Monday, July 8, 2013

DIVIDENDS GAS will ignite Dividend Income for 2013

What Dividend Stock Should You Buy To Ignite Your Income?

You are back from vacation and you are determined to invest for income starting today. 

What stock should you buy? 

If I was your adviser I would ask you to answer this question:  What kind of investor are you?   Do you need income with capital preservation?   Do you need income with growth?   Do you need to sell a little of your portfolio just to meet annual expenses?  

One investment that every type of income investor needs is Dividend Machine stocks because these stocks provide not just dividend income but income that consistently increases over time.   Moreover, these stocks have solid fundamentals and can provide principle preservation.

Dividend Machine Stocks

Stocks that I call dividend machines are companies that pay at least a three percent dividend every quarter and have done so for many years.    These companies have to earn more money than they pay out in dividends.   But even more important for income investors, the companies must have a history of increasing the dividend every year for at least five years.  Finally, these companies need to be financially solid as measured by D/E (debt to equity) ratio.   In other words, if you want income, invest in something that creates income.   Read on for an idea?

AGL Resources, Inc. Symbol, GAS

GAS is the first dividend machine I am profiling to ignite your second quarter income investment search.

GAS provides gas in Georgia.  On Friday, 7/5/2013, Gas closed at $42.65.  Annual earnings are $2.51 per share with dividend payout of $1.88 which is a yield of 4.42%.   Dividends have increased every year since 2003.    If you owned the stock in August of 2002 your quarterly dividend per share would have been $.27.   Today eleven years later you income would have increased to $.47 per share; almost twice as much.   Debt to equity ratio is a very acceptable .94.

AGL Resources Inc.
Price when profiled
Last 4 Qtrs Earnings
Last 4 Qtrs Dividends
Current Qtr Dividend
Annualized Div Yield
No. Years Div Increase
Since 2003
Debt/Equity ratio
GAS by definition is a dividend machine; it meets all the criteria, but are you concerned about interest rate pressure on dividend stocks like GAS?    You are wise to consider the threat of interest rate competition.  Yet, can any of us predict the future?   No, we cannot; we can only use history as our guide and what I like about GAS is their formidable sales and income growth.

History is not a perfect predictor but it does help.

Ignite your second quarter income investing by considering a position in GAS.