In 2013 I profiled AstraZeneca (AZN) as a Dividend Machine.   At that time the cost basis was about $54.  My personal basis is about $46.    Today, Pfizer (PFE) is making a bid to buy AZN and the results is AZN is up over $10.

AZN is no longer a Dividend Machine because of falling revenues that have caused EPS (earnings per share) to fall below their dividend payout.  All of you know that EPS must exceed dividends for a stock to be considered a Dividend Machine.  

Dividends & Income MDP the next 2014 Dividend Machine

The next 2014 Dividend Machine is Meredith Publishing, symbol MDP.   This post is a review of MDP’s Dividend Machine fundamentals. 

Meredith, MDP, is a publisher.   This stock is hovering between its 52 week high of $53.84 and low of $37.28.  MDP closed at $44.53 on Friday April 25, 2014.

Dow down 140 points

Have you noticed that the Dividend Machine Portfolios don't seem to change much in spite of the market's up and downs.

That is why we also add dividend stocks that may not quite reach Dividend Machine status but have enough covered call income to boost your yield to greater than 3.5%.  Otherwise we would be totally bored.

TheMoneyMadam

Have a good weekend.

Next week I think another Dividend Machine will be revealed.

ABBV 3.4% dividend yield + 11% capital gain potential

ABBV is a spin off of Abbott Laboratories (ABT) which was named as a 2011 Dividend Machine.  Nice little call to consider.

TheMoneyMadam

Dividends & Income When do I sell?

When do I sell?

I sell when a stock has increased in price so much that the dividend yield is less than 3% and I can boost my income from that stock position by selling calls.   

A few other circumstances may make me sell but this post concentrates on MSFT as an example of when I sell because my stock is taken by a call buyer.      

The story is described below.

MSFT a first time Dividend Machine.  This post includes the fundamental data that made MSFT a dividend machine and profiles a covered call opportunity to boost income.   Incidentally, the call was not taken. 

MSFT, a dead money conundrum.  This post shows that confidence in the dividend quality of a stock pays off. I added to my position.  

MSFT tests the best income investor.  This post shows how you can make income and capital gains on a stock like MSFT.

And then comes the payoff and the loss:

In January 2014, I sold April $39 calls on my position.   If you read the above posts, you know the basis on MSFT is about $27.50.    When I sold the calls, MSFT’s stock price was in the $36 range and at the high of the year.  This week, when April calls expired, I lost my MSFT.  The call buyer (s) bought them all from me.

The loss and gain are bittersweet.  Total gain on MSFT is in the fifty percent range.  But more important, I lost a stock that is increasing the dividend by over 20 percent per year on average.

If  MSFT corrects enough that I can get close to 3.5% dividend yield, I will jump back in.  Or maybe I will buy at less than a 3.5% yield when calls that will net me a four or five percent yield are available and forty percent capital gains are likely.

Until we find our next 2014 Dividend Machine, these are the kinds of stocks that make sense for income investors.

TheMoneyMadam

BTW, I also sell when the stock price has increased so high that the yield is less than 2.5% and the P/E ratio is at historical highs but no calls are available.  KMP is a good example.  

Another reason to sell would be a dividend cut or a big increase in debt.  PBI is another good example.

Microsoft call yield of more than 1 %

Image via CrunchBase

This is an interesting call on MSFT.

Dividend yield alone is not enough for me, so I try to boost my income with covered calls.   Below is an idea.

TheMoneyMadam

Dividends & Income CMTL 3.77% yield

CMTL 3.77% yield: interesting, mostly earns more than div.  but not during last four qtrs.  Div paid only since 2011.  D/E .5264.  Calls available: $31.89 Jul (90 days) $32.50 for $.95 .. let's watch this one.  

TheMoneyMadam 

Vacation Time

The Money Madam will be on vacation until Monday April 21, 2014.

Sign up for email alerts if you want to be notified when I write up the next dividend and income idea.

MM

Dividends & Income Dividend Machine for 2014 - LEG Leggett & Platt

Another dividend machine for 2014. 

I have owned this stock for a while and now I think it should be a 2014 Dividend Machine.  Leggett & Platt makes all kinds of things for homes, offices, airplanes … they’re everywhere.   As you know I do not use current trends like housing starts to determine which stocks to buy.  I use my four Dividend Machine criteria and by golly LEG qualifies.

I noticed it today as I was looking through my portfolio for covered calls.    I found a nice call on LEG and I checked the Dividend Machine Fundamentals of LEG to make sure I still wanted to own it.  LEG's Dividend Machine Fundamentals are presented below.

Leggett & Platt (LEG) Dividend Machine Fundamentals

Today, as I write, LEG is trading about $32.50 which is the price I will use for my analysis.    Over the past 8 quarters, LEG consistently earned more than it paid out in dividends.   EPS = $1.34 and Dividends = $1.20.   LEG’s dividend yield is 3.68%. 

Dividend increases are very important to income investors and LEG makes the grade with an average dividend increase of 4% over the past five years.  LEG has been solidly managed and sports a debt to equity (D/E) ratio of .625.

See the table below for a summary of LEG’s Dividend Machine Fundamentals. 

Covered Call on LEG

The table below summarizes the income potential for investors who buy LEG at $32.50 and sell a June $35 call.   This kind of additional income is why I own LEG as one of my Dividend Machines.

Consider LEG for the income producing portion of your investment portfolio.

TheMoneyMadam