Category: Stock Charts (page 2 of 2)

March 27, 2014 / 0 Comments

20 Favorite Dividend Growth Stocks from 20 Dividend Growth Bloggers

I love dividend growth stocks. I love reading about dividend growth investing.

So I decided to combine the two by reaching out to some of my favorite dividend growth bloggers and asking them about their favorite dividend growth stocks. And be sure to stick around because at the end I will discuss both my current and my all-time favorites!

Hopefully you will enjoy the answers as much as I did!

What is Your Favorite Dividend Growth Stock (currently or all-time) and why?

The Conservative Income Investor – “I think there are five realistic candidates you can choose from–Coca-Cola, Johnson & Johnson, Procter & Gamble, Nestle, or Colgate-Palmolive. From there, it’s more a debate about style than substance. My guess is that everyone reading this will be six feet under while these companies are still pumping out profits on six different continents. If I could only own one of them for the rest of my life, I’d choose Coca-Cola. The diversification of 500 brands is huge, the distribution network that is unparalleled, and a brand name that actually means something significant is the kind of asset you want to spend your life acquiring. They spend a couple cents coloring water, and are able to sell it for a dollar. That’s a heck of a business model. It’s probably the safest way to get 8-11% annual returns over the coming fifteen to twenty years.”

Dividend Growth Investor – “The dividend stock I like best is Philip Morris International (PM), which sells tobacco products outside of the US. I like several things about the company, such as its current valuation, strong cash flow and the prospects for future growth, all of which could result in massive compounding of wealth. The stock is cheap at 15 times earnings and yields 4.70%. The company expects to grow earnings and dividends in the high single digits or low double digits in the foreseeable future, fueled by acquisitions and organic growth. Phillip Morris International has a high exposure to emerging markets, where number of smokers and their income is increasing. The company also sells popular brands of cigarettes, which have a loyal customer base that buy even if prices increase. Plus, PM generates a lot of cash flow that has allowed it to repurchase massive amounts of stock and double dividends per share since 2008. I actually reviewed the stock in early 2014: http://www.dividendgrowthinvestor.com/2014/01/the-security-i-like-best-philip-morris.html“

Income Surfer – “My favorite dividend growth stock (historically) that I own is Coca-Cola (KO). In the years I have owned it, the dividend has consistently risen and I have little worry about the business. The dividend growth stock I am currently the most optimistic about is China Mobile (CHL). I recently began accumulating China Mobile, and I believe it to be substantially undervalued. A look at its history will show you a stock that has all the characteristics of a great dividend growth stock.”

Buy Smart Never Sell – “The trouble with picking a “favorite” dividend growth stock is that I don’t want to give the impression that any 1 stock should be purchased no matter what the current price is. None the less, in terms of performance and growth, I’ve been most happy with 3M Company (MMM). They increased their quarterly dividend by 35% this year which was awesome. Currently it’s at PE Ratio below 20, yield over 2.5%, and has increased dividends for over 50 years and has a payout ratio percentage in the 40′s which gives it plenty of room for future growth.

Dividend Vet – “I would say Johnson & Johnson (JNJ). This is my favorite of all time because it is a truly bulletproof stock. It is a true core stock to build your portfolio around. It is vastly diversified within the healthcare industry. It has historically steady dividend increases. The stock is fairly valued below a P/E of 20. It has a solid dividend yield at 2.85% and huge potential especially for the long term investor.”

My FI Journey – “I’ve got a few favorites, but one that that is quite memorable for me is Lowes. I bought LOW the middle of the debt ceiling debate back in 2011 when the stock market was in free fall. Since then, the stock has treated me very well, providing substantial capital gains and dividend increases. At the same time I bought LOW, I sold a put against it which netted even more cash for me.”

HelloSuckers.net – “It is not an easy question as there are plenty of great dividend growth stocks and it is impossible to list just one. I have two great stocks which are my favorite and the reason is simple – they make me money. A lot of money. The first stock, and probably an all time favorite stock of mine is Johnson & Johnson (JNJ). It was my first purchase ever and since then the stock doubled my money (and I only have owned it for circa 3 years). I like it for a few reasons: its price appreciation; the company is so big, that any recalls or problems, it went through, were insignificant for the company and investors failed to see it, so for dividend investors, this was a great buying opportunity – so it is safe to invest. And last, but not least, I love its dividend yield and growth, which makes your yield growing every year without doing anything. The second stock I love is Realty Income (O). Although the growth is not as impressive as JNJ, its monthly dividend payout of great yield can help you with growing your portfolio faster as you reinvest dividends. After a few years of investing into this stock I managed to be receiving 30 dollars every month in dividends just from this stock. Isn’t that great? And wait when it turns out to be 3,000 dollars every month!”

Retire Before Dad – “My all-time favorite dividend growth stock is Chevron (CVX). In 1995 my uncle gifted me one share for my birthday and explained that if I invested money consistently over a long period of time and reinvested the dividends, my shares would be worth a lot down the road. Every dollar I have ever invested in Chevron has increased my wealth, and I’ve witnessed 18 dividend increases over the years. Receiving that one share was my first experience investing and it opened up a whole new world for me, and even influence my college major and career path. Today I’m putting new money toward other stocks to diversify my portfolio, but I will likely continue to reinvest my CVX dividends until I retire. I wrote an entire post on this stock called “CVX and How I Got Started Dividend Investing“.

Financial Freedom – “I have only been investing for about 8 months, so I would say my favorite dividend growth stock is Kinder Morgan (KMI). It has great growth potential and its dividend yield and increases are great.”

Simply Investing – “My favorite all time and current dividend growth stock is TransCanada Corporation (TRP) trading on the Toronto Stock Exchange (TSE). In 2000 I bought 185 shares of TRP at $13.40 each for a total investment of $2,479. Since then I have received a total of $3,126.46 in dividends alone from TRP! In 2000 the annual dividend for TRP was $0.80, the dividend has increased every year since then and today the dividend is $1.92. My yield on cost is 14.3%. If I was to sell all my holdings in TRP today the return would be over 400%.”

Brick by Brick Investing – “Believe it or not but I’m really liking Cisco Systems (CSCO), they have tripled their dividend since 2011 and I believe they will be a growing company in the future.”

The Dividend Guy Blog – “On the US market, I’d go with Coca-Cola (KO). It’s the perfect dividend growth machine. On the Canadian Market, I’d go with Telus due to their aggressive dividend increase.”

Compounding Income – “My favorite dividend growth stocks tend to be from the consumer staples sector. Think soft drinks (KO, PEP), food (GIS, KRFT), and cigarettes (MO, PM). These types of businesses are very easy to understand, sell products people will always consume, have wide moats, and have been rewarding loyal shareholders with rising dividends for decades. I try to imagine what the world might look like 20 years from now and try to determine which products might still be popular. Every time I go through this mental exercise I come to the same conclusion: people will still be drinking Coke, people will still be eating Cheerios, and people will still be (gasp!) smoking Marlboros. Picking a single favorite dividend growth stock is tough because there are literally hundreds to choose from. If I had to pick only one, I’d go with Philip Morris (PM). PM offers a nice combination of yield (currently 4.7%) and dividend growth (5 year average of 10.4%). A dividend growth investors dream! The nice part about Philip Morris is that the company sells an iconic brand (Marlboro) worldwide except in the United States & China. Because of that fact PM can take advantage of world’s growing population, the world’s rising disposable income, and avoid the heavily regulated tobacco environment in the United States. As with any individual stock there are risks. The biggest being exchange rates, foreign government regulation, and declining smoking rates in developed nations. While there are risks, I believe Philip Morris is poised to do well over the long run. So much so that I made it my largest holding. However I would always recommend staying diversified so as to minimize risk and not rely on the fortunes of one company.”

The Loonie Bin – “Enbridge (ENB) on the TSX. Solid dividend growth and it doubled my investment after 4 years. You can’t ask for anything more from a dividend growth stock.”

All About Interest – “My favorite dividend growth stock is Coca-Cola (KO). KO has been rewarding shareholders with increasing dividend payments for over 50 consecutive years! There’s not many companies that can say this. I can also relate to their products. I love an ice-cold Coke on a hot summer day. I’m also a fan of Powerade, especially the Mountain Blast flavor. Coke also owns many other well-known brands like Minute Maid, Dasani, and Monster to name a few. Coke is one of those companies that you can count on to produce higher earnings and consistent dividend raises each year.”

A Wealth of Common Sense – “I have always been impressed with Altria Group (MO). It’s been a compounding machine. From September of 1989 to the end of February of 2014, the total return on the stock was 16.1% versus 9.4% for the S&P 500. Investing $10K in MO turned into $380K while $10K in the S&P 500 would have made you about $90K. I think the best future dividend payers could be Apple and Google. Apple already sports a 2.3% yield and I could see that increasing for a long time with their cash hoard. Google isn’t paying anything yet but they also have substantial cash reserves that could translate into a decent payout some day.”

Roadmap2Retire – “My favorite stock is Johnson & Johnson (JNJ) – because it is a blue chip stock with a proven record for dividend growth (51 years consecutively) and the fact that it operates in two sectors – consumer goods and healthcare.”

Financially Integrated – “Coca Cola (KO): Talk about a proven performer. Coca Cola has made its shareholders wealthy over extended period of period, and I don’t believe its done yet. This is a company with strong barriers to entry and a great business model that is simple and transparent to understand.”

Write Your Own Reality – “My favorite DG stock is Aflac (AFL), as it was one of the first true dividend growth stocks I bought, and really epitomizes what a dividend growth company looks like with multiple decades of dividend growth.”

Dividend Growth Stock Investing – “My all time favorite dividend growth stock is McDonald’s (MCD). I love McDonald’s because it was the first dividend growth stock I ever purchased. The company has a 38 year dividend growth streak. Looking over the financials, McDonald’s is able to consistently grow their earnings which means the company is consistently growing in value for investors. My current favorite is Deere & Company (DE). Currently Deere trades with a P/E under 10 offering great value for investors buying at today’s prices. The dividend yield may start out low but the company has been growing the dividend rate strong for the past 10 years. I grew up on a farm and love having this current opportunity of picking up shares of Deere stock at a great price.”

There were some great stocks in this selection of favorites. As you can see, there is quite a variety of companies you can invest in as a dividend growth investor. Thanks to all of the investors that gave their answers to this favorite stock question!

Now it’s your turn! What is your favorite dividend growth stock and why? Share your responses in the comments!

If your interested in dividend growth investing, be sure that you have signed up for my free monthly dividend growth investing newsletter!

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March 7, 2014 / 0 Comments

Successful Investors Demonstrate Patience

Today I have an article from my friend Bryan the Income Surfer. Bryan is a dividend growth investor who shares his ideas in investing and life at his site. Learn from Bryan’s advice and you will become a better investor.

Hello! I am Bryan, the founder of IncomeSurfer.com. On Income Surfer you will read about techniques and strategies to live a fulfilling and balanced life, both financially and relationally. I offer a monthly newsletter that includes changes in our portfolio, assets we are looking at buying/selling, and interesting articles that give a historical perspective to the capital markets. You will also read articles about my family’s quest for balance, our travels, and how we have changed our lives to be more fulfilling. A business partner and I currently have three outstanding valuation tools under development. Income Surfer is also on Twitter, @IncomeSurf.

Develop this Trait for Successful Investing

To state the obvious, investors are people. Just like most of the people in our modern world, investors crave instant gratification. When they purchase a stock, or any other asset for that matter, they may begin to question their decision if the asset doesn’t immediately climb in value. Global markets aren’t usually so responsive, and the differences between the investor’s expectations and reality can cost them a lot of money. As you may have guessed, this article is about patience. If you would like to read about a few of the techniques I use to maintain the patience in my life, read the article I wrote about it last month.

“In the short term the stock market acts as a voting machine. In the long term it’s a weighing machine”

~Ben Graham

The fact of the matter is that no one can tell you, with certainty, where a given stock or index will trade a year or two in the future. An observant and mindful investor may make a guess, based on the differences between recent performance and historical performance, but they are still making a guess. Any given stock market or index can have long periods of flat or downward performance. Just look at a chart of the Nasdaq. In 2014 it is still significantly below its all time high (spring of 2000). The S&P 500 started 2013 more or less where it had begun the year 2000. These long stretches of flat or poor performance are not unusual historically either. The Dow Jones average did not exceed it’s 1929 high until the mid 1950s. More recently the Dow Jones Industrial Average started 1982 essentially where it had been in the late 1960s.

This is why patience comes into investing. There can be long periods of time where the value of your investments goes down….even year after year. If you know when every market top and bottom will be, by all means let me in on the secret. My crystal ball is broken! What I do know however, is that while I wait for stock prices to rise and profits to increase I certainly want to be getting paid. That, dear reader, is why I am a dividend growth investor. Some studies even show that dividend paying stocks perform better in bear markets than the broad S&P 500. Casting those studies aside, I know I feel better and more confident in my investments if the underlying companies are increasing their profits and paying me more (dividends) year after year. That is a hallmark of a great investment.

Below I have a couple examples of long term dividend growing stocks that I own. The first is Coca-Cola (KO). Coke’s share price actually peaked a couple years before the market topped out in 2000. On a split adjusted basis the company was trading at about the same price (~$38) in 1998, that it is today. In hind sight, shareholders were clearly too bullish on Coca-Cola in the late 1990s. The interesting thing is that even shareholders who bought near the 1998 high prices, provided they continued to hold their shares, are being paid a current dividend that is more than 5 times the dividend they received in 1998. I’m sure it would sting to have a stock price go nowhere for 16 years, but having your dividend payout increase 5 times in that time period should take some of that sting away.

Another great example of a long term dividend paying stock is Johnson & Johnson (JNJ). As you can see from the chart below, Johnson & Johnson’s stock appreciated very little from 1999 to 2012. More recently it’s price has rised, but for 13 years investors saw very little price appreciation. In fact, at some point during the following years (1998, 1999, 2000, 2001, 2002, 2003, 2004 and 2009) shares of the stock traded below $50 per share. Would you be patient enough to watch your Johnson & Johnson shares drift sideways for year after year? Long term shareholders were rewarded with a dividend whose annual payout has increased 800% in the last 15 years. That sounds like a wonderful reward to me. Year after year the annual dividend payout increased, while the stock price drifted sideways. If you still felt good about investing in Johnson & Johnson, you could even reinvest those dividends in more JNJ stock.

The dividend growth stocks in my portfolio make it easier for me to be patient and resist my human urge to sell my shares when the stock price doesn’t go straight up. Year after year I am paid to wait patiently by my investments. The rising dividend payments in my portfolio have even outpaced inflation over the past 10 years. I know the salary at my job can’t claim that. Investing for the long term is just my style, and I find it easier to do with dividend growth investing.

November 11, 2013 / 0 Comments

Getting Started With Dividend Growth Investing

What is Dividend Growth Investing

Dividend growth investing is a strategy that involves purchasing stocks for the long term of quality, industry leading companies with a history of annually growing their dividend rate paid to shareholders.

The investor will buy shares of some of the greatest companies in the world. While the investor owns these companies, they will receive income in the form of dividend payments. If the investor has chosen his companies wisely, his dividend income should grow over the years because the companies are annually increasing the amount they are paying out.

Why is Dividend Growth Great

Companies that have the ability to annually grow their dividend rates tend to be great companies. Think about it. If a company can continually increase the amount of income they pay out to shareholders, then they must also be continuously increasing the amount of income they are earning.

When we invest in companies, we want to buy the companies that have the ability to make more money year after year. Yes there will be some down years for net income. But the idea is that more often than not, the companies we want to own should be making more and more income.

Dividend growth companies generally have a history of not only growing their dividend payments to shareholders but also their own bottom lines.

What this means is that these investments are more likely to increase in value over the long term time frame. And isn’t that the main goal with investing? Increasing the value of the stocks we own? Yes it is.

Another great thing about dividend growth investing is that an investor has the ability to grow their wealth and purchase enough assets (shares of stock) that are paying out a passive income to eventually retire and live completely off the passive income. The investor can use this passive dividend income to cover their live expenses. Also, the companies we should want to invest in will be growing their dividend rates faster than inflation. This means that our income will grow faster than our expenses.

Goals of Dividend Growth Investing

The main goal of dividend growth investing is financial freedom. Dividend growth investors are aiming to be able to own enough stocks where they can live completely off the dividend income. The investor will no longer need to work but instead can meet all their financial obligations with the passive income they earn from the stocks they own.

Dividend growth investing can provide:

Financial Freedom – eventually a dividend growth investor will be able to live completely off the passive dividend income earned from their stocks.
Financial Security – the more wealth one has, the more financially secure they are. By building wealth through dividend growth investing, the investor is increasing the amount of financial security they have.
Investing Stability – dividend growth companies are usually very consistently good performing investments. The stocks you own will provide an income. The dividend rate will provide a floor to how low the stock price may fall. When a stock price falls, the dividend yield increases. As a yield increases, the stock will become more appealing to investors and investors will move in buying shares. This creates a sort of floor to how low a dividend growth stock will go in value.

Investment Accounts

When you’ve decided you want to start investing in dividend growth stocks, you need to think about what type of account you should use.

I would recommend opening up an online discount brokerage account to keep costs low.

Scottrade – I personally use Scottrade which has $7 commission trades. I also like the fact that they have physical brick and mortar locations I can go to if I need help.
Charles Schwab – Schwab has trades as low as $8.95.
ETrade – ETrade has trades for $9.99 commissions.
TDAmeritrade – With Ameritrade, the investor trades for $9.99 commissions.

I’m sure there are many others to consider. These are the few that are the most well known and where I would look first when considering a brokerage to invest through. Things you will want to look at when considering a brokerage are minimum account values, commission rates, inactivity fees and dividend reinvestment policies and fees.

Along with deciding where to open an account, the dividend growth investor needs to decide what type of account they want to open. There are a few different account types investors will want to consider based on their personal goals:

Taxable Account – The taxable account is exactly as it sounds, fully taxable. The money you contribute to the account comes from after tax dollars. Once that money is invested, you are taxed on any dividends you earn as well as any short term and long term capital gains you may recognize. However, funds in taxable accounts are available without penalty any time you should need to access them.
Traditional IRA – The traditional individual retirement account (IRA) is a tax advantage account where the investor contributes pretax dollars. Money is invested before you are taxed on it and is allowed to grow without paying any taxes. At the point the investor begins to pull this money out of the account it is taxed as ordinary income. This type of account should be used for retirement savings because there are penalties for withdrawing and spending this money before a certain age.
Roth IRA – The Roth IRA is also tax advantaged. Money is contributed to the account with after tax dollars. Then the investments are able to grow tax free. When the investor begins to withdrawal the money from this account, it is also considered tax free. Like the traditional IRA, there are penalties involved with early withdrawal of the funds in the account. Therefore, it is best to use this type of account for retirement investing.

Once the investor has decided where to open an account and what type of account to use, he needs to figure out where exactly to find dividend growth stocks. Fortunately there are some good resources for this.

Where to Find Dividend Growth Stocks

Finding dividend growth companies may seem like a challenge but there are actually a few decent resources to give the investor a start.

S&P 500 Dividend Aristocrats – the dividend aristocrats are companies that have grown their dividend rate for at least 25 years in a row.
DRIP Investing Resource Center – At this website there is a good resource of dividend growth stocks. Under the information section, you can see the U.S. dividend champions list. Open in excel or PDF and you will see a list of all companies who have increased their dividends for at least 5 years in a row. This is the resource I use most often.
35 Top Dividend Growth Companies – This is my Kindle ebook where I feature the 35 companies I am using to personally build my own dividend growth portfolio. Part one gives a brief introduction to dividend growth investing. Part 2 discusses the most important metrics used in evaluating dividend growth companies along with detailed info on each of the 35 chosen companies.
Free Dividend Growth Stock Investing Newsletter – Along with my site, I write a monthly newsletter in which you will find information about different dividend growth companies. Sign up and you’ll also receive my free Dividend Growth Investing Guide.

Conclusion

Hope you enjoyed this brief article on getting started with dividend growth investing. In the upcoming few weeks I plan on going much more in depth on the many topics involved with learning dividend growth investing. My goal here is to create successful dividend growth investors. Stick around and hopefully you’ll learn all you need to know about creating wealth using dividend growth!