This article originally appeared on The DIV-Net April 4, 2010.

Linked here is a detailed quantitative analysis of Lowe’s Companies, Inc. (LOW). Below are some highlights from the above linked analysis:

Company Description: Lowe’s Companies, Inc. and its subsidiaries operate as a home improvement retailer in the United States and Canada. The company offers a range of products and services for home decoration, maintenance, repair, remodeling, and property maintenance.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

LOW is trading at a discount to only 1.) above. The stock is trading at a slight discount to its calculated fair value of $24.84. LOW earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

LOW earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. LOW earned a Star for having an acceptable score in at least two of the four Key Metrics measured. Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (2000-2003, 2001-2004, 2002-2005, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. The company has paid a cash dividend to shareholders every year since 1961 and has increased its dividend payments for 47 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

LOW earned a Star in this section for its NPV MMA Diff. of the $880. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as LOW has. If LOW grows its dividend at 15.0% per year, it will take 9 years to equal a MMA yielding an estimated 20-year average rate of 3.98%.

Other: LOW is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index.

Conclusion: LOW earned one Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks LOW as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $28.44 before LOW’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 47 years of consecutive dividend increases. At that price the stock would yield 1.23%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 13.6%. This dividend growth rate is less than the 15.0% used in this analysis, thus providing a margin of safety. LOW has a risk rating of 1.00 which classifies it as a low risk stock.

LOW is a stock that I have watched for some time. It is a well-managed company with a highly automated distribution network. The short-term weakness in the housing market is countered with LOW’s long-term prospects given the U.S.’s aging homes and relatively high home ownership. LOW has an excellent balance sheet with low debt and strong free cash flows – which more than doubled in 2009. Even though LOW is trading below my $24.84 fair value price, I hesitate to initiate a position due to its low yield. For additional information, including the stock’s dividend history, please refer to its data page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in LOW (0.0% of my Income Portfolio). See a list of all my income holdings here.

Related Posts:

• 3 Styles Of Sucessful Dividend Investing
• Dividend Payout vs. Free Cash Flow Payout
• Lowe’s Companies, Inc. (LOW) Dividend Stock Analysis
• Seeding A Forest Of Dividend Stocks
• Focus On Stocks, Not The Market

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it’s where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.

Below are the carnivals that I participated in this week, along with a link to my article:

• Carnival of Personal Finance published: Increasing Dividend Yield Part V: MLPs
• Carnival of Money Hacks published: 8 Dividend Stocks Avoiding the Cash Trap
• Carnival of Financial Planning published: 8 Dividend Stocks Avoiding the Cash Trap

Articles I enjoyed reading included (in no particular order):

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: Lowe’s Companies, Inc. (LOW)
• The Dividend Guy presented Don’t Let a Market Rally Cloud Your Judgement
• Barel Karsan presented Avoiding Stock Market Scams
• Dividend Tree presented Success Comes from Investing Discipline and Executing Your Ideas
• Dividend Growth Investor presented HCP Stock Analysis
• Buying Value presented Actively Managed ETFs

Articles From DIV-Net Members

• The Dividend Guy presented How to Identify 10 Dividend Growth Stocks to Consider Now for Free
• Dividend Growth Investor presented Three Dividend Strategies to pick from
• Barel Karsan presented Curious About The Useless
• The Div Guy presented Top 20 Stock Holdings
• Disciplined Approach to Investing presented Bullish Investor Sentiment Essentially Unchanged
• Living Off Dividends & Passive Income presented The Economy Smells Like Roses
• Old School Value presented Regent Communications Case Summary
• Triaging My Way To Financial Success presented Housing: An Un-Correctable Market?
• Dividend Money presented Investing In Canada
• BuyLikeBuffett.com presented Massey Energy Takes It On The Chin Again
• 40percent 20years presented Simple H & M Mathematics and listen to new CEO
• Value Walk presented Warren Buffett on Small, unknown Companies
• The Market Capitalist presented Maximizing Return & Minimizing Taxes

Other Articles

• SmartMoney presented 3 Stocks With (Believable) 5% Yields
• Investopedia presented High-Yield Stocks Vulnerable To Dividend Tax Increase
• BusinessWeek presented The Rebirth Of Dividends – It’s Going To Be A Long Way Back
• DJC Oregon presented 3 good dividend stocks
• Kiplinger presented High Yields From Foreign Stocks
• The Wealth Daily presented Dividend Stocks For 2010 and Beyond
• StreetInsider presented Dividend Increases A Developing Trend for Banks (OZRK, JPM, USB)

There are some really good articles here, please take time and read a few of them.

(Photo: Sachin Ghodke)

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income rose in March, extending the streak to 13 months after February 2009’s decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 27 of the last 28 months.

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2010 Investing Goals post. Below is an updated version of the table found in the original post.

Description	Dividend Income Annualized	Yield on Cost
2027 Goal	110,000	20.00%
2017 Goal	30,000	10.00%
2010 Goal	9,500	5.00%
December/2009	7,274	4.84%
Purchases YTD	875	-0.10%
Div. Changes YTD	64	0.08%
Sales YTD	–	-%
March/2010	8,213	4.82%
Purchases	312	-0.01%
Div. Changes	41	0.07%
Sales	–	-%
February/2009	7,860	4.76%

The above information covers the current month and year-to-date through the current month.

Click here for a Detailed Historical Progress Table.

For the month, annualized dividend income increased $353, and Yield on Cost (YOC) increased 0.06%. This month’s changes were a net of new purchases and dividend changes (no sales). Let’s examine each of the these categories:

Purchases: The $312 increase in annual dividend income and a (0.01%) decrease in YOC related to the following purchases (yield at the time of purchase):

• $104 Leggett & Platt, Incorporated (LEG) 5.13% [Analysis]
• $74 Abbott Laboratories (ABT) 3.20%  [Analysis]
• $134 Vanguard Long-Term Bond ETF (BLV) 5.09%

LEG and BLV raised my YOC, while ABT lowered it. As noted in earlier updates, I generally expect YOC to drop each month since most new investments will yield less than my current YOC, and dividend increases will not be sufficient to offset it. This month was an exception.

Dividend Changes: The $41 increase in annual dividend income and the 0.07% increase YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• $14 CenturyTel, Inc (CTL) $0.70q>$0.73q
• $5 Consolidated Edison Inc. (ED) $0.59q>$0.595q
• $22 United Technologies Corporation (UTX) $0.385q>$0.425q
• $4 Intel Corporation (INTC) $0.14q>$0.1575q
• ($4) Vanguard Long-Term Bond ETF (BLV) $4.00a>$3.96a
• ($3) iShares Invest Grade Corp Bond (LQD) $5.69a>$5.65a
• $3 3M Co. (MMM) $0.51q>$0.525q

Sales: There were no sales in this month.

I am still on target to achieve my goal of an annualized dividend income of $9,500 by December 31, 2010.

That’s it for this time. The next monthly progress update will be early May.

(Photo: sanja gjenero)

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Ned Davis Research examined the relative performances of stocks between 1972 and 2006 and established a link between rising dividends and superior long-term returns. The study found S&P 500 stocks that consistently increased their dividends returned 10.4% total return (dividends + share price appreciation), while those that did not increase their dividends returned only 8.2%. The 2.2% advantage of the dividend raisers would equate to an additional $1,802 per $100 invested in 1972.

Below are several companies looking to provide their share holders with superior long-term returns by increasing their cash dividends:

Entergy Corp. (ETR) is an electric utility holding company serves 2.6 million customers in Arkansas, Louisiana, Mississippi and Texas. April 5th the company increased its quarterly dividend to $0.83/share. The dividend is payable June 1 to stockholders of record on May 12, reflecting the first increase in its quarterly common stock dividend since July 2007. The ex-dividend date is May 10, 2010. Yield on the dividend is 4%. The yield based on the new payout is 4.04%.

Bank of the Ozarks (OZRK) provides retail & commercial banking products and services via 70 banking and two loan production offices in AR, TX, NC. April 6th the company raised its quarterly dividend 7% to $0.15/share. The dividend is payable April 23, 2010 to shareholders of record as of April 16, 2010. The ex-dividend date is April 14, 2010. OZRK is a Dividend Achiever and has raised its dividend for 11 consecutive years. The yield based on the new payout is 1.62%.

TJX (TJX) operates eight chains of off-price apparel and home fashion specialty stores in the U.S., Canada, Germany, Ireland and the U.K. April 6th the company increased its quarterly dividend 25% to $0.15/share. TJX is a Dividend Achiever and has raised its dividend for 11 consecutive years. The yield based on the new payout is 1.34%.

IDEX (IEX) designs, makes and markets a broad range of pump products, dispensing equipment and other engineered products, serving a diverse customer base worldwide. April 6th the company increased its quarterly dividend 25% to $0.15/share. The dividend is payable on April 30 to shareholders of record on April 15. The ex-dividend date is April 13. The yield based on the new payout is 1.79%.

Tanger Factory Outlet (SKT) is a real estate investment trust develops, acquires, owns, operates and manages factory outlet shopping centers in the United States. April 8th the company raised its quarterly dividend to $0.3875/share. The dividend will be payable on May 14, 2010 to holders of record on April 30, 2010. The ex-dividend date is April 28, 2010. Yield on the dividend is 3.6%. SKT is a Dividend Achiever and has raised its dividend for 17 consecutive years. The yield based on the new payout is 3.55%.

In addition to the above dividend raisers, two Dividend Achievers declared regular quarterly cash dividends. April 6th RPM International (RPM) declared a quarterly dividend of $0.205/share with a 3.70% yield. The dividend is payable on April 30, 2010 to stockholders of record as of April 16, 2010. The ex-dividend date is April 14, 2010. Also, Murphy Oil (MUR) on April 7th declared a quarterly dividend of $0.25/share with a 1.70% yield. The dividend is payable June 1, 2010 to holders of record May 14, 2010. The ex-dividend date is May 12, 2010.

To provide superior long-term returns a companies need to increase their dividends on a consistent basis. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• 4 Dividend Stocks in the “Good” Category
• Dividend Payout vs. Free Cash Flow Payout
• 3 Big Names, 3 Big Dividend Increases
• RPM International Inc. (RPM) Dividend Stock Analysis
• Healthcare Services (HCSG) Increases Qtr. Dividend 7% and Others

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This is the sixth and final installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. Last week we looked at Master Limited Partnerships (MLPs). This week we are looking at Time.

Yield does not come without a price. The five options looked at in prior weeks carry some form of added risk and/or complexity. Ultimately, dividend growth investors realize that long-term and sustainable high-yield investments are grown over time. This is accomplished by purchasing high-quality dividend investments with a reasonable yield and a long history of growing their dividends, and waiting for the yield on cost to grow. Consider the following stocks:

Sysco Corp. (SYY)
– Current Yield: 3.36%
– Assumed Dividend Growth Rate: 6.52%
– Yield On Cost in 10 Years: 6.32%
– Yield On Cost in 20 Years: 11.89%

Coca Cola Co. (KO)
– Current Yield: 3.22%
– Assumed Dividend Growth Rate: 7.32%
– Yield On Cost in 10 Years: 6.53%
– Yield On Cost in 20 Years: 13.22%

Abbott Labs (ABT)
– Current Yield: 3.25%
– Assumed Dividend Growth Rate: 8.27%
– Yield On Cost in 10 Years: 7.20%
– Yield On Cost in 20 Years: 15.93%

Raven Industries Inc. (RAVN)
– Current Yield: 1.85%
– Assumed Dividend Growth Rate: 15.00%
– Yield On Cost in 10 Years: 7.49%
– Yield On Cost in 20 Years: 30.31%

Kimberly Clark Corp. (KMB)
– Current Yield: 4.20%
– Assumed Dividend Growth Rate: 6.67%
– Yield On Cost in 10 Years: 8.02%
– Yield On Cost in 20 Years: 15.30%

United Technologies Corp. (UTX)
– Current Yield: 2.09%
– Assumed Dividend Growth Rate: 15.00%
– Yield On Cost in 10 Years: 8.46%
– Yield On Cost in 20 Years: 34.24%

Harleysville Group Inc (HGIC)
– Current Yield: 4.09%
– Assumed Dividend Growth Rate: 8.00%
– Yield On Cost in 10 Years: 8.83%
– Yield On Cost in 20 Years: 19.07%

Cardinal Health Inc (CAH)
– Current Yield: 1.98%
– Assumed Dividend Growth Rate: 15.00%
– Yield On Cost in 10 Years: 8.00%
– Yield On Cost in 20 Years: 32.34%

Nucor Corp. (NUE)
– Current Yield: 3.15%
– Assumed Dividend Growth Rate: 15.00%
– Yield On Cost in 10 Years: 12.76%
– Yield On Cost in 20 Years: 51.60%

McDonalds Corp. (MCD)
– Current Yield: 3.27%
– Assumed Dividend Growth Rate: 15.00%
– Yield On Cost in 10 Years: 13.23%
– Yield On Cost in 20 Years: 53.53%

The growth rates rates used above are the minimum of the compound annual dividend growth rate for the last 1, 3, 5, 7, 10 years or 15% if dividends grew on average in excess of 15% for each consecutive 4 year period, within the last 10 years. The growth rates are for illustrative purposes only. Obviously, no one can definitively say what any stock’s future dividend growth rate will be. However, there were dividend growth superstars over the past 10-years and, needless to say, there will be several in the next 10 years.

Below are links to the other five options to increase the yield in our income portfolio:

1. Increasing Dividend Yield Part I: Utilities
2. Increasing Dividend Yield Part II: REITs
3. Increasing Dividend Yield Part III: Preferred Stock
4. Increasing Dividend Yield Part IV: Bonds
5. Increasing Dividend Yield Part V: MLPs

Full Disclosure: Long SYY, KO, ABT, KMB, UTX, HGIC, NUE, MCD. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• 38 Dividend Securities For A Well-Rounded Asset Allocation
• 10 Best U.S. Dividend Stocks
• Refining Risk Measurement Of Dividend Stocks
• The 2010 Dividend Stock Ideas List
• Dividend Stocks: Three Keys For Successful Investing

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

The number of D4L-Premium Services subscribers continues to grow each month. With that growth, I have noticed that several questions tend to get asked more than others. To help address many of those questions, I pleased to introduce the D4L-FAQ page.

The D4L-FAQ page currently answers the following questions about the D4L-Premium Services subscription process:

1. I clicked on the [Return To Merchant] button and nothing happened. Why didn’t it work?
2. I just signed up, when do I get my login credentials?
3. I subscribed last week and went through the weekend. Why haven’t I received my login credentials?
4. How do I cancel the subscription?
5. Is there another way to pay other than PayPal?
6. I have additional questions/concerns. How do I contact you?

As time passes and more questions come up, I will add them to the D4L-FAQ page. This page can always be accessed via the Premium menu option above on the menu bar. Many thanks to all those that have subscribed to the D4L-Premium Services!

The D4L-Premium Services are designed for the serious dividend investor. If you have not yet subscribed, please see the Overview and Subscribe page for more information on the benefits of these services, sample reports, pricing and subscription information. The premium section can always be accessed via the Premium menu option on the top-left of the menu bar above.

Other D4L-Premium Services Posts

• D4L-Premium Services Affiliate Review
• D4L-Premium Services New Subscription Option
• Introducing D4L-Data
• Introducing The D4L Premium Alerts
• Introducing The D4L-Dashboard
• See all Premium Services Posts…

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This article originally appeared on The DIV-Net March 29, 2010.

Linked here is a detailed quantitative analysis of McGrath RentCorp (MGRC). Below are some highlights from the above linked analysis:

Company Description: McGrath RentCorp rents and sells modular buildings and electronic test and measurement equipment; and manufactures and sells portable classrooms.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

MGRC is trading at a discount to only 1.) above. The stock is trading at a slight discount to its calculated fair value of $25.70. MGRC earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

MGRC earned one Star in this section for 3.) above. MGRC earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1990 and has increased its dividend payments for 17 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

MGRC earned a Star in this section for its NPV MMA Diff. of the $2,479. This amount is in excess of the $1,800 target I look for in a stock that has increased dividends as long as MGRC has. If MGRC grows its dividend at 10.3% per year, it will take 2 years to equal a MMA yielding an estimated 20-year average rate of 3.98%. MGRC earned a check for the Key Metric ‘Years to >MMA’ since its 2 years is less than the 5 year target.

Other: MGRC is a member of the Broad Dividend Achievers™ Index.

Conclusion: MGRC earned one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of three Stars. This quantitatively ranks MGRC as a 3 Star-Hold.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $27.63 before MGRC’s NPV MMA Differential decreased to the $1,800 minimum that I look for in a stock with 17 years of consecutive dividend increases. At that price the stock would yield 3.11%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,800 NPV MMA Differential, the calculated rate is 9.1%. This dividend growth rate is slightly less than the 10.1% used in this analysis, thus providing a small margin of safety. MGRC has a risk rating of 1.50 which classifies it as a low risk stock.

MGRC’s debt to total capital is currently at 50% and the company has seen negative free cash flow in 6 of the last 10 years. Even though MGRC is trading below my $25.70 fair value price, I will not give it serious consideration until the company lowers its debt to total capital to below 45% and goes 10 years without negative free cash flow. For additional information, including the stock’s dividend history, please refer to its data page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in MGRC (0.0% of my Income Portfolio). See a list of all my income holdings here.

Related Posts:

• 18 Dividend Stocks Raising Their Yield On Cost

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it’s where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.

Below are the carnivals that I participated in this week, along with a link to my article:

• Festival of Stocks published: Leggett & Platt Inc. (LEG) Dividend Stock Analysis
• Carnival of Personal Finance published: Increasing Dividend Yield Part IV: Bonds

Articles I enjoyed reading included (in no particular order):

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: McGrath RentCorp (MGRC)
• The Dividend Guy presented Investing Scams to Watch Out For
• Think Dividends presented Mini Dividend Portfolio
• Dividend Growth Investor presented Hingham (HIFS) Stock Analysis
• Buying Value presented Buffett’s Letters

Articles From DIV-Net Members

• The Dividend Guy presented 5 Actions to Restore Portfolios That Have Gotten Smacked
• Dividend Growth Investor presented Four Percent Rule for Dividend Investing in Retirement
• Barel Karsan presented Calibration
• moneygardener presented banks have finger on dividend button
• The Div Guy presented 3 Stocks With March Dividend Boosts
• Disciplined Approach to Investing presented Misconception Surrounding The Importance Of The Asset Allocation Decision
• Living Off Dividends & Passive Income presented How Greece’s Problems Affect Us
• Old School Value presented Cheap Stock under $2: GRVY
• Triaging My Way To Financial Success presented A Time to Sell?
• Dividend Money presented ETF Facts and Misconceptions
• BuyLikeBuffett.com presented The Growth Is Back At Time Warner Inc.
• 40percent 20years presented Power Company and the Stock Stinsen!
• Value Walk presented New Yorker Interview With Michael Mauboussin
• The Market Capitalist presented Real Estate Investment Trusts (REITs)

Other Articles

• Wall Street Journal presented Dividend ETFs Beckon Income-Starved Investors
• Investopedia presented America’s Top Dividend-Paying Stocks
• Yahoo Finance presented Five Billionaires Who Live Below Their Means
• Kiplinger presented Why Stocks Beat Bonds
• Morley Fool presented 6 Dividend Divas

There are some really good articles here, please take time and read a few of them.

(Photo: Sachin Ghodke)

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Growing up in the late 60’s early 70’s, I spent a fair amount of time reading comic books. I don’t remember much about them, but I do remember several of classic ads. Of course, there was the Charles Atlas ad where the beach bully kicked sand on the skinny boy and his girlfriend. But the ad that I remember the best was the “Magnificent Marvelous Money Machine“. It was a wooden block with some rollers in which you would put a one dollar bill in one side and a five dollar bill would come out the other.

Being very young and naive, my mom had a tough time convincing me that it was just a trick and something like that didn’t really exist. Sorry mom, but you were wrong on this one. The “Magnificent Marvelous Money Machine” does exist, but it has a different name. It is called Dividend Growth Investing.

Below are several companies that are multiplying their shareholders return by increasing their cash dividends:

Brinker (EAT) operates or franchises over 1,700 casual dining restaurants, including more than 1,500 Chili’s, and owns a minority interest in Romano’s Macaroni Grill. March 26th the company increased its quarterly dividend 27% to $0.14/share. The yield based on the new payout is 2.95%.

Todd Shipyards (TOD) a shipyard and dry dock facilities in the Pacific Northwest. March 29th the company raised its quarterly dividend to $0.075/share. The dividend is payable June 23, 2010 to all shareholders of record as of June 8, 2010. The yield based on the new payout is 1.83%.

Wayne Savings (WAYN) is the holding company for two bank subsidiaries that operate banking offices in Ohio. March 29th the company increases its quarterly dividend 20% to $0.06/share. The dividend is payable on April 28, 2010 to stockholders of record as of April 14, 2010. The ex-dividend date is April 12, 2010. The yield based on the new payout is 2.84%.

Oxford Industries (OXM) produces branded and private label apparel for men, women, and children. March 30th the company raised its quarterly dividend 22% to $0.11/share. The dividend is payable on April 30, 2010 to shareholders of record as of the close of business on April 15, 2010. The ex-dividend date is April 13, 2010. The yield based on the new payout is 2.16%.

In addition to the above dividend raisers, two Dividend Achiever declared regular quarterly cash dividends. March 26th AT&T (T) declared a quarterly dividend of $0.42/share with a 6.50% yield [Analysis]. The dividend is payable on May 3, 2010, to stockholders of record at the close of business on April 9, 2010. Also, McCormick & Company (MKC) on March 31st declared a quarterly dividend of $0.26/share with a 2.70% yield. The dividend is payable April 26, 2010, to shareholders of record on April 12, 2010. The ex-dividend date is April 8, 2010.

It is a cute trick to turn one dollar into five, but great dividend stocks grow their payout on a consistent basis. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long T. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• Increasing Dividend Yield Part II: REITs
• The 2010 Dividend Stock Ideas List
• 38 Dividend Securities For A Well-Rounded Asset Allocation
• 10 Dividend Stocks With Above Target Returns
• AT&T Inc. (T) Dividend Stock Analysis

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This is the fifth installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. Last week we looked at Bonds. This week we are looking at Master Limited Partnerships (MLPs).

A MLP is by far the most unique investment we will look at in this series. It combines the tax benefits of a limited partnership with the liquidity of common stock. MLPs are a product of the U.S. Tax Reform Act of 1986 and the U.S. Revenue Act of 1987. These laws define which companies are eligible to structure their operations as MLPs. To qualify, a firm must earn 90% of its income through activities or interest and dividend payments relating to natural resources, such as petroleum and natural gas extraction and transportation. Certain real estate operations may also qualify as MLPs.

Like other limited partnerships, MLPs pay no income tax, instead the liability is passed to the unit holders (MLPs’ name for shareholders). Instead of dividends, MLPs pay quarterly required distributions (QRD), based on the stated amount in the contract between the unit holders and the general partner. These distributions are not taxed when they are received. They are treated as a return of capital, thus reducing the cost basis of the investment. MLPs are extremely tax efficient.

However, this tax efficiency comes with a price. Once a year, each investor receives a K-1 statement providing details of the unit holder’s share of the partnership’s net income. K-1s can be quite large (I’ve had some up 30-40 pages) and complex for those without a tax background. Unit holders will record items such as their pro-rata share of the MLP’s depreciation, state taxes, etc. on their individual tax form. In addition to the tax burden, MLPs require more bookkeeping to track their basis. Each year the share basis is adjusted down by the amount of cash distributions and also adjusted by the unit holders allocation of net income. Below are some MLPs that have a history of increasing their unit distributions each year:

Enterprise Products Partners LP (EPD) – Yield: 6.60%
EPD is an integrated provider of natural gas and natural gas liquids services, including processing, fractionation, storage, transportation and terminalling. Years of distribution growth: 11

TC PipeLines LP (TCLP) – Yield: 7.80%
TCLP has interests in three interstate natural gas pipelines, including a 46.5% stake in Great Lakes Gas Transmission LP. Years of distribution growth: 11

Suburban Propane Partners LP (SPH) – Yield: 7.10%
SPH markets propane gas and other refined fuels to residential, commercial, industrial, and agricultural customers. Years of distribution growth: 11

Buckeye Partners LP (BPL) – Yield: 6.40%
BPL is one of the largest independent U.S. pipeline common carriers of refined petroleum products, with over 5,400 miles of pipeline. Years of distribution growth: 15

One way to avoid some of the tax headaches is to own MLPs via funds. The funds deal with the K-1s and issue 1099s to shareholders of the fund. This too comes with a price. Note the management fees of the MLP funds below:

Fiduciary-Claymore MLP Opportunity (FMO) – Yield 7.01%
Fiduciary/Claymore MLP Opportunity Fund is a closed ended equity mutual fund launched by Claymore Securities, Inc. It is co-managed by Claymore Advisors, LLC and Fiduciary Asset Management, LLC.
– Total Assets: $444.3 million
– Expense Ratio: 2.92%

Tortoise Energy Capital Corporation (TYY) – Yield: 6.43%
Tortoise Energy Capital Corp. is a close-ended equity mutual fund launched and managed by Tortoise Capital Advisors L.L.C. It invests in the public equity markets of the United States.
– Total Assets: $22.6 million
– Expense Ratio: 3.92%

Tortoise North American Energy Corporation (TYN) – Yield: 6.30%
Tortoise North American Energy Corporation is a close-ended equity mutual fund launched and advised by Tortoise Capital Advisors, L.L.C. The fund primarily invests in the public equity markets of North America.
– Total Assets: $148.9 billion
– Expense Ratio: 3.21%

Even if I could accept the high fees, there is one other item about MLPs that gives me pause. They are notoriously late in their tax reporting. It was usually well into February before the first K-1 shows up. Then I would normally get one or more corrected K-1s, sometimes as late as early April. MLPs provide excellent yields and are a tax efficient way to invest, but you must prepared to deal with their quirky characteristics.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

(Photo: Steve Woods)

Related Posts:

• The 2010 Dividend Stock Ideas List
• 3 Dividend Stocks Rewarding Their Shareholders
• Five Companies Willing and Capable To Raise Dividends
• Best Stocks For 2009

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This article originally appeared on The DIV-Net March 22, 2010.

Linked here is a detailed quantitative analysis of Kimberly Clark Corp. (KMB). Below are some highlights from the above linked analysis:

Company Description: Kimberly Clark Corp. is a global consumer products company produces tissue, personal care and health care. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

KMB is trading at a discount to 1.) and 3.) above. The stock is trading at a 21.4% discount to its calculated fair value of $78.13. KMB earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

KMB earned two Stars in this section for 1.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. KMB earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 38 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

KMB earned a Star in this section for its NPV MMA Diff. of the $1,556. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as KMB has. The stock’s current yield of 4.3% exceeds the 3.98% estimated 20-year average MMA rate.

Other: KMB is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index.

Conclusion: KMB earned one Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks KMB as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $87.80 before KMB’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 38 years of consecutive dividend increases. At that price the stock would yield 3.01%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 3.0%. This dividend growth rate is less than the 6.7% used in this analysis, thus providing a margin of safety. KMB has a risk rating of 1.75 which classifies it as a medium risk stock.

I have recently avoided KMB due to relatively high debt levels. I generrally look for dividend stocks with debt to total capital less than 45%. Although KMB’s at 50% is above that level, it has consistently dropped from 61% back in July to to its present level. This is a sign of good management. I will look to add to my KMB position while it is trading below my $78.13 fair value price. For additional information, including the stock’s dividend history, please refer to its data page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in KMB (0.7% of my Income Portfolio). See a list of all my income holdings here.

Related Posts:

• 18 Dividend Stocks Raising Their Yield On Cost
• 7 Dividend Stocks To Take The Emotion Out Of Investing
• What’s Wrong With P&G?
• Kimberly-Clark Corporation (KMB) Dividend Stock Analysis
• Underfunded Pension Plans: The Next Shoe To Drop?

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it’s where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.

Below are the carnivals that I participated in this week, along with a link to my article:

• Carnival of Personal Finance published: Increasing Dividend Yield Part III: Preferred Stock
• Carnival of Financial Planning published: 5 Dividend Stocks Delivering What’s Important

Articles I enjoyed reading included (in no particular order):

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: Kimberly Clark Corp. (KMB)
• Barel Karsan presented Running Out Of Cash
• Dividend Growth Investor presented PepsiCo (PEP) Stock Analysis

Articles From DIV-Net Members

• The Dividend Guy presented What Would You Invest in if you only had $1000
• Dividend Growth Investor presented PepsiCo (PEP): a consistent dividend aristocrat
• Barel Karsan presented Avoiding Energy
• Buy Value presented Insider Trades: 3/22/2010
• moneygardener presented bullish dividends
• Disciplined Approach to Investing presented Bullish Sentiment Continues Decline And Market Moves Higher
• Living Off Dividends & Passive Income presented John Templeton’s Lost Memo
• Old School Value presented Negative Enterprise Value Screen Strategy
• Triaging My Way To Financial Success presented Canadian Mortgage Concerns: Banks
• BuyLikeBuffett.com presented Great Wealth Building Articles
• 40percent 20years presented New Blogs, destroying the environment and Warren Buffett!
• Value Walk presented The Best Value Mutual Funds Part I

Other Articles

• Minyanville presented Why Dividends Are Back
• SmartMoney presented Want Income? Catch These Dividends Now
• Globe and Mail presented Dividend firms that fit Sherry Cooper’s profile
• Wall Street Journal presented Why Fund Managers’ Hot Performance Isn’t So Hot
• Investopedia presented 3 Stocks With Superior Fundamentals
• Yahoo Finance presented $1 Million Doesn’t Cut It for Retirement

There are some really good articles here, please take time and read a few of them.

(Photo: Sachin Ghodke)

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

In their efforts to balance short-term investor expectations with long-term strategic goals, The Boston Consulting Group (BCG) warns companies to avoid cash traps that can negatively impact near-term shareholder returns. One of which is the The Stock-Buyback Trap. BCG doesn’t discount the role that stock buybacks can play in boosting near-term returns for some companies. But the firm’s research indicates that buybacks do not change investors’ estimates for long-term earnings-per-share growth, or induce them to accord a company a higher valuation multiple. By contrast, it says, dividend growth has a far more positive long-term impact.

Below are several companies that recently avoided the cash trap by increasing dividends paid to their shareholders:

Village Super Market (VLGEA) operates a chain of 23 ShopRite supermarkets in New Jersey and Pennsylvania. March 19th the company increased its quarterly dividend 4% to $0.25/share. The dividend is payable on April 22, 2010 to shareholders of record at the close of business on April 1, 2010. The ex-dividend date is March 30, 2010. The yield based on the new payout is 3.61%.

Williams-Sonoma (WSM) sells high-quality products for the home via its retail stores and various direct-to-customer channels. March 22nd the company raised its quarterly dividend to $0.13/share. The yield based on the new payout is 1.88%.

Raven (RAVN) provides electronic precision-agriculture products, reinforced plastic sheeting, electronics manufacturing services, specialty aeronautics, and sewn products. March 22nd the company increased its quarterly dividend to $0.16/share. The dividend is payable April 15, 2010, to shareholders of record on March 31, 2010. The ex-dividend date is March 29, 2010. RAVN is a Dividend Achiever and has raised its dividend for 24 consecutive years. The yield based on the new payout is 2.89%. [Analysis]

ConocoPhillips (COP) is the the fourth largest integrated oil company in the world. March 24th the company raised its dividend 10%. COP also announced it would sell of 10 percent of LUKOIL and other assets over the next two years. The yield based on the new payout is 4.22%.

Starbucks (SBUX) is the leading coffee roaster and retailer of high-quality coffee products in the world. March 24th the company approved its first ever quarterly cash dividend of $0.10/share. The quarterly dividend of $0.10 per share will be paid on April 23, 2010, to shareholders of record on the close of business on April 7, 2010. The yield based on the new payout is 1.58%.

Clifton Savings Bancorp (CSBK) serves northeast New Jersey through its Clifton Savings Bank, S.L.A. subsidiary with assets of $801 million. March 24th the company raised its quarterly dividend to $0.06/share. The yield based on the new payout is 2.50%.

Raytheon (RTN) the world’s sixth largest military contractor, specializes in making high-tech missiles and electronics. March 24th the company increased its quarterly dividend 21% to $0.375/share. The dividend will be paid on April 29, 2010 to shareholders of record as of the close of business on April 6, 2010. The yield based on the new payout is 2.62%.

Hingham Institution for Savings (HIFS) is a Massachusetts-chartered savings bank with offices located in Hingham, South Hingham, Hull, Scituate, Cohasset, SouthWeymouth, Norwell and Boston’s South End. March 25th the company raised its quarterly dividend 4.5% to $0.23/share. The dividend is is payable on April 20, 2010 to stockholders of record as of April 9, 2010. Robert H. Gaughen, Jr., President and Chief Executive Officer of the Bank, in announcing the dividend, stated, “We are proud of the fact that we have increased cash dividends to shareholders in each of the past 15 years.” The yield based on the new payout is 2.83%.

Avoiding the cash trap works best when applied on a consistent basis. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• The 2010 Dividend Stock Ideas List
• 38 Dividend Securities For A Well-Rounded Asset Allocation
• Raven Industries Inc. (RAVN) Dividend Stock Analysis
• 5 Dividend Stocks Trading Below Fair Value
• 7 Low-Debt High-Rated Dividend Stocks

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This is the fourth installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. Last week we looked at Preferred Stock. This week we are looking at Bonds.

A bond is a debt security in which the issuer agrees to repay borrowed money with interest at fixed intervals. Bondholders have a creditor stake in the company. Technically, bonds do not pay dividends, but instead they pay interest. However, bonds are an important allocation for many income investors, thus I chose to include them in this series. There are certain things an informed investor needs to understand before purchasing bonds.

Interest rates play an integral part in determining the current value of a bond. Interest rates and the price of a bond are inversely related. The longer the time until a bond matures, the more susceptible its price is to changes in interest rates. Consider two bonds, one that has a maturity of 30 years and another with a 7 day maturity. If after both bonds are sold, interest rates go up one percent, the price of both bonds will decline since new investors expect to earn the prevailing interest rate. However, the interest rate decline will affect the price of the 30 year bond more than the 7 day bond, due to the longer period of “lost” earnings. It works the same in the other direction – if interest rates drop the bond holder will sell it at higher price which lowers the yield to the market rate.

In summary, longer-term investments have lower rate volatility at the expense of higher price volatility. Therefore, the term of the bond purchased should be dictated by your long-term investment goals. If your goal is capital preservation, short-term is the most appropriate investment. If an investor is willing to hold a bond until it matures and values lower rate volatility, then a longer-term investment will likely better meet this investor’s needs.

Like preferred stocks, many investors choose not to research and buy individual bonds. Instead, they have opted to make their bond investments in funds. Consider the following bond funds:

Vanguard Long-Term Bond ETF (BLV) – Yield: 5.16%
Vanguard Long-Term Bond ETF seeks to track the performance of a market-weighted bond index with a long-term dollar-weighted average maturity. It maintains a dollar-weighted average maturity consistent with that of the Index, which generally ranges between 15 and 30 years.
– Total Assets: $2.9 billion
– Expense Ratio: 0.14%
– Holdings: 40% US Corporate, 39% US Treasury, 8% Foreign Corp, 5% Foreign Govt, 8% Other
– Distributions: Monthly

Vanguard Intermediate-Term Bond ETF (BIV) – Yield 4.32%
The investment seeks to track the performance of a market-weighted bond index with an intermediate-term dollar-weighted average maturity.The fund maintains a dollar-weighted average maturity consistent with that of the index ranging between 5 and 10 years.
– Total Assets: $9.8 billion
– Expense Ratio: 0.14%
– Holdings: 45% US Treasury, 37% US Corporate, 9% Foreign Corp, 5% Foreign Govt, 9% Other
– Distributions: Monthly

Vanguard Short-Term Bond ETF (BSV) – Yield: 2.74%
The investment seeks to track the performance of a market-weighted bond index with a short-term dollar-weighted average maturity. The fund’s dollar-weighted average maturity is not expected to exceed 3 years
– Total Assets: $9.8 billion
– Expense Ratio: 0.14%
– Holdings: 52% US Treasury, 24% US Corporate, 14% US Agency, 8% Foreign Corp, 2% Other
– Distributions: Monthly

Vanguard Total Bond Market ETF (BND) – Yield: 3.98%
The investment seeks to track the performance of a broad, market-weighted bond index. The fund maintains a dollar-weighted average maturity consistent with that of the index, ranging between 5 and 10 years.
– Total Assets: $68.8 billion
– Expense Ratio: 0.14%
– Holdings: 33% Mtg Pass-thru, 29% US Treasury, 19% US Corporate, 7% US Agency, 12% Other
– Distributions: Monthly

Invest Grade Corp Bond (LQD) – Yield: 5.44%
The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the iBoxx $ Liquid Investment Grade index. The fund typically invests at least 90% of assets in the bonds of the underlying index, and at least 95% of assets in investment-grade corporate bonds.
– Total Assets: $12.2 billion
– Expense Ratio: 0.15%
– Holdings: 82% US Corporate, 18% Foreign Corp, 0% Other
– Distributions: Monthly

Emerging Mkts Sovereign Debt (PCY) – Yield: 6.44%
The investment seeks investment results that correspond generally to the price and yield (before fees and expensed) of an index called the DB Emerging Market USD Liquid Balanced index. The fund normally invests at least 80% of total assets in emerging markets U.S. dollar-denominated government bonds.
– Total Assets: $520.3 billion
– Expense Ratio: 0.50%
– Holdings: 80% Foreign Govt, 20% Other
– Distributions: Monthly

20+ Year Treasury Bond (TLT) – Yield 3.95%
The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S. 20+ Year Treasury Bond index. The fund generally invests at least 90% of assets in the bonds of the underlying index.
– Total Assets: $2.4 billion
– Expense Ratio: 0.15%
– Holdings: 100% US Treasury
– Distributions: Monthly

Some authors have minimized the importance of bonds in a portfolio primarily focused on dividend growth securities. You can ignore them, but as the past decade has shown it may be to your own peril.

Full Disclosure: Long BLV, BIV, LQD, PCY. See a list of all my income holdings here.

(Photo: Steve Woods)

Related Posts:

• Bonds: The Next Bubble to Burst?
• All Investing Involves Risk
• 38 Dividend Securities For A Well-Rounded Asset Allocation
• Optimizing Your Asset Allocation
• Protecting Your Dollars With Foreign Currency

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This article originally appeared on The DIV-Net March 15, 2010.

Linked here is a detailed quantitative analysis of Leggett & Platt Inc. (LEG). Below are some highlights from the above linked analysis:

Company Description: Leggett & Platt Inc makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as diversified products for non-furnishings markets.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

LEG is trading at a discount to only 3.) above. Since LEG’s tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 62.8% premium to its calculated fair value of $13.08. LEG did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

LEG earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. LEG earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1939 and has increased its dividend payments for 38 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

LEG earned a Star in this section for its NPV MMA Diff. of the $563. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as LEG has. The stock’s current yield of 4.88% exceeds the 3.98% estimated 20-year average MMA rate.

Other: LEG is a member of the S&P 500 and a member of the Broad Dividend Achievers™ Index.

Conclusion: LEG did not earn any Stars in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks LEG as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $21.97 before LEG’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 38 years of consecutive dividend increases. At that price the stock would yield 4.73%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 1.6%. This dividend growth rate is less than the 2.0% used in this analysis, thus providing a margin of safety. LEG has a risk rating of 1.50 which classifies it as a low risk stock.

A sign of a well managed company is the ability to increase cash flow in the face of falling sales and earnings. LEG’s sales and earnings peaked in 2006. However, free cash flow per share has doubled since that time.  2010 should not be any different with S&P forcasting LEG’s customer markets recovering late this year and moving to positive sales growth. Earlier this month I initiated position in LEG in spite of the fact it was trading well in excess of my $17.94 fair value price. Since then, LEG has appreciated an additional 5%. For additional information, including the stock’s dividend history, please refer to its data page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in LEG (1.2% of my Income Portfolio). See a list of all my income holdings here.

Related Posts:

• 9 Small/Mid-Cap Dividend Stocks Answering The Call
• Dividend Payout vs. Free Cash Flow Payout
• High-Yield Dividend Stocks: A Safer Approach
• Leggett & Platt Inc. (LEG) Dividend Stock Analysis
• Five Stocks Raising Their Dividends

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it’s where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.

Below are the carnivals that I participated in this week, along with a link to my article:

• Carnival of Personal Finance published: Increasing Dividend Yield Part II: REITs
• Carnival of Money Hacks published: 11 Dividend Stocks Providing Positive Feedback
• Carnival of Financial Planning published: 11 Dividend Stocks Providing Positive Feedback

Articles I enjoyed reading included (in no particular order):

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: Leggett & Platt Inc. (LEG)
• Barel Karsan presented Investing And Uncertainty
• Dividend Growth Investor presented Emerson Electric (EMR) Stock Analysis

Articles From DIV-Net Members

• The Dividend Guy presented Why I Continue to Hold JNJ As a Dividend Stock
• Dividend Growth Investor presented The right time to buy dividend stocks
• Barel Karsan presented Representing Winners And Losers
• Buy Value presented Is Now the Time for US REITS
• moneygardener presented simplest ways to ensure financial difficulty your entire life
• Disciplined Approach to Investing presented Six Notable Dividend Increases So Far In March
• Old School Value presented Silicon Graphics International (SGI) Analysis
• BuyLikeBuffett.com presented What are Blockbuster’s Options?
• 40percent 20years presented Comparison: H & M, ZARA, GAP
• EPIC INVESTOR presented Final Update on Real Estate Investment
• Value Walk presented Jacob Wolinsky Interviews Bruce Greenwald: Discusses The Future of Value Investing, Buffett’s Purchase of BNI and more

Other Articles

• BusinessWeek presented Record Cash Stockpiles Point to Fatter Dividends
• SmartMoney presented 3 Stocks With Big Dividends and Buybacks
• Globe and Mail presented The U.S. blue bloods of rising payouts
• Morningstar presented Diving for Dividends? Look Beyond Yield Alone
• Wall Street Journal presented Why You Should Get a Bigger Slice of Earnings
• Motley Fool presented 5 Stocks for Growth and Income

There are some really good articles here, please take time and read a few of them.

(Photo: Sachin Ghodke)

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

As a young investor I followed an aggressive growth strategy. Having narrowly missed the tech bubble bursting, I purchased my first dividend stock on December 11, 2003. I had heard dividend investments were supposed to be safer, but knew very little else about the strategy. I was fortunate enough to accidentally buy enough good dividend stocks to learn the “secret” of dividend investing. It is not necessarily starting with a high-yield investment, but ending up with a high-yield investment. This usually occurs by buying stocks with a moderate yield and a long history of growing dividends and letting time do its job.

This week several companies are building future yield by increasing the cash dividends paid to their shareholders:

Birner Dental (BDMS) develops, acquires, and provides business services to dental practice networks in Colorado, New Mexico and Arizona. March 12th the company increased its quarterly dividend 17% to $0.20/share. The yield based on the new payout is 4.92%.

Warwick Valley Telephone Co. (WWVY) provides telephone, Internet and video services to customers in the towns of Warwick, Goshen and Wallkill, New York andWest Milford and Vernon townships, New Jersey. March 12th the company raised its quarterly dividend 9.1% to $0.24/share. The dividend is paid on March 31, 2010 to shareholders of record as of March 22, 2010. The ex-dividend date is March 18, 2010. The yield based on the new payout is 6.63%.

Lennox Int (LII) is a global provider of heating, ventilation and air conditioning and refrigeration products. March 12th the company increased its quarterly dividend 7% to $0.15/share. The dividend is payable on April 15, 2010 to stockholders of record as of March 26, 2010. The ex-dividend date is March 24, 2010. The yield based on the new payout is 1.35%.

PepsiCo (PEP) is a major international producer of branded beverage and snack food products. March 15th the company raised its quarterly dividend 7% to $0.48/share. The dividend is payable on June 30, 2010 to shareholders of record on June 4, 2010. The ex-dividend date is June 2, 2010. PEP is a Dividend Aristocrat and has raised its dividend for 38 consecutive years. The yield based on the new payout is 2.89%. [Analysis]

Astro-Med Inc. (ALOT) designs, develops, manufactures and distributes specialty printers and electronic instruments that acquire, store, analyze and present data in multiple formats. March 16th the company raised its quarterly dividend to $0.07/share. The dividend is payable on April 2, 2010 to shareholders of record on March 19, 2010. The ex-dividend date is March 17, 2010. The yield based on the new payout is 3.76%.

Mead Johnson (MJN) is a global leader in pediatric nutrition. March 17th the company increased its quarterly dividend 12.5% to $0.225/share. The dividend is payable April 1, 2010, to shareholders of record on March 24, 2010. The ex-dividend date is March 22. The yield based on the new payout is 1.75%.

Guess? Inc. (GES) offers one of the world’s leading lifestyle collections of contemporary apparel and accessories for men, women and children, sold in multiple channels including wholesale, company-owned retail locations, e-commerce, and licensed stores. March 17th the company increased its quarterly dividend to $0.16/share. The yield based on the new payout is 1.37%.

Air Products (APD) is a major producer of industrial gases and electronics and specialty chemicals also has interests in environmental and energy-related businesses. March 18th the company raised its quarterly dividend by 9% to $0.49/share. The dividend is payable on May 10, 2010 to shareholders of record at the close of business on April 1, 2010. The ex-dividend is March 30. APD is a Dividend Aristocrat and has raised its dividend for 28 consecutive years. The yield based on the new payout is 2.62%.

Prospect Capital (PSEC) is a financial services company that primarily lends to and invests in middle market privately-held companies. March 18th the company raised its cash distribution to $0.41/share. This distribution marks the Company’s 22nd consecutive quarterly increase. The ex-dividend date is Monday, March 29, 2010. The record date is Wednesday, March 31, 2010. The yield based on the new payout is 13.48%.

When looking for companies that are likely to build future yield, look first at those that have done it in the past. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long PEP. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• Best Stocks For 2010
• 7 Dividend Stocks To Take The Emotion Out Of Investing
• 7 Dividend Stocks To Slay The Wall Street Giants
• 8 Dividend Stocks With The Right Stuff
• Dividend Payout vs. Free Cash Flow Payout

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This is the third installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. Last week we looked at REITs. This week we are looking at Preferred Stock.

Preferred stock is a special equity security that has properties of both equity and debt. Terms of the preferred stock are stated in a “Certificate of Designation” and all are unique to each security. However, there are some generalities. In the order of payments, preferred stock normally has preference to common stock, but are subordinate to bonds. Preferred stock usually has no voting rights, but some have a convertibility feature into common stock. Like bonds, preferred stocks are rated by the major rating agencies such as Moody’s and S&P. The rating for preferred stock is generally lower since preferred dividends do not carry the same guarantees as interest payments from bonds, thus offer yields that are higher than bond market yields and common stock yields.

Given the unique nature of each individual preferred stock and the time necessary to research them, many have opted to place their preferred investments in funds. Consider the following preferred stock funds:

iShares S&P U.S. Preferred Stock Index (PFF) – Yield: 7.79%
The iShares S&P U.S. Preferred Stock Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P U.S. Preferred Stock Index.
– Total Assets: $3.3 billion
– Expense Ratio: 0.48%
– Holdings: 88% Financials, 5% Consumer Discretionary, Consumer Staples 2%, 5% Other
– Distributions: Monthly

PowerShares Financial Preferred Profile (PGF) – Yield: 8.59%
Tracks the performance of U.S. listed preferred stocks of preferred stocks issued in the US market by financial institutions and currently includes approximately 30 securities selected by Wachovia pursuant to a proprietary selection methodology.
– Total Assets: $1.5 billion
– Expense Ratio: 0.60%
– Holdings: 100% Financials
– Distributions: Monthly

PowerShares Preferred Portfolio Profile (PGX) – Yield: 7.91%
The Index is designed to replicate the total return of a diversified group of investment-grade preferred securities.
– Total Assets: $885.5 million
– Expense Ratio: 0.50%
– Holdings: 83% Financials, 17% Utilities
– Distributions: Monthly

Two additional ones to watch are SPDR Barclays Capital Convertible Bond (CWB) and SPDR Wells Fargo Preferred Stock ETF Profile (PSK). They were started in 2009, so there is very little historical data to look at. In addition, there is also Nuveen Quality Preferred Income (JTP), which is an exchange traded note (ETN) administered by JP Morgan. ETNs are linked to the performance of a market benchmark. ETNs are not equities or funds and they carry additional risk compared to an ETF. If the underwriting bank bankrupts, the value of the ETN will be eroded.

I currently do not hold any preferred stock (individually or in funds), but I am giving consideration to the funds listed above.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

This article originally appeared on The DIV-Net March 8, 2010.

Linked here is a detailed quantitative analysis of Meridian Bioscience Inc. (VIVO). Below are some highlights from the above linked analysis:

Company Description: Meridian Bioscience Inc. develops, makes and sells disposable diagnostic test kits and related products used for the rapid diagnosis of infectious diseases.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

VIVO is trading at a discount to only 3.) above. The stock is trading at a 28.8% premium to its calculated fair value of $17.94. VIVO did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

VIVO earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. VIVO earned a Star for having an acceptable score in at least two of the four Key Metrics measured. Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (2000-2003, 2001-2004, 2002-2005, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. The company has paid a cash dividend to shareholders every year since 1990 and has increased its dividend payments for 19 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

VIVO earned a Star in this section for its NPV MMA Diff. of the $6,457. This amount is in excess of the $1,600 target I look for in a stock that has increased dividends as long as VIVO. If VIVO grows its dividend at 15.0% per year, it will take 3 years to equal a MMA yielding an estimated 20-year average rate of 3.98%. VIVO earned a check for the Key Metric ‘Years to >MMA’ since its 3 years is less than the 5 year target.

Other: VIVO is a member of the Broad Dividend Achievers™ Index.

Conclusion: VIVO did not earn any Stars in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of three Stars. This quantitatively ranks VIVO as a 3 Star-Hold.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $38.46 before VIVO’s NPV MMA Differential decreased to the $1,600 minimum that I look for in a stock with 19 years of consecutive dividend increases. At that price the stock would yield 1.77%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,600 NPV MMA Differential, the calculated rate is 10.4%. This dividend growth rate is less than the 15.0% used in this analysis, thus providing a margin of safety. VIVO has a risk rating of 2.00 which classifies it as a medium risk stock.

VIVO is an integrated life science company that manufactures, markets and distributes a broad range of innovative diagnostic test kits, purified reagents and related products. These products provide for early diagnosis of common medical conditions, such as gastrointestinal, viral, urinary and respiratory infections. VIVO’s diagnostic products are used outside of the human body and require little or no special equipment. The company has strong market positions in the areas of gastrointestinal and upper respiratory infections, serology, parasitology and fungal disease diagnosis. VIVO markets its products to hospitals, reference laboratories, research centers, veterinary testing centers, physician offices and diagnostics manufacturers in more than 60 countries around the world. Although the stock is currently trading above my $17.94 fair value price, I view it as a company with a lot of potential; thus I have added it to my watch list. For additional information, including the stock’s dividend history, please refer to its data page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in VIVO (0.0% of my Income Portfolio). See a list of all my income holdings here.

Related Posts:

• 38 Dividend Securities For A Well-Rounded Asset Allocation

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here:

Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it’s where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.

Below are the carnivals that I participated in this week, along with a link to my article:

• Carnival of Personal Finance published: Increasing Dividend Yield Part I: Utilities
• Carnival of Money Hacks published: 18 Dividend Stocks Raising Their Yield On Cost
• Carnival of Financial Planning published: 18 Dividend Stocks Raising Their Yield On Cost

Articles I enjoyed reading included (in no particular order):

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: Meridian Bioscience Inc. (VIVO)
• Barel Karsan presented Calibration
• Dividend Growth Investor presented Abbott Laboratories (ABT) Stock Analysis

Articles From DIV-Net Members

• The Dividend Guy presented Essential Tips For the Struggling Investor – Making Decisions
• Dividend Growth Investor presented Seven Dividend Increases in the news
• Barel Karsan presented When The Company Values Itself
• Buy Value presented Anticipating Dividend Increases
• Disciplined Approach to Investing presented Bullish Investor Sentiment Rises, But…
• Old School Value presented EPS Affected by Tax Rate Changes
• Triaging My Way To Financial Success presented The Ultimate Wrap Mutual Fund
• BuyLikeBuffett.com presented The First Million Is The Hardest To Make
• 40percent 20years presented Time to combine with Dividends Value Investing
• EPIC INVESTOR presented Invest in ethics
• Value Walk presented My Reporting From The Columbia Investment Management Conference

Other Articles

• The Wall Street Journal presented Why You Should Get a Bigger Slice of Earnings
• Associated Content presented 3 Reasons Why Some Stock Market Investors Seek Dividends Rather Than Growth
• Investopedia presented Addictive Dividends
• Motley Fool presented 4 Dividend Stocks Showing You the Money
• BloggingStocks presented Investing in ‘Dividend Aristocrats’
• Forbes presented It’s Payout Time
• BusinessWeek presented Overseas Dividend Payers: Slow to Pay Off
• Jubak Picks presented Despite those huge reserves, China could be, gasp, broke

There are some really good articles here, please take time and read a few of them.

(Photo: Sachin Ghodke)

Related Posts:

• No Related Posts

Have future posts delivered to you for free! If you enjoyed this post, please bookmark or share it here: