Dividends Value » CB

1 Company Announced A Higher Dividend, 7 To Pay Higher Dividends in April *

D4L — Fri, 01 Apr 2011 07:30:11 +0000

A stock with a high yield doesn’t mean much if the dividend is cut or eliminated, and the stock price declines significantly. Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk. One measure of dividend sustainability is the ability of management to consistently raise their dividends each year.

This week only one company announced raised the dividend growth bar one year by increasing its cash dividends paid:

International Paper (IP) is a global paper and packaging company with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. March 29th the company increased its quarterly dividend 40% to $0.2625/share. The dividend is payable on June 15, 2011 to shareholders of record on May 17, 2011. The yield based on the new payout is 3.6%.

The following companies will pay higher dividends in April:

Chubb Corporation (CB) as one of the largest U.S. property-casualty insurers, Chubb has carved out a number of niches, including high-end personal lines and specialty liability lines coverage. April 5th the company will pay its quarterly dividend of $0.39/share. This dividend is 5.4% higher than the previous quarter. The company has paid a cash dividend to shareholders every year since 1902 and has increased its dividend payments for 47 consecutive years. The yield based on the new payout is 2.6%.

The Coca-Cola Company (KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. April 1st the company will pay its quarterly dividend of $0.47/share. This dividend is 7% higher than the previous quarter. The company has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 49 consecutive years. The yield based on the new payout is 3.0%.

Family Dollar Stores Inc. (FDO) operates a chain of over 6,800 retail discount stores in 44 states across the U.S. April 15th the company will pay its quarterly dividend of $0.18/share. This dividend is 16% higher than the previous quarter. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 35 consecutive years. The yield based on the new payout is 1.4%.

Genuine Parts Co. (GPC) is a distributor of automotive replacement parts in the U.S., Canada and Mexico. April 1st the company will pay its quarterly dividend of $0.45/share. This dividend is 10% higher than the previous quarter. The company has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 55 consecutive years. The yield based on the new payout is 3.4%.

Kimberly Clark Corp. (KMB) is a global consumer products company that produces tissue, personal care and health care. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark. April 4th the company will pay its quarterly dividend of $0.70/share. This dividend is 17% higher than the previous quarter. The company has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 38 consecutive years. The yield based on the new payout is 4.3%.

Piedmont Natural Gas (PNY) is an energy services company primarily engaged in the distribution of natural gas to more than one million residential, commercial and industrial utility customers in North Carolina, South Carolina and Tennessee. April 15th the company will pay its quarterly dividend of $0.29/share. This dividend is 3.6% higher than the previous quarter. The company has paid a cash dividend to shareholders every year since 1956 and has increased its dividend payments for 33 consecutive years. The yield based on the new payout is 3.9%.

Wal-Mart Stores, Inc. (WMT) serves customers and members more than 200 million times per week at 8,970 retail units under 60 different banners in 15 countries. April 5th the company will pay its quarterly dividend of $0.3650/share. This dividend is 21% higher than the previous quarter. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 36 consecutive years. The yield based on the new payout is 2.8%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long KO, GPC, KMB, PNY, WMT. See a list of all my income holdings here.

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23 Stocks With A Vision Of Higher Dividends *

D4L — Fri, 25 Feb 2011 07:30:59 +0000

To succeed as a dividend growth investor you must identify and purchase stocks with sustainable dividend growth. Inertia is powerful force. Once a company has established a track record of growing its dividend over the decades and developed a shareholder base that expects higher dividends each year, it becomes increasing difficult for management to cut or fail to raise their dividend. No CEO of this type of company wants a dividend cut to occur on his or her watch.

Here are a few select companies that have recently followed through on their vision of providing increased cash dividends to their shareholders:

Gap Inc. (GPS) operates as a specialty retailing company. February 24th the company increased its quarterly dividend 13% to $0.1125/share. The dividend is payable on or after April 27, 2011 to shareholders of record at the close of business on April 6, 2011. The yield based on the new payout is 2.0%.

Chubb Corporation (CB) provides property and casualty insurance to businesses and individuals. February 24th the company increased its quarterly dividend 5.4% to $0.39/share. The dividend is payable April 5, 2011 to shareholders of record on March 18, 2011. The yield based on the new payout is 2.6%.

BlackRock, Inc. (BLK) is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. February 24th the company increased its quarterly dividend 37.5% to $1.375/share. The dividend is payable March 23, 2011 to shareholders of record at the close of business on March 7, 2011. The yield based on the new payout is 2.7%.

Colgate-Palmolive Company (CL) is a leading global consumer products company, tightly focused on Oral Care, Personal Care, Home Care and Pet Nutrition. February 24th the company increased its quarterly dividend 9% to $0.58/share. The Company has paid uninterrupted dividends on its common stock since 1895. The yield based on the new payout is 3.0%.

TECO Energy, Inc. (TE) is an energy-related holding company and its principal subsidiary, Tampa Electric Company, is a regulated utility in Florida with both electric and gas divisions. February 24th the company increased its quarterly dividend 3.7% to $0.215/share. The yield based on the new payout is 4.9%.

Southwest Gas Corporation (SWX) provides natural gas service to approximately 1.8 million customers in Arizona, Nevada, and California. February 24th the company increased its quarterly dividend to $0.265/share. The Company has paid quarterly dividends continuously since going public in 1956, and has raised its dividend in each of the past five years. The yield based on the new payout is 2.8%.

WesBanco, Inc. (WSBC) is a multi-state bank holding company of $5.4 billion in total assets providing banking services through 112 locations and 132 ATMs in West Virginia, Ohio and Pennsylvania. February 24th the company increased its quarterly dividend 7.1% to $0.15 per common share from the previous quarterly dividend rate of $0.14/share. The increased dividend will be payable on April 1, 2011 to shareholders of record on March 11, 2011. The yield based on the new payout is 4.6%.

Old Republic International Corporation (ORI) provides risk management services for a wide variety of coverages, principally in the property and liability, mortgage guaranty and title insurance fields. February 24th the company increased its quarterly dividend to $0.1750/share. The dividend is payable March 15, 2011, to shareholders of record on March 4, 2011. This latest dividend increase marks the 30th consecutive year that Old Republic has boosted its cash dividend rate, and 2011 becomes the 30th year of uninterrupted cash dividend payments. The yield based on the new payout is 5.7%.

First PacTrust Bancorp, Inc. (FPTB) provides various financial services primarily in San Diego and Riverside Counties, California. February 24th the company increased its quarterly dividend 5% to $0.105/share. The dividend will be payable on April 1, 2011 to shareholders of record as of March 11, 2011. The yield based on the new payout is 2.8%.

Essex Property Trust, Inc. (ESS) a real estate investment trust (REIT) with apartment communities located in targeted West Coast markets. February 23rd the company increased its quarterly dividend to $1.04/share. The dividend distribution is payable on April 15, 2011 to shareholders of record as of March 31, 2011 The yield based on the new payout is 3.5%

The Westar Energy, Inc. (WR) is the largest electric utility in Kansas, providing electric service to about 687,000 customers in the state. February 23rd the company increased its quarterly dividend 3% to $0.32/share. The dividend is payable April 1, 2011 on the company’s common stock. The yield based on the new payout is 4.9%

Nordstrom, Inc. (JWN) is one of the nation’s leading fashion specialty retailers, with 204 stores located in 28 states. February 23rd the company increased its quarterly dividend 15% to $0.23/share. The dividend is payable on March 15, 2011, to shareholders of record on March 4, 2011. The yield based on the new payout is 2.1%

Packaging Corporation of America (PKG) is the fifth largest producer of containerboard and corrugated packaging products in the United States. February 22st the company increased its quarterly dividend 33% to $0.20/share. The dividendis payable on April 15, 2011 to shareholders of record as of March 15, 2011. The yield based on the new payout is 2.8%

B&G Foods, Inc. (BGS) and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, shelf-table foods across the United States, Canada and Puerto Rico. February 22st the company increased its quarterly dividend 24% to $0.21/stock. The dividend is payable on May 2, 2011 to shareholders of record as of March 31, 2011. This is the twenty-sixth consecutive quarterly dividend declared by the Board of Directors since B&G Foods’ initial public offering in October 2004. The yield based on the new payout is 6.0%.

The Allstate Corp. (ALL) is the nation’s largest publicly held personal lines insurer. February 22st the company increased its quarterly dividend to $0.21/share. The dividend is payable in on April 1, 2011 to stockholders of record at the close of business on March 11, 2011. The yield based on the new payout is 2.7%.

Sempra Energy (SRE) is a Fortune 500 energy services holding company with 2009 revenues of more than $8 billion. February 22st the company increased its quarterly dividend 23% to $0.48/share. The dividend is payable April 15, 2011, to shareholders of record on March 18, 2011. The yield based on the new payout is 3.6%.

The Home Depot (HD) is the world’s largest home improvement retailer. February 22st the company increased its quarterly dividend 6% to $0.25/share. “As a testament to our confidence in the Company’s strategic initiatives and our commitment to returning capital to our shareholders, the board increased the dividend for the second consecutive year,” Frank Blake, chairman & CEO. “It is our intent to increase our dividend every year. Our longer-term targeted dividend payout ratio is 40 percent.” The dividend is payable on March 24, 2011, to shareholders of record on the close of business on March 10, 2011. This is the 96th consecutive quarter the Company has paid a cash dividend. The yield based on the new payout is 2.7%.

Flowserve Corp. (FLS) is one of the world’s leading providers of fluid motion and control products and services. February 21st the company increased its quarterly dividend 10.3% to $0.32/share. The dividend is payable on April 14, 2011, to shareholders of record as of the close of business on March 31, 2011. The yield based on the new payout is 1.1%.

Gentex Corporation (GNTX) is the leading supplier of automatic-dimming rearview mirrors and camera-based active safety systems to the global automotive industry. February 21st the company increased its quarterly dividend 9% to $0.12/share. The dividend is payable April 21, 2011, to shareholders of record of the common stock at the close of business on April 7, 2011. The yield based on the new payout is 1.5%.

Genuine Parts Co. (GPC) is a distributor of automotive replacement parts in the U.S., Canada and Mexico. February 21st the company increased its quarterly dividend 10% to $0.45/share is payable April 1, 2011 to shareholders of record March 11, 2011. GPC has paid a cash dividend every year since going public in 1948, and 2011 marks the 55th consecutive year of increased dividends paid to shareholders. The yield based on the new payout is 3.4%.

Abbott (ABT) is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. February 18th the company increased its quarterly dividend 9% to to $0.48/share. This marks the 39th consecutive year that Abbott has increased its dividend payout and the 349th consecutive quarterly dividend to be paid by Abbott since 1924. The dividend is payable May 16, 2011, to shareholders of record at the close of business on April 15, 2011. The yield based on the new payout is 4.1%.

Questar Corp.’s (STR) is a Rockies-based integrated natural gas company with an enterprise value of about $4.3 billion and three complementary lines of business. February 18th the company increased its quarterly dividend 9% to $0.1525/share. The dividend is payable March 21, 2011 to shareholders of record on March 4, 2011. This is the company’s 265th consecutive quarterly dividend. Questar has increased its dividend 38 times in the last 39 years. The yield based on the new payout is 3.4%.

MOCON, Inc. (MOCO) is a leading provider of detectors, instruments, systems and consulting services to research laboratories, production facilities, and quality control and safety departments. February 18th the company increased its quarterly dividend 5% to $0.10/share. The dividend is payable on May 20, 2011, to shareholders of record on May 6, 2011. The yield based on the new payout is 3.2%.

Full Disclosure: Long ABT, CL, GPC. See a list of all my income holdings here.

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10 Financial Services Dividend Stocks To Boost Your Yield *

D4L — Wed, 09 Feb 2011 07:30:43 +0000

This is the second installment in a multi-part series that looks at different sectors that have traditionally been very friendly to dividend investors. Each of these sectors have attributes that make the companies in them potentially desirable to long-term buy-and-hold dividend growth investors. Understanding these attributes will hopefully help us to select the very best companies for our income portfolios. Last week we looked at Consumer Goods Sector. This week we are looking at Financial Services…

Financial Services Attributes

The Financial Services Sector includes insurance companies, banks, brokerages, mutual fund companies, and other similar companies. Before the 2008-09 financial meltdown, financial services stocks were the cornerstone on many dividend income portfolios. They offered relatively high yields and good dividend growth rates, for the perceived small risk of the stock. Unfortunately, things are not always as they seem. Under the surface banks were making questionable loans , while investment firms were creating and peddling exotic financial instruments. In effect, their CEO’s were building a house of cards in a hurricane – it was destined to fail, and it did.

This should be a warning when investing in the Financial Services Sector – not a stop sign. Many of these companies are in very lucrative positions. With interest rates as low as they are, banks are enjoying decent spreads, not to mention all the new fees they are dreaming-up to charge their customers. With the advent of electronic banking, we have so much tied to our accounts. The pain threshold of changing banks is high, and they know it.

Have you ever filed an insurance claim and were satisfied with the outcome? I have not spoke with many people that have. Recently, a hail storm hit my neighborhood causing damage to several roofs, including mine. My insurance company (a name that everyone would know if I mentioned it) paid less than 10% of the damage I incurred – then raised my rates. They will recoup their payment to me in about 20 months. What a business model! You can complain about it, or invest in the industry and profit from it. I’ve chosen the latter.

Financial Services Companies

Below are several leading Consumer Goods companies that I follow. The companies selected have a dividend yield in excess of 2.25% and have raised their dividends for at least 10 years.

People’s United Financial Inc. (PBCT) | Yield: 5.9% | Growth: 11.3% | Years: 13
People’s United Financial Inc. provides a full range of banking and financial service products to individuals, corporations and municipal customers in the U.S. Northeast.

Old Republic International (ORI) | Yield: 5.7% | Growth: 15.0% | Years: 29
Old Republic Intl writes property and liability, mortgage guaranty, title and life, and disability insurance.

Mercury General Corp. (MCY) | Yield: 5.5% | Growth: 1.1% | Years: 23
Mercury General Corp. is an insurance holding company, operating primarily in California, writes a full line of automobile coverage for all classifications of risk.

Hudson City Bancorp Inc. (HCBK) | Yield: 5.4% | Growth: 1.7% | Years: 10
Hudson City Bancorp Inc. operates over 100 branches in the New York metropolitan area. It caters to high median household income counties and focuses on jumbo mortgage loan funding, largely through time deposits.

Cincinnati Financial Corp. (CINF) | Yield: 4.8% | Growth: 1.0% | Years: 50
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.

Arrow Financial Corp. (AROW) | Yield: 4.2% | Growth: 2.2% | Years: 17
Arrow Financial owns Glens Falls National Bank & Trust Company and Saratoga National Bank & Trust Company, which offer commercial and consumer banking and financial products in U.S.

Community Trust Bank Corp. (CTBI) | Yield: 4.2% | Growth: 0.8% | Years: 30
Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company.

Harleysville Group Inc. (HGIC) | Yield: 3.8% | Growth: 8.0% | Years: 24
Harleysville Group Inc. underwrites a broad array of personal and commercial coverages. These insurance coverages are marketed primarily in the Eastern and Midwestern United States.

First Financial Corp. (THFF) | Yield: 2.9% | Growth: 1.1% | Years: 22
First Financial Corporation provides various financial services from 48 branch offices in west-central Indiana and east-central Illinois (Dec. 31, 2008).

Chubb Corporation (CB) | Yield: 2.5% | Growth: 5.7% | Years: 46
Chubb Corporation is one of the largest U.S. property-casualty insurers, Chubb has carved out a number of niches, including high-end personal lines and specialty liability lines coverage.

Conclusion

The Financial Services sector is the second largest sector in my database of dividend stocks. Of the 198 stocks that I track, it currently is represented by 33 stocks (17%). This is a sector many dividend growth investors are hesitant to own. The perceived higher risk brings higher yields and with potential growth to the income investor. Even after the melt-down, many income and value portfolios continue to be over-weighted in Financial Services, including Warren Buffett’s Berkshire Hathaway (BRK.A) at 41%. As for my portfolio, I will continue to enjoy what the Financial Services Sector brings to the table, but I will limit my exposure to no more than 10%.

Full Disclosure: Long CINF, HGIC. See a list of all my income holdings here.

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Harleysville Group Inc. (HGIC) Dividend Stock Analysis *

D4L — Mon, 17 Jan 2011 07:30:18 +0000

This article originally appeared on The DIV-Net January 10, 2011.

Linked here is a detailed quantitative analysis of Harleysville Group Inc. (HGIC). Below are some highlights from the above linked analysis:

Company Description: Harleysville Group Inc. underwrites a broad array of personal and commercial coverages. These insurance coverages are marketed primarily in the Eastern and Midwestern United States.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

HGIC is trading at a discount to only 4.) above. The stock is trading at a 5.3% discount to its calculated fair value of $38.88. HGIC earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

HGIC earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. HGIC earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1986 and has increased its dividend payments for 24 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

HGIC earned a Star in this section for its NPV MMA Diff. of the $1,504. This amount is in excess of the $1,100 target I look for in a stock that has increased dividends as long as HGIC has. If HGIC grows its dividend at 8.0% per year, it will take 1 years to equal a MMA yielding an estimated 20-year average rate of 3.9%. HGIC earned a check for the Key Metric ‘Years to >MMA’ since its 1 years is less than the 5 year target.

Memberships and Peers: HGIC is a member of the Broad Dividend Achievers™ Index. The company’s peer group includes: Chubb Corporation (CB) with a 2.5% yield, Mercury General Corporation (MCY) with a 5.6% yield and State Auto Financial Corp. (STFC) with a 3.5% yield.

Conclusion: HGIC earned one Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks HGIC as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $41.10 before HGIC’s NPV MMA Differential decreased to the $1,100 minimum that I look for in a stock with 24 years of consecutive dividend increases. At that price the stock would yield 3.28%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,100 NPV MMA Differential, the calculated rate is 6.9%. This dividend growth rate is below the 8.0% used in this analysis, thus providing a margin of safety. HGIC has a risk rating of 1.25 which classifies it as a low risk stock.

HGIC underwrites property and casualty insurance policies and offers commercial automobile, workers’ compensation, and multiperil insurance, as well as personal automobile and homeowner’s insurance. The company markets its policies through almost 2,000 insurance agencies, and maintains offices in about a dozen states. On October 27, 2009, HGIC agreed to assume Delta’s book of Delta Lloyds Flood Insurance Business effective November 1, 2009. The company has a strong balance sheet with very little debt. The company still has sufficient room to grow its dividend with a current free cash flow payout of only 33%. I will continue to add to my HGIC position when the stock is trading below my buy price of $38.88 and as my allocation allows. For additional information, including the stock’s dividend history, please refer to its data page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in HGIC (4.0% of my Income Portfolio). See a list of all my income holdings here.

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Cincinnati Financial Corp. (CINF) Dividend Stock Analysis *

D4L — Mon, 27 Dec 2010 07:30:26 +0000

This article originally appeared on The DIV-Net December 20, 2010.

Linked here is a detailed quantitative analysis of Cincinnati Financial Corp. (CINF). Below are some highlights from the above linked analysis:

Company Description: Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

CINF is trading at a discount to 2.) and 4.) above. The stock is trading at a 12.5% discount to its calculated fair value of $36.34. CINF earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

CINF earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. CINF earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1954 and has increased its dividend payments for 50 consecutive years.

1. NPV MMA Diff.
2. Years to > MMA

CINF earned a Star in this section for its NPV MMA Diff. of the $618. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as CINF has. The stock’s current yield of 5.0% exceeds the 3.4% estimated 20-year average MMA rate.

Memberships and Peers: CINF is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. The company’s peer group includes: The Allstate Corporation (ALL) with a 2.6% yield, The Chubb Corporation (CB) with a 2.5% yield and The Travelers Companies, Inc. (TRV) with a 2.6% yield.

Conclusion: CINF earned one Star in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of five Stars. This quantitatively ranks CINF as a 5 Star-Strong Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $33.93 before CINF’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 50 years of consecutive dividend increases. At that price the stock would yield 4.69%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 0.2%. This dividend growth rate is below the 1.0% used in this analysis, thus providing a margin of safety. CINF has a risk rating of 1.25 which classifies it as a low risk stock.

CINF was founded by independent insurance agents in order to better service their needs by providing them preferential treatment when picking an underwriter. The company primarily sells commercial property-casualty insurance with a smaller personal lines exposure marketed through a select group of about 1,100 independent insurance agencies. Like most financial services companies, CINF has seen its share of struggles. Back in December 2009, CINF’s Free Cash Flow payout was at 78%. Since then, the company has worked its FCF payout down to its present level of 47%. The company is more heavily exposed to equity risk than its peers; however management is taking steps to re-balance its investments. I will continue to add to my position in CINF when it is trading below my $36.34 buy price, and as my allocation allows. For additional information, including the stock’s dividend history, please refer to its data page.

Full Disclosure: At the time of this writing, I was long in CINF (2.0% of my Income Portfolio). See a list of all my income holdings here.

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The 2010 Elite Dividend Stocks List *

D4L — Wed, 22 Sep 2010 07:30:31 +0000

As dividend growth investors, we want to limit our purchases to only the very best stocks. Our first step is to look at published lists of dividend companies such as S&P 500 Dividend Aristocrats, US Broad Dividend Achievers™ Index and The U.S. Dividend Champions. These lists are used to narrow the population of all publically traded companies down to the very best dividend stocks. When these lists are combined, as I did with the Stock Ideas list, it is still a large and daunting collection of 218 unique companies. So, how do we find the Elite companies on this list?

In 2009, I devised additional criteria to apply to the Stock Ideas list in an effort to eliminate all but the the Elite Dividend Stocks. Here is the additional criteria that I came up with, along with the companies that met the criteria:

A Long Track Record Of Consecutive Dividend Increases: Aristocrats and Champions have increased their dividends for 25 consecutive years, while Achievers have done so for 10 years. The quickest way to narrow the list down was only include companies with 35 or more years of consecutive dividend increases. This reduced the number of companies to 57.

Ability To Generate Positive Free Cash Flows: To have cash available for dividends, a company must have cash left over after paying the operating expenses and normal capital expenditures. For this I looked for companies that had positive free cash flow for the last 10 years.

Free Cash Flow Sufficient To Pay The Dividend: Free cash flow can be positive, but still not enough to cover an increasing dividend. To ensure adequate coverage, I screened for companies with a 60% or less Free Cash Flow payout ratio.

Low Debt: Dividends paid out of Free Cash Flow must compete for other needs of the business such as interest and debt payments. Lower debt and interest requirements make available more cash for dividend payments. For this item, I eliminated all companies that had a debt to total capital percent in excess of 35%.

Low Risk: An Elite Dividend company should provide a superior return without subjecting your investment to undue risk. For this item, I limited the companies to those with a risk # less than 1.5.

My Elite Dividends List that started with 218 companies, then after considering all the above, it is left with the following nine companies:

		Debt To	FCF	Years of
Company	Yield	Capital	Payout	Div Grow
WW Grainger (GWW)	1.75%	17.99%	22.36%	39
RLI Corp. (RLI)	2.06%	10.53%	5.69%	35
Wal-Mart (WMT)	2.28%	23.88%	36.30%	36
Chubb Corp. (CB)	2.57%	20.16%	19.85%	46
Coca-Cola Co. (KO)	3.06%	16.15%	57.47%	48
P&G (PG)	3.16%	32.69%	31.30%	54
J&J (JNJ)	3.43%	18.62%	38.98%	48
Diebold, Inc. (DBD)	3.62%	34.64%	17.21%	57
Genuine Parts (GPC)	3.77%	15.76%	39.57%	54

This is not a buy list. As noted above, the Elite Dividend List ignores valuation and other factors you must consider before purchasing one of these companies. As we build our dividend growth portfolios, it only makes sense to build its core with the very best stocks.

Full Disclosure: Long WMT, KO, PG, JNJ, GPC. See a list of all my income holdings here.

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Where To Find Great Dividend Stocks *

D4L — Wed, 21 Jul 2010 07:30:26 +0000

In my dividend database, I track nearly 190 stocks in 19 different sectors. Generally, the characteristics of certain sectors tend to match those that dividend growth investors are looking for, thus their constituents are often make better dividend investments. In the case of the stocks I track, nearly half of them are in these three sectors:

I. Consumer Goods (13%)

Consumer goods are items purchased for personal or household use. These would include items such as soap, detergent, cleaning supplies, toilet paper, toothpaste, candies, sodas, etc. These tend to be non-cyclical and many of the products are low cost. Since the demand for these products are less affected by the economic cycle and the industries are mature, the companies tend to generate relatively stable and predictable cash flows. These characteristics are exactly what you look for in a great dividend company. Below are some examples of companies in the consumer goods sector:

Colgate-Palmolive (CL) is a consumer products company, whose products are marketed throughout the world. Colgate’s Oral Care products include toothpaste, toothbrushes, oral rinses, dental floss and pharmaceutical products.
Analysis | Years of Dividend Growth: 47 | Yield: 2.44%

McCormick & Company (MKC) primarily produces spices, seasonings and flavorings for the retail food, food service and industrial markets. Trademarks include McCormick and Schilling.
Years of Dividend Growth: 24 | Yield: 2.70%

Procter & Gamble (PG ) is focused on providing branded consumer goods products. The Company markets its products in more than 180 countries.
Analysis | Years of Dividend Growth: 53 | Yield: 2.90%

Coca-Cola Company (KO) is the world’s largest soft drink company. It engages in the manufacture, distribution, and marketing of nonalcoholic beverage concentrates, fruit juices and syrups worldwide.
Analysis | Years of Dividend Growth: 48 | Yield: 3.35%

Kimberly-Clark Co (KMB) is a global consumer products company produces tissue, personal care and health care. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark.
Analysis | Years of Dividend Growth: 38 | Yield: 4.22%

II. Financial Services (17%)

Have you ever had to pay a bank fee, origination point on a loan, or have you ever filed an insurance claim and were not satisfied with the amount of money you received? Financial stocks are cash cows – they generate large cash flows with minimal capital and ongoing expenses. Historically, these have been some of the best dividend growth stocks, at least until the industry became overly aggressive and made bad operating and investing decisions. Here are several financial companies that survived the last downturn:

Eaton Vance Corp. (EV) is a Boston-based holding company that is primarily engaged in investment management.
Years of Dividend Growth: 30 | Yield: 2.23%

T. Rowe Price Group Inc. (TROW) operates one of the largest no-load mutual fund complexes in the United States.
Analysis | Years of Dividend Growth: 30 | Yield: 2.30%

Chubb Corporation (CB) is one of the largest U.S. property-casualty insurers, Chubb has carved out a number of niches, including high-end personal lines and specialty liability lines coverage.
Years of Dividend Growth: 46 | Yield: 2.86%

Harleysville Group Inc. (HGIC) is a regional holding company for property and casualty insurance companies that operates in 32 states, primarily in the eastern half of the U.S.
Analysis | Years of Dividend Growth: 23 | Yield: 4.29%

Cincinnati Financial Corp. (CINF) markets primarily property and casualty coverage; it also conducts life insurance and asset management operations.
Analysis | Years of Dividend Growth: 50 | Yield: 5.92%

III. Industrial Materials (18%)

Companies classified as industrial materials are those engaged in the manufacturing or production of machinery, raw materials or component parts for use or consumption by other industries or firms. These companies don’t make the consumer goods, but they make the machinery and supply the raw materials that are used to manufacture them. Many of these companies are mature with established markets, strong customer relationships and often hold an exclusive right to their proprietary manufacturing process. Below are some companies in the industrial materials sector:

United Technologies Corp. (UTX) is an aerospace-industrial conglomerate with a portfolio including Pratt & Whitney jet engines, Sikorsky helicopters, Otis elevators and Carrier air conditioners, among other products.
Analysis | Years of Dividend Growth: 18 | Yield: 2.55%

Dover Corporation Corp. (DOV) manufactures a broad range of specialized industrial products and sophisticated manufacturing equipment.
Years of Dividend Growth: 55 | Yield: 2.42%

Emerson Electric (EMR) primarily makes backup power equipment for telecom and Internet providers and users, climate control components, and electric motors.
Years of Dividend Growth: 53 | Yield: 2.95%

Nucor Corporation (NUE) is engaged in the manufacture and sale of steel and steel products. As the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas.
Analysis | Years of Dividend Growth: 37 | Yield: 3.73%

RPM International Inc. (RPM) makes specialty coatings and products for the structural waterproofing and corrosion control markets, as well as products for the consumer, do-it-yourself and hobby markets.
Analysis | Years of Dividend Growth: 37 | Yield: 4.60%

It is no surprise the above three sectors carry the highest allocation in my income portfolio. To keep my asset allocation balanced, I must overweight other sectors in my non-income portfolios. In the same way that too many deserts will expose you to unnecessary health risks, being over-allocated in any sector put your portfolio at risk.

Full Disclosure: Long CL, CINF, PG, KO, KMB, HGIC, CINF, UTX, EMR, NUE. See a list of all my income holdings here.

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Finding Low Risk Dividend Stocks *

D4L — Wed, 30 Jun 2010 07:30:52 +0000

A stock with a high yield doesn’t mean much if the dividend is cut or eliminated, and the stock price declines significantly. Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk. What can we do to help gauge the risk of an individual stock?

In my dividend database I track over 180 stocks, with each having a minimum of 10 years of historical information. This data is gathered from various sources deemed reliable. Most data is generic and can be pulled from various internet sites. I then combine this information into metrics that I consider relevant in determining the stocks ability to sustain and grow its dividend.

Risk is one of the key factors I look at. Risk can have as many definitions as the number of people you ask to define it. Ultimately, we are trying to access how likely is it that something bad will or will not happen. As a quantitative first pass, I consider the following factors:

Dividend Increase Risk (R)

One important metric in accessing the likelihood of future dividend increases is past performance. The logic here is the longer a company raises its divided, the more committed it is to dividend increases and is less likely to stop unless dire financial circumstances dictate it. I use the following criteria to assign the A, B or C risk rating:

A is assigned to companies that have increased their dividends for more than 25 years (numeric value of 1).
B is assigned to companies that have increased their dividends for 15-25 years (numeric value of 2).
C is assigned to companies that have increased their dividends for less than 15 years (numeric value of 3).

Quality of Dividend Increases (Q)

In determining the quality of the dividend, I look at the company’s financial quality by focusing on Free Cash Flow payout and Debt to Total Capital. I assign a 1, 2 or 3 Quality Rating based on:

1 is assigned to companies if their Free Cash Flow Payout % is less than 60% and if their Debt to Total Capital is less than 45%.
2 is assigned to companies if the sum of their Free Cash Flow Payout % plus their Debt to Total Capital is less than 100%.
3 is assigned to companies if the sum of their Free Cash Flow Payout % plus their Debt to Total Capital is greater than 100%.

Current Price vs. Calculated Price (P)

As part of my quantitative analysis, I calculate a “Buy Below” price. If the current price is within plus or minus 10% of the calculated price then this portion of the calculation is assigned a value of 1 (low risk). Results between plus or minus 10% but less than 20% is assigned a value 2 (medium risk), while anything plus or minus 20% or greater is assigned a 3 (high risk).

Dividend Yield (Y)

Dividend yield is an indication of market sediment, and often an early warning for a troubled stock. In this portion of the calculation, the current yield is compared to predetermined levels and a risk value is assigned. Currently, I am assigning a 1 (low risk) to yields less than 5%, a 2 (medium risk) to values from 5% to less than 8% and a 3 (high risk) for values 8% and greater. The predetermined levels are purely arbitrary and subject to future calibration.

Some might argue that it is “normal” for certain industries to pay out a higher yield, such as 10%. However, I think that “normal” higher yield could be indicative of the implicit higher risk of that industry. Blue water shipping (ocean going) would be an example of this. Also, certain industries, such as utilities, tend to sustain a higher yield due to their lack of growth opportunities.

Putting It All Together

My Risk Rating is calculated by averaging the four numeric values above, as such:

(R + Q +P +Y)/4 = Risk Rating

This calculation will yield values between 1 and 3. I divided this range into thirds and assigned an overall rating based on this table:

1.00 to less than 1.67 = Low Risk
1.67 to less than 2.34 = Medium Risk
2.34 to 3.00 = High Risk

Stock Stats

Based on calculations from this past weekend, below are ten stocks with a low risk rating:

Company	Analysis	Risk #	Yield
ADP, Inc. (ADP)	-	1.00	3.29%
Chubb Corp. (CB)	-	1.00	2.82%
Medtronic, Inc. (MDT)	-	1.00	2.42%
AT&T Inc. (T)	Link	1.25	6.76%
Kimberly-Clark (KMB)	Link	1.25	4.27%
Genuine Parts (GPC)	Link	1.25	4.03%
J&J (JNJ)	Link	1.25	3.57%
Clorox Co. (CLX)	-	1.25	3.30%
Pepsico, Inc. (PEP)	-	1.25	3.10%
Wal-Mart (WMT)	Link	1.25	2.46%

There are other factors that can affect the risk of an individual stock such as industry, geopolitical factors, technology, et. al. Needless to say, all these must be considered as we make our decision to buy or sell a stock.

Full Disclosure: Long JNJ, PEP, PG, UTX, WMT. See a list of all my income holdings here.

(Photo: sean carpenter)

18 Dividend Stocks Raising Their Yield On Cost *

D4L — Fri, 26 Feb 2010 11:30:21 +0000

For dividend growth investors, there are certain attributes of investments that are more relevant than others, such as yield and dividend growth. To illustrate the power of dividend growth consider that an investment’s yield-on-cost will double every 5 years if they grow their dividend by 15%/year or 7 years at 10%/year or 14 years at 5%/year.

This week several companies took a step toward doubling their shareholders yield-on-cost by increasing their cash dividends:

PG&E Corp. (PCG) is the parent of Pacific Gas & Electric Co. On February 19th the company increased its quarterly dividend to to $0.455/share. The yield based on the new payout is 4.33%.

Abbott (ABT) is a leading maker of drugs, nutritional products, diabetes monitoring devices, and diagnostics. February 19th the company raised its quarterly dividend 10% to $0.44/share. The cash dividend is payable May 15, 2010, to shareholders of record at the close of business on April 15, 2010. The ex-dividend date is April 13. ABT is a Dividend Aristocrat and has raised its dividend for 38 consecutive years. The yield based on the new payout is 3.24%. [Analysis]

ITT Corp (ITT) is a diversified industrial manufacturer of advanced technology products. February 22nd the company raised its quarterly dividend 18% to $0.25/share. The dividend is payable on April 1, 2010 to shareholders of record on March 3, 2010. The ex-dividend date is March 1. The dividend yield is 1.95% on the new payout.

Home Depot (HD) operates a chain of over 2,200 retail warehouse-type stores, selling a wide variety of home improvement products. February 23rd the company increased its quarterly dividend 5% to 23.625/share. The dividend is payable on March 25, 2010, to shareholders of record on the close of business on March 11, 2010. The dividend yield is 3.01% on the new payout.

Kimberly-Clark (KMB) is a leading consumer products company’s global tissue, personal care and health care brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex and Scott. February 23rd the company raised its quarterly dividend 10% to $0.66/share. The dividend is payable on April 5, 2010, to stockholders of record on March 5, 2010. The ex-dividend date is March 3, 2010. KMB is a Dividend Aristocrat and has raised its dividend for 38 consecutive years. The yield based on the new payout is 4.38%. [Analysis]

MOCON (MOCO) makes equipment to test packages and packaging material, and performs consulting and analytical services. February 24th the company raised its quarterly dividend 6% to $0.095/share. The dividend is payable on May 21, 2010, to shareholders of record on May 7, 2010. The ex-dividend date is May 5, 2010. Yield on the dividend is 3.74%.

Digital Realty Trust (DLR) operates as a real estate investment trust (REIT). February 24th the company increased its quarterly dividend to $0.48/share. The dividend will be paid on March 31, 2010, to common stockholders of record as of the close of business on March 15, 2010. The ex-dividend date is March 11, 2010. Yield on the dividend is 3.76%.

Altria Group (MO) is the largest U.S. cigarette producer. February 24th the company increased its quarterly dividend 3% to $0.35/share. The dividend is payable on April 9, 2010, to stockholders of record as of March 15, 2010. The ex-dividend date is March 11, 2010. MO is a Dividend Achiever and has raised its dividend for 14 consecutive years. The yield based on the new payout is 6.91%.

Westar Energy (WR) provides electric generation, transmission and distribution services to apx. 674,000 customers in Kansas as of December 31, 2007. February 24th the company raised its quarterly dividend 3.3% to $0.31/share. The dividend is payable April 1, 2010 to shareholders of record on March 9, 2010. The ex-dividend date is March 5. The yield based on the new payout is 5.62%.

Chubb (CB) is one of the largest U.S. property-casualty insurers, Chubb has carved out a number of niches, including high-end personal lines and specialty liability lines coverage. February 24th the company increased its quarterly dividend 5.7% to $0.37/share. The dividend is payable on April 6 to shareholders of record on March 19. The ex-dividend date is March 17. CB is a Dividend Aristocrat and has raised its dividend for 45 consecutive years. The yield based on the new payout is 2.90%. [Analysis]

Weingarten Realty Investors (WRI) is a REIT focusing on shopping centers and industrial properties. February 24th the company increased its dividend. The yield based on the new payout is 4.92%.

McGrath Rentcorp (MGRC) rents and sells modular buildings and electronic test and measurement equipment; and manufactures and sells portable classrooms. February 24th the company increased its quarterly dividend to $0.225/share. The dividend is payable on April 30, 2010, to all shareholders of record on April 16, 2010. The ex-dividend date is April 14, 2010. MGRC is a Dividend Achiever and has raised its dividend for 18 consecutive years. The yield based on the new payout is 3.69%.

Essex Property Trust (ESS) is a real estate investment trust primarily owns and operates multi-family properties in California and the Pacific Northwest. February 24th the company raised its quarterly dividend to $1.0325/share. The dividend is payable on April 15, 2010 to shareholders of record as of March 31, 2010, will be $1.0325 per share. The ex-dividend date is March 29, 2010. ESS is a Dividend Achiever and has raised its dividend for 16 consecutive years. The yield based on the new payout is 4.83%.

Donaldson (DCI) operates as a worldwide manufacturer of filtration systems and replacement parts. February 24th the company increased its quarterly dividend 4% to $0.12/share. The dividend is payable March 19th to shareholders of record as of March 5th. The ex-dividend date is March 3. DCI is a Dividend Achiever and has raised its dividend for 24 consecutive years. The yield based on the new payout is 1.147%.

CenturyLink (CTL) provides voice service to 7 million customers and Internet service to 2 million customers in both rural towns and larger cities, like Las Vegas. February 25th the company raised its quarterly dividend 3.6% to $0.725/share. The dividend is payable on March 22, 2010 to shareholders of record on March 9, 2010. The ex-dividend date is March 5, 2010. CTL is a Dividend Aristocrat and has raised its dividend for 36 consecutive years. The yield based on the new payout is 8.37%.

Gap Inc. (GPS) is a specialty apparel retailer operates Gap, Banana Republic and Old Navy stores. February 25th the company increased its dividend 18% to $0.10/share. The dividend is payable on April 28, 2010 to shareholders of record at the close of business on April 7, 2010. The yield based on the new payout is 1.96%.

Old Republic Int. (ORI) writes property and liability, mortgage guaranty, title and life, and disability insurance. February 25th the company raised its quarterly dividend 1.4% to $0.1725/share. The dividend is payable March 15, 2010, to shareholders of record on March 5, 2010. Yield on the dividend is 6.1%. ORI is a Dividend Achiever and has raised its dividend for 28 consecutive years. The yield based on the new payout is 6.13%.

Cleco Corp (CNL) generates, transmits, distributes and sells electricity in Louisiana; holds ownership interest in three steam electric generating stations and one gas turbine. February 25th the company increased its quarterly dividend 11% to $0.25/share. The dividend is payable May 15, 2010. The yield based on the new payout is 3.90%.

The only way a company can consistently increase yield-on-cost is to consistently raise their dividends paid. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long ABT, KMB, CTL. See a list of all my income holdings here.

(Photo Credit)

38 Dividend Securities For A Well-Rounded Asset Allocation *

D4L — Wed, 17 Feb 2010 11:30:12 +0000

I am a firm believer that asset allocation plays a significant part in a portfolio’s long-term results. Recently, I received a question asking if you could have a diversified portfolio of dividend stocks. It is an interesting question that deserves further examination.

As for my portfolio, I consider asset allocation only when looking at my holdings in total. It would be much too difficult to maintain a good allocation within individual portfolios (income, growth, 401(k), Roth IRA, etc.), while trying to maintain my overall allocation. However, an investor could build a degree of allocation into a portfolio of dividend income securities. Consider the following:

Business Services Sector

Automatic Data Processing Inc. (ADP)
Yield: 3.33% | Style: Large Growth | Analysis
C H Robinson Worldwide Inc. (CHRW)
Yield: 1.86% | Style: Large Growth
Expeditors International of Washington Inc. (EXPD)
Yield: 1.16% | Style: Mid Growth

Consumer Goods Sector

Clorox Company (CLX)
Yield: 3.23% | Style: Mid Core
Coca-Cola Company (KO)
Yield: 3.04% | Style: Large Growth | Analysis
Procter & Gamble Company (PG)
Yield: 2.85% | Style: Large Core | Analysis

Consumer Services Sector

Genuine Parts Company (GPC)
Yield: 4.19% | Style: Mid Value | Analysis
Sysco Corporation (SYY)
Yield: 3.56% | Style: Large Core | Analysis
McDonald’s Corporation (MCD)
Yield: 3.22% | Style: Large Core | Analysis

Energy Sector

BP Plc ADR (BP)
Yield: 6.15% | Style: Large Value
Chevron Corporation (CVX)
Yield: 3.75% | Style: Large Value
ExxonMobil Corporation (XOM)
Yield: 2.56% | Style: Large Value

Financial Services Sector

Harleysville Group Inc. (HGIC)
Yield: 3.90% | Style: Small Value | Analysis
Chubb Corporation (CB)
Yield: 2.85% | Style: Large Value | Analysis
Aflac Inc. (AFL)
Yield: 2.38% | Style: Large Core | Analysis

Hardware Sector

Diebold Incorporated (DBD)
Yield: 3.67% | Style: Small Value
Linear Technology (LLTC)
Yield: 3.23% | Style: Mid Core
Raven Industries Inc. (RAVN)
Yield: 1.90% | Style: Small Growth | Analysis

Health Care Sector

Meridian Bioscience Inc. (VIVO)
Yield: 3.27% | Style: Small Growth
Johnson & Johnson (JNJ)
Yield: 3.08% | Style: Large Core | Analysis
Cardinal Health Inc. (CAH)
Yield: 2.10% | Style: Large Core | Analysis

Industrial Materials Sector

Nucor Corp. (NUE)
Yield: 3.40% | Style: Large Core | Analysis
Emerson Electric Co. (EMR)
Yield: 2.90% | Style: Large Core | Analysis
3M Company (MMM)
Yield: 2.58% | Style: Large Core

Media Sector

McGraw-Hill Companies Inc. (MHP)
Yield: 2.63% | Style: Large Core

Pharmaceuticals Sector

Eli Lilly & Company (LLY)
Yield: 5.77% | Style: Large Value
Abbott Laboratories (ABT)
Yield: 2.97% | Style: Large Growth | Analysis

Real Estate Sector

Essex Property Trust (ESS)
Yield: 5.14% | Style: Mid Core
Corporate Office Properties Trust Inc. (OFC)
Yield: 4.29% | Style: Mid Core
Federal Realty Investment Trust (FRT)
Yield: 4.06% | Style: Mid Core

Telecommunications Sector

CenturyLink Inc. (CTL)
Yield: 8.10% | Style: Large Value
AT&T Inc. (T)
Yield: 6.54% | Style: Large Value | Analysis

Utilities Sector

Integrys Energy Group Inc. (TEG)
Yield: 6.61% | Style: Mid Value
Consolidated Edison Company (ED)
Yield: 5.59% | Style: Large Value
MGE Energy Inc. (MGEE)
Yield: 4.45% | Style: Small Core

Bonds

Vanguard Short-Term Bond ETF (BSV)
Yield: 2.74% | Style: Short-Term Bond
Vanguard Intermediate-Term Bond ETF (BIV)
Yield: 4.32% | Style: Intermediate-Term Bond
Vanguard Long-Term Bond ETF (BLV)
Yield: 5.16% | Style: Long-Term Bond

Needless to say, the above will not provide a perfect allocation, but it goes a long way to provide diversity in a portfolio focused only on income securities. In my personal portfolio, I buy the best available dividend securities and use my other investments to balance my asset allocation.

Full Disclosure: Long ABT, ADP, AFL, BIV, BLV, BP, CLX, CTL, CVX, ED, EMR, GPC, HGIC, JNJ, KO, LLY, MCD, MMM, NUE, PG, SYY, T, TEG. See a list of all my income holdings here.