Sunday, November 28, 2010

Dividend Machine Genuine Auto Parts, GPC

Dividend machine, Genuine Parts Company symbol GPC is an excellent example of a company that performs on all cylinders for the income investor. GPC is number three of the fifty two dividend machines that I will profile for your income investing portfolio.

Let's deconstruct this company from an income investor's viewpoint. GPC makes a lot of money. Current earnings are $2.87 per share. Remember one of our 4 rules is that if we invest in a company it has to make money and GPC delivers on that front.

Genuine parts paid a dividend every year since 1983. Moreover, GPC's dividend has increased every year, and during good times, the company paid extra dividends. GPC will pay the next dividend of $.41 per share on January 3, 2011 provided that you own it by December 8, 2010. The annual dividend (4 dividends of $.41 each) is $1.64. Now we know that GPC fulfills two more of our 4 rules; it shares its earnings with us in a dividend; and the dividend increases every year.

To be considered a dividend machine, the yield has to be 3% or more and GPC comes through again with a yield of 3.38% based on the closing price of $48.53 on Friday, November, 26 2010 and the dividend should increase every year. GPC's dividend growth rate is 3.4%. Just sit back and watch your income grow by 3.4% every year or reinvest it and watch your total investment grow until you need the income.

One more hurdle for GPC before we buy it is to determine if the company is on solid ground. I encourage you to determine the D/E (debt to equity) ratio of every company you may buy. GPC sports a D/E ratio of .18. I think we have winner here!

As you become more practiced in evaluating the companies you buy, you will begin to learn about more and more metrics and measurements of a company's earnings, income, and balance sheet. For instance, one very nice fact about GPC is something called book value. If you sold off every hard, solid asset the company owns you would expect to receive about $17.50 per share. This is another measure of the strength of this company.

Genuine Parts a good dividend machine consider adding it to your income portfolio.

Very Truly Yours,