Fight Inflation. Buy a stock that increases your income every year. Meredith Publishing, symbol MDP is a good example.
DIVIDEND
MACHINE
|
6/10/2013
|
Meredith
Publishing
|
MDP
|
Price when profiled
|
$41.09
|
Last 4 Qtrs Earnings
|
$2.66
|
Last 4 Qtrs Dividends
|
$1.63
|
Current Qtr Dividend
|
$0.41
|
Annualized Div Yield
|
3.97%
|
No. Years Div Increase
|
20
|
Debt/Equity ratio
|
0.43%
|
The effect Inflation has on your retirement is the subject
of this post.
An inflation fallacy measured by the experts needs to be examined.
Then I want to convince you that your
investments have to create ever increasing income because of the effect of inflation on your lifestyle.
I like the stock Meredith Publishing, symbol MDP. MDP has increased investor income every year for twenty years; Retirees and for those saving for retirement should consider MDP for the income portion of their portfolio; MDP's dividend machine fundamentals are presented below.
The
no inflation fallacy:
Experts in the government and on TV continue to try
to convince us that “there is no inflation.”
They use complicated formulas. Social Security payments go up based on inflation and since the formulas measure no inflation, social security increases have not been reliable because "there is no inflation."
My personal experience does not support their
analytical results. I have lived long
enough to know how much more it costs me to maintain my lifestyle now as
compared with say ten years ago.
For investors who are saving for retirement, do not
fall into the trap of thinking you will spend less in retirement than during
your working years. You will spend
differently, but nearly all of my clients spent at least as much during their
golden years as they did during their working years.
Inflation is complicated and we can forgive the
experts, but you cannot forgive yourself if you fail
to take into account the effect inflation will have on your lifestyle
during retirement.
In terms we ordinary investors can understand,
inflation is an increase in the cost of things that you buy; and/or a decrease
in the buying power of the dollars you use to buy things.
We have both; increases in the cost of things we buy;
just look at the cost of milk, meat, gas, and now even rent and housing prices. Plus, we have a reduction in how much our
dollars will buy due to dollar devaluation.
Try the "calcxml" website (see link below) that provides an easy way to
determine what your actual cash flow needs will be based on how old you are
now; when you expect to retire and how long you think you could live is worth
your time. Check it out : http://calcxml.com/calculators/ret05?skn=#top
Dividend
Machine Meredith Publishing, symbol MDP
Ten stocks were on my short list as I tried to find an investment that provides income increases; income increases that can keep up with inflation.
I am going to invest in Meredith Publishing,
symbol MDP. This is a publishing company
and you might initially think I am crazy to consider a company in such an old
industry.
Think again.
MDP has been in business since 1902, and it has kept up with current
events. They operate in two major market
segments: national and local: and they
know how to function in both arenas.
MDP closed at $41.09 on Friday, June 7, 2013; MDP pays an annualized dividend of $1.63 per
share which is a yield of 3.97%. MDP
has paid dividends for 66 years and has increased the payout every year for
twenty straight years. We plan for three percent inflation and MDP's dividend growth beats that by 1%. MDP's average annual dividend increase is about four percent.
Meredith, MDP, earns much more than it pays out (E =
$2.66 D = $1.63) and their D/E ratio is only .43. MDP hit a high of $45.00 earlier this year and has
retreated about ten percent. I like a
ten percent sale. However, it is
volatile and could have price fluctuations.
I personally do not care as much about price fluctuations as I do about
the dividend history.
Yet, price fluctuations suggest to me that I could
make additional income selling a call. I
found one covered call on MDP. The call
is a September 2013 call; strike price of $45.00 that would pay a premium of
$.70 per share premium. The call volume
is low so do not invest in MDP for call income.
Invest in MDP for future dividend increases that
will help your retirement portfolio meet the inevitable inflation pressures
every retiree faces.
TheMoneyMadam
