Monday, October 14, 2019

Love People, Use Dividend Stocks

As humans we are often driven by our emotions and relationships. Over time we tend grow fond of people we have a relationship with. Sometimes we grow to love them like a brother or sister; sometimes even more. In much the same way we can easily grow to love certain stocks, but this is not necessarily a good thing.


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Sunday, October 13, 2019

Weekend Reading Links - October 13, 2019

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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Thursday, October 10, 2019

Four Dividend Growth Stocks Rewarding Shareholders With A Raise

I have long subscribed to the theory that buy and hold means buy and monitor. Dividend investors should continue monitoring their holdings after an initial investment. They should also monitor the dividend investing universe fin order to keep informed of notable company developments. It is helpful to observe dividend growth in action, in order to identify new companies for further research.

I review divided growth actions by companies each week as part of my review process. It is helpful to observe the rate of changes in annual dividend increases for companies I own and companies I may consider owning under the right conditions ( valuation/fundamentals etc)

As part of this weeks review, I focused my attention on the companies that have managed to grow dividends for at least a decade. A long track record of annual dividend increases is a way to identify quality companies for further research.

I also reviewed each company by focusing on the rate of dividend increases relative to the ten year average. I also reviewed trends in earnings per share, in order to determine the likelihood of future dividend growth. Investors can expect dividend growth only from companies that can grow earnings over time. It is also important to look at valuation, since even the best companies in the world are not worth overpaying for. I look at valuation in conjunction with growth, and payout ratios. After all, a company with a P/E ratio of 10 and a dividend yield of 4% will not grow as fast as a company with a P/E of 25 and a dividend yield of 1%.

The companies for today’s review include:

American Financial Group, Inc. (AFG) is an insurance holding company, which provides property and casualty insurance products in the United States. The company operates through three segments: Property and Casualty Insurance, Annuity, and Other.

The company increased its dividend by 12.50% to 45 cents/share. This marked the 14th consecutive annual dividend increase for this dividend achiever. During the past decade, it has managed to grow distributions at an annualized rate of 11.20%.

Between 2009 and 2018, American Financial Group managed to grow earnings from $4.45 to $5.85/share.The company is expected to generate $8.65/share in 2019.

The stock looks fairly valued at 12.10 times forward earnings and yields 1.70%.

Bank OZK (OZK) provides retail and commercial banking services to businesses, individuals, and non-profit and governmental entities.

Bank OZK increased its quarterly dividend to 25 cents/share. This is a 4.17% increase over the last quarterly dividend and a 19% increase over the dividend paid during the same time last year. The bank is a dividend achiever with a 23-year history of annual dividend increases. During the past decade, it has managed to grow distributions at an annualized rate of 20.30%.

Between 2009 and 2018, the bank managed to grow earnings from 55 cents/share to $3.24/share.
The company is expected to generate $3.33/share in 2019.

Right now it is attractively valued at 7.90 times forward earnings and offers a dividend yield of 3.80%.

RPM International Inc. (RPM) manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide.

The company raised its quarterly dividend to 36 cents/share. This represents a 2.90% increase over the last quarterly payment, and a 12.50% increase over the distribution paid during the same time last year.

This action marks RPM’s 46th consecutive year of increased cash dividends paid to its stockholders. Over the past decade, this dividend champion has managed to grow distributions at an annualized rate of 5.50%.

Between 2010 and 2019, RPM has managed to grow earnings from $1.39/share to $2.01/share.
The company is expected to generate $3.39/share in 2019.

The stock is fully valued at 20.20 times forward earnings and offers a dividend yield of 2.10%

Northwest Natural Holding Company (NWN) provides regulated natural gas distribution services to residential, commercial, and industrial customers in Oregon and Southwest Washington.

The Board of Directors of Northwest Natural Holding Company increased the quarterly dividend to 47.75 cents per share on the Company's common stock. This marks the 64th consecutive annual dividend increase for this dividend king. This is a half a percent raise in the quarterly dividend.

During the past decade, this dividend king has managed to grow distributions at an annualized rate of 2.20%.

Between 2009 and 2018, earnings per share dropped from $2.83/share to $2.24/share. The company is expected to generate $2.39/share in 2019.

The stock is overvalued at close to 29.30 times forward earnings. The stock yields 2.70%, but has a very high payout ratio, no earnings growth and the likelihood of dividend growth stopping in a few years is high.

Thank you for reading!

Relevant Articles:

Six Dividend Growth Stocks Rewarding Shareholders With a Raise
Record Dividend Payments in the US For A Decade
My Portfolio Monitoring Process In a Nutshell
Altria Group Joins The Dividend Kings List


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Wednesday, October 9, 2019

2 Recent Buys – JNJ, GOOGL

A quick update on two purchases in my portfolio. As with the last iteration, this one also includes a new position in the portfolio.
  • First purchase: I added 20 shares of Johnson & Johnson @ $127.50. During the mayhem of Aug 23, thanks to Trump’s tweets and escalation of trade war, I was able to pick up a few shares of JNJ. JNJ has been undergoing a bit of a weak performance due to ongoing litigation (which later turned into a $572M fine), and some expected revenue drop this fiscal year. However, top line growth should return back to normal starting next year, so I have been adding to my shares in this position over the past few months. The stock yields 2.96% and adds $76.00 in annual dividends.
  • Second purchase: I initiated a new position in one of the largest companies in the world; with 3 shares of Alphabet Inc (GOOGL) @ $1,184.00. There are a lot of reasons to own GOOGL – one of the most forward looking companies, founder-operated, arguably best tech talent in the world, largest online ad platform, wide moat (can you imagine life without Google…not just as consumers, but also as a business?), good capital allocation and reinvestment in business, optionality play on unmonetized segments that will sooner or later get commercialized (Alphabet’s subsidiaries include Calico, CapitalIG, DeepMind, Google, Google Fiber, GV, Jigsaw, Loon, Makani, Sidewalk Labs, Verily, Waymo, Wing, and X). This is a starter position in what I expect to be a core holding for years to come, and will continue adding shares in coming months.
What are your thoughts on these purchases. Share a comment below.
Full Disclosure: Long JNJ, GOOGL. Our 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 Roadmap2Retire.com/feed


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