Showing posts with label HGIC. Show all posts
Showing posts with label HGIC. Show all posts

Thursday, December 29, 2011

DIVIDEND PERFORMANCE

Summary 2011 Dividend Machines


Dividend Machine is the name I give a stock that meets four basic criteria.  During the past year, I profiled fifty two stocks, one per week.  Each stock profiled met all four criteria at the time I wrote about the company.

This group of fifty two stocks is my 2011 DIVIDEND MACHINE PORTFOLIO.   In this post, I provide a review of the 2011 Dividend Machine Portfolio.   In the future, I will follow this portfolio and periodically report on the performance.

Four Dividend Machine Criteria:

  1. Pay at least a three percent dividend
  2. Earn more than the dividend payout
  3. Increased the dividend every year for at least five years
  4. Debt to equity (D/E ratio) 1 or less or not greater than the industry average

Characteristics of the fifty two 2011 Dividend Machines:

This theoretical portfolio is based on buying 100 shares each of fifty two stocks.  I selected one stock per week that met all four criteria without regard to any other factor such as price earnings ratio, recent news, or need for diversification.  You can see a list of these stocks and review the post describing them by clicking on the 2011 portfolio page at the top of this blog.

  1. Amount invested = $207,118
  2. Price range = $9.27 - $93.37
  3. Average Dividend yield = 4%
  4. Average payout ratio (dividend/earnings) = $52.49%

Industry Diversification:

Although I did not try to create a portfolio with industry diversification in mind, I was surprised to find the degree of diversification this selection technique created.

  •     Nine Utilities
  •     Six Processed & Packaged Goods including Personal Products
  •     Five Electronics
  •     Four Oil, gas or chemicals
  •     Four Machinery & Manufacturing
  •     Four Financials – banks, asset management, insurers
  •     Three Telecommunications
  •     Three Medical instrumentation & supplies
  •     Three Aerospace
  •     Two Pharmaceuticals
  •     Two Waste Management
  •     Seven Other individual industries


Diversification by Market Capitalization:

Similarly, I did not try to select these stocks based on small cap. or big cap.  and again, I was surprised by the level of diversification this technique produced.

  •      Thirteen small cap. companies (up to 2 billion)
  •          Sixteen mid cap. companies (2-10 billion)
  •      Sixteen large cap. companies (10-100 billion)
  •      Seven mega cap. companies (greater than 200 billion)


Performance and other events:

Using closing prices on 12/23/2011, the 2011 dividend machine portfolio posted a $16,676 gain for an 8.05% gain.  The portfolio earns $15,819; these stocks pay out $8,300 in dividends based on the most recent quarterly dividend.  Other events are provided below.


  • Five stocks no longer qualify as a dividend machine because they used special dividends to create increased dividends instead of providing a steady annual increase. 
  • Twenty nine companies have already increased their dividend
  •  Eleven companies will have to increase their next quarter dividend or they will violate the requirement of increasing every year.
  • Two companies no longer pay a 3 percent dividend yield due to price appreciation:  Travelers (TRV) and Harleysville Group (HGIC)
  •  Three companies no longer qualify because their D/E ratio is greater than one or greater than the industry standard.  Lockheed Martin (LMT) D/E 2.39, General Mills (GIS) and Hasbro (HAS).  The remaining 49 companies have acceptable D/E ratios.

I will keep this portfolio intact and follow its performance for as long as I write this blog.  My preliminary opinion is that using these four criteria to select a portfolio of dividend stocks is an easy way to build a diversified income portfolio of dividend stocks.

TheMoneyMadam
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Tuesday, December 27, 2011

2011 Dividend Machine and CAPITAL PRESERVATION

2011 Dividend Machine – Capital Preservation
            Do income investors have to sacrifice capital preservation for income?  I will answer this question by looking at our fifty two, 2011 Dividend Machine companies in terms of their stock price. 
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Friday, September 30, 2011

Follow up on dividend machine Harleysville Group, symbol HGIC

          Dear income investors, you hit a home run with HGIC, Harleysville Group a small insurer that I profiled on May 30, 2011 see original post on HGIC.
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Sunday, May 29, 2011

Dividend Machine for May 23, 2011 Revised to HGIC

Dear Income Investors:  Well, this is embarassing; last week I profiled a company BCE which I had already included in our dividend machines list. To correct this error I offer a revised pick.  Harleysville Group, symbol HGIC is my new dividend machine for May 23, 2011.
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