TheMoneyMadam will be on vacation until January 5, 2015.

DRI remember $47

They laughed at me at $47.  MM

Darden's Solid Earnings Make It Attractive http://seekingalpha.com/article/2764585?source=ansh-d $DRI

Chevron like it at $120 and $69

If you liked Chevron at $120 will you still like it a $99 or how about $69? 

Since I started writing my income investing blog, Chevron, symbol CVX made the grade as a Dividend Machine in every one of the four portfolios (2011, 2012, 2013 and 2014) I created using my four Dividend Machine criteria.  Stocks I call Dividend Machines are one of three investments I use to create income.

The four criteria I used to pick Dividend Machines are: yield had to be no less than 3% until 2014 when I upped the minimal yield to 3.5%;  EPS (earnings per share) during the previous four quarters had to be greater than the dividend paid out during the previous four quarters; dividends had to grow consistently and in 2014 I required a 5 years history of at least 4% annual dividend increases; and finally D/E (debt to equity ratio) had to be 1 or less or within industry standards.

Chevron as a Dividend Machine

The first time I picked Chevron was January 31, 2011; CVX’s price that day was $93.37.  In 2012 I picked CVX on June 25, 2012 at a price of $98.90.  In 2013 and 2014, CVX’s stock price was about $120; December 13, 2013 $120.50 and finally January 20, 2014 at $119.29.

I buy stocks for income and while I do not like to lose money when prices fluctuate, I have confidence in my four criteria.   With good D/E ratios I am pretty sure my companies are not going to go bankrupt.  The key question is will the Dividend be safe and will the dividend increases continue?

I tend to hold onto my Dividend Machines through thick and thin. 

The question is if I liked Chevron at $120 will I add at $99?   Will I add at $69?   Will I sell in a panic? A real bear market scares everyone.

Effect of Crude Oil Price on Chevron’ stock price

Oil prices have a major effect on oil company stock prices. Oil prices also drive earnings of these companies.    Earnings drive dividends so it is important to look at the relationship between oil prices and CVX stock price.

Below are two charts:  one is the chart of crude oil over the past 10 years and the other is a chart of Chevron’s stock price over the same period.   You can see a similar pattern.  

In 2009 the price of crude dipped to just above $40 and Chevron’s price dipped to around $60.  In 2008 crude spiked at around $140 and Chevron’s price was up but it did not spike as much as crude.  Yet in 2014 with crude at about $110, Chevron’s price was very strong hitting the $130 mark.  The point is that crude oil prices are slumping and that will affect Chevron’s stock price.  You may get the chance to buy CVX at $99 or maybe even $69.   Should you buy?

Source: NASDAQ

Source NASDAQ

 

Effect of Oil prices on Earnings and Dividends

Let’s look at earnings during these times of tumult where crude prices moved a lot and so did Chevron’s stock price.   Earnings drive dividends and as income investors, we care about dividends.  Between 2004 and 2014 Chevron’s earnings moved from $6.28 per share in 2004 to $10.86 per share most recently.   This has not been a straight line up.   During this 10 year period some years were better than others and lately earnings have declined.   This is not unusual.  Earnings also declined during the crude slump in 2009. 

Dividends, on the other hand have had a straight line up.   In 2004 Chevron’s quarterly dividend was $.40 and today it is $1.07.    I do not fear crude oil prices declines, nor do I fear the related earnings declines because history suggests that Chevron will continue to pay the dividend and even increase it.

The answer is yes; I will like it at $99 and I will like it even more at $69.

TheMoneyMadam

Long CVX

INTC income potential

He thinks like I do.  MM

Intel Has Outperformed In 2014 And Offers 2 Ways To Earn An 8%-Plus Yield http://seekingalpha.com/article/2752945?source=ansh-d $INTC, $AMD, $TXN

BMY increases dividend but not by much.

This meager dividend increase is why I use covered calls to boost income.  My most recent call is profiled below

Bristol Myers Squibb declares $0.37 dividend http://seekingalpha.com/currents/post/2169025?source=ansh-d $BMY

December 11, 2014

BMY is not a Dividend Machine but I have owned it for quite a while because I like the science, I like the 2.43% dividend yield and the 3.12% average annual dividend increase.

Because I am an income investor, I need more yield and more dividend growth. To make up the difference, I sell covered calls.

Here is a call I sold today. I use today's price as the cost basis although my personal cost basis is closer to $50.




Good Income Investing. TheMoneyMadam

RTN good news in down market

Good news for this Dividend Machine in an otherwise down market.

Do not panic.  Look for bargains or just ignore the tax loss selling and wait until you have funds for your next Dividend Machine.   MM

Raytheon awarded contract for Tomahawk launching systems http://seekingalpha.com/currents/post/2170055?source=ansh-d $RTN

Last 2014 Dividend Machine

This article is about two stocks I am evaluating as potential Dividend Machines for 2014. Both are worthy of consideration.  By the way, this will probably be the last DM (Dividend Machines) I name for 2014 which will bring the number of 2014 Dividend Machines to seventeen.  

Everyone should take a break from “work” and take a serious look at their portfolio.   I will be doing this over the next month or so.   Last minute portfolio moves are a consideration.   For instance, will you fund your favorite charity with IRA money if the Senate extends that tax rule?  Have you measured the true income you get from your investments?   The end of the year is a good time for portfolio reflection

Two stock to consider adding in 2014 are profiled below.

Maiden Holdings symbol MHLD

FerdiS wrote an article on Seeking Alpha about 2014 dividend increases. http://seekingalpha.com/article/2735515-dividend-increases-november-2014#comment-44464005. I read these kinds of articles but rarely do I find a stock that just might be a Dividend Machine and that has not shown up on my radar.   But FerdiS got it done.   

One of the stocks he/she (I do not know this person) listed is Maiden Holdings, symbol MHLD.   Maiden is a reinsurer that serves the global market.  MHLD has paid dividends since 2008.  It is a small cap stock.

As you know I use only four criteria to screen for Dividend Machines and MHLD’s data are presented in the table below.

 

Source:  Price, Earnings, Dividends Nasdaq.  Source: D/E ratio MSN 

Laclede, symbol LG

The other stock I am considering is Laclede, symbol LG.  The label LG implies an appliance company but the stock symbol LG refers to a gas company.    This is not the first time that Laclede, symbol LG, qualified as a Dividend Machine.   November 2012, LG was added to the 2012 Dividend Machine portfolio.  http://www.themoneymadam.com/2012/11/laclede-group-inc-dividend-machine-for.html.

I hinted at Laclede as my next 2014 Dividend Machine on November 30 and I wish I had added it to the portfolio then because today it is 4% higher than it was when I hinted at including it in the portfolio.    Like all investors, I have a lot of excuses as to why I did not pull the trigger that day.

Today, both LG and MHLD remain Dividend Machine candidates and they will be my last picks of 2014.   The portfolio will be closed.   No stocks will be bought or sold.   Dividends will not be reinvested.   I will follow this portfolio and report on its performance over time. 

LG’s Dividend Machine fundamentals are presented below.

TheMoneyMadam

November 30, 2014 LG Hint

 

Disclosure:   Long LEG no position MHLD