Most casual income investors focus on current yield, which is important. However, if your objective is to build a portfolio of securities with increasing income, then Yield on Cost is an excellent metric to measure your progress. Yield on Cost is simply the annual dividend rate times number of shares owned divided by what you paid for the investment (basis). As companies increase their dividend, your yield on cost goes up.

Working to to increase their shareholders yield on cost, these companies recently announced higher cash dividend payments:

El Paso Pipeline Partners (EPB) owns and operates natural gas transportation pipelines and storage
assets. January 22nd the company increased its quarterly distribution of 2.9% to $0.36/unit. The distribution will be paid February 12, 2010 on all outstanding common and subordinated units to holders of record as of the close of business on February 1, 2010. The yield based on the new payout is 5.76%.

Intel (INTC) is the world’s largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products. January 22nd the company raised its quarterly 12.5% to $0.1575/share. The dividend will be payable on March 1, 2010 to stockholders of record on Feb. 7, 2010. The ex-dividend date is February 4, 2010. The yield based on the new payout is 3.15%.

Rollins (ROL) provides pest and termite control services to residential and commercial customers. January 26th the company boosted its quarterly dividend 28.6% to $0.09/share. The dividend will be payable March 10, 2010 to stockholders of record at the close of business February 10, 2010. The ex-dividend date is February 8, 2010. The yield based on the new payout is 1.80%.

National Instruments (NATI) is a provider of software and hardware technology solutions for creating custom measurement and automation systems that are typically used for design, control, and test applications. January 26th the company approved an 8% sequential increase in the quarterly dividend to $0.13/share. This dividend is payable on March 1, 2010, to shareholders of record on February 8, 2010. The ex-dividend date is February 4, 2010. The yield based on the new payout is 1.70%.

Sunoco Logistics Partners (SXL) is a master limited partnership (MLP) formed by Sunoco Inc. to acquire, own and operate a group of refined product and crude oil pipelines and terminal facilities. January 26th the company raised its distribution 2.3% to $1.09/unit. The distribution is payable February 12, 2010 to unit holders of record on February 8, 2010. The yield based on the new payout is 6.16%.

Praxair (PX) is the largest producer of industrial gases in North and South America, and the second largest worldwide and it provides ceramic and metallic coatings. January 27th the company boosted its quarterly dividend 13% to $0.45/share. The dividend is payable on March 15, 2010 to shareholders of record on March 5, 2010. The ex-dividend date is March 3, 2010. PX is a Dividend Achiever and has raised its dividend for 17 consecutive years. The yield based on the new payout is 2.37%.

Holly Energy Partners (HEP) is a master limited partnership was formed by Holly Corp. to acquire, own and operate refined product pipeline and terminal facilities. January 27th the company increased its quarterly dividend to $0.805/unit. HEP has increased its distribution to unitholders every quarter since becoming a public partnership in July 2004 or 21 consecutive quarterly increases. The distribution will be paid February 12, 2010, to unitholders of record February 5, 2010. The ex-dividend date is February 3, 2010. The yield based on the new payout is 7.77%.

Energen (EGN) is a diversified energy company is involved in natural gas distribution, and oil and gas exploration and production. January 27th company raised its quarterly dividend 4% to $0.13/share. The dividend is payable March 1, 2010, to shareholders of record on February 15, 2010. The ex-dividend date is February 11, 2010. EGN is a Dividend Achiever and has raised its dividend for 28 consecutive years. The yield based on the new payout is 1.14%.

SJW (SJW) provides water service to a population of approximately one million people in the metropolitan San Jose (California) area. January 28th the company boosted its quarterly dividend to $0.17/share. The dividend is payable on March 1, 2010 to shareholders of record at the close of business on February 8, 2010. The ex-dividend date is February 4, 2010. SJW is a Dividend Achiever and has raised its dividend for 28 consecutive years. The yield based on the new payout is 3.07%.

Airgas (ARG) is a leading distributor of industrial, medical and specialty gases and related equipment also distributes safety and other disposable supplies through its network of stores. January 28 the company increased it quarterly dividend to $0.22/share. The dividend is payable March 31, 2010 to shareholders of record as of March 15, 2010. The yield based on the new payout is 1.88%.

A healthly yield on cost is one that is growing via regular dividend increases. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

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

(Photo Credit)

Related Posts:

• 15 Hot Dividend Increases
• 11 Dividend Stocks Increasing Dividends and Long-Term Returns
• Are REITs and Utilities Good Dividend Investments?
• Five Companies Willing and Capable To Raise Dividends
• Eight Companies Secure In Raising Their Dividends

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

Over the last couple of years we have seen companies fail to raise their dividend, cut their dividend and some even decided to stop paying their dividend. In some cases their financials did not warrant the change. One way to weed these out is to look for companies with a dividend culture. Below are 10 companies that have paid a dividend for over 100 years and have increased their dividend for at least 20 years. They are presented here in descending rank of how long they have paid a dividend:

#10 Chubb Corp. (CB) One of the largest U.S. property-casualty insurers, Chubb has carved out a number of niches, including high-end personal lines and specialty liability lines coverage.
Paid since: 1902 | Consecutive increases: 45 | Yield: 2.92%

#9 PPG (PPG) is a leading manufacturer of coatings and resins, flat and fiber glass, and industrial and specialty chemicals.
Paid since: 1899 | Consecutive increases: 36 | Yield: 3.55%

#8 Colgate-Palmolive Company (CL) is a consumer products company, whose products are marketed throughout the world. Colgate’s Oral Care products include toothpaste, toothbrushes, oral rinses, dental floss and pharmaceutical products.
Paid since: 1895 | Consecutive increases: 45 | Yield: 2.13%

#7 The Coca-Cola Company (KO) is the world’s largest soft drink company. It engages in the manufacture, distribution, and marketing of nonalcoholic beverage concentrates, fruit juices and syrups worldwide.
Paid since: 1893 | Consecutive increases: 47 | Yield: 3.02% | [Analysis]

#6 The Procter & Gamble Company (PG) is focused on providing branded consumer goods products. The Company markets its products in more than 180 countries.
Paid since: 1891 | Consecutive increases: 53 | Yield: 2.92% | [Analysis]

#5 UGI Corp. (UGI) operates propane distribution, gas and electric utility, energy marketing and related businesses through subsidiaries.
Paid since: 1885 | Consecutive increases: 23 | Yield: 3.20%

#4 Consolidated Edison, Inc. (ED), through its subsidiaries, provides electric, gas, and steam utility services in the United States serving parts of New York, New Jersey and Pennsylvania.
Paid since: 1885 | Consecutive increases: 36 | Yield: 5.42%

#3 Eli Lilly and Company (LLY) discovers, develops, manufactures and sells prescription drugs that offers a wide range of treatments for neurological disorders, diabetes, cancer, and other conditions. The company also sells animal health products.
Paid since: 1885 | Consecutive increases: 42 | Yield: 5.52% | [Analysis]

#2 Exxon Mobil Corp. (XOM) is engaged in the exploration, production, and sale of crude oil, natural gas, petroleum products and petrochemicals. XOM is the world’s largest publicly owned integrated oil company.
Paid since: 1882 | Consecutive increases: 27 | Yield: 2.51%

#1 Stanley Works (SWK) is a worldwide producer of tools, hardware and specialty hardware for home improvement, consumer, industrial and professional use.
Paid since: 1877 | Consecutive increases: 42 | Yield: 2.44%

A strong dividend culture is a great place to start looking, but before buying we must also consider other factors such as: dividend fundamentals, ability to cover their dividend and fair value.

Full Disclosure: Long KO, PG, ED, LLY. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• Refining Risk Measurement Of Dividend Stocks
• The 2010 Dividend Aristocrats
• 3 Styles Of Sucessful Dividend Investing
• 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 article originally appeared on The DIV-Net January 18, 2010.

Linked here is a detailed quantitative analysis of Raven Industries Inc. (RAVN). Below are some highlights from the above linked analysis:

Company Description: Raven Industries Inc. manufacturer provides electronic precision-agriculture products, reinforced plastic sheeting, electronics manufacturing services, specialty aeronautics, and sewn products.

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

RAVN is trading at a discount to 2.) and 3.) above. The stock is trading at a slight premium to its calculated fair value of $31.75. RAVN 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%

RAVN 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%. RAVN 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 1972 and has increased its dividend payments for 23 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

RAVN earned a Star in this section for its NPV MMA Diff. of the $1,649. This amount is in excess of the $1,200 target I look for in a stock that has increased dividends as long as RAVN has. If RAVN grows its dividend at 15.0% per year, it will take 6 years to equal a MMA yielding an estimated 20-year average rate of 3.72%.

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

Conclusion: RAVN 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 RAVN as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $35.67 before RAVN’s NPV MMA Differential decreased to the $1,200 minimum that I look for in a stock with 23 years of consecutive dividend increases. At that price the stock would yield 1.54%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,200 NPV MMA Differential, the calculated rate is 14.0%. This dividend growth rate is slightly less than the 15.0% used in this analysis, thus providing only a slim margin of safety. RAVN has a risk rating of 1.25 which classifies it as a low risk stock.

RAVN is a company that I have recently started to follow closely. Its solid cash flows, stong balance sheet and lack of debt are alluring to a dividend investor. Although RAVN is trading near my buy price of $31.75, I have two concerns: 1.) the low dividend yield and 2.) the high growth rate needed to meet my NPV MMA Differential target. For now I will pass on a buy, but ill continue to closely monitor the stock. 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 RAVN (0.0% of my Income Portfolio). See a list of all my income holdings here.

Related Posts:

• 5 Dividend Stocks Trading Below Fair Value
• 7 Low-Debt High-Rated Dividend Stocks
• Eight Companies Secure In 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:

• Festival of Stocks published: 6 dividend stocks increasing their yield
• Carnival of Personal Finance published: 5 Dividend Stocks Trading Below Fair Value
• Carnival of Money Hacks published: 4 Dividend Stocks in the “Good” Category
• Carnival of Financial Planning published: 4 Dividend Stocks in the “Good” Category

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

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: Raven Industries Inc. (RAVN)
• Barel Karsan presented Heelys’ Stock Builds In The Bad News
• Dividend Tree presented Dividend Investing: Two Common Questions?
• Dividend Growth Investor presented Universal Corporation (UVV) Stock Dividend Analysis
• Buying Value presented Check your sources

Articles From DIV-Net Members

• The Dividend Guy presented Why Most People Fail at Investing
• Dividend Growth Investor presented Dividend growth stocks are attractive buyout targets
• Barel Karsan presented Fooled By Yahoo
• Dividend Tree presented Understanding Risk and Return Characteristics
• Buy Value presented Patience
• Stock Market Prognosticator presented Twitter Comment
• The Div Guy presented Health Care Stock Picks for 2010
• Disciplined Approach to Investing presented Comprehensive Review Of The Dividend Aristocrats
• Living Off Dividends & Passive Income presented Berskshire Hathaway Splits 50-to-1
• Old School Value presented More Free Value Stock Screeners
• Triaging My Way To Financial Success presented Dividends in the Rough
• Everyday Finance presented Review of 2010’s Leading ETFs
• Wide Moat Investing presented Trolling for Bargains
• BuyLikeBuffett.com presented Buffett In The News
• 40percent 20years presented Realty Income – Good alternative to the Canada Trust
• EPIC INVESTOR presented Infrastructure Opportunities in Brazil

Other Articles

• Wall Street Journal Presented Shop for Dividends in This Aging Bull Market
• U.S. News and World Report presented Where the Dividends Are
• Globe and Mail presented Don’t let your search for yield blind you to risk
• SmartMoney presented The Correction We’ve Been Waiting For?
• Jubak Picks presented When to buy
• Yahoo Finance presented A Happy Retirement: 6 Steps That Work

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:

After each quarter-end I review my asset allocation and year-to-date total returns by category. The attached PDF contains my actual asset allocation as of 2009-Q4. Below is a high-level summary of the information contained in the PDF:

Asset Allocation

In the past, there have been three areas that I focused on from an asset allocation perspective: 1.) Employer/Company Stock, 2.) International Holdings and 3.) Cash/ Fixed Income Allocation. At the end of 2009, all three were relativity close to my targets. This is something I will continue to monitor and make adjustments as necessary.

2009-Q4 Performance

The forth quarter market improvement continued to be kind to my portfolio. After trailing the S&P through June, my income portfolio’s performance and the S&P swapped leads throughout the second half. Unfortunately, the year ended while the S&P had the lead. Below are the YTD performances of various categories along with my S&P 500 benchmark (VFINX):

When weighted with 2008, the Income Stocks, Pocket Change and Asset Allocation portfolios out-performed the S&P. The Income ETFs tied the S&P while the Mutual Funds portfolio under-performed it. As I have previously stated, it is my desire to beat the S&P over the long-run, so I don’t pay a lot of attention to short-term performance either positive or negative.

Passive Income

For Q4/2009 my passive income averaged $920/month, up slightly from the $714/month in Q3. The increase resulted from fewer dividend cuts in my non-income portfolios and stable interest rates on cash holdings. The above amounts include all sources of passive income in my taxable accounts, primarily interest and dividends. It excludes my Roth IRA, 401(k) and blog income (which is not passive).

The next update will be in mid-April. As always, thanks for reading!

(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:

I couldn’t begin to estimate how many different stocks are traded around the world on the various exchanges. Like everything else, there are many participants, but few players. Though the population of stocks may be large, there are only a precious few that are worthy dividend stocks. Increasing dividends is one attribute that separates the good dividend stocks from the rest.

This week a large number of companies chose to step up and reward their investors with higher cash dividends:

Enterprise Bancorp (EBTC) provides various banking products and services in Massachusetts and New Hampshire. January 19th the company increased its quarterly dividend 5.3% to $0.10/share. The dividend is to be paid on March 1, 2010 to shareholders of record as of February 8, 2010. The ex-dividend date is February 4, 2010. The yield based on the new payout is 3.80%.

ONEOK Partners (OKS) is a leading transporter of natural gas and natural gas liquids (NGLs) in the Mid-Continent area to market centers in the U.S. January 20th the partnership raised its quarterly distribution to $1.10/unit. The distribution is payable Feb. 12, 2010, to unitholders of record as of Jan. 29, 2010. ONEOK Partners has increased its distribution by more than 38 percent since April 2006, when a wholly owned subsidiary of ONEOK, Inc. (NYSE: OKE) became general partner. The yield based on the new payout is 6.67%.

McGraw-Hill (MHP) is a leading information services organization serving worldwide markets in education, business, industry, other professions and government. January 20th the company boosted its quarterly dividend 4.4% to $0.235/share. The dividend is payable on March 10, 2010, to shareholders of record on February 24, 2010. MHP is a Dividend Aristocrat and has raised its dividend for 37 consecutive years. The yield based on the new payout is 2.88%.

Omega Healthcare (OHI) is a real estate investment trust that invests in and provides financing to the long-term care industry with health care facilities in 27 states. January 20th the company increased its quarterly dividend to $0.32/share. The dividend is to be paid February 16, 2010 to common stockholders of record on January 29, 2010. The ex-dividend date is January 27, 2010. The yield based on the new payout is 6.42%.

Tiffany (TIF) is a leading international retailer, designer, manufacturer, and distributor of fine jewelry and gift items. January 21st the company raised its quarterly dividend by 18% to $0.20/share and announced it will resume share buybacks. The new dividend is effective with the next payment in April. The yield based on the new payout is 1.92%.

Washington Post (WPO) publishes The Washington Post newspaper and Newsweek magazine, operates TV stations and cable systems, and provides education and database services. January 21st the company bumped its quarterly dividend $2.25/share. The dividend is payable on February 5, 2010, to shareholders of record on January 25, 2010. The yield based on the new payout is 2.01%.

Family Dollar (FDO) operates a chain of more than 6,650 retail discount stores in 44 states across the U.S. January 21st the company increased its quarterly dividend 14.8% to $0.155/share.The dividend is payable Thursday, April 15, 2010, to shareholders of record at the close of business on Monday, March 15, 2010. FDO is a Dividend Aristocrat and has raised its dividend for 34 consecutive years. The yield based on the new payout is 2.01%.

Wesco Financial (WSC) engages in three principal businesses through its subsidiaries: insurance, furniture rental, and steel services. January 21st the company increased its quarterly to $0.41/share. The dividend is payable March 4, 2010 to shareholders of record at the close of business on February 4, 2010. The ex-dividend date is February 2, 2010. WSC is a Dividend Achiever and has raised its dividend for 38 consecutive years. The yield based on the new payout is 0.46%.

Polaris Industries (PII) manufactures snowmobiles, all-terrain vehicles, motorcycles, and related accessories for recreational and/or utility use. January 21st the company raised its quarterly dividend 3% to $0.40/share. The dividend is payable on February 16, 2010 to shareholders of record at the close of business on February 1, 2010. PII is a Dividend Achiever and has raised its dividend for 15 consecutive years. The yield based on the new payout is 3.61%.

Spectra Energy Partners (SEP) transports natural gas through interstate pipeline systems, and stores natural gas in underground facilities in the United States. January 21st the partnership boosted its quarterly distribution 2.5% to $0.41/unit. The distribution is payable on February 12, 2010, to unitholders of record at the close of business on February 2, 2010. The yield based on the new payout is 5.40%.

Pall Corp (PLL) is a leading producer of filters for the health care, aerospace, microelectronics, and other industries. January 21st the company increased its quarterly dividend to $0.16/share. The dividend is payable on February 23, 2010 to shareholders of record as of February 9, 2010. The ex-dividend date is February 5, 2010. The yield based on the new payout is 1.75%.

Consolidated Edison (ED) is an electric and gas utility holding company serving parts of New York, New Jersey, and Pennsylvania. January 21st the company raised its quarterly dividend to $0.595/share. ED is a Dividend Aristocrat and has raised its dividend for 36 consecutive years. The yield based on the new payout is 5.22%.

Finish Line (FINL) is a mall-based specialty retailer. January 21st the company bumped it quarterly dividend to $0.04/share. The dividend is payable March 15, 2010 to shareholders of record as of February 26, 2010. The ex-dividend date is February 24, 2010. The yield based on the new payout is 1.38%.

Although growing its dividend is important, to be a great dividend stock a company must do it 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:

• 10 Stocks With 100+ Years of Dividend Payments
• Dividend Payout vs. Free Cash Flow Payout
• High-Yield Dividend Stocks: A Safer Approach
• How To Maximize Your Dividend Stocks’ Earnings
• Are REITs and Utilities Good Dividend Investments?

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

Last week I noted that most dividend stocks are now trading in excess of their calculated fair value. However, capital appreciation is not the primary reason for investing in dividend stocks. Dividend fundamentals are what drive my purchase decision, and if I could only look at one metric it would be the Net Present Value of the Money Market Differential (NPV MMA Diff.)

Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a less risky money market account? When I look for worthy dividend investments, one of my first tests is to determine if the investment will perform better than a MMA over time. I use the NPV MMA Diff. calculation to help make this determination.

The basis of the NPV MMA Diff. calculation is a hypothetical $1,000 investment in a dividend stock a Money Market Account. The value calculated is the net present value (NPV) of the differences between the dividend earnings of this investment and the interest income from the MMA over 20 years. Other assumptions include: 1.) dividends grow at a consistent dividend growth rate, 2.) dividends are reinvested, 3.) share price appreciation is not considered, 4.) interest income is reinvested in the MMA. Once calculated, The NPV MMA Diff. is compared to a target amount.

The target is based on the number of consecutive years of dividend increases. The formula is: Target = Base – (Years x Increment) + Minimum where Base=3,000, Increment=100, Minimum=500. Thus 0 years yields a $3,500 target and 30 years yields a $500 target. The MMA rate is an estimate of the average rate earned over a 20 year period. This rate is periodically validated by looking at a 20 year Treasury rate. For more information on calculating the NPV MMA Diff, see the D4L-PreScreen spreadsheet.

Below are 10 high-rated stocks that have a NPV MMA Diff. above their target:

The Procter & Gamble Company (PG) is focused on providing branded consumer goods products. The Company markets its products in more than 180 countries.
NPV MMA Diff. % Above Target: 29.7% | 4 Star | Yield: 2.89% | [Analysis]

Johnson & Johnson (JNJ) engages in the manufacture and sale of various products in the health care field worldwide.
NPV MMA Diff. % Above Target: 54.2% | 4 Star | Yield: 2.99% | [Analysis]

AT&T Inc. (T) provides telephone and broadband service, and the company holds full ownership of AT&T Mobility (formerly Cingular Wireless).
NPV MMA Diff. % Above Target: 78.4% | 4 Star | Yield: 6.36% | [Analysis]

SYSCO Corporation (SYY), through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily for foodservice industry in the United States and Canada.
NPV MMA Diff. % Above Target: 20.11% | 4 Star | Yield: 3.48% | [Analysis]

Abbott Laboratories (ABT) is engaged in the discovery, development, manufacture and sale of a diversified line of healthcare products including: drugs, nutritional products, diabetes monitoring devices and diagnostics.
NPV MMA Diff. % Above Target: 83.7% | 4 Star | Yield: 2.88% | [Analysis]

Cardinal Health Inc. (CAH) is one of the leading wholesale distributors of pharmaceuticals, medical/surgical supplies and related products to a broad range of health care customers.
NPV MMA Diff. % Above Target: 218.4% | 4 Star | Yield: 2.16% | [Analysis]

RLI Corp. (RLI), based in Peoria, IL, provides selected property, casualty and surety insurance.
NPV MMA Diff. % Above Target: 401.3% | 4 Star | Yield: 2.03% | [Analysis]

Aflac Incorporated (AFL) engages in the marketing and sale of supplemental health and life insurance plans in the United States and Japan.
NPV MMA Diff. % Above Target: 534.6% | 4 Star | Yield: 2.19% | [Analysis]

Nucor Corporation (NUE) is engaged in the manufacture and sale of steel and steel products. As the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas.
NPV MMA Diff. % Above Target: 1273.9% | 4 Star | Yield: 2.95% | [Analysis]

Becton, Dickinson and Co. (BDX) provides a wide range of medical devices and diagnostic products used in hospitals, doctors’ offices, research labs, and other settings.
NPV MMA Diff. % Above Target: 345.7% | 5 Star | Yield: 1.94% | [Analysis]

Some might question why not just target yields that are higher than the MMA Rate? That ignores the most powerful concept of Dividend Income Investing – Dividend Growth. Compound interest (interest on interest) is a powerful concept, but growing, compound dividends is the income investor’s most powerful ally.

Full Disclosure: Long NUE, AFL, ABT, SYY, JNJ, PG. See a list of all my income holdings here.

(Photo: Steve Woods)

Related Posts:

• 8 Dividend Stocks Covering Their Dividend
• 7 Low-Debt High-Rated Dividend Stocks
• Dividend Payout vs. Free Cash Flow Payout
• 10 Best U.S. Dividend Stocks
• 12 Dividend Stocks With A 5-Star Strong Buy Rating

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

I am pleased to announce the addition of D4L-Data as the latest feature available to subscribers of the D4L-Premium Services.

D4L-Data is an Open Office spreadsheet containing a significant amount of data on each of the dividend stocks that I track. The data is sortable and has built-in buttons and macros to make it easy to use. This spreadsheet requires Open Office, which is available for multiple platforms (Windows, Linux, Mac, Solaris, etc.) and in multiple languages. Click here to download a FREE copy of Open Office.

The D4L-Data spreadsheet has more than 20 columns of information on the 140+ companies that I track.Some of the information included is: Yield, Div Growth Rate, Buy Price, Prem./ (Disc.), Stars, Debt To Tot. Cap., FCF Payout, NPV MMA Diff., Years of Div Grow, P/E, Risk Rating, and much more.

The D4L-Data spreadsheet is perfect for the times you want to sort data differently than what is available in the D4L-Dashboard and/or you want to screen the dividend stocks based on your unique criteria.

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.

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 January 11, 2010.

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

Company Description: AT&T Inc. (formerly SBC Communications) provides telephone and broadband service, and the company holds full ownership of AT&T Mobility (formerly Cingular Wireless).

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

T is trading at a discount to 1.) and 3.) above. Since T’s tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 28.1% premium to its calculated fair value of $21.16. T 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%

T 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%. T 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 1984 and has increased its dividend payments for 26 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

T earned a Star in this section for its NPV MMA Diff. of the $1,408. This amount is in excess of the $900 target I look for in a stock that has increased dividends as long as T has. The stock’s current yield of 6.05% exceeds the 3.72% estimated 20-year average MMA rate.

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

Conclusion: T 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 T as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $31.80 before T’s NPV MMA Differential decreased to the $900 minimum that I look for in a stock with 26 years of consecutive dividend increases. At that price the stock would yield 5.16%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $900 NPV MMA Differential, the calculated rate is 0.8%. This dividend growth rate is less than the 2.5% used in this analysis, thus providing a margin of safety. T has a risk rating of 1.75 which classifies it as a medium risk stock.

The weak economy will have a minimal impact on T, but it will see revenue pressure as customers cut back spending, especially on older, highly profitable services, like long-distance voice. Customer migration to wireless is likely to occur faster than expected, thus, near-term margins will likely contract. Long-term, T’s scale, customer relationships, and network reach give it an advantage over most of its rivals. Its strong balance sheet and its power over suppliers should help the company generate cash and maintain its dividend. Though T is trading above my buy price of $21.16, it is one I will give strong consideration to initiate a position in in the coming weeks, based on its quality as my allocation and its dividend fundamentals allow. 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 T (0.0% of my Income Portfolio). See a list of all my income holdings here.

Related Posts:

• 10 Dividend Stocks With Above Target Returns
• 5 Stocks Giving The Gift of Dividend Growth
• Dividend Stocks: A Disciplined Approach
• 3 High-Yield Telecom Dividend Stocks
• 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:

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: Harleysville Group Inc. (HGIC) Dividend Stock Analysis
• Carnival of Personal Finance published: 8 Dividend Stocks Covering Their Dividend

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

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: AT&T Inc. (T)
• Barel Karsan presented Show The Buybacks, Ignore The Options
• Dividend Tree presented McCormick and Company – Stock Analysis for Dividend Growth Portfolio
• Dividend Growth Investor presented Realty Income (O) Stock Dividend Analysis
• Buying Value presented Patience

Articles From DIV-Net Members

• The Dividend Guy presented Small or Large: Does Size Really Matter When It Comes to Stocks?
• Dividend Growth Investor presented Buffett the dividend investor
• Barel Karsan presented Making The P/E Meaningful
• Dividend Tree presented LOWE’S Company – Steady Company for Dividend Growth Portfolio
• Buy Value presented CenturyTel Stock Review
• moneygardener presented Fortis powers dividend up
• The Div Guy presented 7 ways to start the new year off right
• Disciplined Approach to Investing presented Investor Sentiment Near Long Term Average
• Living Off Dividends & Passive Income presented So Long Annaly Capital!
• Old School Value presented Forbes Best Small Companies Part 7
• Triaging My Way To Financial Success presented Top Posts of 2009
• Dividend Money presented Take The “Slap Chop” Out of Investing!
• Everyday Finance presented How Well do You Know Your ETF? You May be Surprised
• BuyLikeBuffett.com presented Your 2010 Investment Playbook
• 40percent 20years presented Warren Buffett – The world’s richest person

Other Articles

• MSN Money presented Dividends and 4 other investing keys
• SmartMoney presented 3 Stocks With Affordable 4% Yields
• Wall Street Journal presented Why Many Investors Keep Fooling Themselves
• Yahoo Finance presented The 6 Biggest Investing Mistakes
• Barron’s presented JNJ’s Really Tough Day: Of Kickbacks and Recalls
• Forbes presented Risk-Free Yield? Consider I Bonds

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:

Each month I update the Pocket Change Portfolio (PCP). The table below reconciles the PCP from beginning of period to end of period for November 2009, Year-To-Date (2009) and Life-To-Date. The Portfolio Returns line provides the calculated return for the three displayed periods.

Online Cash Receipts are the collected earnings from my online endeavors. Most of which is advertising on the my various blogs. The year-to-date $147.40 Online Expenses relates to registering 3 domains (DividendsValue.com, Dividends4Life.com and TheDiv-Net.com) and paying my annual hosting fee. The Interest Income line is interest earned on cash balances in an ING account I set up for the PCP. The Gain/(Loss) line is for market changes to the PCP (realized and unrealized). December Dividends of $76.24 included:

• $8.11 Vanguard Intermediate-Term Bond (BIV)
• $9.44 from Vanguard Long-Term Bond ETF (BLV)
• $8.82 Johnson & Johnson (JNJ)
• $16.80 BP plc (BP)
• $8.71 Emerson Electric Co. (EMR)
• $15.34 Consolidated Edison Inc. (ED)
• $9.02 The Coca-Cola Company (KO)

The portfolio was up in December, for the year and since its inception. Online earnings in December once again surpassed the $3,000 mark. A large portion of the increase is related to the strong interest in D4L-Premium Services. The premium service has continued grow each month. Traffic on Dividend Value set a record in December, breaking the previous record set in October 2009.

During the month of December, I purchased the following securities:

• 34 shares McDonald’s Corp. (MCD) providing $74.80 in annual dividend earnings
• 16 shares Johnson & Johnson (JNJ) providing $31.36 in annual dividend earnings
• 40 shares PowerShares Emerging Markets Debt (PCY) providing $64.40 in annual dividend earnings

Including the above December purchases, my annual PCP dividend income is now $688.68 at the current dividend rates. I ended the month with $3,395.78 in cash, enough to purchase two or three stocks in January. Through December, I have purchased 13 stocks this year, including at least one in the last eight consecutive months. I continue to believe the current cash balance and recent earnings will support the purchase of at least one stock each month.

My PCP holdings are always available by selecting the Holdings option from the menu in the header. The next PCP update will be mid-February.

(Photo: sanja gjenero)

Related Posts:

• 10 Best U.S. Dividend Stocks
• Protecting Your Dollars With Foreign Currency
• Optimizing Your Asset Allocation
• 3 Simple Steps For A Successful Retirement
• The Best Dividend Stocks In The World

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

Just as picking fruit from a mango tree does not harm it, living off dividends does not damage the investment’s ability to produce future results. A mango tree’s life will easily span an entire generation. Similarly, well-chosen dividend investments will not only provide income in retirement, but can be passed to your children who can continue to reap the benefits.

Below are several select companies that recently decided to reward their shareholders with fruits of their labor in the form of increased cash dividends:

Epoch Holding (EPHC) is an investment advisory and investment management services company. January 11th the company increased its quarterly dividend 67% to $0.05/share. The dividend is payable on February 12, 2010 to shareholders of record as of January 29, 2010. The ex-dividend date is January 27, 2010. The yield based on the new payout is 1.84%.

CVS Caremark (CVS) is a leading operator of both retail drug stores and pharmacy benefit management services in the U.S. January 12th the company raised its quarterly dividend 15% to $0.0875/share. The dividend is payable February 2, 2010 to holders of record on January 22, 2010. The yield based on the new payout is 1.03%.

Duncan Energy Partners (DEP) gathers, transports, markets, and stores natural gas, as well as in transporting and storing natural gas liquids (NGLs) and petrochemicals in the U.S. January 12th the company raised its quarterly distribution 4.1% to $0.445/unit. The cash distribution will be paid Friday, February 5, 2010, to unitholders of record at the close of business on Friday, January 29, 2010. The ex-dividend date is January 27, 2010. This distribution is the fifth consecutive quarterly distribution increase. The yield based on the new payout is 7.35%.

Linear Technology (LLTC) manufactures high-performance linear integrated circuits. January 12th the company boosted its quarterly dividend to $0.23/share. The dividend will be paid on February 24, 2010 to stockholders of record on February 12, 2010. LLTC is a Dividend Achiever and has raised its dividend for 17 consecutive years. The yield based on the new payout is 3.08%.

Fifth Street (FSC) is a specialty finance company that lends to and invests in small and mid-sized companies. January 13th the company increased its quarterly dividend 11% to $0.30/share. The dividend is payable on March 30 to shareholders as of the close on March 3. The yield based on the new payout is 10.15%.

Shaw Communications (SJR) is a Canadian communications company that provides broadband cable television, Internet and satellite direct-to-home services to apx. 3.4 million customers. January 14th the company boosted its dividend 5% to $0.8775/share. Shaw’s dividends are declared and paid on a monthly basis and this increase will commence March 30, 2010. The yield based on the new payout is 4.37%.

While a mango tree gives fruit for several generations, a great dividend stock will give increasing dividends each year. 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:

• Bank of America Headed Back to the TARP ATM
• 3 Dividend Stocks Rewarding Their Shareholders

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

This time last year it was not a problem to find a good dividend stock trading below its fair value. The question then was, ‘which of these do I buy?’ Unfortunately, now the questions is often, ‘am I willing to pay this much for that stock?’. If we look close enough, there are still a few dividend stocks trading below fair value.

Of the 139 dividend companies that I currently track, only 10 of them are trading below my calculated fair value. Of those 10, some are down because they are in declining industries and some have missed their last dividend increase. Removing those, here are the remaining five:

Raven Industries Inc. (RAVN) provides electronic precision-agriculture products, reinforced plastic sheeting, electronics manufacturing services, specialty aeronautics, and sewn products.
Fair Value: $31.75 | Recent Price: $31.54 | Yield: 1.74%

Becton, Dickinson and Co. (BDX) provides a wide range of medical devices and diagnostic products used in hospitals, doctors’ offices, research labs, and other settings.
Fair Value: $82.99 | Recent Price: $77.91 | Yield: 1.90% | [Analysis]

Harleysville Group Inc. (HGIC) is a regional holding company for property and casualty insurance companies that operates in 32 states, primarily in the eastern half of the U.S.
Fair Value: $34.88 | Recent Price: $31.49 | Yield: 3.97% | [Analysis]

McDonald’s Corporation (MCD) is the largest fast-food restaurant company in the world. Its restaurants serve a varied, yet limited, value-priced menu in more than 100 countries around the world.
Fair Value: $68.79 | Recent Price: $61.84 | Yield: 3.32% | [Analysis]

Cincinnati Financial Corp. (CINF) markets primarily property and casualty coverage; it also conducts life insurance and asset management operations.
Fair Value: $30.77 | Recent Price: $26.58 | Yield: 5.91% | [Analysis]

Needless to say, a winning investment strategy involves more that just looking at price. It is just one aspect we need to consider at before making a purchase. When a stock appears to be under-valued it could mean the market has lost confidence in it. If the market is wrong and we are not too fearful to buy, a handsome reward is likely to come our way.

Full Disclosure: Long MCD, HGIC. See a list of all my income holdings here.

(Photo: Steve Woods)

Related Posts:

• 7 Low-Debt High-Rated Dividend Stocks
• 8 Dividend Stocks Covering Their Dividend
• 10 Dividend Stocks With Above Target Returns
• Harleysville Group Inc. (HGIC) Dividend Stock Analysis
• Best Stocks For 2010

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 January 4, 2010.

Linked here is a detailed quantitative analysis of SYSCO Corporation (SYY). Below are some highlights from the above linked analysis:

Company Description: SYSCO Corporation, through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily for food service industry in the United States and Canada.

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

SYY is trading at a discount to 1.) and 3.) above. The stock is trading at a 19.3% premium to its calculated fair value of $23.42. SYY 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%

SYY 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%. SYY 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 1970 and has increased its dividend payments for 39 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

SYY earned a Star in this section for its NPV MMA Diff. of the $919. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as SYY has. If SYY grows its dividend at 6.5% per year, it will take 1 year to equal a MMA yielding an estimated 20-year average rate of 3.72%. SYY earned a check for the Key Metric ‘Years to >MMA’ since its 1 year is less than the 5 year target.

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

Conclusion: SYY 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 SYY as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $33.61 before SYY’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 39 years of consecutive dividend increases. At that price the stock would yield 2.92%.

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 4.7%. This dividend growth rate is less than the 6.5% used in this analysis, thus providing a margin of safety. SYY has a risk rating of 1.25 which classifies it as a low risk stock.

SYY operates in a relatively stable industry in which it is the market leader. Its size, product diversification and scale continue to help it to weather the economic downturn better than its competitors. A focus on cost reduction has helped its margin. Though SYY is trading above my buy price of $23.42, it is one I will continue to purchase base on its quality as my allocation and its dividend fundamentals allow. 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 SYY (3.9% of my Income Portfolio). What are your thoughts on SYY?

Related Posts:

• 10 Dividend Stocks With Above Target Returns
• 3 Styles Of Sucessful Dividend Investing
• 11 Dividend Stocks Increasing Dividends and Long-Term Returns
• 7 Dividend Stocks To Slay The Wall Street Giants
• 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:

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: Emerson Electric Co. (EMR) Dividend Stock Analysis
• Carnival of Personal Finance published: Seven Stocks Expected to Grow Their Dividends in 2010
• Carnival of Money Hacks published: 7 Low-Debt High-Rated Dividend Stocks
• Carnival of Financial Planning published: 7 Low-Debt High-Rated Dividend Stocks

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

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: SYSCO Corporation (SYY)
• The Dividend Guy presented The Basics of ETFs – Even Dividend Growth Investors Can Use Them
• Barel Karsan presented Bridging The Value Gap
• Dividend Tree presented Understanding Risk-Return
• Dividend Growth Investor presented Brown-Forman Stock Analysis
• Buying Value presented CenturyLink Stock Review

Articles From DIV-Net Members

• The Dividend Guy presented The Good, The Bad and The Ugly of Dividend Stocks
• Dividend Growth Investor presented Five Consumer Stocks for 2010
• Barel Karsan presented Common Stocks And Uncommon Profits: Chapter 4
• Dividend Tree presented Dividend Portfolio: 2009 Year End Update
• Stock Market Prognosticator presented Lympho-Maniac Charity Event
• The Div Guy presented Top 20 Dividend Stocks
• Disciplined Approach to Investing presented Dividend Actions Largely Negative In 2009, Dividend Growth To Resume In 2010
• Living Off Dividends & Passive Income presented Back In Action
• Old School Value presented Value Screen Results for an Explosive 2010
• Everyday Finance presented 10 High Yield Mega-Caps in Diverse Sectors
• BuyLikeBuffett.com presented What a Difference a Year Or Two Makes
• 40percent 20years presented Long Term Capital – The history of financial hubris

Other Articles

• Globe and Mail presented 2009: A dividend disaster
• Wall Street Journal presented Inefficient Markets Are Still Hard to Beat
• SmartMoney presented The Economy’s Improving, but Stocks Might Not
• BusinessWeek presented Buffett’s Big Task: Bringing Berkshire Back Up to Speed
• MSN Money presented 10 stocks for the next 10 years
• Kiplinger presented Be a Better Investor

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 December, extending the streak to 10 months after February 2009’s decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 24 of the last 25 months.

My goals were defined in this December 1, 2007 Investing Goals post and updated in my 2009 Investing Goals post. Below is an updated version of the table found in the original post.

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 $257, and Yield on Cost (YOC) decreased (0.03%). 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 $252 increase in annual dividend income and (0.02%) decrease in YOC related to the following purchases (yield at the time of purchase):

• $68 McDonald’s Corp. (MCD) 3.61% [Analysis]
• $63 Johnson & Johnson (JNJ) 3.03% [Analysis]
• $121 Emerging Markets Debt (PCY) 6.26%

All the above purchases, except PCY,  lowered my YOC. 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.

Dividend Changes: The $5 increase in annual dividend income and (0.01%) decrease in YOC related to the following dividend changes (a=dividend stated in annual terms, q=quarterly, m=monthly):

• ($3) Vanguard Inter. Bond ETF (BIV) $3.48a>$3.45a -0.01%
• ($2) iShares Invest Grade Bond (LQD) $5.74a>$5.71a 0.00%
• $2 Emerson Electric Co. (EMR) $0.33q>$0.335q 0.00% [Analysis]
• $20 McDonald’s Corp. (MCD) $0.50q>$0.55q 0.01%
• ($17) Eaton Vance Global Dividend Fund (ETO) $1.46m>$1.40m -0.01%
• $4 Emerging Markets Debt (PCY) $1.59m>$1.61m 0.00%
• $1 Vanguard Inter. Bond ETF (BIV) $3.45m>$3.47m 0.00%

Sales: There were no sales in this month.

I exceeded my revised estimate of annualized dividend income of $7,000. However, as anticipated, I fell short of my my original goal of $8,000.

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

(Photo: sanja gjenero)

Related Posts:

• Protecting Your Dollars With Foreign Currency
• 10 Best U.S. Dividend Stocks
• High Yield, High Risk Dividend Stocks
• 12 Dividend Stocks With A 5-Star Strong Buy Rating
• Optimizing Your Asset Allocation

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

Virtually everything in this world can be placed into a few basic categories.  This is especially true for Dividend Stocks when looking at their historic performance and expectations for the future. Consider these three broad categories: The Good: As you might guess, these are the dividend stocks that are doing exactly what they should do – consistently raising their dividends each year in spite of troubled economic times. The Bad: Companies that held their dividends flat.  The Ugly: Companies that cut their dividends.

Here are several companies in the “Good” category that recently rewarded their shareholders with increased cash distributions:

RPM International (RPM) makes specialty coatings and products for the structural waterproofing and corrosion control markets. January 5th the company increased its quarterly dividend 2.5% to $0.205/share. The dividend is payable on January 29, 2010 to stockholders of record as of January 15, 2010. The ex-dividend date is January 13, 2009. RPM is a Dividend Achiever and has raised its dividend for 37 consecutive years. The yield based on the new payout is 4.04%.

Calumet Specialty Products (CLMT) operates refineries in Louisiana and facilities in Pennsylvania and Texas with product distribution throughout North America. January 5th the company raised its quarterly distribution to $0.455/unit. The distribution is payable on February 12, 2010 to holders of record of such units at the close of business on February 2, 2010. ex-dividend date is January 29, 2009. The yield based on the new payout is 9.63%.

Robbins & Myers (RBN) supplies engineered equipment and systems for critical applications in global energy, industrial, chemical and pharmaceutical markets. January 5th the company bumped its quarterly dividend to $0.0425/share. The dividend is payable on February 19, 2010 to shareholders of record as of January 21, 2010. The yield based on the new payout is 0.72%.

Pentair (PNR) makes and markets water and fluid control devices, and electrical and electronic enclosures. January 7th the company increased its quarterly cash dividend 6% to $0.18/share. The the dividend is payable in the first quarter of 2010. PNR is a Dividend Achiever and has raised its dividend for 34 consecutive years. The yield based on the new payout is 2.26%.

Raising its dividend each year is the first step for a “Good” dividend stock to becoming a “Great” dividend stock. 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:

• Bank of America Headed Back to the TARP ATM
• 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:

As we discussed last week, when selecting a dividend growth stock there is really only one factor that is important – sustainability.  As dividend growth investors we are looking for stocks can continue to raise their dividends indefinitely into the future. One metric that provides an indication of a dividend’s sustainability is its payout ratio.

The traditional dividend payout is expressed as a percentage and is calculated by dividing annual dividend per share by annual earnings per share (EPS). This tells the investor what percentage of earning the company is paying out as a dividend. At first blush this may seem to make a lot of sense, but it suffers from two potential problems in that 1.) earnings does not always equal cash and 2.) there is no indication of the quality of earnings.

I consider Free Cash Flow payout a better ratio.  Free Cash Flow is Operating Cash Flow less normal capital expenditures (normally the first line in the investing section of the GAAP cash flow statement). The formula for Free Cash Flow Payout is simply Annual Dividend Per Share divided by Free Cash Flow Per Share. I like to see a percentage of 70% or less.

Taking  a look at my stock database, I found the following eight dividend stocks with a free cash flow of 50% or less and rated 4 or 5 stars:

• Procter & Gamble Co. (PG) – 4-Star [Analysis]
  – FCF Payout: 42%
  – Yield: 2.90%
• Emerson Electric Co. (EMR) – 4-Star [Analysis]
  – FCF Payout: 42%
  – Yield: 3.10%
• Abbott Labs (ABT) – 4-Star [Analysis]
  – FCF Payout: 42%
  – Yield: 2.96%
• Johnson & Johnson (JNJ) – 4-Star [Analysis]
  – FCF Payout: 38%
  – Yield: 3.00%
• Harleysville Group Inc (HGIC) – 4-Star [Analysis]
  – FCF Payout: 37%
  – Yield: 3.93%
• Nucor Corp (NUE) – 4-Star [Analysis]
  – FCF Payout: 27%
  – Yield: 3.00%
• Becton Dickinson & Co. (BDX) – 5-Star [Analysis]
  – FCF Payout: 32%
  – Yield: 1.88%
• United Technologies Corp (UTX) – 5-Star [Analysis]
  – FCF Payout: 29%
  – Yield: 2.22%

The ability of a stock to sustain its dividend separates dividend growth stocks from stocks that simply pay a dividend. The latter is quite common, while the former helps define The Best Dividend Stocks in the World.

Full Disclosure: Long PG, EMR, ABT, JNJ, NUE, UTX. See a list of all my income holdings here.

(Photo Credit)

Related Posts:

• 10 Best U.S. Dividend Stocks
• A Winning Investment Strategy
• 12 Dividend Stocks With A 5-Star Strong Buy Rating
• 7 Low-Debt High-Rated Dividend Stocks
• 3 Styles Of Sucessful Dividend Investing

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 December 28, 2009.

Linked here is a detailed quantitative analysis of Harleysville Group Inc. (HGIC). Below are some highlights from the above linked analysis:

Company Description: Harleysville Group Inc. is a regional holding company for property and casualty insurance companies that operates in 32 states, primarily in the eastern half of the U.S.

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

HGIC is trading at a discount to 1.), 3.) and 4.) above. The stock is trading at a 7.5% discount to its calculated fair value of $34.88. HGIC 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%

HGIC 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%. HGIC 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 1986 and has increased its dividend payments for 22 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

HGIC earned a Star in this section for its NPV MMA Diff. of the $2,081. This amount is in excess of the $1,300 target I look for in a stock that has increased dividends as long as HGIC has. The stock’s current yield of 3.87% exceeds the 3.72% estimated 20-year average MMA rate.

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

Conclusion: HGIC 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 HGIC as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $38.49 before HGIC’s NPV MMA Differential decreased to the $1,300 minimum that I look for in a stock with 22 years of consecutive dividend increases. At that price the stock would yield 3.25%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,300 NPV MMA Differential, the calculated rate is 6.7%. This dividend growth rate is less than the 8.4% used in this analysis, thus providing a margin of safety. HGIC has a risk rating of 1.25 which classifies it as a low risk stock.

HGIC underwrites property and casualty insurance policies and offers commercial automobile, workers’ compensation, and multiperil insurance, as well as personal automobile and homeowner’s insurance. The company markets its policies through almost 2,000 insurance agencies, and maintains offices in about a dozen states. On October 27, 2009, HGIC agreed to assume Delta’s book of Delta Lloyds Flood Insurance Business effective November 1, 2009. This is a company that I have watched for some time. It has very little debt and its free cash flow payout is relatively low. HGIC is attractively trading below my buy price of $34.88. It is a stock I will give strong consideration to in the future as my asset allocation allows. 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 HGIC (0.0% of my Income Portfolio). What are your thoughts on HGIC?

Related Posts:

• 5 Dividend Stocks Trading Below Fair Value
• 8 Dividend Stocks Covering Their Dividend
• 7 Low-Debt High-Rated Dividend Stocks
• Snap, Crackle and Pop: The Sound of a Rising Dividend!

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: Nucor Corporation (NUE) Dividend Stock Analysis
• Carnival of Personal Finance published: Best Stocks For 2010
• Carnival of Money Hacks published: 5 Stocks Giving The Gift of Dividend Growth
• Carnival of Financial Planning published: 5 Stocks Giving The Gift of Dividend Growth

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

The DIV-Net Featured Articles

• Dividends4Life presented Stock Analysis: Harleysville Group Inc. (HGIC)
• The Dividend Guy presented Socially Responsible Investing
• Barel Karsan presented Protection From High Debt
• Dividend Tree presented LOWE’S Company – Stock Analysis for Dividend Growth Portfolio
• Dividend Growth Investor presented Most Popular Articles of 2009

Articles From DIV-Net Members

• The Dividend Guy presented Review: The Only Stock Advice I Pay For
• Dividend Growth Investor presented Dividend Aristocrats List for 2010
• Barel Karsan presented Good Returns
• Dividend Tree presented Buying a House But Not for an Investment
• moneygardener presented climbing the ladder
• Disciplined Approach to Investing presented Dividend Payers With Below Market Valuation
• Old School Value presented Negative Enterprise Value Stocks for 2010
• Everyday Finance presented How to Create a Money-Saving eMail Alert
• BuyLikeBuffett.com presented How To Start Investing With $20
• 40percent 20years presented Dividends calendar!

Other Articles

• SmartMoney presented 3 Preferred Stocks Paying 8%
• Globe and Mail presented Small companies offer up most dividend growth
• Wall Street Journal presented Covered Calls Prove Popular Strategy
• Baron’s presented Dow, S&P End The Decade Down
• Yahoo Finance presented Ten Best- and Worst-Performing Stocks of 2009
• BusinessWeek presented How Good Is Your 401(k)?
• Kiplinger presented Where to Invest in 2010
• Rising Dividend Investing presented The Non-Consensus View of Things to Come

Finally, as we prepare for Thursday’s national championship game, Forbes presented College Football’s Most Valuable Teams. Unlike NFL teams, which can be bought and sold on the open market, college teams have value in terms of what kind of dividends they pay to their stakeholders. “Dividend” money is what’s left for the team’s university (for academic purposes, including scholarship payments for football players) and athletic department (to support non-revenue sports) after the cost of running the football operation in question.

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: