Sunday, March 24, 2013

Dividend Companies for growth.

Stocks for dividend and growth .. a few examples.

           Dividend investing is considered boring by many advisers and many investors.   I believe investing for dividend income is a dynamic strategy and far from boring.  Mine is a buy and hold strategy.  I am not so rigid personally but this blog reports on two dividend portfolios and those portfolios are strictly buy and hold. This article reports on the events that have occurred so far with the stocks in the 2011 Dividend Machine Portfolio.  This is a report on events such as splits, mergers, buyouts and extra dividends.  Spits, mergers, buyouts etc. are often associated with growth stocks.   Read on to see how even dividend companies can provide growth.

Bought Out
ABBV Spinoff
PSX Spinoff
Bought PGN
Extra Dividend
Extra Dividend
Extra Dividend

The 2011 dividend machine portfolio included 100 shares of 52 companies that I picked between November, 2010 and November, 2011.  

This portfolio is quite diversified both by industry and by market capitalization.   I do not make any trades.  I only hold.  However, several events have occurred since I created this portfolio; these include one company being bought for cash, two companies spinning off subsidiaries, one company buying and merging with another and three companies that paid extra dividends. These events are described below.

HGIC - Cash Buyout:

Harleysville Group, symbol HGIC, was a small cap. insurance company.  HGIC was added to the portfolio on May 23, 2011 for $31.27.  Two dividends were paid and then in September, 2011 Nationwide bought the company for $60.00 per share.  Including the dividend that gain was more than 94 percent.

ABT & COP Subsidiary Spinoff:

I picked Abbott Laboratories, ABT, on December 20, 2010 and paid $48.40 per share.  On January 1, 2013 ABT executed a spinoff of Abbvie, ABBV; the portfolio received 1 share of ABBV for every ABT share.  The portfolio now holds 100 shares each of ABT and ABBV.

Abbott’s quarterly dividend before the spinoff was $.51 per share.  After the spinoff, ABT dropped the dividend to $.14 per share.  ABBV pays a quarterly dividend of $.40.   Combined income of ABT and ABBV is $.54 or a gain of $.03 per share per quarter in income; a modest increase.

We invested $4,840 in 100 shares of ABT.   On Friday, March 22, 2013 the 100 shares of ABT were worth $3,369 and the 100 shares of ABBV were worth $3,897.   The gain on our original investment is a little over 50 percent.

Conoco Phillips, COP was added to the portfolio on May 16, 2011 at a cost of $71.43.  COP did a spinoff of Phillips Petroleum, PSX on April 30, 2012.  We received 1 share of PSX for every 2 shares of COP owned.  The portfolio holds 100 shares of COP and 50 shares of PSX

Dividend income from COP prior to the spin off was $.66 per share per quarter.  After the spinoff, COP continued the $.66 quarterly dividend and PSX commenced a $.20 dividend which has been increased each quarter and is now $.3125 per share per quarter. The combined increase is a nice increase.

Our original investment in 100 shares of COP was $7,143.  Current value of our 100 shares of COP is $6,076 and our 50 shares of PSX are worth $6,755.  The gain is over 79%.

DUK merge with PGN:

Duke Energy, DUK, was added to the portfolio on July 3, 2011 at a cost of $19.07.   Duke bought Progress Energy, PGN, and merged their operations on July 2, 2012.   We received 1 share of the new company, still called Duke Energy, for every three original shares.   The portfolio now holds 33 shares of DUK.

DUK paid a quarterly dividend of $.25 per share before the merger and now pays $.765.  We started with 100 shares so our quarterly income was $25.  We now own 33 shares so our quarterly income is $25.245 a modest increase.

We invested $1,907 in 100 shares of DUK.  As of last Friday, our 33 shares of DUK are worth $70.61 per share or $2,330.  The gain is a little over 22 percent.

WSO, NHI, ESP extra dividends:

Watsco, WSO, paid two years of dividends early in October 2013 for a total income of $5.00 per share.  WSO  then started a new quarterly dividend of $.25 in 2013.
National Health Investors, NHI,  paid an extra dividend of $.22 in January 2012 and again in January 2013
Espey Manufacturing, ESP,  paid an extra dividend of $1.00 in December, 2011 and again in December, 2012


All seven stocks reviewed in this post provided growth of our principle.  I believe in a dividend income strategy and these are examples of how your dividend portfolio can growth.  Not all companies in the 2011 Dividend Machine portfolio performed this well.   I will write about those in the future.  However, every single company continues to pay a dividend with forty eight of fifty two having increased the dividend.  The portfolio gain is well north of 25 percent. I will continue to investment the funds I need to live on using this dividend machine strategy.