Seeking
Alpha published a terrific article that provided an extensive review of
dividend champions at sound valuations.
The article is very thorough and I read it with interest. I always like to compare my dividend machine
strategy with other professionals. My
post looks at the four companies these two strategies have in common. Here
is the link to the Seeking Alpha article.
Difference between
Dividend champions and Dividend Machines
Dividend
champions have increased the dividend for 25 years. My dividend machines have increased the
dividend for more than 5 years (7 years in 2013.)
Dividend
machines have to pay at least three percent and in 2013 we want closer to four
percent. Dividend champions do not have
to meet that hurdle.
Four Stocks common to
both strategies: KMB, MCD, SYY, CVX
Of
the many stocks profiled in the Seeking Alpha article, I found four that meet
the four criteria I use to call a stock a dividend machine. Incidentally, the author, Chuck Carnevale
states he is long all four of these stocks.
I
have been trying to make sense of my historical data on these four stocks and
Mr. Carnevale nailed it. Of the four stocks we both agree that KMB is pricey,
MCD and SYY fully valued, and CVX a potential buy.
Let’s
look at each company’s dividend machine fundamentals; the data are presented in
the tables below. I have grouped
McDonald’s (MCD) and Sysco (SYY) together as they are considered fairly valued;
then Kimberly Clark (KMB) which is overpriced and Chevron (CVX) which seems to
be the best value.
Dividend Machine
Fundamentals of MCD & SYY
Kimberly
Clark (KMB), considered a bit pricey at the time I conceived this article,
broached the three percent dividend yield minimum today when it closed above
$108. I guess we were right; KMB’s
dividend machine fundamentals are presented below along with Chevron
(CVX.)
Dividend Machine
Fundamentals of KMB & CVX
My
take is that when you can acquire stocks like KMB and CVX with yields greater
than three percent do it because their dividend increase potential makes them
better investments for income investors than a slow growth four percent
yielding stock.
The Money Madam
