Dividends Value » KMB

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.

(Photo Credit)

Why Dividend Stocks Are Evil *

D4L — Wed, 30 Mar 2011 07:30:15 +0000

I can’t carry on anymore. The secret has become too much of a burden and it must be shared with the masses. This will shock some and enrage others, but it must be said, and I should be the one to say it. Dividend stocks are evil and they will eventually lead to the collapse of western civilization as we know it. There, I said it and here is why I believe it…

Dividend Stocks Empowers People

By starting early in life and building a portfolio of dividend growth stocks, people are empowering themselves and taking charge of their future. At first blush, this may not sound like a bad thing but consider the consequences. Lord Acton saw the problem more than a century ago when he stated “All power tends to corrupt; absolute power corrupts absolutely.” Power is meant for the government, not people. The government has a much more experience with corruption than individuals.

Dividend Stocks Weakens The Need For Government

Power is like mass, it can not be created or destroyed. Any gains in power in one area must be offset by a loss in another. When people make wise financial decisions and are empowered with a secure and independent future, this power must come from somewhere, and in this case it is to the detriment of our beloved government. The foundation of our modern government is a needy society beholden to its benevolent hand. If the masses aren’t relying on the government to sustain their meager existence in retirement, how can we continue to justify our current behemoth governmental infrastructure and expenditures. And even worse, a shift of power to the people could go to their heads and eventually lead to them demanding accountability from their elected officials. This is sacrilege!

Dividend Stocks Will Destroy The World Economy

If individuals start making wise financial decisions and investing in dividend stocks instead of buying “stuff” produced around the world. The world economy could collapse. Imagine what would happen if we stopped buying plastic stuff made in China – their government would not be able to fund all their military endeavors. This would leave them open to another student up rising in Tiananmen Square, and this time the government may not be able to silence the people.

7 Dividend Stocks To Bring Down Financial System

The financial system does not like radical change. Responsible behavior and fewer imports could lead to lead to smaller government and less debt. Less debt would keep interest rates low as buyers bid up the price of the remaining debt. Perpetually low interest rates would stimulate the economy and cause stress on the financial institutions as they tried in vain to keep up with a robust economy.

You’ve been warned. You will set in motion a cataclysmic chain of events if act responsibly and buy good dividend stocks such as these:

Abbott Laboratories (ABT) | Yield: 4.0%
Abbott Laboratories is a diversified life science company and is a leading maker of drugs, nutritional products, diabetes monitoring devices, and diagnostics.

Cincinnati Financial Corp. (CINF) | Yield: 4.9%
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.

Colgate-Palmolive Co. (CL) | Yield: 3.0%
Colgate-Palmolive Company (Colgate) is a major consumer products company that markets oral, personal and household care, and pet nutrition products in more than 200 countries and territories.

ConocoPhillips (COP) | Yield: 3.5%
ConocoPhillips Co. is the fourth largest integrated oil company in the world, and the second largest in the U.S.

Kimberly-Clark Corporation (KMB) | Yield: 4.3%
Kimberly Clark Corp. 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.

Pepsico, Inc. (PEP) | Yield: 3.0%
PepsiCo, Inc. is a major international producer of branded beverage and snack food products.

AT&T, Inc. (T) | Yield: 6.1%
AT&T Inc. provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). AT&T Corp. was acquired in late 2005 and BellSouth in late 2006.

Now that the secret is out, what are you going to do? Will you continue to buy these evil stocks and build an independently secure future and allow our government and world economy to fail? As for me, I plan on spending the next couple of days digging my tongue out of my cheek and preparing for Friday’s holiday!

Full Disclosure: Long ABT, CINF, CL, COP, KMB, PEP, T. See a list of all my income holdings here.

(Photo Credit)

Building Yield: 15 Consumer Goods Dividend Stocks *

D4L — Wed, 02 Feb 2011 07:30:08 +0000

Over the next several weeks I plan to look 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. First up the Consumer Goods Sector…

Consumer Goods Attributes

Demand for household and personal care products is generally stable and not affected by changes in the economy or other factors. There are certain things people will continue to purchase no matter how bad the economy gets. If you lose your job, you probably won’t stop bathing, washing your clothes, brushing your teeth or stop buying toilet paper. Given the relatively low price of most consumer goods, consumers often prefer to pay a few pennies more for a name brand that they are confident with.

Raw material costs is a primary driver of profitability, and the larger more established companies are in a better position to negotiate better terms. Growth comes from a growing population and expanding into emerging markets where the people are starting to earn a wage they can not only life on, but begin to buy things we consider necessities.

Consumer Goods 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 5 years (all but one are in excess of 10 years).

McCormick & Company (MKC) | Yield: 2.3% | Growth: 8.3% | Years: 24
McCormick & Company Inc. manufactures, markets and distributes flavor products and other specialty food products to the entire food industry.

J.M. Smucker Company (SJM) | Yield: 2.6% | Growth: 7.6% | Years: 12
J.M. Smucker Co.’s products include coffee, fruit spreads, peanut butter, shortening and oils, ice cream toppings, health and natural foods, and beverages. The Folgers coffee business was acquired in November 2008.

Colgate-Palmolive (CL) | Yield: 2.6% | Growth: 12.5% | Years: 47
Colgate-Palmolive Company (Colgate) is a major consumer products company that markets oral, personal and household care, and pet nutrition products in more than 200 countries and territories.

Weyco Group, Inc. (WEYS) | Yield: 2.7% | Growth: 15.0% | Years: 29
Weyco Group, Inc. distributes, wholesale & retail, men’s branded footwear in the U.S., Canada, Europe; offers casual footwear, dress shoes and accessories under Florsheim, other brands.

Coca-Cola Company (KO) | Yield: 2.8% | Growth: 7.3% | Years: 48
The Coca-Cola Company is the world’s largest soft drink company, KO also has a sizable fruit juice business.

Bemis Company, Inc. (BMS) | Yield: 2.8% | Growth: 2.2% | Years: 27
Bemis Company Inc. is a leading maker of a broad range of flexible packaging and pressure-sensitive materials.

Pepsico, Inc. (PEP) | Yield: 2.9% | Growth: 6.5% | Years: 38
PepsiCo, Inc. is a major international producer of branded beverage and snack food products.

V.F. Corporation (VFC) | Yield: 3.0% | Growth: 2.1% | Years: 36
V.F. Corp is global apparel company, with leading shares in denim and daypacks. It is transforming itself into a designer and marketer of lifestyle apparel brands.

Procter & Gamble (PG) | Yield: 3.0% | Growth: 7.0% | Years: 54
The Procter & Gamble Company is a leading consumer products company markets household and personal care products in more than 180 countries.

Sonoco Products Co. (SON) | Yield: 3.1% | Growth: 1.9% | Years: 27
Sonoco Products Co. makes paper and plastic packaging products serving various industries and markets in more than 85 countries.

Avon Products, Inc. (AVP) | Yield: 3.1% | Growth: 4.8% | Years: 20
Avon Products Inc. is the world’s leading direct marketer of cosmetics, toiletries, fashion jewelry, and fragrances and has more than 5 million sales representatives worldwide.

The Clorox Company (CLX) | Yield: 3.4% | Growth: 9.3% | Years: 35
The Clorox Company is a diversified producer of household cleaning, grocery and specialty food products and is also a leading producer of natural personal care products.

H.J. Heinz Company (HNZ) | Yield: 3.8% | Growth: 1.9% | Years: 7
The H.J. Heinz Company produces a wide variety of food products worldwide, primarily condiments, convenience meals and snacks.

Kimberly-Clark Co. (KMB) | Yield: 4.1% | Growth: 6.7% | Years: 38
Kimberly Clark Corp. 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.

Leggett & Platt, Inc. (LEG) | Yield: 4.7% | Growth: 3.0% | Years: 38
Leggett & Platt Inc makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as diversified products for non-furnishings markets.

Conclusion

The Consumer Goods is the third largest sector in my database of dividend stocks. Of the 198 stocks that I track, it currently is represented by 30 stocks (15%). As noted above this is a very important sector for dividend growth investors. It it brings yield stability and potential growth to an income portfolio. Many income and value portfolios are over-weighted in Consumer Goods, including Warren Buffett’s Berkshire Hathaway (BRK.A) at 42%. Keep the soap and toilet paper coming!

Full Disclosure: Long CL, KO, PEP, PG, CLX, KMB, LEG. See a list of all my income holdings here.

(Photo Credit)

10 Stocks Expected to Grow Their Dividends in 2011 *

D4L — Fri, 31 Dec 2010 07:30:47 +0000

In this space we normally look at companies that have recently raised their dividends. However, as the year draws to a close there were very few companies of note increasing their dividends this week. With that, I thought it would be interesting to see who were the big dividend raisers in 2010 and what we might see in 2011. Here are ten companies for your consideration:

Abbott Laboratories (ABT) in April 2010 raised its dividend 10% to $0.44/share from $0.40/share. In April 2009 it raised its dividend 11%. ABT has increased its dividend for 38 consecutive years and I expect them to do so again next year. The 2011 increase should be similar to the 2010 increase, or possibly higher, since the company’s 12-month trailing free cash flow is up significantly compared to 2009. I project a 2011 increase of 10%. The stock is currently yielding 3.7%.

Kimberly-Clark Corp. (KMB) in March 2010 raised its dividend 10% to $0.66/share from $0.60/share. In 2009 it raised its dividend 3.4%. KMB has increased its dividend for 38 consecutive years and I expect them to do so again next year. I project 2011 be lower than the 2010 increase since the company’s 12-month trailing free cash flow is down from the 2009 high. I project a 2011 increase of 8%. The stock is currently yielding 4.2%.

Clorox Company (CLX) in July 2010 raised its dividend 10% to $0.55/share from $0.50/share. In 2009 it raised its dividend 8.7%. CLX has increased its dividend for 33 consecutive years and I expect them to do so again next year. I project the 2011 increase will be similar to the 2010 increase since the company’s 12-month trailing free cash flow is flat with 2009. I project a 2011 increase of 10%. The stock is currently yielding 3.5%.

Johnson & Johnson (JNJ) in May 2010 raised its dividend 10.2% to $0.54/share from $0.49/share. In 2009 it raised its dividend 6.5%. JNJ has increased its dividend for 48 consecutive years and I expect them to do so again next year. I project the 2011 increase will be higher than the 2010 increase since the company’s 12-month trailing free cash flow is up from 2009. I project a 2011 increase of 12%. The stock is currently yielding 3.5%.

McDonald’s Corp. (MCD) in November 2010 raised its dividend 10.9% to $0.61/share from $0.55/share. In 2009 it raised its dividend 10%. MCD has increased its dividend for 34 consecutive years and I expect them to do so again next year. I project the 2011 increase will be lower than the 2010 increase since the company’s 12-month trailing free cash flow growth is less than the 2010 dividend increase. I project a 2011 increase of 7%. The stock is currently yielding 3.5%.

Wal-Mart Stores Inc. (WMT) in March 2010 raised its dividend 11% to $0.3025/share from $0.2725/share. In 2009 it raised its dividend 14.7%. WMT has increased its dividend for 36 consecutive years and I expect them to do so again next year. I project the 2011 increase will be lower than the 2010 increase since the company’s 12-month trailing free cash flow growth is less than the 2010 dividend increase. I project a 2011 increase of 5%. The stock is currently yielding 2.3%.

Eaton Vance Corp. (EV) in October 2010 raised its dividend 12.5% to $0.18/share from $0.16/share. In 2009 it raised its dividend 3.2%. EV has increased its dividend for 30 consecutive years and I expect them to do so again next year. I project the 2011 increase will be similar to the 2010 increase since the company’s 12-month trailing free cash flow is similar to 2010. I project a 2011 increase of 12%. The stock is currently yielding 2.3%.

Colgate-Palmolive Co. (CL) in March 2010 raised its dividend 20% to $0.53/share from $0.44/share. In 2009 it raised its dividend 10%. CL has increased its dividend for 47 consecutive years and I expect them to do so again next year. I project the 2011 increase will be lower than the 2010 increase since the company’s 12-month trailing free cash flow growth is lower that 2010′s growth. I project a 2011 increase of 15%. The stock is currently yielding 2.6%.

Walgreen Company (WAG) in March 2010 raised its dividend 27% to $0.175/share from $0.1375/share. In 2009 it raised its dividend 22%. WAG has increased its dividend for 35 consecutive years and I expect them to do so again next year. I project the 2011 increase will be lower than the 2010 increase since the company’s 12-month trailing free cash flow growth is less than the 2010 dividend increase. I project a 2011 increase of 12%. The stock is currently yielding 1.8%.

Target Corp. (TGT) in August 2010 raised its dividend 47% to $0.25/share from $0.17/share. In 2009 it raised its dividend 6.2%. TGT has increased its dividend for 43 consecutive years and I expect them to do so again next year. I project the 2011 increase will be lower than the 2010 increase since the company’s 12-month trailing free cash declined from the the 2010 level. I project a 2011 increase of 7%. The stock is currently yielding 1.7%.

Obviously, the above increases are pure speculation on my part. But in a world where cash is king, somehow great companies always find a way to increase their dividends each year.

Full Disclosure: Long ABT, KMB, CLX, JNJ, MCD, WMT, CL. See a list of all my income holdings here.

(Photo Credit)

13 Dividend Stocks With A Good Yield/Growth Mix *

D4L — Wed, 08 Dec 2010 07:30:36 +0000

As dividend growth investors we understand the danger of focusing on high yield alone. Many, if not most, high yields are simply not sustainable over the long term. However, we often turn our heads to what can be an equally dangerous metric – high dividend growth rates. Like high yields, high dividend growth rates often are not sustainable. As a company grows and matures, incremental sales and earnings are harder to come by. So what is a good mix of yield and growth?

Consider the following table:

Initial Yield	Growth Rate	Yr.5	Yr.10	Yr.20
1%	11%	1.7	2.8	8.1
2%	10	3.2	5.2	13.5
3%	9	4.6	7.1	16.8
4%	8	5.9	8.6	18.6
5%	7	7.0	9.8	19.3
6%	6	8.0	10.7	19.2
7%	5	8.9	11.4	18.6
8%	4	9.7	11.8	17.5
9%	3	10.4	12.1	16.3

The first column is the initial yield of the stock. The second column is the dividend growth rate over the period. The final 3 columns are the yields on cost (YOC) after the 5th, 10th and 20th years. After 10 years, the YOC has either doubled (initial yields of 1%-4%), nearly doubled (initial yield of 5%) of exceeded 10% (initial yields of 6%-9%). After 20 years all the YOCs exceeded 10% except the 1% initial yield. Note that the sum of each initial yield and growth rate equals 12%, which is a nice rule of thumb to look for.

The following dividend stocks have a current yield + growth rate between 10%-12%:

	Current	Growth
Company	Yield	Rate	Sum
Abbott Labs (ABT)	3.63%	8.3%	11.90%
J&J (JNJ)	3.37%	8.4%	11.79%
Harleysville Grp (HGIC)	3.77%	8.0%	11.77%
Kimberly-Clark (KMB)	4.26%	6.7%	10.93%
Northeast Utilities (NU)	3.24%	7.6%	10.80%
Buckeye Partners (BPL)	5.62%	5.1%	10.69%
McCormick & Co. (MKC)	2.25%	8.3%	10.58%
Intel Corporation (INTC)	2.91%	7.4%	10.35%
CenturyLink, Inc. (CTL)	6.68%	3.6%	10.25%
J.M. Smucker Co. (SJM)	2.46%	7.6%	10.11%
Procter & Gamble (PG)	3.09%	7.0%	10.05%
Coca-Cola (KO)	2.73%	7.3%	10.05%
Aqua America (WTR)	2.73%	7.3%	10.01%

There is no hard and fast rule to what initial yield + growth rate should equal. To be more conservative you could limit your selection criteria to less than 10%. This of course will lower the future YOC, but highlight stocks that should have a greater chance of performing. As always, a careful evaluation should be performed before buying or selling any stock.

Full Disclosure: Long ABT, JNJ, HGIC, KMB, INTC, CTL, PG, KO. See a list of all my income holdings here.

(Photo Credit)

The Procter & Gamble Company (PG) Dividend Stock Analysis *

D4L — Mon, 22 Nov 2010 07:30:12 +0000

This article originally appeared on The DIV-Net November 15, 2010.

Linked here is a detailed quantitative analysis of The Procter & Gamble Company (PG). Below are some highlights from the above linked analysis:

Company Description: The Procter & Gamble Company is a leading consumer products company markets household and personal care products in more than 180 countries.

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

PG is trading at a discount to only 3.) above. Since PG’s tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a slight discount to its calculated fair value of $65.10. PG 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%

PG 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%. PG 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 1891 and has increased its dividend payments for 54 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

PG earned a Star in this section for its NPV MMA Diff. of the $761. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as PG has. If PG grows its dividend at 7.0% per year, it will take 2 years to equal a MMA yielding an estimated 20-year average rate of 3.4%.

Memberships and Peers: PG 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: Kimberly-Clark Corporation (KMB) with a 4.2% yield, Colgate-Palmolive Co. (CL) with a 2.8% yield, and Clorox Corporation (CLX) with a 3.5% yield.

Conclusion: PG 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 PG as a 5 Star-Strong Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $73.35 before PG’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 54 years of consecutive dividend increases. At that price the stock would yield 2.63%.

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 5.7%. This dividend growth rate is below the 7.0% used in this analysis, thus providing a margin of safety. PG has a risk rating of 1.00 which classifies it as a low risk stock.

PG is one of the few premier dividend growth stocks. As a company, it is a leader in understanding consumer needs, innovative marketing and building brand loyalty. The company enjoys a tremendous benefit of scale, providing enhanced sales opportunities and cost savings compared to its smaller peers. The company’s broad product portfolio and sizable distribution network will continue to be a strengths, along with its balance sheet and free cash flow. As my allocation allows, I will continue to buy PG when it is trading below my fair value price of $65.10. 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 PG (4.4% of my Income Portfolio), and also long in KMB, CL and CLX. See a list of all my income holdings here.

Related Articles:

- Abbott Laboratories (ABT) Dividend Stock Analysis
- Colgate-Palmolive Co. (CL) Dividend Stock Analysis
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis
- Leggett & Platt, Inc. (LEG) Dividend Stock Analysis
- More Stock Analysis

Pocket Change Portfolio – October 2010 *

D4L — Sat, 20 Nov 2010 07:30:45 +0000

The Pocket Change Portfolio (PCP) was first introduced on September 13, 2008 as a real money dividend income portfolio funded by the “pocket change” earned from my various online endeavors. Each month I report on the portfolio’s progress and update its holdings.

Dividends Received

Total dividends received during the month were $218.33, consisting of:

$29.04 The Coca-Cola Company (KO)
$7.57 Vanguard Intermediate-Term Bond ETF (BIV)
$11.48 Genuine Parts Company (GPC)
$14.96 Automatic Data Processing, Inc. (ADP)
$31.68 Kimberly-Clark Corporation (KMB)
$27.00 Leggett & Platt, Incorporated (LEG)
$24.00 Cincinnati Financial Corp. (CINF)
$38.00 Sysco Corp. (SYY)
$4.90 PowerShares Emerging Mkt Debt (PCY)
$29.70 Medtronic, Inc. (MDT)

Dividend Stock Purchases

The following securities were purchased during the month:

30 Shares Johnson & Johnson (JNJ) providing $64.80 in annual dividend income
50 Shares Harleysville Group Inc. (HGIC) providing $72.00 in annual dividend income
58 Shares AT&T, Inc. (T) providing $97.44 in annual dividend income
40 Shares Automatic Data Processing, Inc. (ADP) providing $54.44 in annual dividend income

Also, I liquidated my position in Vanguard Intermediate-Term Bond ETF (BIV).

Annualized Dividend Income

Including the above purchases, my annual PCP dividend income is now $2,494.16 at the current dividend rates. This is up $293.84 from last month’s $2,200.32 amount. The PCP has never had a monthly decline in annualized dividend income.

Portfolio Returns

Month: 2.31%
Year-to-date: 11.98%
Life-to-date: 15.30% (annualized)

My PCP holdings are always available by selecting the Holdings option from the menu in the header. The next PCP update will be mid-December.

(Photo: sanja gjenero)

Kimberly-Clark Co. (KMB) Dividend Stock Analysis *

D4L — Mon, 15 Nov 2010 07:30:04 +0000

This article originally appeared on The DIV-Net November 8, 2010.

Linked here is a detailed quantitative analysis of Kimberly-Clark Co. (KMB). Below are some highlights from the above linked analysis:

Company Description: Kimberly Clark Corp. 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.

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

KMB is trading at a discount to 1.) and 3.) above. The stock is trading at a slight discount to its calculated fair value of $63.90. KMB 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%

KMB earned two Stars in this section for 1.) 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. KMB 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 1935 and has increased its dividend payments for 38 consecutive years.

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

KMB earned a Star in this section for its NPV MMA Diff. of the $1,736. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as KMB has. The stock’s current yield of 4.19% exceeds the 3.4% estimated 20-year average MMA rate.

Memberships and Peers: KMB 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: Procter & Gamble Co. (PG) with a 3.0% yield, Colgate-Palmolive Co. (CL) with a 2.7% yield, and Clorox Corporation (CLX) with a 3.5% yield.

Conclusion: KMB 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 KMB as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $97.58 before KMB’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 38 years of consecutive dividend increases. At that price the stock would yield 2.71%.

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 2.2%. This dividend growth rate is well below the 6.7% used in this analysis, thus providing a reasonable margin of safety. KMB has a risk rating of 1.25 which classifies it as a low risk stock.

KMB enjoys stable demand for its household and personal care products. The company is working to increase its market share through product innovation and marketing. In the face of commodity prices above long-term averages, the company is doing a good job of closely managing its cost structure. At 51% KMB’s debt to total capital is above the 45% that I look for. However, it has trended down from 61% back in July. I will look to add to my KMB position while it is trading below my $63.90 fair value price. 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 KMB (2.4% of my Income Portfolio). See a list of all my income holdings here.

Related Articles:

- Colgate-Palmolive Co. (CL) Dividend Stock Analysis
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis
- Leggett & Platt, Inc. (LEG) Dividend Stock Analysis
- The Clorox Company (CLX) Dividend Stock Analysis
- More Stock Analysis

If Only I Had Known About These Dividend Stocks… *

D4L — Wed, 10 Nov 2010 07:30:19 +0000

At one time or another, we all have thought, ‘If only knew this when I was younger.’ I purchased my first dividend stock for income in 2003. Like many newly converted income investors, I was chasing yield. I quickly built a portfolio consisting of Real Estate Investment Trusts (REITs), Master Limited Partnerships (MLPs) and high yield, high risk stocks. My portfolio’s yield was consistently in the low to mid-teens. Eventually, after some unnecessary losses, I learned there was a better way to invest in dividend stocks. Here is what I learned…

Dividend Investing is About Future Yield, Not Current Yield

I was fortunate enough to accidentally buy some good dividend stocks and hold them long enough to figure out the “secret” of dividend investing. It is not necessarily starting with a high-yield investment, but ending up with a high-yield investment. This usually occurs by buying investments with a moderate yield, a history of growing dividends and letting time do its job.

Too often we take a short-term approach, to our long-term detriment. There is a reason we don’t see infomercials selling dividend growth investment strategies. For those looking to get rich now, a disciplined approach to investing that focuses on the long-term simply isn’t appealing.

Successful Dividend Investing is About Substance, Not Style

In my aggressive growth investing years, I equated dividend investing with old folks and the inept. That was simply not my style. Time and experience have taught me there are no style points awarded in building a winning investment portfolio. In the end the long-term performance (substance) of your portfolio is all that ultimately matters, not how you got there.

I find it interesting that the same people that complain about taking a beating in the market, are the same ones who will ridicule those that follow a dividend growth strategy. For me, I enjoy having a growing income and portfolio, while not having to follow the market’s every move.

You Can’t Beat the Herd, by Following the Herd

Through the years I have settled down quite a bit. Using well-defined investment allocations, I have set boundaries and guidelines to ensure I don’t over expose my portfolio to undue risk and I employ a meticulous process when selecting investments.

Let the talking heads start a stampede to buy a stock after it has seen a significant run up. For me, I prefer to take a contrarian approach and buy stocks when they are cheaper and their yields are higher. My focus is on quality dividend growth stocks with a long record of consecutive dividend increases, such as:

	Current	Price	Yrs of
Company	Yield	Discount	Growth
Weyco Group (WEYS)	2.53%	1.5%	29
Kimberly-Clark (KMB)	4.20%	1.7%	38
Meridian (VIVO)	3.18%	7.7%	19
Abbott Labs (ABT)	3.41%	9.0%	38
Colgate (CL)	2.62%	15.4%	47
Cincinnati Fin. (CINF)	5.23%	16.4%	50
Clorox Company (CLX)	3.49%	20.3%	35
Southside Banc. (SBSI)	4.22%	35.4%	12

Starting in my 40′s, I will enjoy substantial investing success. However, if I knew in my 20′s or 30′s what I know now about dividend growth stocks, I would likely be retired now. The compounding power of growing dividends is tremendous. Start early, at some point time will change from your friend to your enemy.

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

(Photo Credit)

13 Dividend Stocks and 3 ETFs To Balance Your Asset Allocation *

D4L — Wed, 03 Nov 2010 07:30:31 +0000

If you want to lower the risk of your income portfolio and position yourself to increase returns, you can not ignore asset allocation. Many dividend investors loaded up on banks and other high-yield financials, only to see their portfolios collapse along with the financial markets. So what can you do to protect your portfolio from stock and sector specific declines? Here are some of the steps I take to help protect my portfolio:

The Allocation Dilemma

If your entire portfolio consists of income-based dividend stocks it would be very easy to end up over allocated in certain sectors. Of the nearly 200 companies that I track, 15% of them are in the Consumer Goods sector. Furthermore, some of most well-known and very best dividend growth stocks are in this sector, including: Colgate-Palmolive (CL), Coca-Cola Company (KO), Pepsico, Inc. (PEP), Procter & Gamble (PG) and Kimberly-Clark Co. (KMB).

The relatively high yields of the Financial Services sector also make it appealing to dividend growth investors. The Financial Services sector is well represented in the stocks that I track, accounting for nearly 17%.With most banks falling out of favor, many higher-yielding insurance companies have filled the void, including: Erie Indemnity Co. (ERIE), Harleysville Group Inc. (HGIC), Cincinnati Financial Corp. (CINF) and Mercury General Corp. (MCY).

In addition, the Healthcare sector produces several desirable dividend growth stock. These include: Abbott Laboratories (ABT), Cardinal Health, Inc. (CAH), Johnson & Johnson (JNJ) and Medtronic Inc. (MDT).

Judge Allocation Based On Your Total Portfolio

Instead of trying to preserve my allocation at the individual portfolio level (income, 401(k), IRA, etc.), I measuring asset allocation across my entire portfolio. You can’t truly determine your overall risk, unless you consider your entire portfolio. The first time I calculated my allocation across all my holdings, I was surprised at the outcome. Some of the areas I thought would be over-allocated were not, while other areas came up short.

Needless to say, the first time you look at allocation across your portfolio, there is fair amount of set-up work. I have made available my DFL-Calc-Asset-Allocation.xls Excel spreadsheet to those interested in short-cutting some of the effort.

Set Limits On Individual Holdings

In addition to my overall asset allocation, I have set limits on individual stocks, Exchange-Traded-Funds (ETFs) and Closed-End Funds (CEFs). In setting these limits, you have to ask yourself, ‘What is the most I would be willing to lose, if a company went belly-up over night?’ For me and my risk tolerance, 5% was the amount I was comfortable with. I doubled the amount to 10% for funds (ETFs and CEFs) since they are invested in many different stocks. I did limit exchange traded notes to 5%, since your risk is effectively in the company issuing the security.

Sector-Basted ETFs

As a result of being over-allocated in two sectors and close on others, I began to investigate how I could target specific sectors where I was significantly under-allocated. I looked at two fund companies that offered sector-based ETFs, iShares and Vanguard. Their offerings were similar, and included: Consumer, Energy, Financial, Healthcare, Industrials, Materials, Real Estate, Technology, Telecomm and Utilities. In many instances the funds tracked the same indexes. As you might suspect, the Vanguard fund expenses are about half of the iShares funds. Most of the Vanguard sector ETFs charge a 0.25% management fee.

For some time, I have looked for appropriate income investments in the Utilities and Real Estate sectors. Unfortunately, they have been hard to come by. The Vanguard Sector ETFs just may help me increase my allocation in these areas, and few others. Here are three that I am currently evaluating:

Vanguard Utilities ETF (VPU) | Expenses: 0.25% | Yield: 3.76% : The fund employs a passive management investment approach designed to track the performance of the MSCI U.S. Investable Market Utilities 25/50 index. This index consists of all capitalization companies within the utilities sector. The sector includes electric, gas, and water utility companies, as well as companies that operate as independent producers and/or distributors of power. The sector includes both nuclear and nonnuclear facilities.

Vanguard REIT Index ETF (VNQ) | Expenses: 0.13% | Yield: 3.60% : The fund employs a passive management investment approach designed to track the performance of the MSCIÂ® US REIT index. The index is composed of stocks of publicly traded equity real estate investment trusts (known as REITs).

Vanguard Telecom Services ETF (VOX) | Expenses: 0.25% | Yield: 2.61%: The fund employs a passive management investment approach to track the performance of the MSCI U.S. Investable Market Telecommunication Services 25/50 index. The index is made up of stocks of large, medium-size, and small U.S. companies within the telecommunication services sector. The sector includes companies that provide communication services primarily through fixed-line, cellular, wireless, high-bandwidth, and/or fiber-optic cable networks.

In the past I owned VNQ in my income portfolio. After a period of time, I determined its erratic dividends were not appropriate for my income portfolio. After a quick look at VPU and VOX, I found that their dividends were not consistent and thus also not appropriate for my income portfolio. However, I will continue to give consideration to holding these ETFs outside my income portfolio – not as income investments but for allocation purposes.

Full Disclosure: Long CL, KO, PEP, PG, KMB, HGIC, CINF, ABT, JNJ, MDT. See a list of all my income holdings here.