Monday, December 22, 2014
VACATION HOLD
Friday, December 19, 2014
Monday, December 15, 2014
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
Sunday, December 14, 2014
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
Friday, December 12, 2014
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
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
Tuesday, December 9, 2014
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