Monday, March 28, 2011

General Mills symbol GIS Dividend Machine March 28, 2011

English: General Mills's logo.
English: General Mills's logo. (Photo credit: Wikipedia)

Invest in companies that produce the things you use.

When you buy a product, it is nice to share in some of the end profit; sort of like a rebate.   In order to fulfill our true objective of creating ever increasing dividend income, we have to invest in companies that not only produce goods that we use but also pay us a piece of the profit in dividends.

Although you may buy a lot of Apple products, you cannot invest income producing money in Apple because it does not share profit. Apple is a growth strategy and the portion of your portfolio that is designated to creating income must be invested in companies that pay a dividend.  In that vain I profiled KMB as one of my dividend machines because a lot of you buy diapers; perhaps cereal should have come first, but we are on to General Mills, symbol GIS. You all know General Mills' products.

General Mills, GIS Fundamentals

General Mills earns $2.53 per share per year and pays out $1.12.  If you own GIS by April 7, 2011, you will receive the quarterly dividend of $.28 per share on May 2, 2011. Debt to equity might appear a touch high at 1.17 but for these types of companies D/E ratios can run a bit above 1.  The dividend yield might seem a touch low at 3.06% but it grows every year at greater than 10%.  Does any other income investment you currently own increase your income by greater than 10%?

Stock Price up on demand for defensive investments.

GIS is a bit boring and one could argue that it is not cheap at $36.50 per share and they might be right.  Many have moved into defensive investments; these are investments that are safe when the world is in turmoil.    This is why a defensive stock like GIS has done quite well as measured by stock price.  You see, the market climbs a wall of worry. 

Defensive investments are just fine as long as they continue to increase our income.  I can ignore price fluctuations, but I must be sure that my quarterly checks arrive and are greater than they were a few years ago.   These are the reasons I selected GIS as this week's dividend machine.

Very Truly Yours,

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Sunday, March 27, 2011

INCOME - Advantages of Simple Investing

Simple Investing has its advantages.

Wednesday, March 23, 2011

Exelon, EXC - Income Investor Curse - Sentimentality

          Sentimentality can thwart even the most disciplined income investor.

Monday, March 21, 2011

Freeport McMoran a high risk trade revisited

Freeport McMoran, symbol FCX,  was the subject of an option trade

INTEL, symbol INTC, dividend machine for March 21, 2011

SAN FRANCISCO - MAY 13:  A pedestrian walks by...Image by Getty Images via @daylife
This week’s income investment is a company whose products you use every day.  Dividend machine Intel, symbol INTC 's products are in so many machines you use.

Buy Intel's Earnings

Any time you can buy $2.00 of earnings for less than $20.00 you have a nice opportunity.  You will hear growth investors argue that INTC is a bore in the exciting world of technology.  Income investors like income even if our partner is a boring producer of income.

Yet, I argue that when a company sports a 24.2% growth of income in 2010 it has growth and  is the kind of company I am happy to own because I look for income growth which comes from earngins.

Dividend Increase

Intel just raised its dividend and this has been a wonderful pattern since INTC started paying a dividend. You will be paid $.1812 per share on June 1, 2011 provided you own it by May 4, 2011.  INTC’s yield is 3.64% based on the closing price of $20.19 on March 21, 2011.   Plus Intel has almost no debt with a D/E ratio of only .04.

Add INTC  to the portion of your portfolio dedicated to paying the bills.  INTC will pay you and will continue to increase the payout which is more than social security did this last year.

INTC has also provided several opportunities to write calls at a 10 % profit.  Something always seems to happen that sends INTC’s stock price south of $20.  That is when I buy.  Since I like the dividend machine aspect of INTC, I write calls on only part of my position.

INTC, a dividend machine for income investors.

Very Truly Yours,
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Tuesday, March 15, 2011

Income Investors in a down market

Investors never like to open their brokerage account and see losses

Monday, March 14, 2011

Dividend Machine Universal Tobacco, UVV

Nicotiana tabacum, tobacco, detail of a leaf i...
Nicotiana tabacum, tobacco, detail of a leaf in a field, Dordogne, France. (Photo credit: Wikipedia)
Income investors, before you even begin to learn about UVV,  I know many of you will put this pick in the trash bin right away because it is a tobacco product.

While smoking is bad for your health, tobacco leaf sells at a very nice profit and this company pays you a 4.61% dividend yield.

International sales are the growth engine and one could make an argument for the pressure on United States sales because of the move to a smokeless country.  However, tobacco leaf sales are robust.

I would not expect anyone to buy all the stocks that are profiled as dividend machines. Some of you will throw out this idea immediately and others of you may even like this pick because you want to profit from a well run business no matter how socially unacceptable the product is.

Let’s break it down. UVV makes about $5.37 per share per year.  They have a small amount of debt with a D/E (debt to equity) ratio just .53.  Each year the dividend, which is $1.92 increases.  At the most recent closing price of $41.95 the dividend yield is 4.61%.

This company meets all of our criteria for a dividend machine.  If you can stomach the industry, it is worth a place in your cash flow portfolio.

Very Truly Yours,
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Friday, March 11, 2011

Chevron a study for income investors

In want to treat Chevron as a learning laboratory for income investors

Thursday, March 10, 2011

Follow up on Getty Realty, GTY

Income Investors, do not be fooled by GTY

Tuesday, March 8, 2011

We need market volatility

Income investors need market volatility even though it scares the begeezes out of them. You see, volatility provides a chance to buy cheap and sell expensive and it drives covered call income.

Monday, March 7, 2011

Dividend Machine BCE, Inc symbol BCE

Income investors can call on Canada Bell, Canada's largest telecom company, to deliver the income. 

We already have one telecom in our dividend machine list and that is At&T. As I have mentioned before, I would love to be able to add Verizon, symbol VZ, but until it actually earns more than it distributes in dividends, it does not meet our criteria.

Wednesday, March 2, 2011

What to do with Getty, symbol GTY

Income investors flocked into Getty Realty because it pays a big dividend and has increased the dividend by a little bit each year for almost 5 years. Getty, symbol GTY caught my attention last year because of its 8.6% dividend yield. Like all income investors, I wanted a piece of that income so I too bought GTY at about $22.50.

Tuesday, March 1, 2011

Net Income; match the investment with the right account

Net income requires you to match the investment with the right account.     Net income is very important to income investors. If you make 12 percent and the government takes 9% in taxes you are only receiving 3%.