Thursday, December 29, 2011

DIVIDEND PERFORMANCE

Summary 2011 Dividend Machines


Dividend Machine is the name I give a stock that meets four basic criteria.  During the past year, I profiled fifty two stocks, one per week.  Each stock profiled met all four criteria at the time I wrote about the company.

This group of fifty two stocks is my 2011 DIVIDEND MACHINE PORTFOLIO.   In this post, I provide a review of the 2011 Dividend Machine Portfolio.   In the future, I will follow this portfolio and periodically report on the performance.

Four Dividend Machine Criteria:

  1. Pay at least a three percent dividend
  2. Earn more than the dividend payout
  3. Increased the dividend every year for at least five years
  4. Debt to equity (D/E ratio) 1 or less or not greater than the industry average

Characteristics of the fifty two 2011 Dividend Machines:

This theoretical portfolio is based on buying 100 shares each of fifty two stocks.  I selected one stock per week that met all four criteria without regard to any other factor such as price earnings ratio, recent news, or need for diversification.  You can see a list of these stocks and review the post describing them by clicking on the 2011 portfolio page at the top of this blog.

  1. Amount invested = $207,118
  2. Price range = $9.27 - $93.37
  3. Average Dividend yield = 4%
  4. Average payout ratio (dividend/earnings) = $52.49%

Industry Diversification:

Although I did not try to create a portfolio with industry diversification in mind, I was surprised to find the degree of diversification this selection technique created.

  •     Nine Utilities
  •     Six Processed & Packaged Goods including Personal Products
  •     Five Electronics
  •     Four Oil, gas or chemicals
  •     Four Machinery & Manufacturing
  •     Four Financials – banks, asset management, insurers
  •     Three Telecommunications
  •     Three Medical instrumentation & supplies
  •     Three Aerospace
  •     Two Pharmaceuticals
  •     Two Waste Management
  •     Seven Other individual industries


Diversification by Market Capitalization:

Similarly, I did not try to select these stocks based on small cap. or big cap.  and again, I was surprised by the level of diversification this technique produced.

  •      Thirteen small cap. companies (up to 2 billion)
  •          Sixteen mid cap. companies (2-10 billion)
  •      Sixteen large cap. companies (10-100 billion)
  •      Seven mega cap. companies (greater than 200 billion)


Performance and other events:

Using closing prices on 12/23/2011, the 2011 dividend machine portfolio posted a $16,676 gain for an 8.05% gain.  The portfolio earns $15,819; these stocks pay out $8,300 in dividends based on the most recent quarterly dividend.  Other events are provided below.


  • Five stocks no longer qualify as a dividend machine because they used special dividends to create increased dividends instead of providing a steady annual increase. 
  • Twenty nine companies have already increased their dividend
  •  Eleven companies will have to increase their next quarter dividend or they will violate the requirement of increasing every year.
  • Two companies no longer pay a 3 percent dividend yield due to price appreciation:  Travelers (TRV) and Harleysville Group (HGIC)
  •  Three companies no longer qualify because their D/E ratio is greater than one or greater than the industry standard.  Lockheed Martin (LMT) D/E 2.39, General Mills (GIS) and Hasbro (HAS).  The remaining 49 companies have acceptable D/E ratios.

I will keep this portfolio intact and follow its performance for as long as I write this blog.  My preliminary opinion is that using these four criteria to select a portfolio of dividend stocks is an easy way to build a diversified income portfolio of dividend stocks.

TheMoneyMadam

Tuesday, December 27, 2011

2011 Dividend Machine and CAPITAL PRESERVATION

2011 Dividend Machine – Capital Preservation
            Do income investors have to sacrifice capital preservation for income?  I will answer this question by looking at our fifty two, 2011 Dividend Machine companies in terms of their stock price. 

Tuesday, December 20, 2011

Chevron and Darden call income

          Darden restaurants (DRI) was profiled at a stock price of $47.36.  Today, DRI is trading around $43.92 which is a about a 7.25 percent discount.  I want to add more of this Dividend Machine and I always like a sale.  However, since my goal is income, I will sell covered calls on my new shares; let's analyze how

Monday, December 19, 2011

DIVIDEND DIVERSIFICATION - Market Capitalization

Market Capitalization
            My 2011 Dividend Machine project is just about completed.  You already know that portfolio diversification is very important and that diversification within your dividend income portfolio is also important.   

Monday, December 12, 2011

DIVIDEND DIVERSIFICATION

            I continue to analyze the portfolio of dividend stocks that I call Dividend Machines; today I look at diversification.

            If any rule exists that is of equal importance to “always invest in something that makes money”, it is never put all your eggs in one basket.   Diversification is important in any portfolio but it is particularly important for income investors.   You see, except for the much disciplined young person who uses income investing to create wealth, the people who invest to use the income for everyday expenses have little room for

Saturday, December 10, 2011

Dividend Increase + Special Dividend Income

          2011 Dividend Machine National Health Investors (NHI) has announced a quarterly dividend increase from $.615 to $.65. At Friday's closing price of $43.71 the annual dividend yield is 5.95%.  Moreover, NHI will pay a special dividend of $.22.   Nice income investing.

Very Truly Yours,
TheMoneyMadam

Tuesday, December 6, 2011

What to do with Darden Restaurants (DRI)

It is hard to do, but income investors have to insulate themselves from price fluctuations, otherwise you should not invest in stocks to create income.   If you bought Darden Restaurants (DRI) when it was profiled, you cannot help but be unhappy that the stock price is down about 10%.  What should an income investor do?


I bought DRI when I profiled it so I had to  make a decision about my position.   I like the dividend pattern DRI dividend history.  While the news is that DRI will have slower EPS (earnings per share) than previously expected, I still like four percent growth of earnings.   Therefore, I am going to add to my position.

Very Truly Yours,

TheMoneyMadam

Sunday, December 4, 2011

DEBT to EQUITY RATIO

English: Diagram illustrating the relationship...Image via Wikipedia
            This is the fourth of six analyses I have made of the fifty two companies that make up our 2011 Dividend Machines.   First we determined if we met our goal of selecting companies that paid at least a three percent dividend (see post .)  Our next analysis tested our success at picking companies that not only paid at least a three percent dividend but also provided annual dividend increases (see post.)  The third criteria for a company to be considered a Dividend Machine is earnings that are greater than the amount paid in dividends and we analyzed their EPS (see post.)  The final hurdle each company had to meet is a debt to equity ratio of 1 or less or equal to the industry standard.  This post will concentrate on D/E ratio analysis.

Wednesday, November 30, 2011

How did our 2011 dividend machines fare today?

strategyImage by Sean MacEntee via FlickrWhy should you buy a stock every week?  Because you never know when the market will do what it did today.

Why should you sell calls even when the market is down, because call buyers want to get in with little capital and they too do not know when the market will do what it did today.

Monday, November 28, 2011

2011 Dividend Machines EARNINGS PER SHARE

Verifying balance sheetImage by s_falkow via Flickr
Dividend Machines – 2011 Earnings per Share
            An income investor’s sole investment goal is income but we all know that we want our income to flow from a reliable source.  In life there are no guarantees, therefore we must depend on the financial indicators that are consistent with an investment that will deliver safe and ever increasing income.  Earnings per share are, I think, the easiest and best indicator of a company’s profitability.

            Recently I discussed dividends, dividend increases and

Wednesday, November 23, 2011

ESP - 2011 dividend machine declares special income

Dear Income Investors:

          One of our 2011 dividend machines, Espey Manufacturing & Engineering, symbol ESP, was profiled on July 11, 2011 See Original Post.  I would bet that few of you ever heard of ESP before reading this blog.   Currently trading at about $24.00 per share, ESP is a very affordable stock.

Monday, November 21, 2011

Option Income - 2011 Dividend Machines

Option Income analysis – 2011 Dividend Machines
            Income investors, covered calls, as you know, are contracts that pay you money known as a call premium. These premiums can be as little as ten cents a share or as much as several dollars a share.  So you see covered calls can provide significant investment income.  In retirement, this is very important.

 In exchange for receiving the call premium, you give the buyer the right to buy your stock at the strike price of the contract. The strike price is critical because income

Friday, November 18, 2011

2011 Dividend Machine DIVIDEND INCREASES

up arrowImage by Leo Reynolds via Flickr

Dear Income Investors:

          Finding dividend machines using only four simple criteria was the one of the goals of this blog during this first year.  One of the criteria was to include companies that have increased their dividend every year for at least the past five years.

          The theory behind including the dividend increase hurdle was that we income investors need our income to increase and we do not want to be traders in order to accomplish that goal.  Other fixed income instruments rarely provide for reliable increasing income.   Dividend machines can fulfill your need for increasing annual income.

Monday, November 14, 2011

2011 Dividend Machines INCOME

CashImage by bfishadow via Flickr
REVIEW and ANALYSIS of 2011 DIVIDEND MACHINE INCOME


                Income investors if you are looking for a new dividend machine for this week, note that I have completed profiling 52 dividend machines for 2011.   For the remainder of calendar 2011, I will analyze how we did with those 52 companies.  I will continue to opine and comment on covered call income and interest income opportunities.  I will start profiling 2012 dividend machines again in January, 2012.

Thursday, November 10, 2011

Dividend Machine Atmos Energy - follow up

Dear Income Investor:

Atmos Energy raised its dividend again.   I love these dividend machines. See original post on Atmos Energy, symbol ATO

Very Truly Yours,

TheMoneyMadam

Wednesday, November 9, 2011

QCOM - a better story today

          QCOM, income investors, has been a source of a lot of income for me and yesterday I profiled a potential covered call trade.   Well today the story is even better.

2011 Dividend Machines DIVIDEND YIELD


REVIEW and ANALYSIS of 2011 DIVIDEND MACHINES


                In this post, income investors, I will relate to you the methodology I used to select the 52 companies that met the criteria to be considered dividend machines and I will tell you what measures I will use to determine how well we did.

Tuesday, November 8, 2011

QCOM covered calls

Image representing Qualcomm as depicted in Cru...Image via CrunchBaseIncome investors, I have written about Qualcomm as a cash cow three times during the first year of this blog.  Today was another example of how to use Qualcomm in your income investing strategy.

Monday, November 7, 2011

Dividend machine for November 7, 2011 Darden Restaurants, symbol DRI

The company's former logo, used until 2009Image via Wikipedia


                Income investors, the 52nd dividend machine is Darden Restaurants, symbol DRI.  DRI provides income investors with an opportunity to diversify.  You know we tend to be heavy into industrials, telecoms, utilities, and big pharma, so it is important to add a dividend machine, our final dividend machine for (fiscal year 2011), that meets all the criteria and that adds some diversification.

Monday, October 31, 2011

Dividend machine for Oct 31, 2011 Met-Pro Corp. symbol MPR

Exhibit of Pollution Control System. at Four C...Image by The U.S. National Archives via Flickr
                A little company with a little stock price and a little dividend … but listen up … Met-Pro Corp. is an income investor’s friend.  Met-Pro, symbol MPR, costs less than $10 per share.  


As you know, I rarely discuss stock price; I prefer to concentrate only on my chances of realizing more income every year from my income investments.   However, for new income investors, a stock price of $10 is very appealing.

Let’s look at why MPR is a dividend machine.   In 2007 MPR paid $.191 in dividends; in 2008 they increased the dividend to $.207.  The company has increased the dividend every year for at least 5 years.   If you own MPR by December 2, 2011, you will receive the quarterly dividend of $.071 on December 16, 2011. 


On an annual basis, the dividend is now $.284.  At the closing price of $9.27 on Friday, October 28, 2011, the yield is just over three percent.  MPR earns $.41 per share which is almost twice the amount they pay out in dividends.

 Income investors we have a found a very affordable and reliable dividend machine in MPR.  Their low D/E ratio of .04 is another encouraging part of this picture.  By the way, MPR is a provider of environmental control services. Consider this company for your growing list of dividend machines.

Very Truly Yours,
TheMoneyMadam
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Friday, October 28, 2011

Chevron, symbol CVX - a dividend machine

A gas station in Chevron Corporation's new tra...Image via Wikipedia          Income investors, our dividend machine Chevron, symbol CVX has increased the dividend again.  Even at yesterday's elevated closing price of $108.97 the yield is 2.97 percent.   Using the price when I profiled CVX the yield is up to 3.58 percent.See my original post on CVX

          Good income investing!

Very Truly Yours,
TheMoneyMadam

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Thursday, October 27, 2011

MEDICARE and INFLATION - income investors pay attention!




They taketh and they giveth.   

           Is there any more telling proof that inflation affects income investors than the announcement that social security payments will increase and so will the amount you pay the government for Part B Medicare costs?  If you are not yet old enough to know about Medicare, you may be surprised to learn that part of your social security income is used to pay for your Part B medical costs.  If you are old enough to be on Medicare, you already know that the amount your pay for Part B medical costs increases pretty regularly.   

Monday, October 24, 2011

Dividend Machine for October 24, 2011 Hasbro Inc., symbol HAS

Hamtaro plush from HasbroImage via Wikipedia

Dividend Machine for October 24, 2011 Hasbro Inc., symbol HAS


            Writing this blog on investing for income is such fun and who does not like to have fun?   Hasbro Inc, symbol HAS, is company that makes money selling toys and games.  Hasbro, Inc has been engaged in proving not only fun but also a steadily increasing dividend for quite a while now.  This is our income investors’ dividend machine for October 24, 2011

Tuesday, October 18, 2011

BREAKING THE BUCK: Are mutual funds safe?

Safe introImage by *spo0ky* via Flickr
           Anyone who reads this blog knows I concentrate on investing for income:  yet every once in a while I opine on other areas of investing.  Today, my focus is pooled investments.  Pooled investments could mean you and your brother in law buy a rental property.  You share your investment with your partner and you share the work.  At least you have 50 percent of the input.   Perhaps it does not

Monday, October 17, 2011

Dividend Machine for October 17, 2011 Thomson Reuters symbol TRI

ReutersImage by FezRutherford via Flickr

            Income investors who follow this blog know that my sole purpose is to help you invest for income using stocks and bonds.  My intent is to find one company per week that meets all four of the criteria necessary to classify it as a dividend machine.  Those four criteria are that each company earns more money that it pays out in a dividend; pays a dividend of at least three percent; has increased the dividend payout every year for at least five years; and has a debt to equity ratio less than one or within the standards of the industry. 

Monday, October 10, 2011

Dividend Machine for October 10, 2011 Proctor & Gamble, symbol PG

Logo for Procter & Gamble. Source of the logo.Image via Wikipedia

Dividend Machine for October 10, 2011 Proctor & Gamble, symbol PG


                Defensive times require investing in defensive stocks.  We have already added Kimberly Clark and General Mills so you could expect Proctor & Gamble, symbol PG not to be far behind in our dividend machine list.   Everybody knows about this company.  But do you know they have paid uninterrupted dividends since 1890?   Think of all the trouble the world has been through during that time frame and you can understand why conservative, income investors have made PG part of their portfolios.

At the close on Friday October 7, 2011 PG’s stock price was $63.91.   PG earns $3.93 per share and pays out $2.10 per share.    This payout is a dividend yield of 3.30%.   Every year for at least 5 years, the company has increased the dividend and increased it substantially.   They are a solid company with a debt to equity ratio of only .47.

You can expect a quarterly dividend of $.525 in November.  Consider PG as one of the companies for the income-producing portion of your investment portfolio. 

Very Truly Yours,
TheMoneyMadam
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Friday, October 7, 2011

RPM - more income

RPM's stock price may be down but it increased the dividend again, for the 38th consecutive year.

Thursday, October 6, 2011

Find more income from COP

RODEO, CA - JANUARY 25:  Cars drive past the C...Image by Getty Images via @daylife

Finding Money in COP


                This brutal market has some recent life and we income investors are always looking for ways to increase our income.   I know it is hard to stomach stock price reductions but you have not lost money unless you actually sell.

                I sell when fundamentals change such as a company reducing or stopping a dividend or taking on so much debt that I get nervous about their balance sheet or debt to equity ratio.  I rarely sell on price alone.

Monday, October 3, 2011

Dividend Machine for October 3, 2011 Raytheon, symbol RTN

President Dwight D. Eisenhower, Oval OfficeImage via Wikipedia

Dividend Machine for October 3, 2011 Raytheon, symbol RTN


                Beware of the military industrial complex said President Eisenhower.  As income investors, who are we to fight an uphill battle?   Raytheon, symbol RTN like NOC see my post on NOC and LMT see my post on LMT is a dividend machine.  

When I was in “the business”, I liked to suggest to my clients a troika (three companies) of income stocks just to cover all bases.   For instance, I might choose three industrials, three chemicals, three pharmas,    or three banks depending on the client's needs. That strategy worked out well.

Friday, September 30, 2011

Follow up on dividend machine Harleysville Group, symbol HGIC

          Dear income investors, you hit a home run with HGIC, Harleysville Group a small insurer that I profiled on May 30, 2011 see original post on HGIC.

Wednesday, September 28, 2011

Follow up on dividend machine Watsco, symbol WSO

Follow up on dividend machine Watsco, symbol WSO


                Income investors who want to invest when the market is down, which is the best time to add to your income investments, have to decide to dedicate their capital to a new holding or an existing holding.  In that vein, I would like you to look at Watsco, symbol WSO.  See original post on WSO.

Monday, September 26, 2011

Dividend Machine for September 26, 2011 Landauer, symbol LDR

Patient treating room for neutron radiation th...Image via Wikipedia

                When I started this simple income investing  project that includes  finding at least one company per week that qualifies as a dividend machine, my theory was that 52 companies are just about the right number of companies for a large portfolio.  Fewer companies are okay but you risk too much concentration in one company or industry.  More than 52 and you have trouble tracking them.  I know this much from my many years of investing my money and that of others, you need to diversify; never risk everything on one endeavor.  Equally, portfolios with 100 holdings usually underperform as far as income is concerned; and income in the sole purpose of this investing for income blog.

Thursday, September 22, 2011

Income investor strategy for today’s market

Income investor strategy for today’s market


          Like all of you, the market action, the fed action, the U.N action, the European action all lead to making me sickly especially when I look at the value of my portfolio.  Today is painful but we have to view it as an opportunity.  If you keep your lists up to date, you can scan through your holdings and look at opportunities to add to your positions or to write calls against positions.

Monday, September 19, 2011

DIVIDEND MACHINE September 19, 2011 TRASH - RSG or WM

Trash Recycling with Disposal ContainersImage by epSos.de via Flickr
                My search for a dividend machine for this week was very interesting.    Several companies came so close to meeting our four hurdles (1) makes money (2) pays at least a 3% dividend with a payout that is less than their earnings (3) has increased the dividend every year for at least 5 years and (4) has a low debt to equity ratio.  I am still waiting for Verizon to be my pick but it is just not quite ready as they pay down debt and work on creating ever-increasing income…after all, ever-increasing income is a precursor to ever-increasing dividends.


                I am going with trash this week.  RSG, Republic Services peaked my interest with earnings of $1.26 and a dividend of $.88.  At the close on Friday September 16, 2011, of $28.85, the yield is just barely above 3 percent.  Analysis of RSG lead me to review Waste Management symbol WM.


              Waste Management, symbol WM, earns a solid $1.98 per share and pays out $1.36 in dividends.  At Friday’s closing price of $32.01, WM sports a dividend yield of 4.25 percent, which exceeds Republic’s dividend yield by over 1.25 percent.   When looking at dividend growth Republic is the winner, but WM has also increased the dividend every year and has provided a few extra payouts.   In 2006, RSG paid $.107 per share per quarter and will pay $.20 per share this quarter.  In 2006, WM paid $.22 per share per quarter and will pay $.34 per share per quarter.   


                Since both RSG WM meets three of our four criterion, the final measure is debt to equity ratio.  WM has a D/E ratio of 1.44 and RSG has a D/E of .95.  


               The choice is yours.  WM pays out more today than RSG but RSG is more fiscally solid than WM.  RSG pays out less but has increased the payout at a faster rate than WM.   It is nice to have two choices this week.


Very Truly Yours,
TheMoneyMadam
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Monday, September 12, 2011

ITW Dividend Machine with Call Option Income

          Earlier today I profiled ITW as a dividend machine.  I want to share with you another income opportunity on ITW and that is to sell calls against ITW.  Here are the facts:  you can buy ITW today at about $41.25, you will receive a dividend of $.36 on October 12, 2011; you can sell a December $45 call against your holdings and you immediately receive a call premium of about $1.75.

DIVIDEND MACHINE for September 12, 2011 ITW Illinois Tool Works

NEW YORK - JULY 30:  A financial professional ...Image by Getty Images via @daylife
DIVIDEND MACHINE for 9-12-2011, ITW, ILLINOIS TOOL WORKS

            Income investors must take advantage of poor markets; these are opportunities to search for deals.  ITW, Illinois Tool Works has been a company I have wanted to own.  My reasons for not buying ITW already are many, including already owning a bunch of industrial companies, and the dividend yield was a touch too weak for me in the past.

            Times have changed for me and perhaps for you too.  Earlier this year when the markets were up, I wrote calls on the industrials and the call  buyers took my stock.   I always make at least 10% on the gain from a call being taken, so I was happy to lose them.  Now I am a little short on industrials.  Since over time, industrials have provided nice dividend income that goes up during bad times and they share extra profit with us during boom times we always want to have a healthy allocation of industrials.  With the recent market swoon, I finally find an opportunity to add ITW to my income portfolio.

            ITW’s dividend fundamentals are solid.  Earnings are $3.85 per share per year, dividends were just increased again as they have been for at least five years.  ITW’s annual dividend is now $1.44 per share per year.  If you own ITW by September 30, 2011, you will receive the recently enhanced quarterly dividend of $.36 per share on October 12, 2011.  The dividend yield is 3.39% based on the closing price of $42.51 on Friday, September 9, 2011.  

            ITW has been in business for around one hundred years and is composed of 840 small businesses.  They have a very solid balance sheet as measured by D/E ratio, which is .39.

            If you have money to invest and want to buy a diversified industrial with a dividend yield that is well above what you can get from a corporate bond and with a dividend yield that has increased every year for at least five years, ITW is for you … and me!

Very Truly Yours,
TheMoneyMadam
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Monday, September 5, 2011

Portland General Electric - Dividend Machine for Sept 5, 2011

Rosskopf (Freiburg), Windräder vom AussichtsturmImage via Wikipedia          Our dividend machine for September 5, 2011 is Portland General Electric, symbol POR.  This electric and alternative energy company was a subsidiary of Enron.


After POR became independent, it has consistently increased its earnings.  POR paid its first dividend of $.225 in March of 2006.  If you own it before September 26, 2011, you will receive a quarterly dividend of $.265 on October 17, 2011. Few investments have increased their payout recently.



POR meets our very stringent criteria for a dividend machine.  POR earns $2.19 per share per year, pays our $1.06 per share per year, which, at Friday's closing price of $23.45, is a dividend yield of 4.52 percent.  POR's debt to equity ratio is 1.09, within industry average.


The above paragraph depicts the nature of simple income investing.  Bonds are still too expensive and this blog does not cover real estate investing, therefore your investment choices tend toward investing (not trading) equities.  During times of market uncertainty, a safe investment is one where the company makes more that it pays you and it pays you more and more every year.


Consider POR, Portland General Electric for the income-producing portion of your portfolio.

Very Truly Yours,

TheMoneyMadam
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Friday, September 2, 2011

Adding to MOLX & LMT

Image representing Lockheed Martin as depicted...Image via CrunchBase          A quick review of my list of dividend machines revealed two buys in this down market.  Readers of this blog know that the sole purpose of income investing is to generate income.  We know stock prices will move up and down.

          LMT and MOLX are two companies whose stock price is down at least 10 percent from the date each was profiled as a dividend machine.   I like to add to positions when I can get it on sale.  Each of these companies still meet my criteria as a dividend machine.

          Today you could buy LMT at about $71.20 and write a December $77.50 call for $1.80.  LMT's quarterly dividend is $.75.  Writing this call, also known as selling a call, creates income greater than two dividend payments.  Furthermore if the buyer of my call takes LMT at $77.50 we book a capital gain of 11.37 percent.  My kind of trade.

          MOLX is trading today at about $20.30.  You can write a November $22.50 call for $.75.  Again this meets our criteria.  The call premium is almost equal to a whole year of dividends which are $.80.  Moreover, if MOLX is bought by our call buyer, we book a 14.53 percent gain.

          You have to have ice in your veins to do this kind of investing.  The income is worth it for me.  You will have to determine if this strategy works for you.


Very Truly Yours,

TheMoneyMadam
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Monday, August 29, 2011

Travelers Company, symbol TRV Dividend Machine for August 29, 2011

          Income investors take note that during down markets, we have more choices for income investing than we have during up markets.  I was torn between profiling another utility or looking for a company in another industry.

Friday, August 26, 2011

HOW MUCH TO DEDICATE TO INCOME

An example of a cheque.Image via Wikipedia
I think this is one the more simple decisions to make.  You need to know how much you spend every month and how much monthly income, if any.

Monday, August 22, 2011

Dividend Machine Telus Company, symbol TU – August 22, 2011

Fibre optic strandsImage via Wikipedia


Simple income investing leads us to the third telecom company to be included in my list of dividend machines.   Telus Company is a Canadian telecommunications company delivering both landline and wireless service to Western Canada.

Thursday, August 18, 2011

How to decide if a covered call premium is enough?

          Readers of TheMoneyMadam's blog know that our sole focus is creating income and doing it with simple income investing techniques.  During turbulent times, selling calls (read my post on how to write, also known as sell, a covered call) is a good opportunity to create income.  I am often asked how to decide if the premium is enough?

Monday, August 15, 2011

Cullen and Frost, symbol CFR, dividend machine for August, 15, 2011

State Seal of TexasImage via Wikipedia


Dividend machine, Cullen and Frost Bankers, symbol CFR, has been on my radar screen for quite a while.  CFR was just a bit too expensive for me and I was too nervous to buy it at a recent low of $43.04 in February of 2009.

Wednesday, August 10, 2011

Chevron, symbol cvx 20 percent down

Chevron now pays a dividend yield of 3.5 percent. The price $90 is 20 percent off the high. It could go lower but I think it will continue to pay us and increase our income over time. If you liked it at $100, buy it at $90.

TheMoneyMadam

Buy your dividend machines at 10 percent down

Check the list; select your favorite stock. If it is still a dividend machine, in other words the stock still makes more money than it pays you, has at least a three percent yield, a good balance sheet, and has increased the dividend every year, then buy it on sale.

TheMoneyMadam

Monday, August 8, 2011

Consolidated Edison, symbol ED, dividend machine for August 8, 2011

Con Edison plant on the East River at 15th Str...Image via Wikipedia


Income investors have to both hate and like the recent action of the stock market.  We are partially immune from the price gyrations but not totally.  After all, we do not have ice in our veins; we just have investments that deposit money in our checking account with little worry.  But it is difficult to see the value of an investment decrease.  My advice is the same as always.  Try not to worry as much about your portfolio value and more about the income it creates.

Thursday, August 4, 2011

An income investor's dream

Today was indeed unique.  Not only could you buy income on sale, you could write calls against it immediately.  It takes two sides to make the market work and we were on the contrarian side.  Moreover, someone else out there is even more contrarian I am and they bought  my calls.

Tuesday, August 2, 2011

Almost Dividend Machine Target, symbol TGT

This is a row of Cash Registers at a Target st...Image via Wikipedia          Target comes and goes in my portfolio.  TGT pays an ever increasing dividend and has earnings nearly four times the payout.  Their debt to equity ratio is 1.00 which is the upper limit for a company in my income portfolio.    Target is not quite a dividend machine because the dividend yield is only 2.42%.  However, as readers of this blog know, I often use almost dividend machines that have call options to goose my income.

Monday, August 1, 2011

NORTHROP GRUMMAN, Symbol NOC, dividend machine for August 1, 2011

The Lockheed C-130 Hercules serves as the prim...Image via Wikipedia


Years ago when I first started in this business a colleague suggested to me that I buy more than one stock in each of the areas I wanted to invest.  At that point in time, I still worked and did not have as much interest in dividend stocks.


His advice applies to dividend machines as well. Northrop Grumman, symbol, NOC is the second stock I have profiled in the aerospace industry.


The first was Lockheed Martin, which with the dividend and covered call income has been a stellar performer for the income investor.


NOC earns a mighty $6.53 per share and that number goes up all the time.  If you own NOC by August 25, 2011, you will receive the quarterly dividend of $.50 per share on September 10, 2011. NOC’s annual dividend is $2.00 a share to investors.


NOC’s dividend, as is required for a dividend machine, has increased every year for at least the past five years.  Based upon the closing price on Friday, July 29, 2011 of $60.51, NOC’s dividend yield is 3.31%.  For a large manufacturer with very capital extensive products, it is refreshing to see NOC’s D/E ratio at only .33.


An investment the income investor can love.


Very Truly Yours,
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