Category Archives: Dividend Growth Stocks

Blue-Chip Dividend Growth Stocks Today’s Strong Option For Retirement Portfolios Part 2 – Seeking Alpha

Blue-Chip Dividend Growth Stocks Today’s Strong Option For Retirement Portfolios Part 2 – Seeking Alpha: In part one of this two-part series (Found Here) I laid the groundwork for why I believe that blue-chip dividend paying US equities represent not only a viable, but also a safer investment choice than many give them credit for. I also pointed out why I believe the risk profile on bonds is currently upside down, arguing that for one of the few times in history they may actually be more dangerous an investment than equities.

Our Top 25 Dividend Growth Stocks Are Dirt Cheap – Seeking Alpha

Our Top 25 Dividend Growth Stocks Are Dirt Cheap – Seeking Alpha: Anyone who had recently invested in real estate would most likely agree that the phrase “dirt cheap” carries a new and enhanced meaning today. In the same vein, we would argue that our top 25 dividend growth stocks based on the potential for five-year estimated annual total returns are dirt cheap. Consequently, we believe that most of the bad news is already priced in, and therefore, the opportunity to buy low is the best it’s been since 1997.

Wikio

Dividend Growth Stocks: 15 Dividend Stocks That Have Paid Dividends For Over 110 Years

Dividend Growth Stocks: 15 Dividend Stocks That Have Paid Dividends For Over 110 Years: 15 Dividend Stocks That Have Paid Dividends For Over 110 Years

The key to successfully selecting dividend growth stocks is the ability to identify companies that will not only maintain but grow their dividend. Often it can be boiled down to a simple question: “How committed is the company to paying its dividend?”

Sure most CEOs give lip-service to their commitment to shareholders, but what happens when times are hard. When the economy turns down and the future looks bleak, will the company hoard cash and stop its dividend or put action behind its words?

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5 Exceptional Dividend Growth Stocks With Lower Volatility And Higher Total Return – Seeking Alpha

5 Exceptional Dividend Growth Stocks With Lower Volatility And Higher Total Return – Seeking Alpha: For many people these are troubled times where fears about our economy and the stock market are at a heightened state. Stock price volatility is higher than we’ve ever seen it, which only adds to investor nervousness. Therefore, we searched for a safe place for conservative investors to invest. Our due diligence identified five dividend growth stocks that possess stringent quality characteristics, while at the same time have produced strong above-average historical total returns. But more importantly, each candidate had to have future consensus earnings estimated growth rates greater than the S&P 500.

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Dividend Growth Stocks: 8 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends

8 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends

The S&P 500 Dividend Aristocrats is the most recognized list of dividend stocks. The Dividend Aristocrats index is designed to measure the performance of S&P 500 constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years.

Dividend Aristocrats exhibit the following characteristics:


– They are a member of the S&P 500
– The index is equally weighted with constituents re-weighted quarterly
– List is reviewed and updated annually in December


Make no mistake, Dividend Aristocrats are the blue-blood of dividend growth stocks. When building your core portfolio, this list is where you want to start your evaluation. If you want dividend growth, these stocks have been there, and done that – for decades.


This week week, I screened my dividend growth stocks database for Dividend Aristocrats with a yield greater than 3% and have increased their dividends for at least 35 consecutive years. The results are presented below:


Procter & Gamble (PG)
Yield: 3.1% | Years of Dividend Growth: 54
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries.


Pepsico, Inc. (PEP)
Yield: 3.1% | Years of Dividend Growth: 39
PepsiCo, Inc. is a major international producer of branded beverage and snack food products.


Johnson & Johnson (JNJ)
Yield: 3.2% | Years of Dividend Growth: 49
Johnson & Johnson is a leader in the pharmaceutical, medical device and consumer products industries.


Abbott Laboratories (ABT)
Yield: 3.6% | Years of Dividend Growth: 39
Abbott Laboratories is a diversified life science company and is a leading maker of drugs, nutritional products, diabetes monitoring devices, and diagnostics.


Kimberly-Clark Co. (KMB)
Yield: 4.1% | Years of Dividend Growth: 39
Kimberly Clark Corp. is a global consumer products company that produces tissue, personal care and health care. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark.


Consolidated Edison, Inc. (ED)
Yield: 4.5% | Years of Dividend Growth: 38
Consolidated Edison, Inc. is an electric and gas utility holding company that serves parts of New York, New Jersey and Pennsylvania.


Leggett & Platt, Inc. (LEG)
Yield: 4.6% | Years of Dividend Growth: 39
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.


Cincinnati Financial Corp. (CINF)
Yield: 5.6% | Years of Dividend Growth: 51
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.


As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.


My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 210+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Is Dover Corp. a Cyclical, Growth or Dividend Growth Stock? – Seeking Alpha

6 Attractively Valued Dividend Growth Stocks Reporting Earnings – Seeking Alpha

Dividend Growth Stocks: 6 High-Yield Financial Services Stocks With Rising Dividends

The Financial Services Sector includes insurance companies, banks, brokerages, mutual funds and other similar companies. Before the 2008-09 financial services meltdown, these stocks were the cornerstone on many income portfolios. The companies were flush with cash, the stocks provided relatively high yields, good dividend growth rates and carried very little perceived risk.

Unfortunately, things are not always as they seem. Under the surface banks were making questionable loans, while investment firms were creating and peddling exotic financial instruments. In effect, their CEO’s were building houses of cards in a hurricane – it was destined to come tumbling down, and it did.

As a result, investors learned some very valuable, but expensive lessons. This should serve as a warning when investing in the Financial Services Sector – not a stop sign. Many of these companies are now in very lucrative positions.

With interest rates as low as they are, banks are enjoying decent spreads, not to mention all the new fees they are charging their customers. As more consumers take advantage of electronic banking, we are becoming more tied to our accounts. The pain threshold of changing banks is high, and they know it.

Have you ever filed an insurance claim and were satisfied with the outcome?

Insurance companies are the ultimate business. They charge premiums to protect you. Then take the premiums, invest them and earn a return, which is then reinvested. The money is theirs to keep if you don’t file a claim. If you do file a claim, the insurance company will find ways to minimize what they actually pay you – then raise your rates for filing a claim.

You can complain about these companies, or invest in the industry and profit from them. I’ve chosen the latter.

This week week, I screened my dividend growth stocks database for Financial Services companies with a yield at or above 4% and have increased their dividends for at least 14 consecutive years. The results are presented below:

Mercury General Corp. (MCY)
Yield: 6.2% | Years of Dividend Growth: 24
Mercury General Corp. is an insurance holding company, primarily in California, writes a full line of automobile coverage for all classifications of risk.

Old Republic International (ORI)
Yield: 6.0% | Years of Dividend Growth: 30
Old Republic Intl writes property and liability, mortgage guaranty, title and life, and disability insurance.

Cincinnati Financial Corp. (CINF)
Yield: 5.8% | Years of Dividend Growth: 51
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.

People’s United Financial Inc. (PBCT)
Yield: 4.6% | Years of Dividend Growth: 14
People’s United Financial Inc. provides a full range of banking and financial service products to individuals, corporations, and municipal customers in the U.S. Northeast.

Harleysville Group Inc. (HGIC)
Yield: 4.5% | Years of Dividend Growth: 25
Harleysville Group Inc. underwrites a broad array of personal and commercial coverages. These insurance coverages are marketed primarily in the Eastern and Midwestern United States.

Community Trust Bank Corp. (CTBI)
Yield: 4.3% | Years of Dividend Growth: 31
Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company.

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 210+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers

Wikio

Should Dividend Growth Investors Forgive General Electric? Part 2: The Jeffrey Immelt Era – Seeking Alpha

Should Dividend Growth Investors Forgive General Electric? Part 2: The Jeffrey Immelt Era – Seeking Alpha

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Low, Medium or High Yield: 16 Dividend Growth Stocks for Every Type of Investor – Seeking Alpha

The Dividend Champions spreadsheet and PDF have been updated through 6/30/11 and are available here. Note that all references to Champions mean companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. “CCC” refers to the universe of Champions, Contenders, and Challengers.
Dividend Growth vs. Yield
In a recent article by SA Contributor Low Sweat Investing, the author, who deservedly earned an Editor’s Pick and garnered at least 242 comments, discussed the relatively friendly “feud” between “high-yield fans and dividend-growth lovers.” He went on to report some surprising findings that seem to favor the high-yield fans…up to a point.
Comparing a static 6% yield with dividend reinvested to a 3% yielder with a dividend growing at 7.5%, he found that it would take until Year 13 for the latter to catch up in terms of current income and until Year 19 before the dividend growth stock pulls even in terms of cumulative dividends received. Of course, the dividend growth lover often counters that his or her stock is more likely to enjoy capital appreciation, so it would provide better total returns over time.
The high-yield fans can counter that by pointing out that many high-yielders also increase their payouts regularly. I don’t intend to settle that debate, which will probably go on as long as there are dividend-paying stocks to enjoy owning.
If anything, I hope to expand on LSI’s excellent work by adding a third, and possibly larger, group of dividend growth investors. Of course, I’m talking about those who focus on the middle ground of moderate yield and better-than-average dividend growth, sometimes referred to as the “sweet spot” of the dividend-growth universe.
These investors often target yields of 3-5% and dividend growth rates of 5-10%. (We could also say that there are fourth and fifth groups, being investors who either want no dividends or want yields of 10% or more. But neither of those groups involve dividend growth patterns, so I’ll leave them out of this discussion.) What’s clear is that the three main groups of dividend-growth investors all have valid claims that their approaches work well over time. And we also should recognize that many investors are successful at using various blends of these approaches.
But Wait, There’s More!
One thing that struck me among the many intelligent comments to the aforementioned article was the varying usage of the term “high yield.” Specifically, some commenters were inclined to chide some authors who like to attract readership by using the term in their titles, but include stocks in the articles that yield less than 2%! I’m sure that you’ve seen these articles, mainly by authors who seem to crank out two or three articles a day, with teasing titles such as “12 High-Yield Stocks Abe Lincoln Would Love” or “18 High Dividend Stocks with Lots of Cash.” (Don’t ask me what the term “High Dividend” means; I think it’s code for “High Yield,” but only the title writers know for sure.)
Of course, including stocks with yields of less than 2% reveals something about the technique employed by the authors, who seem to be equating any yield higher than that of the S&P 500 as being OK to classify as “high.” But there are at least two reasons to consider this wrong, and frankly, I have to agree with the commentors that this tendency is nothing more than sloppy journalism, at best.
The first problem with this usage is the simplest one: Attaching the term “high” to anything above the average is far too liberal in terms of labeling. While 51% may be a majority, it certainly isn’t a landslide, nor did a C student get a “high” score when his test came back with 74% of his answers marked as correct.
The second problem is that the S&P 500 Index is an inappropriate measure of yield, since it includes over 100 stocks that don’t pay dividends and many others that don’t have histories of dividend increases. Back in January, I spelled out why the index is such a poor yardstick for measuring dividend growth. So my only advice to readers to take with a grain of salt any article that includes the phrase “High Yield” or the more quizzical “High Dividend.”
Defining the Universe
To get a better handle on what dividend yields might be called low, medium, or high, I went back to the Champions spreadsheet (mentioned at the top of this article) and sorted all CCC stocks by yield. I think it’s a valid proxy for the dividend-growth “universe,” since it includes all companies that have paid higher dividends for at least five straight years.
Companies that have increased their dividends for 1-4 years simply haven’t yet established a “culture” of annual dividend increases, and those that have “frozen” or declining payouts simply fall outside the topic of discussion. As a preliminary step, I eliminated six companies that have agree to be acquired and two others that have announced plans to break up into two or three companies each.
That left 441 CCC companies, which divided evenly into three groups of 147 companies each, which I labeled Low, Medium, and High Yield. (I kept companies that have “overdue” increases – dividends that haven’t been raised in over 12 months – because we can’t really predict at this point which ones may “save” their streaks and which may fall by the wayside.) All prices and other data were as of June 30.
Before I write about the three groups, I think it’s useful to spell out some of the numbers for the 441-stock universe from which they are derived. The average yield for these 441 stocks is 2.99%, more than a full percentage point higher than that of the S&P 500. The average stock has a streak of 16.9 years of dividend growth and a price of $47.53, whereas the most recent increases have averaged 8.51%, which is up from the 2010 calendar year increase of 7.8%, but still lower than the 3-, 5-, and 10-year Dividend Growth Rates of 9.9%, 12.7%, and 10.6%, respectively.
This universe includes only one stock, PennantPark (PNNT) that yields over 9%, five that yield at least 8%, 13 that yield at least 7%, 33 that yield at least 6%, 61 that yield at least 5%, 111 that yield at least 4%, 187 that yield at least 3%, 283 that yield at least 2%, and 406 that yield at least 1%. That puts 126 companies in the “sweet spot” between 3% and 5%.
Yields for Every Taste
Many of the dividend growth numbers coincide with what we might expect. The low yield group has the highest dividend growth rate, and vice verse, but each group has attractive investment candidates and familiar names. Here are some of the details:
The low-yield group of 147 companies averages a yield of just 1.29% and ranges from 0.18% to 1.89%. With an average price of $58.85 and a streak of 15.0 years, the most recent increases average 15.02%, whereas the 1-, 3-, 5-, and 10-year DGRs were 12.0%, 13.8%, 17.0%, and 14.2%, respectively. Home to such familiar names as CSX Corp. (CSX), FedEx (FDX), Hormel (HRL), Praxair (PX), and Walgreen (WAG), it includes 25 Champions, 52 Contenders, and 70 Challengers.
The medium-yield group of 147 companies averages a yield of 2.66% and ranges from 1.89% to 3.45%. With an average price of $47.11 and a streak of 20.3 years, the most recent increases average 10.46%, whereas the 1-, 3-, 5-, and 10-year DGRs were 8.0%, 9.7%, 11.8%, and 10.3%, respectively. Home to such familiar names as 3M Company (MMM), Coca-Cola (KO), Johnson & Johnson (JNJ), Procter & Gamble (PG), and Wal-Mart (WMT), it includes 46 Champions, 45 Contenders, and 56 Challengers.
The high-yield group of 147 companies averages a yield of 5.02% and ranges from 3.45% to 9.63%. With an average price of $36.63 and a streak of 15.5 years, the most recent increases average 4.91%, whereas the 1-, 3-, 5-, and 10-year DGRs were 6.2%, 8.6%, 11.9%, and 9.6%, respectively. Home to such familiar names as Altria Group (MO), AT&T Inc. (T), Intel (INTC), Kimberly-Clark (KMB), and Kinder Morgan Energy Partners LP (KMP), it includes 29 Champions, 38 Contenders, and 70 Challengers.
While some of the data confirms expectations, it’s clear that each group offers many attractive investment candidates. The dividend “sweet spot” of 3-5% yield starts just above the mid-point (or average yield of 2.99%) and stretches into the high-yield group, which tends to confirm the notion that investors focused on that characterization are looking for above average yield and dividend growth, without taking on the perceived risk of higher-yielding stocks, which also might offer slower dividend growth.
As I mentioned at the start, I don’t intend to settle the “debate” and it’s clear that each investor can fulfill his or her strategy by owning dividend growth stocks, whether that investor is young and looking to own low-yield/high-growth stocks, in or near retirement and looking to own high yield/low-growth companies, or somewhere in between.
As always, please add your thoughts, questions, or suggestions in the comment section below.
Disclosure: I am long CSX, HRL, PX, MMM, KO, JNJ, PG, MO, T, INTC,KMB.
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