Sunday, November 7, 2010

Dividend Machines that pay in November

Sticking with the theme of dividend machines, I want to explore with you the idea of creating a portfolio of dividend machines that consistently pay dividends and increase them every year.

If you are planning to retire, now is the time to start accumulating a group of stocks that will pay you every quarter. If you are already retired, consider using these ideas as part of your income investing strategy. 

These stocks pay every quarter. That means if a stock pays a dividend in January, it will also pay a dividend in April, July and October. If it pays in February, it will also pay in May, August, and November. March payers also distribute the dividend in June, September, and December. Therefore, you need 3 groups of stocks that pay every quarter to construct an income stream every moth.
An example is the best teaching tool.

Let's assume you would like to create about $1,000 per month of income. Moreover, you want to sleep at night with the understanding that these companies have strong balance sheets. You want to know they are solid. Last month, we worked on learning how to find out if your company makes money and is solid so I will not go over that at this time.

Rather, let's concentrate on the quality of the dividend. You want companies that make more money than they pay out. Even more important you want to invest in companies that give you a raise every year. Finally, you want to be able to afford to buy the company.

Between November 1, 2010 and November 15, 2010 at least 5 companies will pay a dividend greater than 3%, will have increased that dividend every year over the past 4 – 5 years, and have a solid balance sheet. These are dividend machines with quality dividends. 

These five companies are AT&T symbol T; Abbott Laboratories symbol ABT; Federated Investors symbol FII; Paychex symbol PAYX; and National Health Investors symbol NHI.

To create $1,000 of income in November from these 5 companies requires 500 shares of T with an income of $210; 400 shares of ABT with an income of $176; 800 shares of FII with an income of $192; 700 shares of PAYX for an income of $217 and 400 shares of NHI with an income of $242. Total cost of these shares if you bought on Friday at the close is $94.347. 

This is a well diversified portfolio of only 5 stocks that pay 4.4%. Where are you going to get 4.4% income that increases every year?

Start accumulating your dividend machines. Use these ideas or research other stocks. Plan, learn, and then invest.

Very Truly Yours,