected. Even if interest rates did increase, and cost of capital was raised for all of corporate America, it could impact the speculative companies with untested products or constant need of new capital to maintain operations. This could potentially deflate the ongoing bubble in some technology stocks today.

Tuesday, February 6, 2018

Your future retirement income is on sale

The stock market has finally started going down. This is great news for those investors, who are in the accumulation phase. When you are able to purchase shares are lower entry prices, you end up purchasing future dividend income on sale. Investors in the accumulation phase should therefore be praying for lower prices during their work careers.

Retirees should ignore stock price fluctuations and focus on their dividend checks. This is where it pays to focus on dividend dependability for each company you bought in the first place.

Intelligent dividend investors view stocks as partial ownership shares of real businesses. They do their research in uncovering those businesses, and then try to buy existing owners out at bargain prices. They can then sit back, monitor their business interests, and collect dividends one check at a time. After all, if you owned an apartment building next to a college that is always occupied, you won’t give a damn if their quoted valued fell by 5% - 10%- 20% in one single day. As long as you can rent your building out, you should do just fine by ignoring “quoted values”.

I am starting to get giddy for a change. While I have hit my objectives, I am still saving and investing. This is why I will continue buying one or twice per month, whenever I have money to invest. Some of my money is automatically invested through my 401 (k), while the rest is invested manually in my taxable accounts.

It is important to stick to the plan of earning money, saving money and investing money on a regular basis, and staying the course through thick or thin. As you can imagine, long-term investing is a marathon, not a sprint. This is why it is important to keep investing for years, while building out that cash machine.

You then need to be able to stay invested throughout your retirement years, while living off those dividends.

For my taxable accounts, I usually screen the list of dividend champions regularly, using the following entry criteria:

1) A ten year track record of annual dividend increases (being a dividend champion is more than enough)
2) Having a forward P/E at or below 20
3) Having a dividend payout ratio below 70%
4) Having earnings per share growth over the past decade
5) Having a more than nominal dividend growth over the past decade ( at least 3%/year)

I came up with the following list of thirty dividend champions for further research:

Monday, February 5, 2018

Eight Companies Giving Raises To Their Shareholders

As part of my monitoring process, I review the list of dividend increases every week. This process helps me to monitor the performance of existing holdings, while also identifying companies for further research. I focus my attention on companies that have raised dividends for at least a decade, in order to focus on the companies that have delivered during an average boom-bust economic cycle. I try to dig further into each dividend increase, by looking at trends in earnings per share, valuation and historical dividend growth, in order to determine if a company is worth researching any further. This process is a great addition to my monthly screening using my entry criteria. It is very helpful to check the pulse of dividend increases, which could be lost when analyzing averages.

Over the past week, there were eight companies that raised dividends to shareholders, and have managed to boost dividends for at least a decade. The companies include:

Commerce Bancshares, Inc. (CBSH) operates as the holding company for Commerce Bank that provides retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals and businesses. It operates through three segments: Consumer, Commercial, and Wealth.

The company raised its quarterly dividend by 4.40% to 23.50 cents/share, bringing the new dividend yield to 1.60%. This marked the 50th consecutive annual dividend increase for this newly minted dividend king. Over the past decade, the company has managed to boost its dividends at an annual rate of 4.40%/year. Between 2007 and 2017, Commerce Bancshares managed to grow earnings from $1.73/share to $2.77. Analysts expect the company to earn $3.39/share in 2018. The stock may be worth a closer look below $50 - $51/share.

Thursday, February 1, 2018

Fourteen Dividend Aristocrats For Further Research

Last week, I shared with you the 2018 Dividend Aristocrats list. This is a good starting point in the research process. However, just because a company is on the list of dividend aristocrats, that doesn’t necessarily mean that it is a good investment to make today. Inclusion in an elite list of dividend stocks is like having a great resume – it lets you get a foot in the door for further evaluation, but nothing else.

Today, I will share with you a list of attractively valued dividend aristocrats for further research. I utilized forward earnings as much as possible, in an effort to screen out any one-time items affecting earnings. Those are not without their pitfalls of course, because analyst projections are typically on the optimistic side.

In order to come up with this list, I used my entry criteria.

1) P/E ratio below 20
2) Dividend Payout Ratio below 60%
3) Earnings per share growth over the past decade
4) At least a token annual dividend growth over the past decade

As a result of this screen, I came up with the following companies for further research:

Monday, January 29, 2018

Nine Companies Giving Raises To Shareholders

I review the list of dividend increases every week, as part of my monitoring process. This is a helpful step that helps me check for dividend increases for companies I own. I update my dividend portfolio spreadsheet with the new dividend rates, in order to see if my portfolio’s organic dividend growth rate is increasing above the rate of inflation.

I also use this process in order to identify hidden dividend gems for further research.

I started with the list of all dividend increases for the week, and then narrowed it down by focusing only on those companies that have managed to grow dividends for at least a decade. I came up with a list of nine companies for today’s review. The next step involves a brief analysis of each company, analysis of trends in earnings and dividends, followed by a brief take on valuation. The goal is to analyze not only historical dividend growth, but try to determine if it was supported by growth in fundamentals. It is helpful to evaluate the latest dividend hike against the historical dividend growth. We are looking for companies that grow earnings, grow dividends and grow intrinsic values over time. However, we also want to get those companies only if the valuation is right. Even the best company in the world is not worth overpaying for.

The nine dividend growth companies which raised dividends over the past decade include:

Friday, January 26, 2018

Dividend Aristocrats for 2018 Revealed

The S&P Dividend Aristocrats index tracks companies in the S&P 500 that have increased dividends every year for at least 25 years in a row. The index is equally weighted, and rebalanced every quarter.

To qualify for membership in the S&P 500 Dividend Aristocrats index, a stock must satisfy the following criteria:

1. Be a member of the S&P 500
2. Have increased dividends every year for at least 25 consecutive years
3. Meet minimum float-adjusted market capitalization and liquidity requirements defined in the index inclusion and index exclusion rules below.

The group of companies in the Dividend Aristocrats index tend to generate reliable dividend income, and provide the potential for strong total returns. The list is well diversified across sectors.

There are 53 companies in the Dividend Aristocrats index, after the committee dropped C.R. Bard (BCR) from the list. The company is being acquired by Becton Dickinson (BDX).

The three new additions include Praxair (PX), A.O. Smith (AOS) and Roper Technologies (ROP)

The 2018 Dividend Aristocrats are listed below:

Thursday, January 25, 2018

Getting Started – The Hardest Part About Dividend Investing

Imagine you have a certain amount of cash in your possession, which you do not plan on using for say 10 – 20 years. Or imagine that you are just starting out, and have a small amount of cash that will be added to your savings account every month.

You decide to invest that amount. You have been reading about dividend investing, and think it sounds cool to be paid more dividends every year from the investments you made years ago.

However, you have an uneasy feeling – there is so much information out there, you get information overload and you cannot do anything as a result. Where do you start?

Not all dividend stocks are created equal. A company is not an automatic buy, just because it happens to pays a dividend. You need to develop some knowledge to develop a framework to evaluate companies, and then need to use that knowledge to select companies for long-term income for your diversified portfolio.

So how to gain the knowledge if you are a complete beginner? What steps should you take?

Monday, January 22, 2018

Ten Dividend Companies Rewarding Investors With A Raise

As part of my monitoring process, I review the list of dividend increases every week. I use this list to monitor dividend increases for any companies I own, along with any pertinent news. I ause this process in an effort to check the pulse of dividend growth stocks in general, and potentially uncover hidden values.

To come up with the list today, I looked at all dividend increases over the past week.

I tried to narrow the list down to companies that have raised dividends for at least a decade.  I find it helpful to look at companies that have raised dividends for at least a decade, because this period covers a full economic cycle. This criteria also eliminates having to look at companies that achieved this streak of annual increases due to luck. A great company with a sustainable business model should be able to grow dividends for decades – therefore you do not need to buy it at the time it first initiates a dividend.

By focusing on the ten year requirement however, I excluded companies like Blackrock (BLK) from the group to discuss today. Perhaps, if they play their cards right, they will be featured next year.

I also included a short blurb about each company that fit the criteria from above, followed by pertinent information such as longevity of dividend increases and rate of annual dividend growth over the past decade. I find it helpful to review recent increases to the historical rate of dividend growth along. I also find it helpful to check whether the business is growing earnings per share, in order to determine if dividend growth is sustainable or it is running on fumes.

Last, but not least, I include a short evaluation on valuation. I look at P/E, growth in earnings and dividends, in order to come up with a rough idea whether I like a business or not. I believe that valuation is important. I look at the relationship between entry valuation and growth in determining fair value. This is how I determine if a company is worth researching further for my portfolio or not.

Without further ado, the companies that raised dividends over the past week include:

Friday, January 19, 2018

Investing Lessons Learned From Ten Years of Writing

Today marks the tenth birthday of the Dividend Growth Investor blog. It is unreal that I have managed to keep this up for ten years in a row. There have been more than 1,700 articles published during that time. I wanted to thank you all for reading along the way, through the ups and downs.

Today, I wanted to share nine lessons that I have learned about successful investing over the past decade. Those were learned from personal experience, through my interactions with readers and through observations of other investors.

1) Diversification matters.

Diversification is the only free lunch out there. This means holding as little as 40 – 50 individual companies from as many sectors as possible. Diversifying over time helps build the discipline to allocate money in the best ideas every single month. By slowly building out a dividend machine over time, you will end up with a portfolio that is well diversified, since different companies and sectors are available at different points of each economic cycle. Having some allocation to fixed income in retirement could be helpful as well, though not as helpful in the accumulation phase.

Tuesday, January 16, 2018

I Hit My Dividend Crossover Point

I wanted to share my exciting news with you today. I was going through my investments, and calculating my forward income and net worth numbers. After a little bit of adding things up, I came to the realization that I have exceeded my dividend crossover point in 2017. In other words, my forward dividend income from my taxable and tax – deferred accounts is set to meet or exceed my expenses.

I do not make monthly or quarterly updates like other blogs. The last update was probably in January of last year.  Though a lot of readers liked this update from 2015. I wanted to share this with you, and illustrate that aggressive savings coupled with patient dividend growth investing works.

Long-term readers know that this is a substantial increase from my position a little over ten years ago. Back when I graduated college in 2007, I had only a couple of thousand dollars to my name.

I was extremely lucky that my parents paid for my first year of college. This is why I cannot say that all accomplishment is entirely mine, since I had a large dose of initial help. But I was also lucky that I worked several jobs during school and summer breaks in order to pay for my college and living expenses for three subsequent years. Therefore, I had zero dollars in debt when I graduated.

After finding a job in 2007, I steadily saved a large portion of my paycheck. I had no idea how to invest my money however. The only no-brainer thing I knew how to do was to put enough in a 401 (k) to get the company match, and enough to get to the stock ownership plan. The stock ownership plan offered a discount on company stock, which could be sold right away for an almost guaranteed profit.


Friday, January 12, 2018

Attractively Valued Dividend Contenders To Consider

Earlier this week, I shared with you a list of 24 dividend champions, which I believed to be worthy for further research. These companies are attractively valued, have each managed to grow distributions for at least a quarter of a century. In addition, their dividends are secure, being raised by dependable earnings growth.

Today, I am going to delve into the list of dividend contenders. A dividend contender is a company, which has managed to grow dividends for at least a decade (but far less than 25 years). There are currently 220 dividend contenders. If you add in the list of dividend champions, we have 335 companies in the US, which have managed to grow dividends every single year for at least a decade.

This is a solid starting point for any serious dividend investor, who is looking for a group of quality companies for further research.

To create the list I shared with you today, I went through the following process:

1) Obtained the list of dividend contenders from dripinvesting.org
2) Dump it into a Yahoo! Finance custom portfolio that I downloaded to excel.
3) Remove companies where trailing P/E ratio was below 20
4) Removed companies where the dividend payout ratio was above 60%
5) Added information for the 5 and 10 year annual dividend growth rates

As a result, I came up with 65 dividend contenders for further research.

Continue Reading >>>

Thursday, January 11, 2018

Attractively Valued Dividend Contenders To Consider

Earlier this week, I shared with you a list of 24 dividend champions, which I believed to be worthy for further research. These companies are attractively valued, have each managed to grow distributions for at least a quarter of a century. In addition, their dividends are secure, being raised by dependable earnings growth.

Today, I am going to delve into the list of dividend contenders. A dividend contender is a company, which has managed to grow dividends for at least a decade (but far less than 25 years). There are currently 220 dividend contenders. If you add in the list of dividend champions, we have 335 companies in the US, which have managed to grow dividends every single year for at least a decade.

This is a solid starting point for any serious dividend investor, who is looking for a group of quality companies for further research.

To create the list I shared with you today, I went through the following process:

1) Obtained the list of dividend contenders from dripinvesting.org
2) Dump it into a Yahoo! Finance custom portfolio that I downloaded to excel.
3) Remove companies where trailing P/E ratio was above 20
4) Removed companies where the dividend payout ratio was above 60%
5) Added information for the 5 and 10 year annual dividend growth rates

As a result, I came up with 65 dividend contenders for further research.


Wednesday, January 10, 2018

Profiles of Successful Dividend Investors

We all invest in dividend stocks in order to achieve financial independence. I find it very motivating to read the stories of long-term dividend investors, who started from modest beginnings and turned into multi-millionaires after decades of patiently compounding their wealth.

Back in early 2017 I posted a summary including the stories of several millionaire dividend investors:

The Most Successful Dividend Investors of all time

Another inspirational story appeared a few months ago:

This Is How This Successful Dividend Investor Turned $1,000 Into $2 Million


Yesterday, I read the story of a retired British teacher, who left a blue chip portfolio worth $9.5 million to charity at the time of his passing away in 2017. His name was Grahame Pincock, and he passed away at 90, leaving a portfolio in a trust to spend for charitable causes fighting ill health. Mr Pincock, was a principal teacher of languages before retiring.

Monday, January 8, 2018

24 Dividend Stocks For 2018

I believe that the list of Dividend Champions, Contenders and Challengers is the most complete list of US dividend growth stocks available today. As part of my process, I screen the list of dividend champions regularly. I have a custom built portfolio in Yahoo! Finance, which includes all dividend champions. Using information from Yahoo Finance, Company Annual Reports and David Fish’s excellent site, I come up with all the data I need for my screening purposes.

In order to come up with a list of companies for further research, I used the following entry criteria:

1) A ten year minimum for annual dividend increases ( being a champion already helps in pre-qualifying this criteria)
2) Forward P/E ratio below 20
3) Dividend Payout Ratio below 60%
4) Companies that have managed to grow earnings per share over the past decade
5) Companies which have achieved a more than nominal dividend growth over the past decade

I applied those basic criteria on the Dividend Champions list, maintained by David Fish and came up with the following group of companies for further research:

Friday, January 5, 2018

Dividend Champions, Contenders & Challengers: The most complete list of US dividend growth stocks available

A long streak of annual dividend increases is a filter to weed out unwanted companies. Companies that pay dividends are able to do that based on earnings growth. A company cannot grow dividends for 25 years in a row, if earnings are not increasing. This company is thus focusing on only the projects with the most potential, when they invest their cash.

If you put money in a dividend stock, you earn higher dividends for decades. The growing earnings stream supports the higher dividend payments, and results in intrinsic value growth over time.

Early in my journey as a dividend growth investor, I was limited to using the Dividend Aristocrats and the Dividend Achiever indexes. The dividend aristocrat index is maintained by McGraw Hill/S&P Global, who also owns the rights to the S&P 500 index. It included companies which were part of the S&P 1500 index, and which had raised dividends for at least 25 years in a row.

The index included some of the best known dividend stocks such as Coca-Cola(KO), Wal-Mart (WMT), Johnson & Johnson (JNJ) to name a few. Since I was a new investor, I had a list of about 50 companies to research, which made it easier to focus on those and choose only the ones that fit my value criteria. The problem was that it didn’t seem to be including other quality companies with long dividend growth streaks such as Altria (MO), Colgate Palmolive (CL) to name a few. As a result, I was potentially missing out on other companies. By focusing on dividend increases every week, I was able to uncover more companies which were never part of Dividend Aristocrats index. I then created my own list of companies to follow, but this took a lot of extra time, which I already didn’t have. I am not sure why S&P committee excludes certain companies. I believe it has to do with the index requirements.

Wednesday, January 3, 2018

Two Dividend Achievers on My List for 2018

Over the years, I’ve built my own model to identify the best dividend paying companies. The core of my investment strategy has been built around dividend growth. Overtime, I didn’t want to limit myself among a short list of 19 or 51 companies and rather starting the study of a wider group; the achievers.

The Dividend Achievers Index refers to all public companies that have successfully increased their dividend payments for at least ten consecutive years. At the time of writing this article, there were 265 companies that achieved this milestone. With the right combination of metrics, this list is probably the best starting point to build your dividend growth portfolio or to find your next addition.

As we start a new year, I’m fairly positive about the upcoming months. I believe 2018 will mark the 10th consecutive year of this bullish market. I’ve selected two companies from the Achievers list that should continue to reach higher levels this year. 

HASBRO (HAS)


Source: Ycharts

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