Monday, August 20, 2018

How to read my stock analysis reports

I usually try to analyze one dividend paying company every week. In a typical stock analysis report, I would outline the years of consecutive dividend increases along with the amount and timing of the latest dividend increase. This should be a helpful review for readers of the premium dividend growth investor newsletter and all readers in general.

I would then look at trends in stock prices, earnings per share, dividends, and dividend payout ratios over the preceding decade.

Right under earnings per share, I typically try to discuss qualitative factors that might drive future profitability. I believe that rising earnings per share is the fuel behind future dividend increases. The rising stream of earnings per share also allows for growth in intrinsic values over time. I am not a big fan of stagnant earnings per share, because this shows me that there is natural ceiling for future dividends to grow. Therefore, I am losing purchasing power for my dividend income and intrinsic value over time. While some higher yielding companies tend to have low growth in earnings per share, but compensate with the high dividend, I still want some growth in the future.

We also want to review the quality of earnings over time. The trends in earnings per share should show you how cyclical those profits are over time. For cyclical companies, earnings per share are their highest at the top of the economic cycle. Therefore, P/E ratios are relatively low and these companies appear cheaper than they really are. We want stable and dependable earnings as much as possible. A historical review, coupled with a qualitative understanding of the dependability of the business model throughout the economic cycle.

I tend to review trends in dividend payout ratios, in order to determine dividend safety. As an investor whose goal is to live off dividends in retirement, dividend safety is of paramount importance. Once you hit the dividend crossover point, which is the point where dividend income exceeds your expenses, you are good to go as long as the dividend is stable and growing over time. The goal of the dividend investor is to stay retired no matter what happens in this unpredictable world. This is why I not only want a dividend payout ratio that is generally below 60%, but also want a growing dividend that is supported by growth in underlying fundamentals ( earnings per share). In other words, I would like to see a dividend payout ratio that stays within a range, rather than a situation where companies grow dividends by paying out a larger and larger portion of the earnings pool. For most companies, there is a need to reinvest a portion of earnings in the business to grow. Anything in excess of that should be distributed back to shareholders, or else risk being wasted by executives on ill-timed acquisitions, corporate jets or projects with poor visibility and sub-par expected risk adjusted returns.

Of course, I also review the trend in dividends per share. Dividends are more stable and dependable than stock prices, which is what makes them an ideal source of income for retirees. I want to focus on companies which can pay and grow dividends no matter where they are in the economic cycle. I review the recent increases in dividends versus the trends over the past decade. A rising dividend indicates a management team that is shareholder focused, which also wants to establish a track record of sharing excess shareholder wealth with the rightful owners of the business. The rising dividend that is based on growing earnings, and coupled with a sustainable payout ratio, while available at an attractive valuation is something I look for in an investment.

Basically in the article I discuss how I like a record of dividend growth, earnings growth and a sustainable dividend payout ratio. If the stock has these traits, I then focus on valuation.

In my conclusion section, I usually link to my article on entry criteria when I call a stock attractively, fully or overvalued. In my article on entry criteria I discuss that I am not willing to pay more than 20 times earnings for a stock. If the company trades at less than 20 times earnings, I would call it attractively valued and call it a day. However, if the stock trades above 20 times earnings I would try to calculate a reasonable price which would make it a good buy on dips. This entry criteria applies to most corporations that pay dividends and are traded on exchanges.

For example, Automated Data Processing (ADP) trades at 27.50 times forward earnings, which is above the price I am willing to pay for it. If it earns $5.18/share, at 20 times earnings, the most I would pay is $104/share. Hence, if I posted an analysis on ADP I would say it is overvalued at 27.50 times earnings, and would buy on dips below $104/share.

If Automated Data Processing (ADP) traded at $90/share, and earned $5/share, I would say it is attractively valued at the moment. For example, in my analysis of Johnson & Johnson (JNJ), I discussed that I thought the stock was attractively valued at the moment.

I link to my entry criteria article, because I want readers to understand how I value company stock.

For a recent dividend stock analysis of Starbucks (SBUX), I assigned an entry price of $48/share at $2.40/share in earnings per share. If you read the article in 12 months and the stock trades at $70 but earns $4/share, you would think it is above fair value and ignore it completely for that reason. However, at $70, the stock would have been attractively valued since the P/E is a reasonable 17.50.

Readers would notice that I do not assign “fair values” to stocks I analyze. I am not going to complicate my screens by using discount rates, forecasting future dividend payments and discounting them back etc.

Instead I use the P/E and yield as mentioned above. However, I do select companies that have raised dividends for at least a decade, and which usually have done so above the rate of inflation. In the end, yield and dividend growth is a balancing act. This should go without saying, but in the valuation criteria I look at P/E ratios in conjunction with looking at earnings growth rates and dividend growth rates. If we select a company with a higher P/E ratio, we would expect a higher growth in earnings and dividend growth. For an equity with lower P/E ratios, we would generally see slower growth but probably a slightly higher yield.

I select companies that have not only raised dividends for long periods of time, but I believe also have a decent shot of continuing that in the foreseeable future. I expect dividends to grow over time, I just don’t want to overcomplicate things by assigning forecasted values and proving my point mathematically. I would avoid doing math since I can mention my expectations with one single sentence or less, and have them already built into the assumption.

Readers of my dividend growth newsletter are receiving ten dividend ideas per month in their emails. I have these ten companies analyzed in detail, by following the logic outlined in this article. I will post an updated list of the ten dividend growth stocks I will be buying at the end of the month on August 26. The structure of each analysis is similar to the following dividend stock analyses below:

Thank you for reading!


Relevant Articles:

The ten year dividend growth requirement
My Entry Criteria for Dividend Stocks
How to retire in 10 years with dividend stocks
How to become a successful dividend investor

Thursday, August 16, 2018

Starbucks Dividend Stock Analysis

Starbucks Corporation (SBUX), together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide. The company operates in four segments: Americas; China/Asia Pacific; Europe, Middle East, and Africa; and Channel Development.

Starbucks is a dividend challenger, which has increased dividends every single year since it initiated its first dividend in 2010. The last increase occurred in June 2018, when Starbucks hiked its quarterly dividend by 20% to 36 cents/share.

The stock has compounded by 21.90%/year over the past decade. This came off the lows in 2008, when the stock was depressed due to mismanagement and the global financial crisis. Future returns would be much more reasonable in my opinion.


Over the past decade, the company managed to boost earnings from $0.44/share in 2007 to $1.97/share in 2017. Earnings per share growth seems to have slowed down since 2015. That being said, Starbucks is expected to earn $2.41/share in 2018.

Monday, August 13, 2018

Broadridge Financial Delivers Strong Dividend Growth

Broadridge Financial Solutions, Inc. (BR) provides investor communications and technology-driven solutions for the financial services industry worldwide.

The company raised its quarterly dividend last week by a massive 32.90% to 48.50 cents/share. With this increase, the company's annual divided has increased for the eleventh consecutive year since becoming a public company in 2007.


The new quarterly payment is almost seven times larger than the dividend payment from a decade ago. This was possible due to the rapid expansion in the dividend payout ratio, as earnings managed to double.

For history buffs, Broadridge Financial was spun-off from Automatic Data Processing in 2007. ADP itself has a long history of growth and dividend increases, which it has passed onto its spin off-spring.

This dividend achiever is careful in its capital allocation strategy, as it focuses on projects with high return on investment, which could improve its competitive position and ability to serve its customers efficiently and cost effectively. This mindset has allowed the company to grow earnings and excess free cash flows, the majority of which are distributed in the form of dividends and share buybacks.

Thursday, August 9, 2018

Best Dividend Investing Articles For July 2018

For your reading enjoyment, I have highlighted several articles that the readers found of particular interest this month. I have included the article title, as well as a short description.

1) Introducing Dividend Growth Investor Newsletter
Last month, I created my own dividend investing newsletter. It features ten quality companies for the long-term each month. This newsletter features companies that I am investing in every single month. This dividend portfolio would be a great teaching exercise on building a portfolio from scratch. We would also discuss diversification, how to allocate new cash towards new or existing position and how to monitor and manage the portfolio. Subscribers of the newsletter received a report listing the ten dividend paying companies I bought last week.

2) Screening The Dividend Champions List For Bargains
I ran my screen against the list of dividend champions from June 2018, in order to identify bargains. The list of dividend champions includes companies that have managed to increase dividends to shareholders for at least 25 years in a row. The dividend champions list is more comprehensive than the list of dividend aristocrats, which is why I prefer to use it for my investing process. In this article, I discussed my approach to screening large groups of dividend growth stocks. Not surprisingly, I focus on qualitative and quantitative criteria to come up with a list of companies for further research.

3) Dividend Champions List For June 2018
I updated the list of dividend champions on June 30, 2018. I discussed the process I took to do the updates, which is mostly manual in nature. I discussed this in an effort to educate investors how to maintain their own lists if noone updates it for the community on a go forward basis. After going through the process of just updating the list of dividend champions, I have a lot of respect for the amount of work that David Fish did on a monthly basis for a decade, in updating the champions, contenders and challengers lists. He will be missed.

4) Three Dividend Growth Stocks Rewarding Shareholders With A Raise
In this article, I highlighted three dividend growth stocks with a ten year record of annual dividend increases. Those companies had raised dividends in the preceding week. I review the dividend increases that interest me, as part of my monitoring process. I own two of the three companies mentioned in the article, and recently added to my position in one of them.

5) How to retire in 10 years with dividend stocks
In this article, I shared a simple model for forecasting dividend income using a few simple inputs such as dividend yield, dividend growth and the impact of regular contributions to a dividend portfolio. While the future is seldom linear, this model gives at least a ballpark estimate of what can be expected if certain assumptions are made. When playing with models, I have found it very helpful to change assumptions, and see what the overall impact to the end result turns out to be. It is always helpful to stress test assumptions.

Relevant Articles:

Best Dividend Investing Articles For June
Dividend Investing Resources I Use
Best Dividend Investing Articles For May
Help! I have a serious spending addiction

Monday, August 6, 2018

Three Notable Dividend Increases To Consider

As part of my monitoring process, I review recent dividend increases. The process of identifying dividend increases is manual, because it relies on information coming from a list of multiple sources. I usually focus my attention on companies which have managed to increase dividends to shareholders for at least ten consecutive years. This is then followed by a brief review of trends in fundamentals and valuation. I like to compare the recent increase against the ten year average, and then try to discern whether that growth is supported by the business.

Over the past week, I noticed three companies with a ten year record of annual dividend increases. The companies include:

Illinois Tool Works Inc. (ITW) manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products.

The Board of Directors of Illinois Tool Works Inc. (ITW) increased the company’s quarterly dividend by 28.20 percent to $1.00 per share. This marked the 44th consecutive annual dividend increase for this dividend champion.

Wednesday, August 1, 2018

August 2018 Dividend Champions List

I took upon myself to update the list of dividend champions, after the untimely passing of David Fish two months ago. While there are other users updating the list, I find it helpful to be self-reliant, because I do not know how long they will keep updating it for. I use the list of dividend champions very often, which is why it is helpful to own the updates on my end, and then have a reliable source for my screening and monitoring process. I am not monitoring the list of dividend contenders and challengers at this time.

I use the streak of consecutive annual dividend increases, along with the historical rates of annual dividend growth. I sometimes even review the annual dividend payments going as far back as 1999, in order to verify whether the streak of annual dividend increases listed is accurate.

I discussed briefly the process I use to update the list of dividend champions in the last months update. By using a combination of data pulls from Yahoo Finance, references to my weekly reviews, and notification for companies that “should be raising their dividend” this time of the year, I was able to make some updates. This is a labor intensive process, and I find it hard to automate it.

I titled the last file June 2018 Dividend Champions, because it was as of June 29, 2018. Some readers believed that it was for June and not July. So to avoid any confusion, I will call this list August 2018 Dividend Champions list. The list shows updated information on the number of dividend champions as of July 31, 2018. Therefore, it shows the list of dividend champions for August 2018.

You can open the excel file from this location.

We have one new dividend champion added for this month.

Aptar Group (ATR) – after a 6.70% increase in the quarterly dividend to 32 cents/share. 25 years in a row.

We have no dividend champions removed however. Tenant (TNC) company is in jeopardy of being removed from the list of dividend champions, since it hasn’t raised distributions since 2016.

There were a few notable dividend increases over the past month from the list of dividend champions.
Those include the following companies, their ticker, the rate of most recent increase and consecutive streak of annual dividend increases.

Aqua America (WTR) – a 7% increase in its quarterly dividend to 21.90 cents/share. Aqua America has increased dividends for 26 years in a row.

Computer Services Inc. (CSVI) – a 16.10% increase in its quarterly dividend to 36 cents/share. Computer Services has raised dividends for 47 years in a row.

Medtronic (MDT) – a 8.70% increase in its quarterly dividend to 50 cents/share. It was announced in June. Medtronic has rewarded shareholders with annual raises for 41 years in a row.

Realty Income (O) – increase monthly dividend to 22 cents/share. Realty Income has increased dividends for 25 years in a row.

1st Source Corp. (SRCE) – a 4.20% increase in the quarterly dividend to 25 cents/share, which is the second this year. 31 years in a row.

Stanley Black & Decker (SWK) – a 4.80% raise in its quarterly dividend to 66 cents/share. The company is also a dividend king after raising dividends for 51 years in a row.

PPG Industries (PPG) – a 6.70% increase in its quarterly dividend to 48 cents/share. PPG Industries has raised dividends to shareholders for 47 years in a row

National Retail Properties (NNN) – a 5.30% increase in its quarterly dividend to 50 cents/share. National Retail Properties has a 29 year streak of consecutive annual dividend increases.

Relevant Articles:

Dividend Champions List For June 2018
Five Companies Committed to Increasing Returns To Shareholders
Three Dividend Growth Stocks Rewarding Shareholders With A Raise
Two Notable Dividend Increases To Consider
Seven Dividend Paying Companies Rewarding Shareholders With A Raise

Monday, July 30, 2018

Seven Dividend Growth Stocks Rewarding Shareholders With a Raise

I review the list of dividend increases every week as part of my monitoring process. It is very helpful to keep up with the world of dividend growth stocks by monitoring regular dividend increases. This helps me to see up and coming future dividend growth stars, monitor existing holdings and see it as an excuse to do a deeper analysis of fundamentals.

In my weekly reviews of dividend increases, I usually look for companies that have managed to boost dividends for at least a decade. For today's review, I am making an exception. There is a companies I like, which may be good fits for my dividend growth portfolio if they are ever available at attractive valuations. Everything else is consistent with my process for identifying, screening and researching individual investments.

Over the past week, the companies that raised dividends and met my criteria above include:

Thursday, July 26, 2018

How to retire in 10 years with dividend stocks

The goal of every dividend investor is to generate a sufficient stream of passive dividend income, that would adequately cover their expenses. In order to achieve this goal however, investors need to select a strategy and fine-tune it over time to reflect current market conditions. In most of my articles I tend to focus on investing that would generate dividends for several decades to come. But how would someone who wants to retire in one decade afford to retire? Follow the guidelines in this article, and you might end up being one of the lucky ones who can afford to quit the rat race in a decade.

The first guideline is to contribute regularly to your dividend portfolio. This is important, because it allows our investor to dollar cost average their way over many years. This would provide them with the opportunity to build their portfolio brick by brick, without purchasing everything as a lump sum. Many articles on retirement focus on lump sum investing, which is not relevant to most future retirees.

The second guideline is to focus on dividend growth stocks, which are companies that regularly raise distributions. Since our dividend investor is likely to live off distributions for decades to come, they need to overcome the risk of inflation. As a result, they need to invest in stocks that can afford to regularly increase dividends, thus ensuring an inflation adjusted stream of income. Luckily, David Fish has the dividend champions list, which can be accessed from here. Investors can use this list as a starting point to identify dividend growth stocks, and apply their screening criteria.

Tuesday, July 24, 2018

Seven Dividend Paying Companies Rewarding Shareholders With A Raise

As part of my monitoring process, I review the list of dividend increases every week. I typically focus on the companies that have at least a ten year streak of annual dividend increases. I then dig further by reviewing the trends in fundamentals over the past decade, in order to determine how safe is the dividend and whether the company is growing dividends on borrowed time. This occurs when management is expanding the dividend payout ratio, as it grows the dividend faster than earnings. In general, we want earnings and dividends to grow in lockstep. I also review valuation as part of my process. When I read the press releases announcing dividend increases, I also like to note what management says about rewarding shareholders with their excess cash. For the companies, whose executives were proud in discussing their dividend increases, I added a short citation.

The companies that raised dividends last week, that also met my criteria for inclusion for this article include:

Monday, July 23, 2018

I just bought 10 dividend growth stocks for my portfolio

Good Morning,

You may have noticed that I created a newsletter focusing on dividend growth stocks last week. I plan to invest $1,000 in a real world portfolio every single month, and let interested readers observe in real time how I build a dividend machine from scratch.

I just bought shares in ten companies this morning. Subscribers to my Dividend Growth Investor newsletter received a report of the companies I am planning to purchase at the market open in their emails.

If you want to give my newsletter a try, you may do so by signing up here:







The price for the newsletter is a bargain at just $6/month. If you subscribe at the low introductory rate today, the price will never increase for you.

Once you sign up, I will add you to my premium mailing list, and you will receive all exclusive content related to the portfolio.

Each month, I will be allocating $1,000 to my dividend portfolio by buying stakes in ten attractively valued companies. The newsletter will include information on the companies I am purchasing, along with a brief analysis of each company.

The ultimate goal of the portfolio is to generate $1,000 in monthly dividend income.

I plan to track this portfolio in real time over the next few years, and track our progress towards our goal.

I offer a 7 day free trial for new readers, after which you will be billed $6/month.


Thank you for reading Dividend Growth Investor.


Thursday, July 19, 2018

Introducing Dividend Growth Investor Newsletter

I wanted to share with you some exciting news!

After writing Dividend Growth Investor website for over a decade, I am starting a newsletter which is focusing on premium content for subscribers. I am launching this service, particularly to address a common question I receive quite often from readers. Most readers ask either for a summary of my best ideas or for a listing of my dividend portfolio holdings. One of the challenges I have is that I would not recommend purchasing many of the companies I own today due to valuation. However, I think that my newsletter will address the need for a snapshot of dividend holdings for the long-term and a list of attractively valued companies that the portfolio will purchase each month.

In my newsletter, I will run a real world dividend portfolio. I will make purchases every single month in the best values I can find at the moment. I will start by allocating a $1,000 per month to the portfolio. Each month, I will try to invest in 10 dividend companies using the commission free brokerage Robinhood.

Each newsletter will include the ten companies to be bought for the Dividend Growth Portfolio. You will be able to obtain an analysis of each company included in the portfolio through the newsletter. In my analysis, I will focus on dividend safety, dividend growth potential and valuation. I try to invest that money with utmost care, because I know that I will rely on that dividend income stream in the future.

As the dividend portfolio matures, I will walk you through the process of managing portfolio weights, working on diversification and monitoring the portfolio.

The newsletter with ten dividend ideas will always come out on the first Monday of the month. Just for the introductory newsletter however, we will select and post the top ten companies this Monday, July 23rd. The orders will be executed at the open on Monday morning. Subscribers will receive confirmation about the purchases that are made in a follow up email later that day.

Each month, we will also include a brief overview of the portfolio performance. The ultimate goal of this portfolio will be to generate $1,000 in safe monthly dividend income. Therefore, I have the commitment to stick to this portfolio for a few years.

Dividends will be reinvested in the best values at the moment. They will be reinvested in the best values of the month along with the new cash deposits into the brokerage account. Once dividends earned in a given month reach $100 however, I may make investment decisions on an ad-hoc basis if I find a good value for the money that is short-lived. Subscribers will receive alerts for any real time trades made for the portfolio.

In order to thank you for being a loyal reader, I am offering the newsletter for a low introductory price of $6/month. There is a 7 day free trial, during which your card will not be charged. After that, you can still cancel at any time, but you will be charged. For less than 20 cents/day, you will receive a listing of 10 quality companies that my real world portfolio will purchase every month. I believe that this is a bargain.

You can subscribe using this Paypal form:







Once you subscribe, I will add you to my exclusive email list, and you will be able to receive premium information about the dividend growth investor portfolio.

The price will increase over time, so you have a limited chance to grab this subscription today. If you subscribe today however, your price will never increase. I guarantee it.

Monday, July 16, 2018

Five Companies Committed to Increasing Returns To Shareholders

As part of my monitoring process, I review the list of dividend increases every week. I am able to monitor companies I own and those I may be considering owning at the right price. I find the rate of recent dividend increases to be very telling about management’s expectations for near term profitability growth. If they believe that their company is operating at a predictable rate, they are likely to consider growing the dividend close to the historical average annual rate of increase. If there is the expectation for a deceleration in profitability, we will see management growing their distribution’s at a much slower pace than before.

This is why I try to compare the most recent dividend increase relative to the ten year average. In order to get more context, I also review the historical trends in earnings per share along with the near term earnings expectations by Wall Street Analysts (which should be taken with a grain of salt of course).

Over the past week, there were several companies that announced dividend raises to their shareholders. After going through the press releases, I also included some comments from top executives, which should summarize their opinions on dividends. As usual, I focus on companies that have managed to increase dividends for at least a decade. I want companies that can pay and grow dividends throughout the economic cycle.

The companies include:

Thursday, July 12, 2018

Evolution of the dividend kings list over the years

A dividend king is a company that has managed to reward shareholders with a dividend increase for at least 50 years in a row. This is no easy feat, as only 20 companies in the US have managed to achieve this regal status.

When I came up with the idea for the dividend king's list in 2010, there were only ten companies claiming this status. The prosperity of the 2010’s has led to an increase in the number of dividend kings. I have done some research on the dividend kings, as I like to look at historical data and play around in excel.

But history buffs like me have always wondered about the dividend kings of the olden days. I am always fascinated to learn about financial history.

After spending some time at a local library, I came up with a few books containing historical dividend records for the dividend achievers. The list of dividend achievers is not as comprehensive as the list of Dividend Champions, Contenders and Challengers. However, it is the best way to find information that is good enough.

The information covers the period of the 1990s and the early 2000s.

There was only one dividend king in 1994 – it was Winn Dixie with a 50 year record of annual dividend increases. The company remained the only dividend king in 1995, raising its record of annual dividend hikes to 51 years in a row.

Monday, July 9, 2018

Screening The Dividend Champions List For Bargains

I ran my screen against the list of dividend champions from June 2018, in order to identify bargains. The list of dividend champions includes companies that have managed to increase dividends to shareholders for at least 25 years in a row. The dividend champions list is more comprehensive than the list of dividend aristocrats, which is why I prefer to use it for my investing process.

The criteria used to screen the list of dividend champions are listed below:

1) A trailing P/E ratio below 20
2) A dividend payout ratio below 60%
3) A ten year dividend growth of at least 3%/year
4) A history of earnings growth over the past decade
5) A 25 year streak annual of dividend increases ( being a dividend champion meets this requirement automatically)

The process of screening is fairly straightforward.

The first step involves creating a portfolio in Yahoo Finance, which includes the dividend champions from the latest update.

The second step involves creating a custom view, which allows you to see the ratios that are most important for you. In my case, I look for price, prospective dividend and earnings. I used trailing earnings per share for this screen, but I usually use forward earnings in order to account for one-time accounting items distorting short-term results. For example, my screen excluded Becton Dickinson (BDX) since it was showing to be having negative earnings ( caused by one-time items). But a review using forward earnings would have included it for potential screening. Trailing earnings are automatically populated, but for some reason I have to manually look for forward earnings for each company individually, because their “Forward Earnings” column shows the earnings for the year after next year. This is way too forward for me.

Tuesday, July 3, 2018

Three Dividend Growth Stocks Rewarding Shareholders With A Raise

I review the list of dividend increases every week, as part of my monitoring process. This exercise is very helpful, as it allows me to view how the dividend is progressing relative the ten year average.

Dividend rates are set out by company’s boards of directors, after taking into consideration the outlook for the business environment, the needs of the business and the excess cashflow that is generated from it. I view the rate of dividend increases as a helpful tool that allows me to see the near term sentiment from the company’s top executives.

I focus my attention on companies with a ten year track record of annual increases, in order to weed out cyclical companies whose dividends are not as dependable. As dividend growth investors, we are after companies that will pay and grow dependable dividends even during recessions. As a result, this review excluded the dividend increases by financial companies such as Wells Fargo (WFC), J.P. Morgan (JPM) and Bank of America (BAC), since those companies broke their long records of annual dividend increases during the Global Financial Crisis of 2007 - 2009.

Over the past week, there were three notable companies that announced dividend hikes. The companies include:

Sunday, July 1, 2018

Dividend Champions List For June 2018

As many of you know, the untimely death of David Fish left a void in many of us. His creation, the list of Dividend Champions, Contenders and Challengers provided an indispensable amount of information for dividend growth investors. It is unclear who will inherit those responsibilities. This was the best list for dividend investors, with a comprehensive number of companies and a wealth of data for further analysis.

But in the meantime, I came up with a nifty hack that could help each one to update the list quickly for themselves. I am not sure if I will be updating it on a monthly basis due to time commitments, but I can share with you how I will be updating the list for my use on a go forward basis.

To start, I focused only on the list of dividend champions and the dividend contenders which have increased dividends for 24 years in a row. The latter are prime candidates for future inclusion in the dividend champions list.

Second, I imported the list of dividend champions to create a custom portfolio in Yahoo Finance.

Third, I compared the dividend payment date from Yahoo to the data left from David Fish. For any increases, I updated the streak of dividend increases upwards. For any decreases – I dropped the stock from the list (there were none). I also reviewed the companies that seemed like they haven’t raised dividends for over a year. Those would likely be dropped from the list by the end of 2018.

There were two new additions to the Dividend Champions list. The first is Chubb (CB) and the second John Wiley (JW.A).

Fourth, I updated the trailing EPS number and deleted the columns I never use, such as Graham number and technical numbers. These are columns that I don’t use – perhaps you use them so in your process you should keep or expand upon them. I also updated the last price for June, which automatically updates the trailing P/E ratio, EPS Payout and the Dividend Yield.

Last, this process took a lot of time, because I did a few verifications that went beyond the process. As you know, I look at notable dividend increases on my site every week or so. The automatic process had failed to account for the increases in companies like H&P (HP) for example. I spent quite a lot of time verifying whether I am looking at genuine dividend increases, or just having bad data. Reviewing dividend history on Seeking Alpha was super helpful. It is one of my favorite dividend resources.

I have even more respect for the amount of work that Dave Fish did for all of us over the past decade by updating this list painstakingly. And never complaining about it either.

You can view the updated list of Dividend Champions as of June 29, 2018 by following this link.


You can download the file into spreadsheet format.


Alternatively, you can also download it from Dropbox from this link. ( and click Download)



Please share this post with your friends, so that they know about this update!

Relevant Articles:

Dividend Champions, Contenders & Challengers: The most complete list of US dividend growth stocks available
RIP David Fish
- 2018 Dividend Kings
Dividend Aristocrats List for 2018

Thursday, June 28, 2018

Best Dividend Investing Articles For June

For your reading enjoyment, I have highlighted several articles that the readers found of particular interest this month. I have included the article title, as well as a short description.

Four Cheap Consumer Staples For Dividend Investors
The consumer staples sector has been hated by investors over the past year or two. There are several headwinds that appear to have depressed the share prices for many quality consumer staples with reliable dividend payments. Some of these headwinds include slowing growth, threats of product obsolescence, rising interest rate and a general decrease in investor demand for these securities. After performing some reviews, I came up with a list of companies in the consumer staples sector, which are attractively priced today. I believe that each one of these companies has sustainable dividends. Each one of those companies is also growing earnings per share, which will be helpful for future dividend growth and to increase the intrinsic value of our share investments over time. All of those companies are priced below 20 times forward earnings.

Historical Performance Of The Dividend Kings List
The dividend kings list includes the most elite dividend growth companies in the US. A dividend king is a company that has managed to increase its dividends to shareholders for at least 50 years in a row.

This is a testament to the endurance and resilience of those businesses over the past 50 years. This great track record make each dividend king an excellent case study on what makes for a successful and lasting investment. For the purposes of this article, I calculated to total returns performance per year for each group of dividend kings. I assumed that portfolios were equally weighted in a tax-deferred account that qualified for commission free trades. The results were very interesting. But I like crunching data.

Dividend Investing Resources I Use
I am frequently asked by readers about resources I use. While I have discussed before the resources I use to monitor my holdings, and I have compiled before information on resources before, those lists are forever changing. As I have done this for over a decade, I continuously add, test and remove tools from my list. However, I also have to keep in mind the fact that this site is read by investors with varying levels of experience. Therefore, I decided to list a few free resources that may be helpful for any dividend investor out there.

Five Consumer Staples to Consider On Dips
I shared a list of five consumer staples with good track records of dividend growth and solid earnings growth. Unfortunately, these shares were either overvalued or close to the top of the valuation range. In general, I prefer to buy shares at a P/E ratio below 20. However, the lower the entry price, the better my chances of earning good returns and locking in a higher yield from the start.

Question to readers:

I also wanted to ask the readers about helpful articles on dividend investing they have recently read. For this exercise, please use articles from other authors. Please feel free to email me at dividendgrowthinvestor at gmail dot com.

Relevant Articles:

2018 Dividend Kings List

Monday, June 25, 2018

Two Notable Dividend Increases To Consider

Last week, there were two notable dividend increases from companies I follow. Both companies are popular in the dividend investing community. I find those companies to illustrate very well the trade-off between dividend yield and dividend growth, as well as the principles of the three different phases of dividend growth.

The first company has a longer track record of annual dividend increases, albeit at a slower rate of annual growth. The payout ratio is relatively stable and the company also spots an above average yield.

The second company however has a shorter track record of annual dividend increases, but a higher rate of annual dividend growth. The payout ratio is increasing, and the company is starting to show a respectable dividend yield today.

The two notable companies which managed to increase dividends last week include:

Thursday, June 21, 2018

Dividend Investing Resources I Use

I am frequently asked by readers about resources I use. While I have discussed before the resources I use to monitor my holdings, and I have compiled before information on resources before, those lists are forever changing. As I have done this for over a decade, I continuously add, test and remove tools from my list. However, I also have to keep in mind the fact that this site is read by investors with varying levels of experience. Therefore, I have decided to list a few free resources that may be helpful for any dividend investor out there.

The first resource that I have been using for several years is the list of Dividend Champions, Contenders and Challengers, that used to be maintained by Dave Fish. Unfortunately, Dave passed away last month. While a June list was published by someone else, I am afraid that noone will take the leadership role that Dave had in painstakingly updating that monster spreadsheet every month for a decade!

The site also includes links to some international dividend growth stock lists focusing on UK, Canada, Swedish securities.

The second resource I have leveraged is Morningstar. I have found Morningstar to be helpful in providing a quick ten year snapshot of a company’s financials. Under the following link, you can view the ten year financials for Johnson & Johnson.

Monday, June 18, 2018

Five Dividend Increases From Last Week

As part of my monitoring process, I review the list of dividend increases every week. I usually focus on the dividend increases for companies with a status of a dividend contender. A dividend contender is a company which has managed to grow its dividend for at least ten years in a row.

After I come up with a list of companies, I do a brief review of the most recent dividend increase relative to the ten year average. It is helpful to see whether dividend growth is staying constant or decelerating. This exercise is most helpful when done in conjunction with reviewing the dividend payout ratio, in order to check for dividend safety.

I also find it very helpful to review trends in earnings per share over the past decade, in order to determine if the business is growing or stagnant. The dividend investor has to be careful about noise in the data. This means that the information presented always needs to be put in the context of the type of business we are reviewing, and also through the lens of the big picture.

Last but not least, I also review valuations. Putting all of those pieces together has been invaluable for me in selecting investments for my dividend machine.

The five companies that raised dividends over the past week include:

Thursday, June 14, 2018

Historical Performance Of The Dividend Kings List

The dividend kings list includes the most elite dividend growth companies in the US. A dividend king is a company that has managed to increase its dividends to shareholders for at least 50 years in a row.

This is a testament to the endurance and resilience of those businesses over the past 50 years. This great track record make each dividend king an excellent case study on what makes for a successful and lasting investment.

I first came up with the term dividend king in 2010. Since then, there have been hundreds of copycats who talk about the concept, without even giving me any credit.

For the purposes of today's article, I backtested the performance of the dividend kings list since the end of 2007. I used data from the compilation of historical Dividend Champions lists created by the late Dave Fish and stored by the site of Robert Allan Schwartz.

I calculated to total returns performance per year for each group of dividend kings. I assumed that portfolios were equally weighted in a tax-deferred account that qualified for commission free trades.

I followed the historical changes in the dividend kings list using information that an investor at the time would have used. Therefore, the 2008 total return was for the dividend kings available on December 31, 2007. The 2009 total return was for the dividend kings available on December 31, 2008 etc. This method assumes annual rebalancing at year-end in order to account for new additions and removals, and to equally weight the components at year-end. All of this was to ensure that this backtest doesn’t suffer from survivorship bias.

Monday, June 11, 2018

Three Dividend Growth Stocks Rewarding Shareholders With a Raise

Over the past week, there were two companies that raised dividends to shareholders. For my review, I included only those companies which have managed to grow dividends for at least a decade.

The next step involves reviewing the trends in fundamentals and dividends, in order to determine if they are sustainable. Last but not least, we also review valuations, in order to determine if the companies are worth purchasing today.

The companies include:

Philip Morris International Inc. (PM) manufactures and sells cigarettes, other tobacco products, and other nicotine-containing products. The company raised its quarterly dividend by 6.50% to $1.14/share. This marked the tenth consecutive annual dividend increase for this future dividend achiever. The company has managed to grow its quarterly distribution by 9.50%/year. Earnings per share grew from $2.75/share in 2007 to $3.88/share in 2017. Philip Morris International is expected to earn $5.21/share in 2018. Unfortunately, the company has been unable to grow earnings per share since 2012. While the shares look attractively valued at 15 times forward earnings and spot a high yield of 5.70%, the lack of earnings growth and the high forward payout ratio of 87.50% is concerning. Without growth in earnings, future dividend growth will be limited. In addition, high payout ratios increase the risk of a dividend cut. As a result, I view the stock as a hold today. I view Altria (MO) as a more attractive tobacco investment.


Lowe's Companies, Inc. (LOW),operates as a home improvement retailer in the United States, Canada, and Mexico. The company raised its quarterly dividend by 17.10% to 48 cents/share. This marked the 56th consecutive annual dividend increase for this dividend king. Over the past decade, the company has managed to grow dividends at an annual rate of 19.30%/year. Over the past decade, the company has managed to grow earnings per share by 8.20%/year to $4.09/share in 2018. Lowe's is expected to earn $5.45/share in 2019. Right now, the stock is richly valued at 18.40 times forward earnings and yields 2%.

Helmerich & Payne, Inc. (HP) primarily engages in drilling oil and gas wells for exploration and production companies. The company operates through U.S. Land, Offshore, and International Land segments. The company raised its quarterly dividend by 1.40% to 71 cents/share. This dividend champion has raised distributions for 46 years in a row. The ten year dividend growth rate is 31.60%/year. However, the rate of dividend increases since 2014 very slow, due to the slowdown in the energy sector. The stock is overvalued, given the forward earnings of $0.10/share for 2018. This is a far cry from the highest earnings of $6.65/share, achieved in 2013. In addition, the dividend doesn’t seem sustainable either. The new yield is 4.30%, though I do not believe it to be sustainable at the current rate of earnings. It is challenging to value companies with cyclical business models, because they earn most at the top of the cycle, which makes them appear cheaper than they are. At the bottom of the cycle, most of these companies tend to have very low earnings ( or even losses), which makes them to appear more expensive than their intrinsic value.

Relevant Articles:

The ten year dividend growth requirement
Not all P/E ratios are created equal
Look beyond P/E ratios dividend investors
Getting Started – The Hardest Part About Dividend Investing
39 Dividend Champions To Consider

Thursday, June 7, 2018

Five Consumer Staples to Consider On Dips

The other day, I shared with you a list of four attractively valued consumer staples for further review. The companies had attractive valuations, a record of dividend and earnings growth, and well covered distributions.

Today, I will share with you a short list of a few consumer staples with good track records of dividend growth and solid earnings growth. Unfortunately, these shares are overvalued today or are close to the top of the valuation range. In general, I prefer to buy shares at a P/E ratio below 20. However, the lower the entry price, the better my chances of earning good returns and locking in a higher yield from the start.

The companies I am considering on dips include:

The Clorox Company (CLX) manufactures and markets consumer and professional products worldwide. It operates through four segments: Cleaning, Household, Lifestyle, and International. The company is a dividend aristocrat, with a 41 year history of annual dividend increases. Over the past decade, it has managed to increase its dividends at a rate of 8%/year. Earnings per share grew at an annual rate of 8%/year over the past decade to $5.35/share in 2017.The company is expected to earn $6.19/share in 2018. The stock is selling at 19.70 times forward earnings and yields 3.15%. I see it as attractive below $107/share. Check my analysis of Clorox for more information about the company.

Monday, June 4, 2018

Four Cheap Consumer Staples For Dividend Investors

The consumer staples sector has been hated by investors over the past year or two. There are several headwinds that appear to have depressed the share prices for many quality consumer staples with reliable dividend payments. Some of these headwinds include slowing growth, threats of product obsolescence, rising interest rate and a general decrease in investor demand for these securities.

I believe that investors are overly conservative in their expectations for consumer staples today, which is why the valuations are overshooting on the downside. This is in stark contrast to the situation in 2016, when valuations were overshooting to the upside.

The market is a manic-depressive entity. Back in 2016, consumer staple stocks were red-hot and selling at high valuations relative to their growth prospects. Investors were bidding them up and happy to pay 25 – 30 times forward earnings. For example, back in 2016, General Mills was expected to earn roughly $3/share and sold as high as $69/share for a cool 23 times forward earnings.

Right now, General Mills (GIS) is still expected to earn roughly $3/share, but is selling for $42/share, for a cheap 14 times forward earnings. The business prospects for the entity were equally grim in 2016 and in 2018. The only thing that changed is the investor perception of the entity. This rosy perception triggered investors to be excited and willing to overpay dearly at 23 times earnings in 2016 for a business that was not growing. Once the perception became grimmer, investors were unwilling to pay even 14 times forward earnings in 2018 for the same entity, with the same prospects. The problem with General Mills today is that earnings per share have not grown since 2011.

Therefore future dividend growth will be limited and the return will be dependent on the dividend yield plus a potential expansion of the P/E multiple. This is why I see it as a hold.

In general, I try to buy into companies with growing earnings and dividends, and hold on to them for years, rather than try and “forecast” whether the P/E multiple will shrink or expand. However, if management turns the ship around and ekes out some growth in earnings and revenues, shareholders will be rewarded well.

After performing some reviews, I came up with a list of companies in the consumer staples sector, which are attractively priced today. I believe that each one of these companies has sustainable dividends. Each one of those companies is also growing earnings per share, which will be helpful for future dividend growth and to increase the intrinsic value of our share investments over time. All of those companies are priced below 20 times forward earnings.

Sunday, June 3, 2018

RIP David Fish

I just learned that David Fish, who was the creator of the Dividend Champions, Contenders and Challengers list, passed away last month at the age of 68. This is a link to his obituary.

David Fish was a generous and kind man, who shared his research with dividend investors. He created, updated and freely shared the CCC list for over a decade, without expecting anything in return. Updating the list on a monthly basis for over ten years was definitely a painstaking process. His work definitely helped a lot of dividend growth investors out there, who have benefited tremendously from this research.

This type of a quiet individual, who works hard to selflessly help others is a rarity!

This is tragic news. He will be missed!

RIP David Fish




You may sign the guestbook to honor his memory.

PS: You can read his bio on the Moneypaper website from here. David Fish was a former accountant, turned investment writer and a co-manager of the MP63 Fund (DRIPX), which has beaten the S&P 500 since its inception

Thursday, May 31, 2018

Best Dividend Investing Articles For May

For your reading enjoyment, I have highlighted several articles that the readers found of particular interest this month. I have included the article title, as well as a short description.


38 Dividend Champions To Consider
As part of my investing process, I screen the list of dividend champions every month, looking for companies to add to my dividend portfolio. In this article, I discussed the entry criteria I used to come up with the list of 38 dividend champions for further research. I believe that the ability to develop a strategy to achieve your goals, and sticking to it is very important.

The ability to follow your strategy and making regular investments is very important. By buying stock regularly, you are dollar cost averaging your way into building your dividend machine. You are building your future income stream one investment at a time. The next step is the hard one – holding patiently for the long-term and reinvesting that dividend income during the accumulation phase.


Dividends Provide a Tax-Efficient Form of Income
In this article, I discuss the tax treatment of qualified dividends for US investors. Qualified dividend income receives a better tax treatment than wage income. Depending on your taxable income, you may end up without any taxable liability to the IRS if certain conditions are met. For my retirement strategy, I plan to live off qualified dividends to pay for expenses. For married couple today with no other forms of income, a qualified dividend income below $101,200 results in a zero tax rate at the Federal Level.


Three Dividend Growth Stocks Delivering Higher Returns To Shareholders
I discussed three companies that raised distributions to their shareholders over the preceding week. As part of my monitoring process, I review the list of dividend increases every week. I use this exercise to check up on my holdings, and to get a feel for the rate of dividend increases for companies I may be interested in at some price point.


Five Dividend Contenders Raising The Bar
I discussed five companies which boosted dividends to their shareholders. I also discussed the general guidelines I utilize when reviewing any group of dividend growth stocks, be it the list of weekly dividend increases or the list of dividend champions. All of those guidelines help me get an adequate margin of safety when selecting companies for my dividend growth portfolio.

Relevant Articles:

2018 Dividend Kings List


Tuesday, May 29, 2018

Five Dividend Stocks Working Hard For Their Owners

I review the list of dividend increases weekly, in order to monitor existing holdings and review companies on my list for accumulation at the right price. This exercise is part of my monitoring process.

It is helpful to check the rate of dividend growth relative to the historical average. In addition, it is helpful to see the earnings performance over the past decade. Looking at these two variables shows me whether there is room for further dividend growth, and whether I should spend my time digging further into a corporation.

I also find it helpful to review valuation, in order to acquire that future income stream at a discount. I review current P/E ratios relative to earnings growth expectations and current dividend yields. I use valuation as a tool to compare between different companies.

For the weekly review of dividend increases, I focus only on the companies that have managed to rewards shareholders with a raise for at least ten years in a row. That way, I focus on companies that have managed to boost dividends throughout a whole economic cycle of expansion and contraction. This indicates a higher likelihood that those businesses are resilient.

Over the past week, there were five companies which raised dividends and have a long track record of annual dividend increases. The companies include:

Thursday, May 24, 2018

38 Dividend Champions To Consider

In order to succeed in dividend investing, you need to have a long-term focus, follow your strategy by making investments at regular intervals and by diversifying your exposure. I believe that the ability to sit tight for a long period of time is underrated, because short-term noise usually gets in the way by scaring off the inexperienced into mindless trading action.

I also believe that the ability to develop a strategy to achieve your goals, and sticking to it no matter what happens, is very important. The inability to develop a strategy would lead to chasing hot tips, and never really learning what works for you and what doesn’t ( while losing a lot of hard-earned money in the process).

The ability to follow your strategy and making regular investments is very important. By buying stock regularly, you are dollar cost averaging your way into building your dividend machine. You are building your future income stream one investment at a time. The next step is the hard one – holding patiently for the long-term and reinvesting that dividend income during the accumulation phase.

As part of my investing process, I screen the list of dividend champions every month, looking for companies to add to my dividend portfolio. I focus on the following criteria, in order to come up with a list of companies for further consideration:

Monday, May 21, 2018

Three Dividend Growth Stocks Delivering Higher Returns To Shareholders

As part of my monitoring process, I review the list of dividend increases every week. I use this exercise to check up on my holdings, and to get a feel for the rate of dividend increases for companies I may be interested in at some price point.

I try to focus on companies that have raised distributions for at least a decade. I have found that the ten year requirement tends to remove a lot of companies which fail at getting serious about establishing a serious track record of annual dividend increases.

I then review the rate of the most recent dividend increase relative the ten year average. I have found that the latest dividend hikes in percentage terms reflect management expectations for near-term growth.

I also want to review the growth in earnings per share over the past decade, in order to determine whether dividend growth is sustainable or is running on fumes.

Last but not least, we also want to determine whether the valuation is attractive. In general, we want a good balance between valuation and the growth trajectory of fundamentals.

Over the past week, there were three companies which raised dividends to their shareholders and have managed to increase dividends for at least ten years in a row. The companies include:

Friday, May 18, 2018

Cardinal Health (CAH) Dividend Stock Analysis

Cardinal Health, Inc. (CAH) is a global, integrated healthcare services and products company, providing customized solutions for hospitals, health systems, pharmacies, ambulatory surgery centers, clinical laboratories and physician offices worldwide. The company provides clinically-proven medical products and pharmaceuticals and cost-effective solutions that enhance supply chain efficiency from hospital to home. Cardinal Health connects patients, providers, payers, pharmacists and manufacturers for integrated care coordination and better patient management.

Cardinal Health is a dividend aristocrat, which has managed to reward shareholders with a dividend increase for 34 consecutive years. The last dividend increase was just last week, when the board of directors approved a 3% increase in the company’s quarterly dividend to 47.63 cents/share. This was the second dividend increase in a row of 3%. The slow rate of recent dividend hikes for two years in a row suggests that management sees turbulence ahead for the company’s business.

Cardinal Health has delivered an annualized total return of 5.18%/year over the past decade to its shareholders. The returns over the next decade could be better than the growth rate of earnings per share, due to the low valuation today.

Wednesday, May 16, 2018

Two Buy Stories from the Q2 Earnings Season


The following is a guest post from Mike, a former private banker and passionate investor blogging at The Dividend Guy Blog and founder of Dividend Stocks Rock.

In May, we often read a bunch of articles about stats telling us to sell away and come back in the fall. As a dividend growth investor, I always found those stories strange. After all, why would I sacrifice one or two dividend payments from my favorite stocks just because *they might* lose in value? So while others are selling, I’m keeping a close eye on the market to find buy stories.

Over the past month, I went through hundreds of quarterly earnings to find the most interesting stocks on the market. I’ve found many stories I liked, and I wanted to share 2 Kings stories with a happy ending for your portfolio. 

#1 The King with a Knee on the Floor


Source: Ycharts

Monday, May 14, 2018

Five Dividend Contenders Raising The Bar

As part of my monitoring process I review the list of dividend increases every week. I filter out the companies that have not reached dividend contender or dividend achiever status yet. I do this in order to focus on those companies that have a long track record which spans a period that covers a recession and an expansion.

The next step in the process involves reviewing the rate of most recent dividend increase relative to the ten year average. I have found that the rate of the latest dividend increase usually shows the confidence in near term business prospects for the company.

I also like to review trends in historical dividend growth relative to the trends in earnings per share during the same time periods. In general, we want roughly similar rates of earnings and dividend growth over time. However, there are individual exceptions for companies in the initial phases of dividend growth which tend to start off from a lower dividend payout ratio. In general, it is helpful to see an upward trend in earnings per share over time. Future dividend payments can be in danger when we have flat or declining earnings per share.

Last but not least, I also like to see quality companies available at attractive valuations. I try to avoid overpaying for future income streams. In order to do that, I have some pre-set maximum P/E ratios I will pay for a stock.

These are the general guidelines I utilize when reviewing any group of dividend growth stocks, be it the list of weekly dividend increases or the list of dividend champions. All of those guidelines help me get an adequate margin of safety when selecting companies for my dividend growth portfolio.
Over the past week, there were five dividend contender companies that raised dividends by more than a token amount. The companies include:

Thursday, May 10, 2018

Paychex Dividend Stock Analysis

Paychex, Inc. (PAYX) provides payroll, human resource (HR), retirement, and insurance services for small to medium-sized businesses in the United States and Germany. The company is a dividend challenger, which has rewarded shareholders with an annual dividend raise since 2010. Paychex was a dividend achiever until 2009, when it stopped raising dividends during the Global Financial Crisis.

Last week, the company announced that its board of directors approved a $0.06 increase in the company’s regular quarterly dividend, an increase of 12 percent. The dividend will go from $.50 per share to $0.56 per share.

“This dividend increase demonstrates our commitment to providing a benefit to our shareholders as a result of the Tax Cuts and Jobs Act (TCJA) and continues the company’s history of providing outstanding shareholder value and a leading dividend yield,” said Martin Mucci, Paychex president and CEO. “Paychex is uniquely positioned in our industry to benefit from the TCJA due to our strong margins. As we realize these tax benefits, we continue to invest in strategic growth opportunities. These investments, combined with our financial strength, enable us to expand the returns we deliver to our shareholders.”

Over the past decade, this dividend growth stock has compounded shareholder wealth at an annual rate of 9.40%/year.


Monday, May 7, 2018

Church & Dwight (CHD) Dividend Stocks Analysis

Church & Dwight Co., Inc. (CHD) develops, manufactures, and markets household, personal care, and specialty products. The company operates through three segments: Consumer Domestic, Consumer International, and the Specialty Products Division. The company is a dividend achiever, which has increased distributions for 22 years in a row.

Back in February, the Board of Directors approved a 14% increase in the quarterly dividend to 21.75 cents/share.

Over the past decade, this dividend growth stock has delivered an annualized total return of 14.60% to its shareholders.


Thursday, May 3, 2018

Dividends Provide a Tax-Efficient Form of Income

A famous saying goes that there are two things certain in this world: death and taxes. While I am pretty sure I can’t escape death, I know that I can try to legally minimize taxes as much as possible. I hate paying more taxes than I have to. In a previous series of articles I discussed how I am maxing out tax-deferred accounts today, in order to minimize my tax liabilities as much as possible. In addition, I am trying to get a deduction today, and then roll these amounts into Roth and try to pay as close to zero percent on the conversion as possible. The amounts in tax-deferred accounts will be the tip of the iceberg, or the “safety net” in case my main strategy experiences turbulence. In effect, these tax-deferred accounts are equivalent to an emergency fund for my retirement.

However, I think I didn't stress enough the fact that most of my income in retirement would be coming from qualified dividends. This will be my bread and butter, because dividends provide the best tax-efficient method of income in the US.

Did you know that if you were single, and your taxable income does not exceed $38,600 in 2018, you would owe zero dollars in Federal taxes on your qualified dividend income? If you were married, filing jointly, you won’t owe a dime in taxes on qualified dividends at the Federal level as long as your taxable income does not exceed $77,200.

Tuesday, May 1, 2018

Five Tips to Avoid Dividend Cuts

Have you ever held a stock that eventually cut its dividend?

Or do you worry that a company you own might have to reduce its dividend in the future?

If so, you aren’t alone.

Most of the dividend investors I know are focused on building a safe income stream (typically for retirement) and want to preserve their capital.

Avoiding dividend cuts can help with both objectives, and in this article I will explore five techniques that can help identify companies with the best potential of delivering safe, growing dividends over time. 

But first, I want to thank Dividend Growth Investor for letting me share with you.

His blog has been an inspiration and a wealth of quality information for dividend investors for nearly a decade, and it’s an honor to be part of it today.

Let’s take a look at five of the most important factors you can use to understand the safety of a company’s dividend and make better informed investment decisions.

Monday, April 30, 2018

Ten Dividend Growth Stocks Working Hard For Their Owners

As part of my monitoring process, I review the list of dividend increases every week. This process is helpful in observing how my investments are performing. This process is also helpful in monitoring companies on my watchlist for a potential addition to the portfolio.

I start by focusing my attention on companies that have managed to boost distributions for at least a decade. The next step includes reviewing each company, in order to compare the latest dividend increase against the ten year performance in terms of annual dividend growth. It is helpful to see if a company is accelerating or decelerating its rate of annual dividend growth from year to year.

The next step involves reviewing trends in earnings per share. In an ideal world, we would want earnings and dividends to be rising in tandem. While there will be some differences from a period to period due to one-time items, we want those two indicators to be growing in sync. Otherwise, a growth in dividends that is not supported by growth in earnings per share would show the investor that the dividend streak may be in jeopardy. Reviewing the payout ratio is helpful, in order to determine dividend safety. I review the payout ratio as an absolute number, and also by reviewing ten year trends in this ratio.

The last step to consider involves looking at valuation. I believe that even the best company in the world is not worth overpaying for. You want to have an adequate margin of safety when investing in a solid blue chip dividend payer.

The companies that raised dividends last week include:

Saturday, April 28, 2018

Best Dividend Investing Articles For April

For your reading enjoyment, I have highlighted several articles that the readers found of particular interest this month. I have included the article title, as well as a short description.

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

I highlighted the real story of one investor who put some money to work in a popular REIT a decade ago. After that, they automatically reinvested dividends for a decade, and they left their investment alone. After a decade of dividend growth and patient dividend reinvestment, this investment is generating an yield on cost of 15%.

Four Dividend Growth Stocks Rewarding Shareholders With A Raise

I highlighted several dividend growth stocks which rewarded their shareholders with a raise in April. There are some prominent and widely held companies on that list. It is important to keep monitoring investments for changes in fundamentals.

Are you ready for the next bear market?

After a 9 year bull market, it is hard to imagine share prices declining and staying low for more than a few months. Despite the fact that we are long-term investors we have to be prepared for the eventual bear markets. This is where focusing on company fundamentals such as earnings and dividends can be helpful in staying the course. The beauty of dividend investing is that in retirement you are living off dividends, and do not have to sell shares. This means that investors in the accumulation phase should be praying for lower prices, while retired investors should largely ignore stock prices and focus on the stability of their dividend income stream. This is why we focus so much on analyzing what we own, and making sure that the dividends are safe and that the assets we own are acquired at an attractive value.

Three Cheap Dividend Stocks To Consider

I highlighted three dividend paying companies, which sell at bargain prices today. Fears of Amazon entering the drug distribution market have plagued the share prices for these companies. According to recent reports I have read, Amazon has shelved plans to sells drugs to hospitals. That’s because these companies may have some competitive advantages that would take quite a few obstacles for a new incumbent such as Amazon. Selling drugs online is a different business from selling books online.

Thank you for reading!

Relevant Articles:

- 2018 Dividend Kings List

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