Thursday, October 29, 2015

ABBV good dividend and good call

Abbvie, symbol ABBV is part of the Dividend Machine stable of stocks.  We acquired ABBV as a spin off from Abbott Laboratories, symbol ABT. 

The Dividend Machine portfolios hold both stocks.  I personally sold off ABT and kept ABBV because most of the dividend yield came with the ABBV spin off.

However, I have been worried about ABBV because EPS (earnings per share) have been less than dividend paid out. That fundamental is changing and the four percent dividend yield has made ABBV worth keeping under the cloud of poor earnings.

I have sold many calls on ABBV while I have held it and today provides another nice opportunity.  See the table below for the call I sold today.

Disclosure: Long ABBV with calls

ABBV $62.73 and someone took it already.  Amazing 24 hour gain.   MM

CVX Income steady

All Dividend Machine portfolios are stuck with Chevron.  My theory is to buy a stock that provides nice income while you wait for fundamental improvement.  MM

Chevron declares $1.07 dividend $CVX

Tuesday, October 27, 2015

INTC coming back

This Dividend Machine is coming back. MM

Intel's Memory Push Is Huge For Its Data Center Business $INTC, $MU

Friday, October 23, 2015

Another 2015 Dividend Machine - Meredith Publishing MDP

I continue to find a few Dividend Machines for inclusion in the 2015 model portfolio.  My five year project of creating annual model portfolios designed to deliver dividend income north of 3.5% is coming to a close.  I am adding another stock today and that is Meredith Publishing, symbol MDP.

Meredith Publishing Dividend Machine History

2015 will be the fourth year Meredith Publishing qualified as a Dividend Machine.   In 2012, I added the stock at $29.41.   Their dividend at that time was $1.43.   MDP again qualified as a Dividend Machine in 2013.  That year the stock price shot up to $41.09 and the dividend increased to $1.63.  At least between those two years, this stock was a winner.

In 2014 MDP's stock price increased another 10% to $44.53 and the dividend increased to $1.73. Today MDP trades at $44.82.  The dividend is $1.83 for a yield of 4.11%.    While the stock price has been stagnant during the past year, the dividend continues to increase.  Moreover, a yield of over four percent is hard to find in an industry other than energy.

2012 Dividend Machine MDP.
2013 Dividend Machine MDP.
2014 Dividend Machine MDP.

Meredith Publishing Dividend Machine Fundamentals

Meredith may appear to be in a declining industry.  They service journalism and have for 110 years.  Fewer and fewer newspapers and magazines are circulated every year but MDP has adapted using multiple platforms for distribution.

Earnings per share (EPS) during the past four quarters were $3.02.  Dividends paid out during that same time frame were $1.83.   Their  most recent dividend was $.4575 and I would expect their next ex-dividend date to be around the end of November.  

MDP has paid dividends every year for 67 years and has increased the dividend every year for 21 years.   Dividend growth rate has averaged 19.78% over the past five years.  Look at their corporate website and read about their commitment to deliver solid, ever increasing dividends.   Meredith Publishing Investor Website.

D/E (debt to equity) ratio is .8352 which is well within the range we look for.

Meredith Publishing is good fit for investors who want above average yield with growing dividends.  Consider MDP for the income producing portion of your portfolio.


Disclosure:  Long MDP

Thursday, October 22, 2015

New Stock Ticker

Check out the new stock ticker at the top of this page.    All the stocks I have profiled right there.


Sunday, October 18, 2015

Emerson Electric Dividend Machine Performance

Dividend stocks remain the best investment alternative for income investors.  I had hoped that by now our economy would be humming along enough that interest rates would edge up to where we could begin to diversify our income investments to include more bonds.  Sadly, that is not the case.

Bond yields still too low

I cannot predict how long it will take for bonds to deliver yields that are competitive with quality dividend stocks but I know some day it will happen.   Having lived through times when interest rates on investment grade corporates were in the double digits, I know that sense of comfort at having a big chunk of my portfolio in government backed seven percent bonds and some in certificates of deposit in double digits.

Those of us who no longer have a paycheck coming in do not have the luxury of waiting for the bond market to deliver the yield we need to pay our bills. 

Put new capital to work 

This week, October calls, expired.   As readers of this blog know, I use covered calls on dividend stocks to enhance my income.   This weekend several of my calls were assigned which means the person who paid me money for the option to buy these stocks at a specific price on or before October 16, 2015 actually did buy the stocks. 

These stocks included General Electric (GE), Bristol-Myers (BMY), and DuPont (DD.)    Bristol Myers and DuPont’s yield were well below my requirement and I used the calls to lock in my gains and liberate capital for reinvestment.  The stocks may continue to rise but I do not care as I know I can find more income in the same space from another stock.

GE, on the other hand is finally turning things around but I have reservations. GE’s negative EPS is one example.   I was able to lock in a bit of gain on GE.  I received their most recent dividend as well as the call premium and since I have reservations about the success of their turnaround, I was happy to give up the 3.28% yield and liberate some capital for reinvestment.

Emerson Electric symbol EMR my next 2015 Dividend Machine stock

The point of this post is to profile another diversified industrial that pays more of a dividend than GE, has increased the dividend every year for over fifty years, has other solid fundamentals and I hope will be good place to put my GE proceeds.

Emerson Electric as a 2012 Dividend Machine
Emerson was a Dividend Machine in 2012 when my four criteria were nearly identical to my current criteria, however, at that time I required a yield of greater than 3% where as now, I require a dividend yield of 3.5% or more.   The other difference is the amount of dividend increase I expect from Emerson.   

In 2012, I simply required a solid history of dividend increases.  In 2015 I require an average annual dividend increase over the past five years of 4%.

You can see EMR’s fundamentals from 2012 in the table above.   Total return on this stock from 2012 has been tepid.  But, remember I am an income investor and concentrate on current cash flow to me and expected future cash flow increases.

EMR has had some covered call opportunities as I noted in the original post on EMR so income has been solid and income increases have been solid.   EMR’s Stock price is stuck in the mud and very near the 5 year low which gives me the opportunity to buy this solid company with a greater than four percent yield.

Emerson Electric Dividend Machine Fundamentals 2015

Currently, EMR’s latest four quarter earnings were $3.59 per share.  Dividends paid out during the same time frame were $1.88.  At the closing price of $45.27 on Friday October 16, EMR’s yield is 4.02%.   

EMR’s has a compelling dividend history having raised the dividend for over fifty years.  Over the past five years dividend increases have averaged 8.06% which are double what I require. 

EMR’s D/E ratio at .8537 is below my requirement of less than 1 but for those with a keen eye, you will note that their debt is at an all-time high.   I can live with this as EMR has borrowed at very low rates.  See EMR’s Dividend Fundamentals in the table below.

If you are nervous that the industrial sector will continue to suffer losses, you could enhance your income with calls.   I see three of interest: a December $48 at about $.70; a January $47.50 at $1.15 and a January $50 at $.50.   There is no guarantee that your stock will be assigned but you will have the benefit of pocketing the next dividend which is expected in November, 2015 and the call premium.

Consider EMR for the income producing portion of your portfolio.


Disclosure:  Anticipate adding EMR next week

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