Thursday, May 17, 2012

Dividend Machine for week of May 14, 2012 Meredith Corporation, MDP

LA TimesLA Times (Photo credit: Wikipedia)
Dividend Machine for week of May 14, 2012 Meredith Corporation
             Most good income dividend stocks were down today.

            Are you nervous yet?  If so, you are not alone.  Dividend investors were killed on Thursday, 5/17.   Why did income investors suffer so grievously yesterday?  We suffered because the industrial companies are expected to suffer when the world’s economy slows.   We buy earnings and industrials create earnings so if earnings are down so goes their stock price.

Moreover, you have to create earnings to create dividends. We buy dividends.  When we observe slowing world economies, it would seem that will lead to lower earnings and thereby lower dividends.  Hence, lower stock prices.

            However, every event has its exception and yesterday was MPD’s day.  Meredith Corporation is in the media and publishing business.  This is a crowded field and one that is changing.   However, MPD has been a steady earner since 1930 and the stock price was up yesterday. 

            Meredith is not a dynamic company.  This is not a Facebook or an Apple or even a Qualcomm.  Meredith is a small cap., thinly traded company that has done nothing but raise the dividend every year for 19 years.

            Moreover, Meredith produces increasing earnings and dividends without much debt.  Meredith’s D/E ratio is .52.  At $29.41 the current quarterly dividend of $.3825 is an annualized yield of 5.2%.   Over the past 4 quarters MPD earned $2.31 and paid out $1.275 in dividends.

            Do tell where you can find a reasonably priced stock with a solid history of dividend distribution in this negative market?   You’ll find it in MDP.

Very Truly Yours,

Enhanced by Zemanta

No comments: