Sunday, January 25, 2015

Weekend Reading Links - January 25, 2015

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, January 24, 2015

A Look At Four Great Dividend Stocks

Special note: Today, we have a guest post by Ben. He writes for Sure Dividend and he’s sharing an article about four excellent stocks and how they rank within the framework of his “8 Rules of Dividend Investing”.  I don’t allow guest posts very often, and Ben and I have been in discussion about this article for more than a month now. But he took a lot of time to put this post together and I think there’s some real value here. In addition, I spent considerable time formatting everything. I hope everyone enjoys it!
Dividend growth stocks make an excellent choice for investors seeking both income and growth. Dividend growth stocks raise their dividend year after year, growing their owner’s income streams. Who doesn’t want a rising standard of living year after year? Not only do dividend growth stocks have practical appeal, they have also historically outperformed non-dividend paying stocks by about 7.8 percentage points per year from 1972 through 2013.

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Friday, January 23, 2015

Stock Review of Target

Target Corporation (TGT) operates general merchandise stores in the United States and Canada. Target is a dividend champion, which has paid dividends since and raised them every year for 47 years in a row.

The most recent dividend increase was in June 2014, when the Board of Directors approved a 20.90% increase in the quarterly dividend to 52 cents/share.

The company’s largest competitors include Wal-Mart (WMT), Costco (COST) and Amazon (AMZN).

Over the past decade this dividend growth stock has delivered an annualized total return of 4.80% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.

The company has managed to deliver a 4.40% average increase in annual EPS over the past decade. Target is expected to earn $3.25 per share in 2015 (minus losses on exiting Canada) and $3.88 per share in 2016. In comparison, the company earned $3.07/share in 2013. Earnings per share have been depressed by steep losses in the company’s Canadian division, where expansion has been difficult.

Between 2005 and 2014, the number of shares outstanding has decreased from 912 million to 638 million. The decrease in shares outstanding through consistent share buybacks adds an extra growth kick to earnings per share over time. The annual dividend payment has increased by 19.80% per year over the past decade, which is much higher than the growth in EPS.

Currently, Target is selling for 23.60 times expected current year earnings and 19.80 times next year's earnings and yields 2.70%. So far in 2014, I was slowly building my position in the stock by dollar cost averaging my way. At this stage I am not planning on adding more to Target.

I posted the full analysis on Seeking Alpha in September. The thing that changed is that Target is now exiting Canada. By stopping the bleeding, the company can start generating more income right away. 

Full Disclosure: Long TGT, WMT

Relevant Articles:

How to buy when there is blood on the streets
Why Did I Purchase This Dividend Paying Company For a 3rd Month in a Row?
How to think like a long term dividend investor
Top Dividend Growth Stocks of the past decade

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, January 22, 2015

Why I Purchased National Oilwell Varco, Inc. (NOV)

Boy, I’m getting the month started off a little earlier than I anticipated. As previously aforementioned, my capital availability for stock purchases is going to be light this year, especially for the first few months. But there’s no challenge I’m not willing to take on!
Anyway, I wasn’t planning on purchasing any stocks for the first week or so. I had a couple of names in mind and I was doing some research when oil took another beating on Monday, dropping below $50 per barrel for the first time in five years. If being greedy when others are fearful is the name of the game, consider me a player.
That said, I’m not particularly enthusiastic about going crazy on energy stocks due to my allocation to that sector, which is already north of 15%. Furthermore, my cost basis in a number of really great stocks is already attractive. However, one stock in particular is trading well below my cost basis and the opportunity to average down became apparently too strong to ignore.
I purchased 20 shares of National Oilwell Varco, Inc. (NOV) on 1/5/15 for $61.91 per share.

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