Rules are to be followed and sometimes they put a crimp in my style. This happens quite often when I find an attractive income stock that just barely misses being a Dividend Machine. I am so tempted to change my rules for tracking stocks in mid-stream but that would make for messing with my data. My Dividend Machine portfolio holdings meet all the criteria I set up at the beginning of the year I try to keep the data clean. That means I can analyze the results with confidence. Every stock meets those criteria.
With that in discipline in mind, when it comes to my own money, I can be bought. This is the case with Cincinnati Financial, symbol CINF. CINF just misses the Dividend Machine cut based on annual dividend increases. Their most recent increase is over 4%; $.44 to $.46. When you go back 5 years, CINF’s dividend increases have averaged only 3.37%. Even rounding up does not help meet my 2015 minimal 5 year dividend increase average of 4%.
CINF – an almost Dividend Machine
Every Dividend Machine has to earn more money than it pays out in dividends. Cincinnati Financial earned $2.92 over the past 4 quarters. Dividends paid out during that time were $1.76. With the new quarterly dividend increase, CINF’s dividend is annualized at $1.84 for a forward yield of 3.65% using the intraday price of $50.43
Debt to equity ratio is the measure I use to determine financial strength. CINF has a D/E ratio of .14 as compared with an industry average of .24. Therefore, Cincinnati Financial is almost a Dividend Machine but not quite using my 2015 Dividend Machine Criteria.
CINF – 10 year Dividend History
Let’s look more closely at this company’s history. CINF is a property and casualty insurer based in Ohio. They have a long history and their dividend history is important to evaluate. Ten years ago CINF paid a quarterly dividend of $.305. Current quarterly dividend is $.46 (CINF is ex dividend March 16, 2015 with dividend payable on April 15, 2015.) That translates into an average dividend increase over those ten years of 5%. I cannot change my 2015 Dividend Machine criteria in mid-stream, but I personally can cheat. Take a look at the CINF’s Dividend Machine Fundamentals.
The Table below presents CINF’s Dividend Machine Fundamentals.
CINF - Previous Dividend Machine
Cincinnati Financial was a dividend machine in both 2012 and 2013. I am long CINF and will add to my position. Consider Cincinnati Financial, symbol, CINF for the income producing portion of your portfolio.