Friday, March 27, 2020

Three REITs Delivering Fresh Dividend Growth To Shareholders

Last week was a crazy week in the US Stock market, as the number of Covid-19 cases in the country surged, and so did the number of deaths. It looks like we are in a widespread phase of panic on the financial markets, as a quarter of the US is under quarantine, with the rest to follow suit pretty soon.

It was a very slow week for dividend increases. I saw three companies with a long history of dividend increases hiking distributions last week. All three were REITs.

We have had some large profile dividend cuts and suspensions from the likes of airlines like Delta, Boeing, Ford, Marriott etc. Few of these had a track record of annual dividend increases however, so they were never on my radar. Energy companies will likely cut dividends at some point this year, however, and those have been on my radar and some of my portfolios. The expectation for US dividend payments is that they decline as much as they did in 2008, during the global financial crisis.

Stock prices are already 35%+ below their all-time-highs set just a month ago. Things are starting to get ugly, as the number of unemployed is expected to skyrocket, a lot of businesses like restaurants are closed, and a lot of businesses are losing money. We are witnessing a widespread disruption in the economy, which most probably resembles the Great Depression. The only difference is that this is happening very quickly, and strikes at a high pace.

It looks like the expectations for US earnings are to start decreasing significantly, and for GDP to fall through Q2, before attempting a recovery. It is likely that things would get ugly, before they start getting better. I am worried mostly about the millions who will get infected, and the millions who will be without jobs. And the amount of people who will die, which is the real problem we are facing.
Most probably, when we start ignoring bad news (climb the wall of worry), and stocks rally is when we will see some light at the end of the tunnel.

I do believe that the best strategy in today's environment, and in any other environment is to live within your means, save money, and invest money regularly in blue chip companies with a solid history of paying and growing dividends. If you stick to a long-term routine of regular investment, you would likely come out ahead. Even if you started investing around the time of the Great Depression.

I believe that this too shall, pass, albeit at large personal and financial loss for people in the US and the world. But just as the supply chains and economy and stock and labor markets were disrupted at a fast-accelerated pace, I believe that the recovery could be just as quick.

The pace of dividend increases has definitely slowed down from just a couple of weeks ago. Companies need bailouts, the US government is trying to find innovative ways to stimulate the economy, put money in people’s pockets, inject liquidity into the system.

There were several companies that raised dividends last week. The companies include:

Company Name
Ticker
Price
New
Old
Forward FFO/Share
Forward Payout
Years Annual Increases
10 year annualized growth
Dividend Yield
American Tower
AMT
195.39
1.08
1.01
                23.89
52.81%
9
n/a
2.21%
UDR Inc
UDR
32.03
0.36
0.34
                14.56
65.45%
10
3.41%
4.50%
Realty Income
O
47.42
0.233
0.2325
                13.55
79.89%
27
4.68%
5.90%

I think these companies offer decent value today. That doesn’t mean they cannot go down by 50% from here, as more stores shut down for example or a large portion of the population has trouble paying rent. If we think beyond the next year however, and if these companies can survive the tough season ahead, they can deliver satisfactory returns to shareholders. By the way, certain stocks are still valued richly, notably the ones like American Tower. If we see it at a price to forward FFO of 15 or lower, I would know that stock market investors are worried.

I am a fan of Realty Income (O), and believe that this high quality REIT will survive the crisis. While the dividend would be defensible under a normal crisis, I am not 100% certain for this one.



These companies are not automatic investment ideas of course. You need to do your research, and determine if they can survive this crisis first, and whether they can deliver solid returns for your long-term investment period.


Thank you for reading! Please stay safe!

Relevant Articles:

Seven Dividend Companies Rewarding Shareholders With Raises
A Record Week on Wall Street For Dividend Increases
Seven Dividend Achievers Defying Coronavirus Fears
Dividend Investors: Stay The Course



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Tuesday, March 24, 2020

2 Recent Buys

A quick update on two purchases in my portfolio.


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Thursday, March 19, 2020

Seven Dividend Companies Rewarding Shareholders With Raises

As part of my monitoring process, I review the list of dividend increases every week. This is helpful in monitoring dividend increases for my dividend portfolio holdings, and for companies I am monitoring for a potential acquisition.

There were seven companies with long histories of annual dividend increases, which also raised dividends last week.

The companies include:

Company
Symbol
Dividend Yield
New Dividend
Old Dividend
Stock Price
Forward P/E ratio
Dividend Payout Ratio
Years Annual Dividend Increases
Annualized Dividend Growth
Colgate-Palmolive
CL
2.55%
0.44
0.43
69.1
    23.27 
59%
56
7.11%
Globe Life
GL
1.05%
0.1875
0.1725
71.58
    10.04 
11%
14
10.53%
Gentex
GNTX
1.90%
0.12
0.115
25.21
    14.32 
27%
9
7.54%
Horace Mann Educators
HMN
3.09%
0.3
0.2875
38.82
    14.38 
44%
10
17.09%
Qualcomm
QCOM
3.43%
0.65
0.62
75.81
    18.36 
63%
17
13.98%
W.P. Carey
WPC
5.63%
1.04
1.038
73.88
    15.20 
86%
23
7.59%
Wyndham Destinations
WYND
6.32%
0.5
0.45
31.64
      5.16 
33%
10
27.38%

These companies are not investment recommendations. To determine if these dividend growth stocks are worth investing in, I focus on the following:

1) Growth in earnings per share over the past decade
2) A dividend payout ratio that is below 60%
3) A P/E ratio below 20
4) A history of consistent annual dividend increases over the past decade

I use a variation of my screening criteria when looking for quality companies to consider for my portfolio. Check my article on screening the dividend aristocrats list for more information.

Obviously, having an income stream that is relatively insulated against the ups and downs of the economic cycle is an advantage, particularly in today’s challenging world economy. If your earnings do not fall as much during a recession, your company can afford to continue paying the dividend. If the earnings stream dries up, and there are significant debt obligations to be serviced in a challenging credit market, chances are that the dividend may be put on the chopping block. This is why it is important to buy quality companies, at attractive valuations.

When I analyze companies, I look for things like rising earnings per share, dividend payout ratios, perform qualitative assessments, and looks for trends in dividends per share. Check my analysis of Colgate-Palmolive from a couple of years ago for more information on how I analyze companies in detail.

Relevant Articles:

How to read my stock analysis reports
Thirty-One Dividend Aristocrats for Further Review
Seven Dividend Achievers Defying Coronavirus Fears
A Record Week on Wall Street For Dividend Increases


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Wednesday, February 26, 2020

Recent Buy – GOOGL

A quick update on a recent purchases in Baby R2R’s portfolio from last week.
Frequent readers may be aware that in addition to the education fund, I run a Nest Egg fund for Baby R2R where I earmark a portion of my portfolio and track it as part of her Nest Egg.


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