Wednesday, February 26, 2014

An almost Dividend Machine & a Bona Fide Dividend Machine - DGAS and RAI

This post compares two stocks.    One is an almost Dividend Machine and the other is a bona fide Dividend Machine which I will name as a 2014 DM. 

DGAS – an almost Dividend Machine

Delta Natural Gas Company, symbol (DGAS) is an inexpensive, almost dividend machine stock that could be worth a look.   Dividend Machine fundamentals are in the table below.  The reason DGAS is not a 2014 Dividend Machine is the five year annual dividend increase is only 3.5% and there are no options.


Note that DGAS is ex-dividend today so if you buy it, you have to wait a full 3 months before you are paid.

RAI – a 2014 Dividend Machine

At the risk of receiving damning emails, consider Reynolds American, symbol (RAI.)  This is a tobacco company.   All of these companies generate tons of cash, unlike biotech they do not “burn” through it, they share it.   Look at the Dividend Machine fundamentals table below and you will see that RAI is a 2014 Dividend Machine.

Moreover, RAI has call options.   See the call option table below for an option available today.

These are two ideas for income investors.

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Tuesday, February 25, 2014

Dividends & Income Yields that increase 4% every year

I search, I look, I listen. 

Stocks with dividend yields that beat the 10 year U.S. Treasury are not hard to find.  Even stocks with a minimal 3.5% yield are not hard to find.    Finding a stock, in today’s market that has both a 3.5% yield and a five year history of dividend increases that are greater than 4% per year is the trouble.

I thought I should lower my dividend increase hurdle and then I went grocery shopping and I realized that I will need that 4% increase in a few years.

Stay in touch and as soon as I buy another Dividend Machine in 2014, I will write it up.

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