Sunday, December 21, 2014

Weekend Reading Links - December 21, 2014

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:

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Saturday, December 20, 2014

The Shiller P/E: A Tool for Market Valuation

A simple valuation metric for the market developed by Professor Robert Shiller, is commonly referred to as the “Shiller P/E” or “P/E 10″.
The normal price to earnings ratio is straightforward enough: divide the price of the stock by the EPS to calculate the earnings multiple. For example, a stock priced at $80 with $5 in EPS would have a P/E of 16. It can be used on the whole S&P 500 to come up with the average market valuation as well.

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Friday, December 19, 2014

Stock Analysis of Consolidated Edison

Consolidated Edison, Inc. (ED) is engaged in regulated electric, gas, and steam delivery businesses in the United States. The company, through its subsidiary, Consolidated Edison Company of New York, Inc., provides electric services to approximately 3.4 million customers in New York City and Westchester County; gas to approximately 1.1 million customers in Manhattan, the Bronx, and parts of Queens and Westchester County; and steam to approximately 1,703 customers in parts of Manhattan This dividend champion has paid dividends since 1885 and managed to increase them for 40 years in a row.

The company has managed to deliver an 4.30% average increase in annual EPS over the past decade. Con Edison is expected to earn $3.78 per share in 2014 and $3.90 per share in 2015. In comparison, the company earned $3.61/share in 2013.In the past decade, the number of shares outstanding increased from 236 million in 2004 to 294 million in 2014. 

The annual dividend payment has increased by 1% per year over the past decade, which is lower than the growth in EPS. I would expect the dividend growth rate to be slightly higher to 2% for the near future, as the dividend payout ratio is more sustainable these days.

Currently, Con Edison looks attractively valued on the surface at 16.30 times forward earnings, and has a dividend yield of 4%. However, due to the low earnings and dividend growth, I am not planning to initiate a position in the company anytime soon. The shares only make sense for investors who really need current income today, but are fine if their dividend income loses purchasing power over time, and their ability to generate capital gains is extremely limited at best.

Read the Full Analysis over at Seeking Alpha

Full Disclosure: None

Relevant Articles:

High Dividend Utility Stocks – Are they a trap for dividend investors?
Utility dividends for current income
Why I am replacing ConEdison (ED) with ONEOK Partners
How to analyze dividend stocks
Focus on High Yielders with Growing Distributions

This article was written by Dividend Growth Investor. If you enjoyed this article, please subscribe to have future articles emailed to you [Email] or follow me on Twitter [Twitter]

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Thursday, December 18, 2014

Considering Foreign-Domiciled Dividend Growth Stocks

I was recently asked by a reader to discuss foreign stocks, dividend taxation, and how that applies to some of the stocks I discuss and invest in.
The reader, who goes by wtd7576, commented in my recent article on Unilever PLC (UL):
Nice analysis and good luck.An interesting topic as well as explanation would be to discuss buying a foreign stock like this and its tax ramifications for the average U. S. Investor. Companies ike BP, Royal Dutch Shell, Unilever, etc., are all worth looking at but many investors have shied away from foreign investments due to tax considerations and are you really getting the yield here that they report. Thanks.

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