Thursday, July 31, 2014

Why did I purchase Deere (DE)?

Well, I promised you all that while I quit my full-time job to focus on writing, I didn’t quit my pursuit of financial independence. And to that end, I have remained committed to investing in high-quality companies that regularly and reliably pay and raise dividends. Of course, my capital is more constrained than before, but I’m doing my best.
This most recent equity purchase was really interesting for me. I’ve honestly had mixed feelings on this company in the past, but I could no longer ignore the low valuation, attractive entry yield, and strong dividend growth over the last decade.
Another interesting consideration is that this position was initiated just days after my initial investment with Visa Inc. (V). So it’ll be fun to see how a value play compares to a growth play over the next decade or so in terms of both business performance and stock performance. However, I feel that both offer an attractive valuation based on potential growth prospects, although the value and growth mix for these two companies are on different sides of the spectrum.


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Wednesday, July 30, 2014

8 Cheap Dividend Growth Stars You Must Know....

Dividend stocks are a passion for me but most of the long-term dividend payer and grower underperformed the market within the recent years.

However, I maintain my strategy because I know what I own and how much return they will deliver over the long-run. I don't care about my friends and other investor colleagues and what they might say about my boring strategy. 

Toady I've screened the market by cheap opportunities, stocks that look fundamentally cheap. It does not mean that they perform well in the near future but they offer a good yield with solid fundamentals which is a good seed of future crops.

My criteria are:

- Dividend growth of more than 5 consecutive years
- Debt-to-equity ratio under 0.5
- Dividend Yield above 3 percent
- Market Cap over $2 billion
- Forward P/E below 15

8 companies survived my screening. Below are the detailed stocks in review.

8 Cheap Dividend Stars you must know...

Colony Financial (NYSE:CLNY) has a market capitalization of $2.09 billion. The company generates revenue of $184.82 million and has a net income of $125.92 million. Colony Financial’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $138.92 million. The EBITDA margin is 75.16 percent (the operating margin is 68.51 percent and the net profit margin 68.13 percent).

Financial Analysis: The total debt represents 23.44 percent of Colony Financial’s assets and the total debt in relation to the equity amounts to 36.58 percent. Due to the financial situation, a return on equity of 5.48 percent was realized by Colony Financial. Twelve trailing months earnings per share reached a value of $1.10. Last fiscal year, Colony Financial paid $1.40 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 20.54, the P/S ratio is 11.31 and the P/B ratio is finally 1.03. The dividend yield amounts to 6.36 percent and the beta ratio has a value of 0.79.


Long-Term Stock Price Chart Of Colony Financial (CLNY)
Long-Term Dividend Payment History of Colony Financial (CLNY)
Long-Term Dividend Yield History of Colony Financial (CLNY)

Old Republic (NYSE:ORI) has a market capitalization of $4.37 billion. The company employs 7,900 people, generates revenue of $5,442.70 million and has a net income of $448.00 million. Old Republic’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $718.60 million. The EBITDA margin is 13.20 percent (the operating margin is 12.77 percent and the net profit margin 8.23 percent).

Financial Analysis: The total debt represents 3.44 percent of Old Republic’s assets and the total debt in relation to the equity amounts to 15.08 percent. Due to the financial situation, a return on equity of 12.15 percent was realized by Old Republic. Twelve trailing months earnings per share reached a value of $2.03. Last fiscal year, Old Republic paid $0.72 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 8.26, the P/S ratio is 0.80 and the P/B ratio is finally 1.16. The dividend yield amounts to 4.35 percent and the beta ratio has a value of 0.89.


Long-Term Stock Price Chart Of Old Republic (ORI)
Long-Term Dividend Payment History of Old Republic (ORI)
Long-Term Dividend Yield History of Old Republic (ORI)

First American Financial (NYSE:FAF) has a market capitalization of $2.95 billion. The company employs 17,292 people, generates revenue of $4,956.08 million and has a net income of $187.06 million. First American Financial’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $400.92 million. The EBITDA margin is 8.09 percent (the operating margin is 6.58 percent and the net profit margin 3.77 percent).

Financial Analysis: The total debt represents 4.76 percent of First American Financial’s assets and the total debt in relation to the equity amounts to 12.65 percent. Due to the financial situation, a return on equity of 7.75 percent was realized by First American Financial. Twelve trailing months earnings per share reached a value of $1.59. Last fiscal year, First American Financial paid $0.48 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.40, the P/S ratio is 0.60 and the P/B ratio is finally 1.19. The dividend yield amounts to 3.47 percent and the beta ratio has a value of 0.91.


Long-Term Stock Price Chart Of First American Financial (FAF)
Long-Term Dividend Payment History of First American Financial (FAF)
Long-Term Dividend Yield History of First American Financial (FAF)

ABB (NYSE:ABB) has a market capitalization of $52.44 billion. The company employs 147,700 people, generates revenue of $41,848.00 million and has a net income of $2,944.00 million. ABB’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $6,188.00 million. The EBITDA margin is 14.79 percent (the operating margin is 10.48 percent and the net profit margin 7.03 percent).

Financial Analysis: The total debt represents 16.69 percent of ABB’s assets and the total debt in relation to the equity amounts to 42.95 percent. Due to the financial situation, a return on equity of 15.87 percent was realized by ABB. Twelve trailing months earnings per share reached a value of $1.17.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.47, the P/S ratio is 1.26 and the P/B ratio is finally 2.81. The dividend yield amounts to 3.46 percent and the beta ratio has a value of 1.43.


Long-Term Stock Price Chart Of ABB (ABB)
Long-Term Dividend Payment History of ABB (ABB)
Long-Term Dividend Yield History of ABB (ABB)

ConocoPhillips (NYSE:COP) has a market capitalization of $104.06 billion. The company employs 18,800 people, generates revenue of $56,185.00 million and has a net income of $8,037.00 million. ConocoPhillips’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $20,761.00 million. The EBITDA margin is 36.95 percent (the operating margin is 22.78 percent and the net profit margin 14.30 percent).

Financial Analysis: The total debt represents 18.35 percent of ConocoPhillips’s assets and the total debt in relation to the equity amounts to 41.59 percent. Due to the financial situation, a return on equity of 15.94 percent was realized by ConocoPhillips. Twelve trailing months earnings per share reached a value of $6.51. Last fiscal year, ConocoPhillips paid $2.70 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.03, the P/S ratio is 1.85 and the P/B ratio is finally 1.99. The dividend yield amounts to 3.45 percent and the beta ratio has a value of 1.02.


Long-Term Stock Price Chart Of ConocoPhillips (COP)
Long-Term Dividend Payment History of ConocoPhillips (COP)
Long-Term Dividend Yield History of ConocoPhillips (COP)

Chevron (NYSE:CVX) has a market capitalization of $248.22 billion. The company employs 64,600 people, generates revenue of $220,264.00 million and has a net income of $21,597.00 million. Chevron’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $41,912.00 million. The EBITDA margin is 19.03 percent (the operating margin is 12.59 percent and the net profit margin 9.81 percent).

Financial Analysis: The total debt represents 8.05 percent of Chevron’s assets and the total debt in relation to the equity amounts to 13.70 percent. Due to the financial situation, a return on equity of 15.00 percent was realized by Chevron. Twelve trailing months earnings per share reached a value of $10.27. Last fiscal year, Chevron paid $3.90 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.70, the P/S ratio is 1.13 and the P/B ratio is finally 1.67. The dividend yield amounts to 3.28 percent and the beta ratio has a value of 1.08.


Long-Term Stock Price Chart Of Chevron (CVX)
Long-Term Dividend Payment History of Chevron (CVX)
Long-Term Dividend Yield History of Chevron (CVX)

BHP Billiton (NYSE:BHP) has a market capitalization of $115.72 billion. The company employs 49,496 people, generates revenue of $65,953.00 million and has a net income of $12,820.00 million. BHP Billiton’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $28,819.00 million. The EBITDA margin is 43.70 percent (the operating margin is 31.84 percent and the net profit margin 19.44 percent).

Financial Analysis: The total debt represents 23.84 percent of BHP Billiton’s assets and the total debt in relation to the equity amounts to 46.96 percent. Due to the financial situation, a return on equity of 16.44 percent was realized by BHP Billiton. Twelve trailing months earnings per share reached a value of $5.58. Last fiscal year, BHP Billiton paid $2.28 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.91, the P/S ratio is 2.85 and the P/B ratio is finally 1.64. The dividend yield amounts to 3.27 percent and the beta ratio has a value of 1.60.


Long-Term Stock Price Chart Of BHP Billiton (BHP)
Long-Term Dividend Payment History of BHP Billiton (BHP)
Long-Term Dividend Yield History of BHP Billiton (BHP)

Syngenta (NYSE:SYT) has a market capitalization of $33.37 billion. The company employs 29,000 people, generates revenue of $14,688.00 million and has a net income of $1,649.00 million. Syngenta’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2,853.00 million. The EBITDA margin is 19.42 percent (the operating margin is 14.20 percent and the net profit margin 11.23 percent).

Financial Analysis: The total debt represents 15.86 percent of Syngenta’s assets and the total debt in relation to the equity amounts to 33.78 percent. Due to the financial situation, a return on equity of 18.00 percent was realized by Syngenta. Twelve trailing months earnings per share reached a value of $3.56. Last fiscal year, Syngenta paid $2.00 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 20.45, the P/S ratio is 2.30 and the P/B ratio is finally 3.52. The dividend yield amounts to 3.13 percent and the beta ratio has a value of 1.05.


Long-Term Stock Price Chart Of Syngenta (SYT)
Long-Term Dividend Payment History of Syngenta (SYT)
Long-Term Dividend Yield History of Syngenta (SYT)
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*I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

This article was written by Dividend Yield. If you enjoyed this article, please subscribe to his feed [RSS].


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Tuesday, July 29, 2014

Here's Why I Added To My Position In Qualcomm

I added to my position in Qualcomm Inc (QCOM). Qualcomm designs, develops, manufacturers and markets digital communication products. Qualcomm's business segments include mobile device chipset manufacturing, mobile device royalties and strategic investments. Qualcomm is the leader in ARM-based chipset processors which can be found in the bulk of Android (GOOG), BlackBerry (BBRY) and Windows (MSFT) mobile devices. The licensing segment is used by almost all mobile device manufacturers including Apple (AAPL). The real winner from the smartphone/tablet/connected-cars wars really is Qualcomm. Qualcomm charges royalties on each handset sold based on its technology and one time licensing fees from handset vendors to use its proprietary technology.

Financials

Qualcomm's revenue per share, earnings per share (EPS) and free cash flow (FCF) per share are extremely healthy. In addition, Qualcomm has no debt and holds $16.63B in cash.



Qualcomm's industry leading processors are not only found in the latest Android, BlackBerry and Windows phones, but Qualcomm commands a formidable patent portfolio. Qualcomm currently generates 2/3 of its revenue from sales of mobile device chipsets and 1/3 of its revenue from royalties by licensing the technology. On  the earnings side, the numbers flip around - 2/3 from licensing and 1/3 from chip sales.

Dividends

Qualcomm is a Dividend Contender that has been raising dividends for 12 straight years in a row. The company has a 5-year dividend growth rate (DGR) of 16% and 10-yr DGR of 26.9%. The last dividend increase came in March 2014 with a hike of 20%. A current payout ratio of 34.50% gives QCOM plenty of room for future increases.


Valuation

With record profits and stock market all-time highs, companies have increased stock buybacks tremendously over the last few years. While this improves the EPS numbers of the stock, the book value takes a hit (read details here). While I am not completely against the idea of returning cash to stockholders via buybacks, I also like to make sure that the companies do not erode their book value. Being a value investor, I like to see the book value have healthy gains year-over-year. Qualcomm, during its March announcement, confirmed that they were increasing their stock repurchase program to $7.8B. However, due to the strong financials, the book value continues to grow and numbers stand at:

  • Book value growth of 4.1% in the last 12 months
  • Book value growth of 16.3% in last 5 years
  • Book value growth of 15.1% in last 10 years







Recent Buy Decision

  • Its business as usual with very agreeable growth in current markets. The smartphone/tablet wars between the different device manufacturers has one common element to it - Qualcomm. The business is robust and the innovation cutting edge. The strong patent portfolio brings QCOM a steady stream of revenue quarter after quarter.
  • A major source of growth in the short term is expected to come from China. China is in the midst of moving from 3G to 4G LTE wireless technology. China Mobile (CHL), which commands a respectable 65-70% of the Chinese wireless marketshare, has decided to offer discounts on smartphones that will run on Qualcomm's 4G LTE technology. In the recent announcement, CHL has backed five-mode LTE-enabled handsets, which should benefit QCOM.
  • Recent acquisition of Wilocity has allowed QCOM to leapfrog the competition in the small cell market. The 802.11ad network technology, also called the WiGig technology, uses the 60GHz radio frequency and boasts a much higher speed than the 802.11 g, n, ac standards with data transfer speeds of up to 7 Gbps.
  • Qualcomm has thrown its hat into the Internet of Things (IoT) movement by forming a smart home platform. With this initiative, QCOM is expected to target home devices such as Smart TVs, set top boxes etc. 
  • QCOM is also expected to benefit from the infant wearable market and if consumers latch on it this time, QCOM stands to benefit big from the chip sales and the licensing agreements similar to the smartphone/tablet market.
  • Another growth avenue in QCOM's future is the In-Car Entertainment systems and the development of vehicular networks. Apple and Google have started their push to provide a platform for integrating their platform into the cars. The common factor here again is the necessity to communicate with the base stations and QCOM stands to benefit from the chip sales and/or licensing.


Risks

  • On the technology front, Qualcomm competes with GSM mobile phone technology, which is wildly prevalent outside North America and is an open source technology.
  • As the world moves from 3G to 4G (LTE/WiMax), Qualcomm has lost some of the hefty royalty pricing power on OFDMA-based LTE technology as it commanded on CDMA technology.
  • On a corporate front, Qualcomm faces intense competition from Broadcom, Mediatek and Intel.
  • Market saturation in the smartphone market.
  • The foreign currency fluctuations may impact future results.



A summary of the stock:

  • Symbol: QCOM
  • Quote: $78.11
  • 52-week range: $60.82 - $81.66
  • P/E: 20.87
  • Forward P/E: 13.63
  • Debt: $12M
  • Yield: 2.15%
  • 5-yr average yield: 1.70%
  • 5-yr DGR: 16%
  • 10-yr DGR: 26.9%
  • Book value: 22.69
  • Graham Number: 43.70
  • Chowder Rule: 18.1
  • Mean Analyst Recommendation: Buy
  • Mean Analyst target: $85.61
What are your thoughts on the future prospects of QCOM?

Full Disclosure: Long QCOM. My full list of holdings is available here.



This article was written by Roadmap2Retire. If you enjoyed this article, please consider subscribing to my feed at [RSS].


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Monday, July 28, 2014

Mid-Year 2014 Top And Bottom Performing Dividend Stocks

Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don't have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system.


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