Recent Purchase of Caterpillar (CAT)

I continue to remain aggressive hunting down the best deals on high-quality stocks I can possibly find and deploying capital when those sales present themselves.

It appears another sale presented itself. So I deployed some capital. What else would you expect, right?

The stock I’m going to discuss today is available at one of the best values that’s been offered on it over the last few years. It also sports the highest yield it’s possibly ever had outside the financial crisis. It’s a cyclical stock, but I see a long-term opportunity here.

I purchased 15 shares of Caterpillar Inc. (CAT) on 7/9/15 for $81.53 per share.

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Union Pacific Corporation (UNP) Stock Analysis

Union Pacific Corporation (UNP), through its subsidiary, Union Pacific Railroad Company, operates railroads in the United States. Union Pacific Corporation is a dividend achiever, which has raised dividends for 10 years in a row.

The most recent dividend increase was in February 2015, when the Board of Directors approved a 10% increase in the quarterly dividend to 55 cents/share.

The company’s largest competitors include CSX Corporation (CSX), Norfolk Southern Corporation (NSC), and Burlington Northern Santa Fe which is part of Berkshire Hathaway (BRK/B).

Over the past decade this dividend growth stock has delivered an annualized total return of 23% to its shareholders. Future returns will likely be much lower, and will be dependent on growth in earnings and starting dividend yields obtained by shareholders. Investors should also not forget that the transportation sector is exposed to the cyclical nature of the economy, and would follow its short-term cycles pretty well.

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Recent Buy – Qualcomm Inc

Whenever I make a purchase, I like to share my buys to document and illustrate how I am building my income stream over the course of months/years. My main goal is simply to keep investing at regular intervals and build my passive income over the course of time. In a sort of ways, I am building my own pension, hoping to get to a point where I can simply live off my dividends without touching my principal investment. The current volatility in the market provides an opportunity to pick up shares at attractive valuations which have been hard to find in the past. I decided to put some of my cash to work.

I added to my position in Qualcomm Inc (QCOM) with 20 shares @ $62.00. The stock yields 3.09% adding $38.40 to my annual dividend income.

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5 Undervalued Dividend Stocks By Graham and Buffett

Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk.

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A Winning Investment Strategy

We all want to succeed in everything that we do, including investing in the stock market. Though I have no analytical data to back it up, I am convinced that most people will lose money in the stock market over their lifetime. So why do so few people succeed at investing? Could it be that an individual's desire to succeed is a significant reason for their failure.

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Weekend Reading Links - July 26, 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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National Oilwell Varco (NOV) Recent Purchase

More volatility? Yes, please.

Just when I thought I was out, they pull me back in.

– Michael Corleone, The Godfather: Part III

That’s kind of how I feel about this most recent purchase, though. It’s a buy in the Energy sector, which is a sector I’ve been actively trying to dance around a bit.

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The First is $100,000 is The Hardest

My, my. Feels good to write this article!

Munger has said that accumulating the first $100,000 from a standing start, with no seed money, is the most difficult part of building wealth. Making the first million was the next big hurdle. To do that a person must consistently underspend his income. Getting wealthy, he explains, is like rolling a snowball. It helps to start on top of a long hill—start early and try to roll that snowball for a very long time. It helps to live a long life.

– From the book, Damn Right: Behind The Scenes With Berkshire Hathaway Billionaire Charlie Munger

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Six Dividend Growth Stocks That Keep Delivering For Their Shareholders

Dividend growth stocks are the gift that keeps on giving. I like the fact that most of the work in selecting good dividend growth stocks is upfront in analyzing those investments. What follows next is a lifetime of dividend payments, distributed every quarter, which grow over time. My goal is to assemble enough dividend growth stocks in my portfolio, in order to start generating income to pay for my retirement. My dividend portfolio is a silent worker in my household, who works 24/7 for me, and who dutifully shares all of their income with me. This income is completely passive in nature, and it does not require me to wake up at 6 am every day, shuffle TPS reports all day long, and make sure I do not forget to put a coversheet on those same reports.

I like watching dividend growth investing at work – this is when the companies I own keep rewarding me with a higher dividend check for a decision I made years ago. There were several notable companies which raised their dividends to shareholders. The list includes:

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Recent Buy – Johnson & Johnson

Another purchase in my portfolio to close out this quarter. I added to my position in Johnson & Johnson (JNJ) with 15 shares @ $98.50. The stock yields 3.05% adding $45 to my annual dividend income.

Recent Buy Decision

• Johnson & Johnson barely needs an introduction as it is one of the best known brand names in the world. The company is a well diversified healthcare giant with three major segments – pharmaceuticals, medical devices and consumer goods.
• A global giant, sees revenue diversification breakdown of: 45% from US, 26% from EU, 18% from Asia-Pacific, and 10% from the rest of the world
• JNJ came under a lot of pressure in 2014 with record recalls and lawsuits. As expected, JNJ has turned things around and the company now runs more efficiently with better QA in order to avoid similar mistakes.
• One of only three companies having a AAA rating from S&P (the other two being Microsoft (MSFT) and Exxon-Mobil (XOM))
• My healthcare diversification had shrunk – with only Amgen Inc (AMGN) making my other healthcare exposure. I decided to add here as the sector is recession-proof and is seeing robust inflation
• JNJ expects to launch 10 new drugs by 2019, each with a $1B potential
• A dividend champion, with 53 consecutive years of dividend raises, and 31 consecutive years of adjusted earnings increases

Risks

• Operating in the healthcare/pharma sector, the company always runs the risks of FDA non-approval on new drugs
• Patent expiry could see some revenue erosion/increased competition from generic drug makers
• The strong US dollar provides a drag on international earnings
• More QA issues resulting in product recalls as we saw in 2014

Valuation

• A blue chip name that almost always trades at a premium, getting a 3%+ yield is at an attractive valuation currently
• The P/E, P/B, PEG ratios etc are all in a decent range based on historical valuation

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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5 Best Stocks For Retirement Investors (Yield And Value)

If you are in retirement, it’s important to have multiple income streams, such as Social Security and savings and investments you built up on your own. For the lucky, there are pensions, but those are fast disappearing. Investing in stocks that pay a dividend is another way to generate income while you're in retirement.

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7 Dividend Stocks With A 20% Yield In 20 Years

I know very little about hockey, but I have always loved this quote:

I skate to where the puck is going to be, not where it has been."
- Wayne Gretzky

It can be applied to so many things in life, including investing in Dividend Growth Stocks. Just as Gretzky has a vision as to where the puck is going, investors need to have a similar vision, and not get caught up on short-sighted distractions.

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Weekend Reading Links - July 19, 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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W.P.Carey (WPC) Looks Cheap Enough To Purchase

I’m getting July started off right, with the purchase of shares in a high-quality company that has a penchant for rewarding shareholders (the owners of the company) with large and growing dividends. They saysnowballs don’t roll in July. I beg to differ!

This past weekend saw July 4th, or Independence Day.

First, thank you to everyone who serves in the military and allows us the freedom we enjoy.

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Why I Added to Union Pacific (UNP)

Bam.

My 10th stock purchase this month.

More than $6,000 in new capital (including reinvested dividends) put to work.

Those will likely be records that stand for a long time to come.

I honestly wasn’t planning on doing anything else this month. Not only was I happy with the stocks I bought and the prices I paid relative to their respective intrinsic values and long-term earnings power, but my capital was just about exhausted. And that’s why I prefer cash flow to cash: The former regenerates itself, while I have to actively rebuild the latter. And with all that money I spent on stocks this month, along with a fat quarterly estimated tax payment sent in, cash is low.

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Stock Analysis of TJX Companies

The TJX Companies, Inc. (TJX) operates as an off-price apparel and home fashions retailer in the United States and internationally. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX Europe. TJX Companies is a dividend achiever, which has raised dividends for 18
years in a row.

The most recent dividend increase was in March 2015, when the Board of Directors approved a 20% increase in the quarterly dividend to 21 cents/share.

The company’s largest competitors include Ross Stores (ROST), Kohl’s (KSS) and Target (TGT).

Over the past decade this dividend growth stock has delivered an annualized total return of 20.40% to its shareholders. Future returns will be dependent on growth in earnings and starting dividend yields obtained by shareholders.

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How to Invest in Water – Water Utilities

The next hot investment is water. Water, freshwater to be particular, will have a profound impact on human civilization in the coming decades. Naturally, the savvy and prudent investors will have some exposure to water in their portfolio, as the value of water rises. In this series of posts, I will cover some obvious and not-so-obvious ways to invest in water. This the first post of the series and we look at the most obvious of the investment vehicles available for water, i.e.,  water utilities.

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8 Small Cap Dividend Growth Stocks Warren Buffett Would Love

Today I'd like to share small-capstocks with businesses that are both understandable and durable, but trade at prices I personally deem too high. All businesses have traits Buffett would love: durable brands, strong competitive positions, and low-cost advantages. If Mr. Market gives me a deal, I'll be buying shares of each with both hands.

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5 Industrial Strength Dividend Growth Stocks With Yields In Excess Of 3%

The Industrials Sector consists of companies that manufacture products or provide business services. The products are often inputs or raw materials into another manufacturing process, such as steel producer.

Many of these companies are often referred to as members of the “smokestack industry” and are classified as cyclical stocks. A cyclical stock is one that rises and falls in step with the economy.

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Weekend Reading Links - July 12, 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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I initiated a position in Gilead Sciences (GILD)

Here we go.

This is the final stock I purchased with the cash that was sent my way whenReynolds American, Inc. (RAI) acquired Lorillard Inc., upon which I received some stock in the former company and cash after relinquishing my holdings in the latter company.

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I added to my stake in Oneok (OKE)

As I was discussing recentlywhen revealing that I added to my position in Apple Inc. (AAPL), June has been a really crazy and abnormal month in regards to capital deployment.

However, as mentioned, that AAPL purchase was fully funded by the cash that was part of the acquisition of Lorillard Inc. by Reynolds American, Inc. (RAI).

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Stock Analysis of 3M Company

3M Company operates as a diversified technology company worldwide. 3M Company is a dividend king, which has raised dividends for 56 years in a row.

The most recent dividend increase was in December 2014, when the Board of Directors approved a 19.90% increase in the quarterly dividend to $1.025/share.

The company’s largest competitors include General Electric (GE), Siemens (SIEGY) and ABB (ABB).

Over the past decade this dividend growth stock has delivered an annualized total return of 9.50% to its shareholders. Future returns will be dependent on growth in earnings and starting dividend yields obtained by shareholders.

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Sector Overview – Utilities

The utilities sector has seen a fair bit of correction as investors have sold off this bond-substitute as the interest rate jitters took hold of emotions. The Utilities SPDR ETF (XLU) is down approx 9% YTD. This has pushed the valuation to attractive levels for some utilities and I am looking to initiate positions in this sector. Regular readers of this blog are familiar that I recently sold my position in a utilities ETF (BMO Utilities ETF – ZUT.TO) that had exposure only to 12 companies and all exposed only to the Canadian economy. There were a few other reasons for selling that ETF – one of the main ones was the fact that I wanted dividend growth from my holdings. In my quest to narrow down utilities and find one to invest in, I have been doing some research and decided to share the details on how I am narrowing down my pickings. This way, you can see how I am picking my investments. Feel free to share your thoughts and comments below.

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George Soros Highest Yielding Dividend Stocks

Beside Warren Buffett, George Soros is also a popular investor. He was born in 1930 in Hungary where he fled in 1947 to avoid the onset of communism.

Soros went to England where he graduated from the London School of Economics. He then moved to the United States and eventually opened his own hedge fund which would later be called the Quantum Fund.

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Finding Low Risk Dividend Stocks

A stock with a high yield doesn't mean much if the dividend is cut or eliminated, and the stock price declines significantly. Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk. What can we do to help gauge the risk of an individual stock?

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Weekend Reading Links - July 5, 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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Why I Invested in Hershey

Financial independence isn’t going to achieve itself, folks. As such, I continue to aggressively put capital to work by exchanging dollars for equity in wonderful businesses that reward me as a shareholder with growing cash flow. And it’s that cash flow that will one day render me financially independent and able to live life completely on my terms.

This transaction represents the fifth stock purchase this month, and now the 60th position in the portfolio. And it also gives me exposure to a whole new industry, which I’m pretty excited about.

Jason, the chocolatier? 

I purchased 15 shares of Hershey Co. (HSY) on 6/11/15 for $90.82 per share.

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Recent Sell – BMO Utilities ETF

A sector that has been under-represented in my portfolio has been the Utilities sector. The only exposure I had to the sector was via an ETF – BMO Equal Weight Utilities Index ETF (ZUT.TO). Even though the exposure has been small and the only one, I decided to liquidate my holdings in the ETF and will be looking to purchase some stocks in the sector instead. The ETF provided good stability and regular monthly income. However, there were a few things that bothered me that caused me to sell the position.

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