I have recently stumbled upon some intriguing dividend information that broadened my investment horizon. Some fellow dividend bloggers mentioned HSY and CL in their dividend analyses. Being too focused on the dividend aristocrats and the high-yield aristocrats I ignored those picks as ones that are “not good for me”.
After reading through both companies financial statements though, it seems to me that both have increased their dividend payments for over 25 years. In fact Colgate Palmolive has increased its annual dividend payments for over 45 years, while Hershey’s has increased its dividends only for 33 years. I had a brief conversation under my posting on “Historical changes of the S&P Dividend Aristocrats”, where yielder posted some S&P data, showing that both companies have cut their dividends. Yet, according to my trusted data source (Yahoo Finance) and both companies’ annual reports, these stocks should be included in the dividend aristocrats lists. I think that the S&P sometimes eliminates stocks from the lists due to factors such as spin-offs ( Altria, Hillenbrand Industries), or special dividends (CL). In addition, the dividend aristocrat lists exclude all companies which are not part of the S&P 1500 universe. What about a company with a market cap of less than 2 billion dollars, which trades 200,000 shares a day and has increased its dividends for 40 years? It appears that one of my local banks, Commerce Bancshares is indeed a company worth investigating.
I found a more thorough list of US companies that have continuously increased their dividend payments to shareholders for over 25 years on http://www.dripinvesting.org/ website. There are more than 130 companies in the US that fit this criterion. The person who prepared the list is Dave Fish, Exec. Editor of The Moneypaper, Direct Investing, The Moneypaper Guide to Direct Investment Plans as well as a Co-manager of The MP 63 Fund (DRIPX).
For future references I would call this list Dividend Champions. You could find the complete list here.
Tomorrow, I would present to you the results of my screen on the US Dividend Champions.
Relevant Articles:
- Historical changes of the S&P Dividend Aristocrats
- Current Aging of the Dividend Aristocrats
- Diversification Matters
- Dividend Achievers Watchlist
Wednesday, May 14, 2008
Sunday, May 11, 2008
PEP looks attractive
In a previous analysis of PEP Cola Wars - Coke versus Pepsi, i concluded that PEP is a buy on dips below $68.
"Overall Pepsi has shown a much bigger progress than Coke over the past 10 years. In addition, it’s trading at a bargain multiple relative to its biggest competitor. And last but not least, its dividend growth is much higher than Coke. I would consider adding to Pepsi on dips below $68. I might also consider adding to Coca-Cola below $51."
Over the past several weeks the company has traded below 68 on a couple of occasions. I am considering buying some PEP this week, as long as the price is below $68.
"Overall Pepsi has shown a much bigger progress than Coke over the past 10 years. In addition, it’s trading at a bargain multiple relative to its biggest competitor. And last but not least, its dividend growth is much higher than Coke. I would consider adding to Pepsi on dips below $68. I might also consider adding to Coca-Cola below $51."
Over the past several weeks the company has traded below 68 on a couple of occasions. I am considering buying some PEP this week, as long as the price is below $68.
In addition to that PEP recently announced an increase in its annual dividend from $1.50 to $1.70, which is a healthy 13.33% raise. The quarterly dividend of $0.425 is payable June 30, 2008, to shareholders of record on June 6, 2008.The ex-dividend date is June 4.
Disclosure: I do not own PEP or KO at the moment. This analysis is not a recommendation to buy or sell securities. Always consult a financial professional before investing.
Relevant Articles:
- Cola Wars - Coke versus Pepsi
Friday, May 9, 2008
Gannett Co (GCI) Dividend Analysis
Gannett Co., Inc. operates as a news and information company in the United States and the United Kingdom. It operates in two segments, Newspaper Publishing and Broadcasting.
Gannett Co is a dividend aristocrat as well as a component in S&P 500 index. Gannett has been increasing its dividends for the past 39 consecutive years. The next increase will be in July, based on the past several years.
At the same time the company has managed to deliver a meager 2.00 % average annual increase in its EPS.
The ROE has been in a steep downtrend from its 1998 highs at 25% to less than 11% in 2007. The decline in the newspaper business is the main driver behind the deterioration in fundamentals.
Annual dividend payments have increased over the past 10 years by an average of 6.70% annually, which is above the growth in EPS. A 6.70% growth in dividends translates into the dividend payment doubling every eleven years. If we look at historical data, going as far back as 1985, GCI has indeed managed to double its dividend payments every eleven years. If the company does not increase its EPS over time, any future dividend increases would be unsustainable.
If we invested $100,000 in GCI on December 31, 1997 we would have bought 1662 shares. Your first quarterly check would have been $315.78 in March 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly payment would have risen to $770 by December 2007. For a period of 10 years, your quarterly dividend has increased by 110.50 %. If you reinvested it though, your quarterly dividend would have increased by 143.90%.
The dividend payout has remained below 35% during our study period. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings. Even with the small growth in earnings, it could take several years of positive dividend growth and flat earnings for this ratio to cross 50%. 
I think that GCI is attractively valued with its low price/earnings multiple of 6.50 and low DPR. The company also boasts an above average dividend yield at 5.50%.
Gannett Co is a dividend aristocrat as well as a component in S&P 500 index. Gannett has been increasing its dividends for the past 39 consecutive years. The next increase will be in July, based on the past several years.
Over the past 10 years the company has delivered a negative average total return of 2.70 % annually to its shareholders.
At the same time the company has managed to deliver a meager 2.00 % average annual increase in its EPS. The ROE has been in a steep downtrend from its 1998 highs at 25% to less than 11% in 2007. The decline in the newspaper business is the main driver behind the deterioration in fundamentals.Annual dividend payments have increased over the past 10 years by an average of 6.70% annually, which is above the growth in EPS. A 6.70% growth in dividends translates into the dividend payment doubling every eleven years. If we look at historical data, going as far back as 1985, GCI has indeed managed to double its dividend payments every eleven years. If the company does not increase its EPS over time, any future dividend increases would be unsustainable. If we invested $100,000 in GCI on December 31, 1997 we would have bought 1662 shares. Your first quarterly check would have been $315.78 in March 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly payment would have risen to $770 by December 2007. For a period of 10 years, your quarterly dividend has increased by 110.50 %. If you reinvested it though, your quarterly dividend would have increased by 143.90%.The dividend payout has remained below 35% during our study period. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings. Even with the small growth in earnings, it could take several years of positive dividend growth and flat earnings for this ratio to cross 50%. I think that GCI is attractively valued with its low price/earnings multiple of 6.50 and low DPR. The company also boasts an above average dividend yield at 5.50%. GCI does seem to have troubles selling advertising for its newspapers. The growth of the internet represents a threat to the newspaper industry. I do believe though that the newspaper industry will survive. It survived the radio, TV so it will survive the internet. This stock is not for everyone as it is a true contrarian play, which has its place in a diversified dividend portfolio. I would consider initiating a position by spreading my purchases over a 12 month period.
Full Disclosure: I do not own GCI
Full Disclosure: I do not own GCI
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Thursday, May 8, 2008
The friendliest states for dividend investors
I usually spend several hours per week researching dividend investing. I go through hundreds of stocks and stock strategies in order to learn something new and get an edge over other investors in the marketplace. Over time I have started to notice that most companies from the state of Ohio look promising as dividend stocks and seem to be shareholder friendly. Thus, I conducted a short research in order to check which states were the friendliest for dividend aristocrats investors. By doing that, I could then isolate some specific trait for those states which might have escaped my attention, had I not focused on it.
I simply took the 59 aristocrats in the index and checked to see where they are headquartered. And the winner was Illinois, with 7 dividend companies located there. The number two spot is held by three competing states – North Carolina, New York and Ohio. New Jersey holds the third spot for most dividend aristocrats located there.
I simply took the 59 aristocrats in the index and checked to see where they are headquartered. And the winner was Illinois, with 7 dividend companies located there. The number two spot is held by three competing states – North Carolina, New York and Ohio. New Jersey holds the third spot for most dividend aristocrats located there.
Relevant Articles:
- My Goals
- What’s a passive income from dividends?
Wednesday, May 7, 2008
Valspar Corporation (VAL) Dividend Analysis
The Valspar Corporation manufactures and distributes coatings, paints, and related products primarily in the United States and internationally. Its coatings include decorative and protective coatings for metal, wood, plastic, and glass, primarily for sale to original equipment manufacturer customers.
Valspar Corp is a dividend aristocrat as well as a component in S&P 500 index. It has been increasing its dividends for the past 27 consecutive years. Over the past 10 years the company has delivered an average total return of 5.40 % annually to its loyal shareholders.
At the same time the company has managed to deliver an impressive 7.00 % average annual increase in its EPS.
The ROE declined from a high of 21% in 1998 to a low of 8% in 2001, before recovering to 13% in 2007.
Annual dividend payments have increased over the past 10 years by an average of 11% annually, which is above the growth in EPS. An 11% growth in dividends translates into the dividend payment doubling every six and a half years. If we look at historical data, going as far back as 1994, VAL has indeed managed to double its dividend payments every six and a half years.
If we invested $100,000 in VAL on December 31, 1997 we would have bought 6435 shares (adjusted for a 2:1 split in September 2005). Your first quarterly check would have been $337.84 in March 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly payment would have risen to $1045.80 by December 2007. For a period of 10 years, your quarterly dividend has increased by 166.67 %. If you reinvested it though, your quarterly dividend would have increased by 209.60%.
The dividend payout has remained below 50% during our study period. 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 think that VAL is attractively valued with its low price/earnings multiple of 14.60 and low DPR. The company also boasts an above average dividend yield at 2.50%.
Disclosure: None
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