I promised to find a company that can serve as an example of a
dividend machine; one that if added to a portfolio will provide increasing
dividend income, capital preservation and diversification. Here it is!
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DIVIDEND
MACHINE
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3/21/2013
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McGrath
Rents
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MGRC
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Price when profiled
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$31.21
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Last 4 Qtrs Earnings
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$1.78
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Last 4 Qtrs Dividends
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$0.94
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Current Qtr Dividend
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$0.235
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Annualized Div Yield
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3.012%
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No. Years Div Increas
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since1991
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Debt/Equity ratio
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0.83%
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McGrath Rents, symbol MGRC.
Dividends come from the most interesting
stocks. I am always surprised at what I
find when I commit to finding a dividend company that meets all four of my
dividend machine criteria.
I loved Wednesday’s Wall Street Journal article on
General Mills (GIS) but GIS does not meet the three percent threshold for
income. I found an interesting microcap
company named Frischs but when you go back to 2007, it had a stretch of 6
quarters where it kept the dividend level which violates my rule of a dividend
increase every year since at least 2007.
I thought about Kimberly-Clark; KMB is an exceptional
company but it is expensive at over $90 per share and it does carry a debt load
greater than one and greater than its competitor Proctor and Gamble. What is a Madam to do?
I persist in the quest for ever increasing dividend
income with an eye toward capital preservation, growth and diversification
until I find one. Unless you read this
blog consistently, I would be willing to bet you have not heard of McGrath
Rents, symbol MGRC. McGrath was in my 2011 dividend machine portfolio and it appears
again in 2013.
McGrath Rents, MGRC Fundamentals:
McGrath is a small company. MGRC closed at $31.21 yesterday. It pays just over a three percent dividend
yield and it has increased that yield every year since at least 1991. They make more money than they pay in
dividends and have a very manageable amount of debt as measured by D/E ratio
which is .83. See the table at the top
of this post for a summary of MGRC’s fundamentals.
Income & Income Increases:
This company provides income that is 50 percent
greater than you can get from a US Treasury.
Income increases have been consistent through thick and thin. Like all stocks during the market meltdown of
2008, MGRC lost money, but your income would have consistently increased.
Capital Preservation:
In 2011 when MGRC appeared on my screen, (see the
post McGrath,
symbol MGRC See Original Post on June 27, 2011) MGRC traded at about
$27. Today it trades at over a ten
percent premium.
Diversification:
Diversification is important. Most portfolios of income stocks concentrate
on big pharma or utilities. Moreover,
most income portfolios include mostly large cap. stocks. MGRC provides diversification by industry and
by size.
Consider using this technique for finding stocks to
invest in for income.
TheMoneyMadam
