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.
DIVIDEND
MACHINE
|
7/7/2013
|
AGL
Resources Inc.
|
GAS
|
Price when profiled
|
$42.65
|
Last 4 Qtrs Earnings
|
$2.51
|
Last 4 Qtrs Dividends
|
$1.88
|
Current Qtr Dividend
|
$0.47
|
Annualized Div Yield
|
4.41%
|
No. Years Div Increase
|
Since 2003
|
Debt/Equity ratio
|
0.94%
|
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.
TheMoneyMadam
