Sunday, July 27, 2014

Dividends & Income TGT - Target should you buy it?

Sunday evening is a good time to look for stocks for income.   Once I find a stock that meets all four of my Dividend Machine criteria, I profile it here on my blog and I quite often invest in the stock myself.

Often times I can go through 20 stocks and find nothing.  But today it took only three. 

Stocks that did not make the grade.

I use “’s” dividend calendar as my first source for finding a new Dividend Machine.  I simply click on any stock with a yield around 3.5% or higher.   I avoid funds, floating rate notes, and even real estate investment trusts.  I concentrate on individual stocks.   I found three stocks right away that pay a dividend greater than 3.5%.   I dug deeper into my analysis to determine if indeed these stocks meet all four of my criteria.   The results are listed below.

DUK (Duke Energy) 4.41 % yield - Earnings less than dividend. 

SJR (Shaw Communications) 4.02% yield - Already a 2014 Dividend Machine. And still a Dividend Machine

STO (Statoil) 3.58% yield - spotty dividend history

Target Corporation, TGT, the next 2014 Dividend Machine

Then I found TGT, Target corp., with a 3.44% yield.  Do you know that their dividend growth averaged 45% every year from $.16 per quarter in Aug. 2008 to $.52 in Aug. 2014? Earnings are $2.96 with dividends of $2.08 and their D/E ratio is a very respectable.85%.  By every measure TGT is a Dividend Machine and I will add it to the model portfolio.  

Clearly, TGT's stock price has collapsed from $72 to just over $60 because of their credit card security issues as well as the inherent difficulties of retail.   But as I always remind you, for the purposes of these model portfolios, I do not use any other variables then the four criteria that make a stock a Dividend Machine.

TGT’s Dividend Machine Fundamentals are presented in the table below.

Consider Target, TGT, for the income producing portion of your 2014 portfolio.