Monday, September 15, 2014

Dividends & Income MDP, CVX, SO

Back from vacation and I have to put some money to work.   That happens when you are Charlie Munger (he mentioned in a Wall Street Journal Article that $125K showed up in his account but he just could not find anything he wanted to buy at this time.)

Money shows up in the ordinary investors account as well.   When you are an income investor dividends build up, but you spend those; bond Interest accumulates but you spend that; then we have covered calls.   I pocket the income from call premiums but recently I have had several stocks called away at a profit and now I have to put that money to work. Therein lies the difference between me (we ordinary investors) and Charlie Munger.   He does not have to invest the money for income and I do because that means we can spend even more, or save even more, or give away even more.  We just want more income. Let’s get to work.

Bonds or Stocks

I looked for some junk bonds including some retail names that have suffered recently like Sears  symbol SHLD, JC Penny symbol JCP, Best Buy symbol BBY, and Istar symbol STAR.   I just could not take the risk on the 4% for three years or the 5% for five years.   Earnings were bad, and I could not see any redeeming fundamental other my shopping activity so I have to pass on the bonds.  What stocks are worthy?


I am looking for a stock that meets all my 2014 dividend machine criteria and has had a stock price correction of at least 10%.   I looked for a few small financial companies like AUBN or CINF but most often they just do not have dividend increases that we need.    Other companies that have corrected no longer have EPS greater than the dividend like DRI or LDR.  

Three stocks are of interest.   Meredith Publishing symbol MDP meets all the criteria so I will add to my position.  Note that MDP was named a 2014 Dividend Machine in April.

Chevron, symbol CVX, at $122 is a buy but above $122 it is a hair short of my 2014 minimal yield of 3.5%.  Like MDP, I already added Chevron to the 2014 Dividend Machine portfolio.

Southern Companies, symbol SO, meets all the criteria to be named a 2014 Dividend Machine but for the purpose of this post the stock price correction is only 7.9% and SO would not qualify.    I have owned SO through thick and thin and I will add to my position based on its Dividend Machine fundamentals.

Review the tables below to learn about the dividend fundamentals of these three companies.   Then you can decide if you want to initiate or add a position for the income producing portion of your portfolio.

MDP Dividend Machine Fundamentals

CVX Dividend Machine Fundamentals


SO Dividend Machine Fundamentals