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.
TheMoneyMadam
