Thursday, November 14, 2019

The million dollar dividend portfolio for retirement

A few days ago, I posted an inspiring quote on Twitter. I stated that if you have a portfolio worth $1 million, you can easily expect to generate $30,000 in annual dividend income. I also mentioned that annual dividends would likely grow at 6%/year, which is higher than the raises received from most jobs.

This statement infuriated a lot of people out there. It was also well received by a lot of people too.

Based on reading the responses, I came to the conclusion that there are two camps of thought.

The first one consisted of individuals who are not millionaires, and do not see themselves as someone who will ever achieve financial independence. This is why they produced the most bitter responses. I felt sad for them, because I believe that anyone can reach financial independence if they are willing to live below their means, work to increase their income and cut expenses, and invest money intelligently with a long-term mindset. While everyone gets their fair share of disappointments and setbacks in life, we can at least control our reaction to these unfortunate events, and at least try to improve our financial situation. This group saw the million dollar figure, immediately became scared of what seems like an insurmountable amount of money, and concluded that it is impossible to reach it in the first place. The second group on the other hand immediately grasped the concept at hand, and understood the process to get to their goals and objectives.

The second type of responses were from individuals who were either financially independent, or had a plan in action to reach financial independence. These individuals understand the simple mechanics behind achieving financial independence, and were using the tools within their disposal to get there. These common sense tools include saving money in order to invest in assets, and hold those assets for the long-term. Some examples include buying income producing assets such as dividend stocks, real estate, index funds, businesses, which also grow wealth over time. These individuals are go-getters, who try to learn as much as possible, and improve themselves, in order to improve their lives. This group saw the million dollar figure, and immediately asked themselves how they can get there. The participants in this group knows that they should not despise the days of small beginnings. These investors know how to break down a large goal into small manageable tasks, and to conquer it along the way.

Perhaps the first group did not understand that building wealth is dependent on four simple wealth-building tools within their disposal:

1) The amount of money they save regularly, by living within their means. This includes cutting expenses, while increasing income. The math behind early retirement is simple.

2) The types of investments they select for building wealth. This could include dividend growth stocks, rental real estate, business ownership or index funds.

3) Their holding period. Being a buy and hold investor is probably the best option for most out there. By managing your behavior and investing regularly, you are following a plan and not reacting to the ups and downs of the economy. Staying the course is smarter than active trading, and results in lower costs in terms of taxes and commissions.

4) Another important tool is to educate yourself about investments all the time, while taking a firm control of your money. No one cares more about your family’s financial situation than you. This is why it is important to invest in your own financial education, avoid expensive middlemen that cost you money. It may also make a lot of sense to minimize tax liabilities by investing through tax-deferred accounts.

It is fascinating that a million-dollar portfolio can generate $30,000 in annual dividend income. A 3% yield is fairly easy to obtain today, whether you focus on building out your own portfolio one company at a time, or whether you go the ETF route. If history is of any guidance, dividend income is expected to grow faster than inflation over time. A carefully selected and diversified portfolio of dividend growth stocks can reasonably be expected to grow distributions at an annualized rate of 6%/year over time. If you are still in the accumulation phase and you can reinvest those distributions, you can easily grow portfolio dividends at a double digit percentage rate annually. By adding more money to the portfolio regularly, you are further turbocharging your dividend machine.

The nice thing about being a dividend investor is that dividend payments are more stable than share prices. It is easier to estimate future dividend payments, than to forecast what share prices will do. This is why retirees love the recurring nature of dividend payments. Dividends are more stable than share prices, which makes them an ideal source of income for my retirement. Plus, dividends represent a return on your investment, and help you avoid focusing on short-term stock price fluctuations. In essence, I am being paid to hold on to my shares when I receive dividends. In other words, dividends represent a return on investment, as well as a return of investment.

Getting to the coveted dividend crossover point, which is the point at which your dividend income covers your expenses is the ultimate goal of every investor out there. Getting to the point is a function of:

1) Amount of money you invest every month
2) The dividend income and yield you receive when you invest your money
3) The annual dividend growth for your portfolio
4) The amount of time you let your portfolio to compound for
5) Keeping your investment and tax costs to the bone

Notice that I am a firm believer in regular investing whenever I have money to invest. It makes to sense to me to even think about timing the market. I have learned that the sooner I invest in income producing assets, the sooner I can start earning dividends. While the amount of time to get to your financial independence will vary, I do believe getting there is a function of patience and perseverance.

Once you get there, you have control over your time and schedule. You can decide to continue working, to change careers, or to retire and watch Disney + all day. This is your life and your time, and you will be in charge of it. After all, you have worked hard to get there, and have done something that most people are not willing to even try.

The best part is that once you generate a healthy chunk of dividends, and you choose to stop working for money, you are joining the investor class. As an investor you are in a unique position to make money without needing to do much work, and you are getting hefty tax breaks in the process. You can do this from work, in your pajamas if you choose to.

As a result, for married couple that files jointly in the US, who earns up to $100,000 in qualified dividend income, they would owe zero in taxes to the Federal Government. Plus, they would owe zero taxes for FICA. They may owe state and local taxes. This is the best part about being financially independent however – they are location independent as well. They do not need to be in a certain place in order to generate money. A financially independent investor can travel the world, and still receive their dividends deposited neatly into their brokerage accounts. If you just move across state lines to one of the states that do not tax income, you won’t owe any taxes on income.

When you work in the accumulation phase, you end up paying high marginal tax rates to the Federal and State Governments, and you have to change employers if you want to work from a state with no income taxes. Plus, you would have to pay FICA, and you would have expenses related to
commuting and dressing in appropriate attire. Working is expensive because it ties you down to a certain area, and it sucks up most of your productive time in the week. You have less time to spend with your family, which is why you may end up outsourcing tasks to daycares, house cleaners etc.

This is the mindset I have always had about wealth building in general. I have always tried to get to the coveted financial independence spot, and have tried to accumulate all sorts of knowledge and experience to get me there. While it took a while to get to financial independence, the journey has definitely been exciting. Rather than be bitter about others successes, I have embraced them and tried to learn from them. Rather than be scared of the lofty goal of achieving financial independence, I have tried to break down the goal into smaller components and smaller targets, that are easier to accomplish. I have also focused my attention on building a system of achieving my goals, through meticulous savings, investing and patience, while also enjoying the journey along the way.

It is ironic that when I was first starting out, I was infuriating people because my first dividends were about 20 cents/month. I was scoffed at as insignificant. Nowadays, people are infuriated because the amount of dividend income seem high, and they do not believe in themselves enough to think how to get to their financial independence. It is easier to be dismissive of accomplishments, rather than try and figure out for your self how you can get there. Perhaps the lesson for me is that no matter what you do, you should do things to achieve your goals and objectives, and not try to appease everyone. Having an inner scorecard definitely helps. And that helps in the wealth building phase, because you can save much more when you don't spend money on luxury cars, expensive clothes and McMansions, in order to look better to others.

So in order to get to the financial independence, it is important to get started. Then enjoy the journey!

Relevant Articles:

How to retire in 10 years with dividend stocks
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Monday, November 11, 2019

Eleven Dividend Growth Stocks For Further Research

As part of my monitoring process, I review the list of dividend increases every week. This is helpful in checking developments for companies I own, as well as companies I am considering. Quite often, dividend increases are announced alongside the release of quarterly or annual results. It is helpful to pay attention to major developments, but it is equally important not to read too much into it, and end up micromanaging your portfolio by increasing trading activity. In general, this exercise helps me to see if my original thesis is working. If I see developments that show me that I was wrong, I will stop adding to my positions. In the case of a dividend cut, I will sell. Otherwise, I will hold on, and just allocate dividends elsewhere.

I share an article about dividend increases weekly with you, in order to show you how I go about quickly reviewing companies, and how I screen for them on the go. I am hopeful that this exercise shows readers the qualities I look for in companies, before I put them on my list for further research.

In general, I look for:

1) Minimum streak of annual dividend increases. Usually more than 10 years in a row.
2) A valuation below 20 times earnings. However, I am not as big of a stickler for it as I once were.
3) A dividend payout ratio below 60%. The obvious exceptions are companies which have a history of high payout ratios, while also raising dividends for long period of time. Companies in the Utilities, Telecom and Real Estate sectors are prime suspects off the top of my mind.
3) Earnings growth over the past decade, whether is more likely to continue and fuel future dividend increases
4) Dividend growth over the past decade exceeding inflation. I am on the lookout for acceleration or deceleration in dividend growth. When management slows down on dividend growth, this tells me that there are some headwinds along the way.

Inter Parfums, Inc., (IPAR) manufactures, markets, and distributes a range of fragrances and fragrance related products. The company operates in two segments, European Based Operations and United States Based Operations.

The company raised its quarterly dividend by 20% to 33 cents/share. This is in line with the ten year average of 20.20%/ year.

Between 2008 and 2018, the company managed to grow earnings from 77 cents/share to $1.71/share. Inter Parfums is expected to earn $1.90/share in 2019.

The stock is overvalued at 40 times forward earnings. It yields 1.70%.

Assurant, Inc. (AIZ) provides risk management solutions for housing and lifestyle markets in North America, Latin America, Europe, and the Asia Pacific. The company operates through three segments: Global Housing, Global Lifestyle, and Global Preneed.

The company raised its quarterly dividend by 5% to 63 cents/share. This marked the 16th year of annual dividend increases for this dividend achiever. During the past decade, Assurant has managed to boost distributions at an annualized rate of 1%

Between 2008 and 2018, the company managed to grow earnings from 3.76 cents/share to $3.98/share. Assurant is expected to generate $8.69/share in 2019.

The stock is fairly/ valued at 15 times forward earnings and offers a well-covered dividend yield of 1.90%. It may be worth researching further.

Snap-on Incorporated (SNA) manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. It operates through Commercial and Industrial Group, Snap-on Tools Group, and Repair Systems & Information Group segments.

Snap On declared $1.08/share quarterly dividend, which is a 13.7% increase from prior dividend of $0.95. This is the tenth consecutive annual dividend increase for this newly minted dividend achiever. During the past decade, Snap-On has managed to boost distributions at an annualized rate of 11%/year.

Over the past decade, Snap-On has managed to grow earnings from $4.07/share to $11.87/share. The company is expected to generate $12.26/share in 2019.

The stock is fairly valued at 13.60 times forward earnings and offers a well covered dividend yield of 2.60%. It may be worth following for further research.

Aaron's, Inc. (AAN) operates as an omnichannel provider of lease-purchase solutions to underserved and credit-challenged customers. It operates in three segments: Progressive Leasing, Aaron's Business, and DAMI.

The company raised its quarterly distribution by 14.30% to 4 cents/share. This marked the 17th year of annual dividend increases for this dividend achiever. Over the past decade, Aaron’s has managed to boost distributions at an annualized rate of 10.90%/year.

Between 2008 and 2018, earnings per share increased from $1.11 to $2.78. Aaron’s is expected to generate $3.93/share.

The stock is attractively valued at 14.80 times forward earnings. It yields 0.30%, but offers the opportunity for faster dividend growth and potentially higher total returns. It may be a good idea for younger investors to research.

Emerson Electric Co. (EMR) is a technology and engineering company, that provides solutions to industrial, commercial, and consumer markets worldwide.

Emerson Electric hiked its quarterly dividend by 2% to 50 cents/share. As a result, this dividend king achieved 63 consecutive years of increased dividends per share. The company has managed to hike distributions at an annualized rate of 4.70% over the past decade.

Between 2008 and 2018, Emerson Electric has managed to grow earnings from $3.06/share to $3.46/share. The company is expected to generate $3.67/share in 2019. In other words, earnings per share have been flat for over a decade. Dividend growth has been running on fumes, as evidenced by the slowdown in distributions growth. There is some pushback from activist investors, so I am hopeful that they can reinvigorate the company. Otherwise, it may be forced to end its streak of annual dividend increases in the near future.

The stock is also overvalued at 20.40 times forward earnings. While it offers a decent yield at 2.70%, its dividends are growing slowly due to stagnation in earnings per share and the higher payout ratio. I view the stock as a hold today, with dividends being allocated elsewhere.

Utah Medical Products, Inc. (UTMD) develops, manufactures, and distributes medical devices for the healthcare industry in the United States, Europe, and internationally.

The company raised its quarterly dividend by 1.80% to 27.50 cents/share. It has managed to increase dividends by 1.80%/year over the past decade. Utah Medical Products is a dividend achiever which has managed to increase distributions for 17 years in a row.

Between 2008 and 2018, Utah Medical Products has managed to boost earnings from $1.86 to $4.95/share.

The stock is slightly overvalued at 21 times earnings. Utah Medical Products yields 1.10%, but offers a very slow rate of annual dividend increases. I like the potential for capital gains, but the slow rate of dividend increases is putting me off a little bit.

KLA Corporation (KLAC) designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries worldwide.
The company managed to increase distributions by 13.30% to 85 cents/share. It has managed to boost dividends for 10 years in a row. Over the past decade, KLA Corporation has managed to increase distributions at an annualized rate of 16.80%.

Between 2008 and 2018, this dividend achiever managed to boost earnings per share from $1.95 to $7.49. The company expects to earn $10.01/share in 2019.

KLA Corporation looks fairly valued at 17.40 times forward earnings and yields 1.95%. It may be worth researching, only to understand how this former dot-com darling managed to increase earnings and hit all-time-highs.

Evergy, Inc. (EVRG) engages in the generation, transmission, distribution, and sale of electricity in Kansas and Missouri.

Evergy increased its quarterly dividend by 6.30% to 50.50 cents/share. This marked the 15th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to increase distributions at an annualized rate of 4.30%.

Between 2008 and 2018, the company has managed to boost earnings from $1.69/share to $2.50/share. Evergy is expected to earn $2.88/share in 2019.

The stock is overvalued at 21.90 times forward earnings and yields 3.20%. It may be worth reviewing on dips.

BOK Financial Corporation (BOKF) operates as the financial holding company for BOKF, NA that provides various financial products and services in Oklahoma, Texas, New Mexico, Northwest Arkansas, Colorado, Arizona, and Kansas/Missouri. It operates through three segments: Commercial Banking, Consumer Banking, and Wealth Management.

The company hiked its quarterly distribution by 2% to 51 cents/share, bringing its track record of annual dividend increases to 15 years in row. Over the past decade, it has managed to boost distributions at an annualized rate of 8.10%.

BOK Financial managed to boost earnings per share from $2.27 to $6.63/share between 2008 and 2018. The company is expected to generate $7.35/share in 2019.

The stock is attractively valued at 11.20 times forward earnings and yields 2.50%. I like the long term trend in earnings per share, and the owner-operator behind the enterprise. The slowdown in dividend increases is giving me pause however.

WestRock Company (WRK) manufactures and sells paper and packaging solutions for the consumer and corrugated markets in North America, South America, Europe, and the Asia Pacific.

The company raised dividends by 2.20% to 46.50 cents/share. This was a much slower rate of distribution growth than the ten year average of 25.50%/year. WestRock is a dividend achiever with an 11 year record of annual dividend increases.

The company earned $1.07/share in 2008, and has managed to grow it to an estimated $3.41/share in 2019.

The stock is attractively valued at 11.80 times forward earnings and yields 4.70%. Based on the slow increase in dividends, it looks like the days of fast dividend growth are over.

Atmos Energy Corporation (ATO) engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through Distribution, and Pipeline and Storage segments.

The utility increased its quarterly distribution by 9.50% to 57.50 cents/share. This marked the 36th consecutive annual dividend increase for this dividend champion. During the past decade, it has managed to boost distributions at an annualized rate of 4.30%.

Atmos Energy earned $2/share in 2008, and is expected to earn $4.63/share in 2019.
The stock is overvalued at 23.20 times forward earnings. It yields 2.10%.

Relevant Articles:

Six Companies Growing Dividends for Shareholders
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Thursday, November 7, 2019

Kimberly-Clark (KMB) Dividend Stock Analysis

Kimberly-Clark Corporation (KMB), together with its subsidiaries, manufactures and markets personal care, consumer tissue, and professional products worldwide. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional.

This dividend champion has paid dividends since 1935 and has increased them for 47 years in a row. The last dividend increase occurred in January 2019, when the board of directors raised the quarterly payment by 3% to $1.03/share.

Between 2008 and 2018, Kimberly-Clark managed to grow earnings from $4.05/share to $4.03/share.  The figures should be adjusted upwards in my opinion for the impact of the 2018 restructuring program to the tune of $2.24/share. This would bring the figures closer to $6.27/share. If you add-in one-time items related to the US tax reform to the tune of 33 cents/share, we come up with adjusted EPS of $6.60/share. Kimberly-Clark is expected to earn $6.82/share in 2019.

Demand for company’s products is relatively stable and relatively recession resistant. There is a high probability that people will still be using tissues, toilet paper and other products that KMB produces for several decades out. Demand won’t change drastically during a recession.  The company can grow earnings through new product innovation, expansion in emerging markets and taking cost out through streamlining of operations. Product marketing should keep customers continuing to buy branded products, rather than switching to generics, which are perceived as lower quality by consumers and are not really saving a lot of money per item either.

In 2019 the company unveiled its K-C Strategy 2022, whose objective is to deliver growth and create shareholder value in what is viewed as a challenging business environment. This would be achieved by growing Kimberly-Clark's iconic brand portfolio, leveraging the company's strong cost and financial discipline and allocating capital in value-creating ways. (Source:)

Key highlights:
The company will target to grow sales in-line with, or slightly ahead of, category growth rates. Kimberly-Clark's three growth pillars are to elevate core businesses, accelerate growth in D&E markets and drive digital marketing and e-commerce. The company expects to achieve these pillars by launching differentiated product innovations, driving category development and leveraging commercial capabilities in sales and marketing.
The company will generate savings in order to fund growth initiatives and improve margins. Focus areas will include driving ongoing supply chain productivity improvements through the FORCE program ( a 4 year cost-savings target of $1.5 billion through 2021), executing the 2018 Global Restructuring Program ( workforce reductions of 12 – 13% of headcount that could save 500 -550 million per year, while eliminating or selling manufacturing facilities.), rigorously controlling discretionary spending to sustain the company's top-tier overhead cost structure and driving further improvement in working capital.

The company will allocate capital in value-creating ways, enabled by strong cash generation. Kimberly-Clark expects to spend capital at an annual rate of 4 to 5 percent of net sales after completing the 2018 Global Restructuring Program. In addition, the company plans to return significant amounts of cash to shareholders through dividends and share repurchases.
The company's medium-term financial objectives associated with K-C Strategy 2022 assume that category growth remains relatively modest and similar to recent conditions.

The objectives are as follows:
Sales and organic sales growth - 1 to 3 percent annually.
Adjusted earnings per share growth - mid-single digits annually.
Adjusted Return On Invested Capital - at least maintain at current level.
Dividend growth - generally in line with adjusted earnings per share growth.


The company has maintained a very consistent stock buyback program over the past year. Between 2008 and 2018, the number of shares decreased from 419 million to 350 million.

The annual dividend payment has increased by 6.20% per year over the past decade, which is higher than the growth in EPS. This has been achieved mostly due to the expansion of the dividend payout ratio. In January 2019 the Board of Directors approved a 3% increase in the quarterly annual dividend to $1.03/share. I believe that future dividend growth will likely be closer to 4% - 5%/year over the next decade, mostly driven by growth in earnings per share.

The dividend payout ratio has increased from 57% in 2008 to almost 61% in 2018. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.


I find Kimberly-Clark to be close to fully valued at 19.60 times forward earnings. The stock yields 3% and has a sustainable distribution.

Relevant Articles:

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Monday, November 4, 2019

Seven Dividend Growth Stocks For Further Research

Welcome to my weekly review of dividend increases. I have done this process for over eleven years on my site, in order to share with readers how I go about monitoring my portfolio. I also review the list of dividend increases every week in order to uncover any hidden dividend gems.

I start by looking at dividend increases for the past week by US listed companies. I narrow the list down to the ones with a ten year track record of annual dividend increases. This exercise provides me with the list of companies for today’s article.

The next step in my process applies my entry criteria, in order to determine if a company is worth researching today or at some lower point. A few companies are good values today, while others may be a good idea for research if they come down in price. A third group of companies are not worth researching for me for one reason or another.

The type of review I do focuses on growth in dividends per share that is fueled by growth in earnings per share. I also review recent dividend increases and compare them to the ten year average. Recent dividend increases are a good barometer for management sentiment towards their short-term business environment. I also review valuation of course, in order to determine the point at which a company may be worth researching. I always try to do the work of researching a company, before investing. That way, I have a record of the reasons why I bought in the first place, which is helpful for my education as an investor.

The companies I that made the cut for today’s review include:

The Estée Lauder Companies Inc. (EL) is one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products.

The company raised its quarterly dividend by 12% to 48 cents/share. This marked the tenth consecutive annual dividend increase for this newly minted dividend achiever. Over the past decade, the company has managed to grow distributions at an annualized rate of 19%.

Between 2009 and 2019, Estee Lauder managed to grow earnings from 55 cents/share to $4.82/share. The company is expected to generate $5.89/share in 2020.

The stock is overvalued a 31.70 times forward earnings and offers a dividend yield of 1%. Estee Lauder may be a good idea on dips below $120/share.

Rockwell Automation, Inc. (ROK) provides industrial automation and information solutions worldwide. It operates in two segments, Architecture & Software; and Control Products & Solutions.

The company raised its quarterly dividend by 5% to $1.02/share. This marked the tenth consecutive annual dividend increase for this newly minted dividend achiever. Over the past decade, the company has managed to grow distributions at an annualized rate of 12.10%.

Between 2008 and 2018, the company managed to grow its earnings from $3.90/share to $4.21/share. It is expected to earn $8.59/share in 2019.

The stock is slightly overvalued at 20.70 times forward earnings. The stock yields 2.30. It may be worth a look on dips below $172/share.

UMB (UMBF) offers personal banking, commercial banking, healthcare services and institutional banking, which includes services to mutual funds and alternative-investment entities and registered investment advisors. UMB operates banking and wealth management centers throughout Missouri.

The company increased its quarterly dividend by 3.30% to 31 cents/share. This marked the 28th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to grow distributions at an annualized rate of 6.20%.

Between 2008 and 2018, UMB Financial has managed to increase earnings from $2.38/share to $3.93/share. UMB Financial is expected to generate $4.76/share in 2019.

The stock is fairly valued at 13.90 times forward earnings but offers a low dividend yield of 1.90%. This is a low yield for a bank. The slowing dividend growth is a concern.

Cintas Corporation (CTAS) provides corporate identity uniforms and related business services primarily in North America, Latin America, Europe, and Asia. It operates through Uniform Rental and Facility Services and First Aid and Safety Services segments.

The company increased its annual dividend by 24.40% to $2.55/share. This is the 36th consecutive year that the annual dividend has increased, which is every year since Cintas’ initial public offering in 1983. Over the past decade, this dividend champion has managed to boost distributions at an annualized rate of 16.10%.

Between 2009 and 2019, Cintas has managed to grow earnings from $1.48/share to $7.99/share.
Cintas is expected to generate $8.59/share in 2020.

The stock is overvalued at 31.30 times forward earnings. Cintas yields 0.95%. The stock may be worth a look on dips below $172/share, which may be possible if we get another decline like the one from December 2018.

Black Hills Corporation (BKH), operates as an electric and natural gas utility company in the United States. It operates through Electric Utilities, Gas Utilities, Power Generation, and Mining segments.
The company hiked its quarterly distribution by 5.90% to 53.50 cents/share. This marked the 49th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to grow distributions at an annualized rate of 3.30%.

The company managed to grow earnings from $2.75/share in 2008 to $3.54/share in 2018. The company is expected to earn $3.46/share in 2019.

The stock is overvalued at 23 times forward earnings. It offers a dividend yield of 2.70%. I like the acceleration of dividend growth in recent history relative to the ten year average, but I find the valuation to be too rich at present levels.

DTE Energy (DTE) is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide.

The company raised its quarterly dividend by 7% to $1.0125/share. This event marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, DTE has managed to boost distributions at an annualized rate of 5.20%.

Between 2008 and 2018, the company managed to boost earnings from $3.34/share to $6.17/share.
The company is expected to generate $6.25/share in 2019.

The stock is overvalued at 20.30 times forward earnings. DTE Energy yields 3.20%. While low interest rates have pushed valuations for utilities upwards, I would like to be able to acquire shares at a lower valuation.

Mercury General Corporation (MCY), engages in writing personal automobile insurance in the United States.

The company raised its quarterly dividend by 0.40% to 63 cents/share. This marked the 33rd consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to boost distribution’s at an annualized rate of 0.80%.

Earnings per share have gone all over the place over the past decade, oscillating between a high of $7.32/share in 2019 to a low of -$4.42/share in 2008. The company is expected to generate $2.85/share in 2019.

Mercury General is trading at 17 times forward earnings, yields 5.20% and has a payout ratio of 88%. I am not interested in the company at this point, given the slow rate of dividend growth, high payout ratio and inconsistent earnings trend.

Relevant Articles:

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