Monday, May 11, 2015

Next 2015 Dividend Machine WASH

For every expert opining that interest rates are going up, you can find another who is convinced they are not.    I know that predicting interest rate direction can make a fool of the best trained and intentioned economist.   

 Predicting interest rates can also make fools of traders.  Yet, we are not traders or economists; we are income investors.   History, (see the previous Dividend Machine portfolios) suggests that we should ignore economic noise and stick to a disciplined strategy for picking our income stocks.

In this post I am profiling the next 2015 Dividend Machine.   I selected this stock using my four 2105 Dividend Machine criteria.   The connection to interest rates is based on the fact this new Dividend Machine is a regional bank.   

Theory holds that if interest rates do go up, banks will benefit from a steepening of the interest rate curve.  When long duration interest rates are greater than short duration interest rates, banks can lend out at an interest rate higher than they pay depositors.   If interest rates do not go up, this stock has a history of paying and growing the dividend.

Washington Trust, symbol WASH Dividend History

Washing Trust is a regional bank in Rhode Island.   Dividends have been paid since 1988.   During the major credit market disruptions that occurred in 2008, WASH held the dividend steady at $.21 for 11 quarters.  In March of 2011, they commenced dividend increases again.  If you look back five years to 2010 you will see the dividend increases have averaged 7.75%.

WASH Dividend Machine Fundamentals

WASH earned $2.51 during the past four quarters and paid out $1.36 in dividends.   Today it is trading at $36.87 with a dividend yield of 3.68%.  Debt to Equity ratio, D/E is 1.155 which is within industry standards.   The table below presents WASH’s Dividend Machine Fundamentals.

In addition to its Dividend Machine fundamentals, Washington Trust, WASH, provides industry diversification for a 2015 Dividend Machine Portfolio that is heavy on energy.   

Consider WASH for the income producing portion of your portfolio.