Monday, July 15, 2013

DIVIDEND PERFORMANCE July 15, 2013



ARE DIVIDEND STOCKS STILL GOOD IDEA?
  

Building a portfolio that delivers income when you no longer work is the goal of every income investor.    

Many theories exist to accomplish that goal.   I remember in the early 1980’s learning about dollar cost averaging and it seemed to me that I always bought higher and did not get any advantage from the market’s ups and downs.   It was frustrating to see my mutual fund buys at higher and higher costs.  

Then I became an investment professional and learned that if you are going to invest for income, you have to buy stocks that pay income.   However, we all want to know how those stocks are “doing.”  In this post, I have a table that reviews my 2013 dividend stocks.

2013 is challenging for the yield starved investor.   We are risk averse investors because we have to live off the money our portfolio generates.    Yet, the deposits that show up in the bank are not quite enough; we also like to see how our principle is doing.

If you started investing in 1980, you have done really, really well.   If you started investing in 2011, you have done quite well.   But what if you just started in 2013, when the market is at a top, how have you done?    


So far in 2013, I have profiled 14 stocks.   I own them all.   I want income and I am hoping to preserve capital, and maybe even realize some capital gains.    I selected these 14 stocks using the simple discipline of TheMoneyMadam:  the company has to make more money in earnings than it pays out in dividends, the dividend has to be at least three percent, the dividend has to have increased every year for at least five years and the company has to have a reasonable debt to equity ratio.





2013 DIVIDEND MACHINES Bought 100 Shares






Basis

 $    55,668

Div. Income
 $    2,494

Value

 $    60,001

Yield on Basis
4.48%

$ Gain

 $      4,333

Current Yield
4.16%

% Gain

7.78%











Stock Prices close on 7/11/2013

Stock Quotes Provided by MSN Money


  

Symbol
Date Acquired
Current Value
Current Dividend
Basis
Capital Gain
Dividend Yield
GAS
 $      44.72
 $     1.88
 $       42.65
4.85%
4.20%
NHI
 $      62.64
 $     2.94
 $       59.20
5.81%
4.69%
MDP
 $      48.30
 $     1.63
 $       41.09
17.55%
3.37%
AZN
 $      49.58
 $     3.80
 $       52.64
-5.81%
7.66%
BCE
 $      42.17
 $     2.29
 $       46.13
-8.58%
5.43%
COP
 $      64.84
 $     2.76
 $       59.84
8.36%
4.26%
VVC
 $      35.47
 $     1.42
 $       33.02
7.42%
4.00%
RTN
 $      69.47
 $     2.20
 $       57.50
20.82%
3.17%
MGRC
 $      34.70
 $     0.96
 $       31.21
11.18%
2.77%
SYY
 $      35.60
 $     1.12
 $       33.27
7.00%
3.15%
CINF
 $      49.18
 $     1.63
 $       44.84
9.68%
3.31%
MCHP
 $      39.44
 $     1.41
 $       33.94
16.21%
3.58%
INTC
 $      23.90
 $     0.90
 $       21.35
11.94%
3.77%
DRI
 $      50.43
 $     2.20
 $       45.36
11.18%
4.36%
































Currently this group of stocks delivers a 4.48% dividend yield on my principle.   My investment value has increased 7.78% and the yield on this increased capital is 4.16%.


Look at this table and consider learning how to invest for income by buying stocks that pay dividends.  

Do not listen to the pundits; dividend investing is still a good strategy for income investors.

TheMoneyMadam
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Monday, July 8, 2013

DIVIDENDS GAS will ignite Dividend Income for 2013



What Dividend Stock Should You Buy To Ignite Your Income?

You are back from vacation and you are determined to invest for income starting today. 

What stock should you buy? 


If I was your adviser I would ask you to answer this question:  What kind of investor are you?   Do you need income with capital preservation?   Do you need income with growth?   Do you need to sell a little of your portfolio just to meet annual expenses?  


One investment that every type of income investor needs is Dividend Machine stocks because these stocks provide not just dividend income but income that consistently increases over time.   Moreover, these stocks have solid fundamentals and can provide principle preservation.


Dividend Machine Stocks



Stocks that I call dividend machines are companies that pay at least a three percent dividend every quarter and have done so for many years.    These companies have to earn more money than they pay out in dividends.   But even more important for income investors, the companies must have a history of increasing the dividend every year for at least five years.  Finally, these companies need to be financially solid as measured by D/E (debt to equity) ratio.   In other words, if you want income, invest in something that creates income.   Read on for an idea?


AGL Resources, Inc. Symbol, GAS


GAS is the first dividend machine I am profiling to ignite your second quarter income investment search.


GAS provides gas in Georgia.  On Friday, 7/5/2013, Gas closed at $42.65.  Annual earnings are $2.51 per share with dividend payout of $1.88 which is a yield of 4.42%.   Dividends have increased every year since 2003.    If you owned the stock in August of 2002 your quarterly dividend per share would have been $.27.   Today eleven years later you income would have increased to $.47 per share; almost twice as much.   Debt to equity ratio is a very acceptable .94.



DIVIDEND MACHINE
7/7/2013
AGL Resources Inc.
GAS
Price when profiled
$42.65
Last 4 Qtrs Earnings
$2.51
Last 4 Qtrs Dividends
$1.88
Current Qtr Dividend
$0.47
Annualized Div Yield
4.41%
No. Years Div Increase
Since 2003
Debt/Equity ratio
0.94%
GAS by definition is a dividend machine; it meets all the criteria, but are you concerned about interest rate pressure on dividend stocks like GAS?    You are wise to consider the threat of interest rate competition.  Yet, can any of us predict the future?   No, we cannot; we can only use history as our guide and what I like about GAS is their formidable sales and income growth.

History is not a perfect predictor but it does help.



Ignite your second quarter income investing by considering a position in GAS.

TheMoneyMadam
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