Monday, July 30, 2012

Drug Store Walgreens WAG Dividend Machine for July 30, 2012

Walgreens drug store electric sign, MilwaukeeWalgreens drug store electric sign, Milwaukee (Photo credit: mechanikat)
Dividend Machine for week of July 30, 2012 Walgreens (WAG)

            The ongoing effort to find a dividend machine, every week, continues.  This week I found Walgreens drug stores.  This huge company has raised the dividend every year for 36 years.  Their most recent dividend increase makes the dividend the biggest ever in company history.   To learn more about this dividend increase see this link.

            During the past four quarters, Walgreens earned $2.80 per share.   They recently made an acquisition that should set the stage for future business growth that will equal or exceed their stellar growth history.  WAG paid out $.90 in dividends during that same

Friday, July 27, 2012

China Mobile (CHT)

English: Third generation mobile phones (TD-SC...English: Third generation mobile phones (TD-SCDMA) for China Mobile (Dalian, China) (Photo credit: Wikipedia)This post if for those of you interested in international diversification.   You've heard the old phrase "trust no man" (or woman for that matter.)  Well in this case, you cannot trust foreign accounting; you can barely trust U.S. accounting.  However, with that disclosure in mind, those of you who would like to add a little international diversification to your income portfolios consider China Mobile (CHT.)

CHL is reported to have increasing earnings with their most recent report at $6.20 American.  They pay out $2.25 dividend.  The yield at today's price of about $57.60 is 3.9%.  Their D/E is reportedly a very tolerable .30.

I have owned this company for some time and the dividend moves around with currency issues but I have made some additional money on calls.  Here is one I'm taking today.

Have a great weekend.  Another dividend machine next week.

Very Truly Yours,

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Tuesday, July 24, 2012

Dividend Machine for week of July 23, 2012 UVV

HAVANA - FEBRUARY 25:   A Cuban tobacco worker...HAVANA - FEBRUARY 25: A Cuban tobacco worker prepares a cigar in the Cohiba tobacco factory on February 25, 2010, in Havana, Cuba. The Cohiba tobacco factory is preparing a new line of the Cohiba brand, Behike, to be presented during tomorrow�s gala dinner and closing auction ending the annual Habanos Tobacco Festival, that takes place in Cuba from Between February 22 to February 26. (Image credit: Getty Images via @daylife)
Dividend Machine for week of July 23, 2012 Universal Corporation (UVV)

            Get over it right now!  Universal Corporation sells tobacco and it makes a lot of money selling tobacco.  Universal (UVV) earned $3.25 per share during the last four quarters and paid out $1.94 in dividends.  

            UVV, trading at about $46.59 is near its high.  My dividend machine project does not use stock price to determine if a stock like UVV should be included in my 2012 dividend machines list.   Therefore, we should look at the four key criteria that define UVV as a dividend machine.

            Current quarterly dividend is $.49 per share.  At $46.59, the dividend yield is 4.2%.   UVV earned $3.25 during the last four quarters and paid out $1.94 in dividends.  This company, it appears to me will be able to continue to pay me income. In spite of efforts to reduce tobacco use, UVV has been able to grow earnings enough to fund dividend increases every year for fifty-eight years.  Their debt to equity ratio (D/E) is .45.

            You might consider UVV for the portion of your portfolio dedicated to income.

Very Truly Yours,

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Friday, July 20, 2012

Dividend Machine for week of July 16, 2012 NJR a gas utility

                Utilities are riding high these days.   The index of all utilities is in the mid $400’s.  I remember early in my investing career the same scenario when utility company stocks prices were very high.  I also remember when the index of their prices was in the mid 170’s.   That means that utility stock prices not only could but also will moderate in the future.  I am not a stock market timer, as you know.  I kept most of my utilities through thick and thin reinvesting the dividend during times when the stock price was low and cashing those dividends when the stock price is high.
                What should be the distinguishing quality between two utility choices?  Of course, the dividend has to be above three percent.  When a utility has also raised the dividend every year for at least five years, my interest in that stock increases.   When a utility has always earned more per share than it pays out in dividend, I am tempted to include it in the dividend machine list.  Then when I find a utility with little debt, I can include it in my 2012 dividend machine list.

                New Jersey Resources (NJR) is a gas utility that is not limited to New Jersey.  NJR provides gas utility services from the Gulf States up to New England.  Their most recent financial report was very strong.  And NJR is my dividend machine for this week. 

                The table below presents NJR’s dividend machine criteria.  The dividend yield at today’s price of about $46.03 is 3.3 %; their previous four quarters earnings were $2.99 per share; their previous four quarters dividends were $1.48 and their D/E (debt to equity ratio) of .73 is below the industry average.

New Jersey Resources (NJR)

Price when profiled
Last 4 Qtrs Earnings
Last 4 Qtrs Dividend
Current Dividend Yld
No. of Years increased
Debt/Equity ratio

                As you build your dividend machine portfolio, you might consider NJR as one of the utilities.

Very Truly Yours,


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Wednesday, July 18, 2012

Ten Percent Yield - Should you touch it?

A German postage meter marking made with a Pit...A German postage meter marking made with a Pitney Bowes system. Русский: Штамп франкировальной машины системы Pitney Bowes (Германия). (Photo credit: Wikipedia)
Dividend Machines are only one of the investments I use for income.   I provided two ideas for interest income earlier this week.   Today I have not a dividend machine but an almost dividend machine that pays over a 10 percent dividend.

I am usually very careful about buying a company with such a high yield even with a strong

Monday, July 16, 2012

Royal Bank of Scotland RBS Ladder Internotes for more yield.

Royal Bank of ScotlandRoyal Bank of Scotland (Photo credit: Wikipedia)
Where to put cash?

            Most income investors have a lot of cash around.  We tend to be conservative and follow the rules about having between 6 months and a year’s expenses in cash.   In the past, when we could get four percent or more in money market funds it made sense to keep cash in CD's or money markets.  However, today you feel like an idiot.

Thursday, July 12, 2012

General Mills GIS Dividend Machine - a contrarian play

A box of Cheerios breakfast cereal.A box of Cheerios breakfast cereal. (Photo credit: Wikipedia)

Contrarians can get yield too!


            Are you a contrarian?  I would not be surprised that an income investor like you would not really know what a contrarian is?   In stock market terms, it refers to someone who goes against the prevailing market direction. 

            Contrarians sometimes congregate around a particularly industry or sector.  Right now, everybody believes growth is dead.  The consumer is dead.  Why would you want to buy a company that sells goods to consumers?   Most consumer stocks are pretty stinky right now.   Contrarians like that kind of environment because if they are right and the consumer returns, (so far they always have) they buy these companies at a bargain.

Tuesday, July 10, 2012

How to employ a covered call strategy on a stodgy company.

English: A photo of Eli Lilly and Company's or...English: A photo of Eli Lilly and Company's original laboratory located at 15 W. Pearl St, Indianapolis, Indiana. Photo was taken in 1876. The two people on the right side of the doorway are Colonel Eli Lilly (the taller one) and his 14 year old son Josiah K. Lilly (shorter one). The man on the left side is the only other other business employee. (Photo credit: Wikipedia)
This blog concentrates on dividend machines,  but other dividend producing companies can be good stocks for income investors to own.  Companies that pay a dividend and have for a long time but do not warrant "dividend machine" status because they have not increased the payout every year, can provide even more income than a "dividend machine" if you can sell covered calls. 

The "dividend machine" hurdle is high and the "almost dividend machine" is not much lower.  I want to make sure you understand that in order to mitigate risk, I eliminate all companies with too much debt even if they increase the dividend every year.  I also eliminate all companies whose last four quarters of earnings are less than their dividend payout.  

When you apply those screens you find companies that have a dividend yield less than three percent but have increased it regularly;  or you find a company that has a dividend yield greater than three percent but has not increased the payout regularly.

Thursday, July 5, 2012

Pitfalls of Fixed Income!

Retirees and pre retirees with conservative investing philosophies tend to invest at least part of their portfolios in fixed income

Sunday, July 1, 2012

Give me some air or the possibility of a 13% gain!

Dividend Machine for week of July 2, 2012 Air Products (APD)

            I hate it when they listen to my thoughts as I sleep.  Last Thursday I was doing my research for this week’s dividend machine and I came across Air Products (APD) and I said to myself how did I not find this company that has raised the dividend every year for 29 years before today?   With a dividend yield north of three percent, earnings that exceed the dividend by a lot, and a very decent D/E ratio of 3%, Air Products, symbol (APD) was perfect.