In this blog I write about stocks that I think will provide a steady and increasing stream of income. This blog is not about what to buy today or sell tomorrow. This blog provides income ideas for the ordinary investor to consider. Income ideas that the ordinary investor can manage on their own.
Three Pillars of Income
My three pillars of income that an ordinary investor can manage on their own are stocks I call Dividend Machines, covered calls on certain dividend paying stocks, and high yield bonds at par or less.
- Dividend Machines
- Covered Calls on dividend paying stocks
- High yield bonds at par or less
A Dividend Machine Discipline
In order to measure the effectiveness of the Dividend Machine portion of this strategy, I keep track of the Dividend Machine stocks about which I write. The results are analyzed by year and you can find the results in the Model Portfolio Page of this blog.
I do not recall writing about selling any of the Dividend Machine stocks because I do not manage these portfolios. I write about Dividend Machine stocks that I think are worthy of consideration when investors have money to buy.
Investors buy when money is available not on the first day of trading in January. They may buy when the market is up or maybe when it is down. They buy when they have money.
It seems to me that you have a good chance of achieving a well balanced income producing investment portfolio if you buy income investments when that money is available no matter if the market is up or down provided that you pick your investments with precision.
That is the point of using a discipline like Dividend Machines. When the market is soaring, a stock may be so expensive that the yield is no longer attractive. You don’t need to chase that stock.
Stocks move into and out of the realm of “Dividend Machine.” Other times a stock price decreases so much that the yield combined with dividend history and financial safety make a stock a compelling buy. You have to filter out the noise and stick with a discipline.
So far in 2015, who knows what the overall market will be doing when you have the money to buy? Each day brings intense volatility. Therefore I find it even more important to avoid the noise and invest for income with discipline.
Widow and Orphan’s Stocks
One is not surprised to find a lot of utility stocks in this group. Although I must say that even I am surprised at the degree of diversification in the portfolios I have written about so far.
Utilities are often called stocks appropriate for widows and orphans suggesting they need steady sources of income. Many of us ordinary investors have the same investment needs as “widows and orphans;” we need income.
Avista, symbol AVA
Avista is my next 2015 Dividend Machine stock. Avista is a utility company in the Northwest. AVA is a Dividend Machine. AVA just increased the quarterly dividend from $.3175 to $.33 which is a about a 4% increase; their five year average dividend growth is 6.4%. Today, AV closed at $34.84 which makes their forward yield 3.788%. Last four quarters EPS were $3.17 with dividends paid out of $1.27. Debt to equity ratio is .98 as compared with an industry average of 1.22. You need to own AV by February 18, 2015 to receive the dividend.
The Table below presents AVA’s Dividend Machine Fundamentals.
Consider AVA for the income investing portion of your portfolio.
* For tracking purposes, the basis of this Dividend Machine will be the closing price on Tuesday 2/10/2015.
* Disclosure no position but may add.