Dividends Value » MMM

3 Dividend Stocks That I Will NEVER Lose Money On *

D4L — Wed, 16 Mar 2011 07:30:20 +0000

Wouldn’t it be nice to buy stocks that only had upside. While we are wishing why don’t we add in predictable earnings, predictable dividends and, of coarse, we don’t want to pay a premium for this investment. Does this sound unrealistic? Possibly, at face value, but there is a way to accomplish this. It won’t happen overnight, but it can be done. Here is how I have been able to do it…

Start With Quality Stocks

Just as ‘better ingredients make a better pizza’, higher quality stocks provide more predictable dividends and an increased chance of becoming one of these Golden Stocks. As with any income investment, I look for stocks that have consistently increased their dividends for many consecutive years and operate in businesses that do well over all parts of the economic cycle.

Add In A Generous Portion Of Time

This is not an overnight process. Most good things are worth waiting for. If you are to establish a long-term relationship with a stock, it better be a quality stock. Time is a powerful force, with it we can overcome poor choices, poor timing and bad decisions. Without it, we immediately are forced to pay for our indiscretions.

Strategic Selection Of Entry And Exit Points

Just typing the above made the hair on the back of my neck stand up — It sounds too much like market timing, for which I have no use for. However, all successful strategies have an element in them that encourages investors to buy low and sell high. Consider how asset allocation works. When one sector experiences a decline, the investor will buy that sector to keep his or her allocation in balance. Later when it rises, the investor may be forced to sell to rebalance their allocation. In much the same way, I tend to smile a lot when the market is crashing-and-burning. It is at these times when truly great stocks are being traded and rock-bottom prices. As we will see, these purchases are more quickly turned into Golden Stocks.

Three Golden Stocks

So what exactly is a Golden Stock? The concept did not originate with me, and others have different names for it, including ‘zero-basis stock.’ I don’t care for that name since, in reality it is nearly impossible to hold a stock with zero basis (at least the way the IRS calculates basis). A Golden Stock is one in which I have fully recovered my entire investment either through dividends or from partial liquidation or a combination of both. In my income portfolio, I am currently holding these 3 Golden Stocks:

3M Company (MMM) | YOC: 4.4% | Yield: 2.3%
This stock was originally purchased in March 2009 when the market was at its low. In October 2010, I sold 50% of my shares. Proceeds from that sale, along with dividends received, account for 101.1% of my original investment.

Emerson Electric Co. (EMR) | YOC: 3.5% | Yield: 2.3%
My EMR holdings were purchased in July 2009 and October 2009. The July purchase was at $31.64 while the October purchase was at $39.59. In February 2011, I sold 55% of my shares. Proceeds from that sale, along with dividends received, account for 100.4% of my original investment.

Integrys Energy Group, Inc. (TEG) | YOC: 7.3% | Yield: 5.4%
TEG is different from the first two stocks in that its quarterly dividend has been frozen at $0.62/share since March 2009. I purchased one block in November 2008 at $43.81 and a second block in February 2009 at $36.83. In March 2011, I sold 67% of my shares. Proceeds from that sale, along with dividends received, account for 102.7% of my original investment.

More Golden Stocks On The Way

In addition to the above, several of my other income holdings are well on their way to becoming Golden Stocks. These include:

The Coca-Cola Company (KO) | YOC: 3.8% | Yield: 2.7%
This stock is in most every dividend growth investors portfolio. I have currently recovered through sales and dividends 21.2% of my initial investment.

Realty Income Corp. (O) | YOC: 6.9% | Yield: 5.0%
This stock is hold-over from my yield chasing days. When I started investing the right way, I held on to a handful of the better high-yield dividend stocks. I have currently recovered through sales and dividends 26.8% of my initial investment.

Consolidated Edison, Inc. (ED) | YOC: 5.5% | Yield: 4.7%
I have held a position in this stock since January 2005. Though its dividend increases have been rather modest, they have been consistent. I have currently recovered through sales and dividends 43.8% of my initial investment.

Commercial Net Lease Realty, Inc. (NNN) | YOC: 7.9% | Yield: 5.9%
This stock is another hold-over from my yield chasing days. In May 2009, I sold 51% of my shares after NNN failed to raise its dividend. However, it later raised its dividend in August 2010 to keep its streak of annual dividend increases alive. I have currently recovered through sales and dividends 68.6% of my initial investment.

Health Care Property Investors Inc. (HCP) | YOC: 6.0% | Yield: 5.0%
Yet another hold-over from my yield chasing days. I have held a position in this stock since March 2005. On paper, I should have sold this stock a long time ago, but it has continued to appreciate and to raise its dividend. It will likely be my next Golden Stock. I have currently recovered through sales and dividends 81.2% of my initial investment.

Conclusion

Needless to say, the statement that I will NEVER lose money on my 3 Golden Stocks is predicated on not purchasing any additional shares, which may or may not be the case. These stocks have already paid for themselves once, and given the right circumstances, I would be willing to let them do it again. Dividend growth stocks are truly stocks that pay you to own them.

Full Disclosure: Long MMM, EMR, TEG, KO, O, ED, NNN, HCP. See a list of all my income holdings here.

(Photo Credit)

List of 195 Dividend Stocks Every Income Investor Should Know About *

D4L — Wed, 09 Mar 2011 07:30:16 +0000

In 2009, I introduced the Stock Ideas list and it has proven to be immensely popular. The list consists of Dividend Aristocrats, US Broad Dividend Achievers and U.S. Dividend Champions. Duplications in the above lists are eliminated and stocks are crossed out when I learn that they have either cut their dividend or fail to raise it. Here is some information on each of the constituent lists and some highlights on this year’s changes:

Dividend Aristocrats: Companies in the S&P 500 that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. As the name denotes, these are the best of the best – the blue blood stocks, including names like:

US Broad Dividend Achievers: Is comprised of companies incorporated in the United States or its territories, trade on the NYSE, NASDAQ or AMEX, and have increased their annual regular dividend payments for the last ten or more consecutive years. Notable names on this list include:

The U.S. Dividend Champions: Is maintained by Dave Fish of MoneyPaper. The list is updated monthly and located at the The Drip Investing Resource Center. Like the Dividend Aristocrats above the Dividend Champions list looks for companies that have increased their dividend for at least 25 consecutive years. However, since S&P 500 membership is not a requirement, the list is larger than the Dividend Aristocrats list and also includes small-cap companies.

- Bowl America (BWL.A) | Yield: 5.0%
- Conn. Water Service (CTWS) | Yield: 3.8%
- Weyco Group Inc. (WEYS) | Yield: 2.6%

Membership in the Stock Ideas list declined in this edition, but it was significantly less than what was experience in the prior year. Overall the number of constituents fell to 198 in the 2011 Stock Ideas list from 218 stocks in the 2010 list. There were 319 stocks in 2009. There were 28 companies that fell off the list, including these prominent stocks:

- Eli Lilly & Co. (LLY)
- Paychex Inc. (PAYX)
- Progress Energy Inc. (PGN)
- SUPERVALU Inc. (SVU)
- Integrys Energy Group, Inc. (TEG)

The news wasn’t all bad. Partially offsetting the 28 companies that fell off the list were 5 new companies joining the Dividend Stock Ideas List. Some of these aren’t household names, not yet at least, but here are some names we will likely be seeing in the future:

You can see the entire Dividend Stock Idea List here. Remember, not every stock listed here is a great dividend investment, but virtually all great dividend investments are on this list.

Full Disclosure: Long ABT, KO, JNJ, MCD, MMM, PG, WMT, CVX, NUE, LLY, TEG. See a list of all my income holdings here.

(Photo Credit)

These 11 Dividend Stocks Could Make You Wealthy *

D4L — Wed, 02 Mar 2011 07:30:03 +0000

It seems the older I get the more I fight with my weight. I know how to lose weight – I have done it several times. The formula is not difficult, eat less and exercise more. My problem, like many others, is in the implementation. In much the same way, the formula to building wealth is rather simple – spend less than you earn and invest the difference. Once again implementation is where many people come up short. With the right focus and some positive feedback, building wealth can be much easier than shedding the spare tire around your mid-section. Here’s how to do it…

Fad Diets and Fad Investing Plans Rarely Work

Forget about those ‘Make 534% On Every Trade’ ads that you see on many financial websites. Real wealth is built with sweat equity and a sound financial plan. The only people making money off fad investments are the people selling them. To understand what will and will not work in the future you must understand the concepts that have worked in the past. Granted, each success story is different, but there are common traits as Philip E. Humbert noted when he studied successful people and came up with the “Top 10 Traits of Highly Successful People.” Here are 3 traits that we can apply to our investments:

1. Highly successful people work hard

They get up early, rarely complain. They expect high performance from others, but they expect extraordinary performance from themselves. Success starts with a recognition that hard work pays off. Highly successful investors don’t waste time trying to find an quick and easy way to get rich in the stock market.

2. Highly successful people are self-reliant and take responsibility

How many times have you heard, ‘I am fat because of my genes, my thyroid, my wife, my husband, …’ Or how many times have you heard, ‘I am broke because, I don’t make enough (my boss’ fault), things are so expensive (companies’ fault), Social Security will fund for my retirement, …’

3. Highly successful people “look over the horizon” to see the future

We live in a society of instant gratification. There is no planning for the future and certainly no foresight what the future will bring. A successful retirement just doesn’t happen – it is build with a plan over many decades.

Dividend Stocks To Help Grow Your Wealth

A long-term buy-and-hold investing approach focusing on quality dividend growth stocks has has provided the means for many investors to enjoy a comfortable retirement. If you start early enough, you will go beyond a comfortable retirement into the realm of building long-term wealth. For starters, you might consider these dividend stocks that have been rewarding their investors with growing dividends for 40 or more consecutive years:

Sysco Corporation (SYY) | Growth Yrs: 40 | Yield: 3.7%
Sysco Corporation is a large distributor of food and related products, primarily to the food-service or food-away-from-home industry.

Black Hills Corporation (BKH) | Growth Yrs: 40 | Yield: 4.7%
Black Hills Corp. is a South Dakota-based holding company that encompasses electric utility and integrated energy businesses.

California WaterService Group (CWT) | Growth Yrs: 43 | Yield: 3.4%
California Water Service Group operates regulated water utilities in California, Washington, New Mexico and Hawaii, and provides other non-regulated services.

Hormel Foods Corp. (HRL) | Growth Yrs: 45 | Yield: 1.9%
Hormel Foods Corp. company is a leading processor of branded, convenience meat products (primarily pork) for the consumer market.

Colgate-Palmolive (CL) | Growth Yrs: 47 | Yield: 2.6%
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.

Coca-Cola Company (KO) | Growth Yrs: 48 | Yield: 2.7%
The Coca-Cola Company is the world’s largest soft drink company, KO also has a sizable fruit juice business.

Johnson & Johnson (JNJ) | Growth Yrs: 48 | Yield: 3.5%
Johnson & Johnson is a leader in the pharmaceutical, medical device and consumer products industries.

Cincinnati Financial (CINF) | Growth Yrs: 50 | Yield: 4.7%
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.

3M Company (MMM) | Growth Yrs: 52 | Yield: 2.3%
3M Co. provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives, and other chemical additives.

Procter & Gamble (PG) | Growth Yrs: 54 | Yield: 3.1%
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries.

Emerson Electric Co. (EMR) | Growth Yrs: 55 | Yield: 2.3%
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world.

Conclusion

If losing weight and building wealth were easy, there wouldn’t be people wanting to sell you the secret. Notice there aren’t any seminars on how to yawn (though several accounting seminars have caused me to do it.) The first step toward success is deciding to take responsibility for our future. With a little planning, effort and the right dividend growth stocks, we can be well on our way to creating long-term wealth.

Full Disclosure: Long SYY, CL, KO, JNJ, CINF, MMM, PG, EMR. See a list of all my income holdings here.

(Photo Credit)

12 Industrial Strength Dividend Stocks *

D4L — Wed, 16 Feb 2011 07:30:13 +0000

This is the third 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 Financial Services Sector. This week we are looking at Industrial Materials…

Industrial Materials Attributes

The Industrial Materials Sector consists of companies that manufacture products or otherwise harvest a product, such as a mining company. The products are most often inputs or raw materials into another manufacturing process, such as steel producer. Many of these companies are often referred to as members of the “smokestack industry” and are classified as cyclical stocks – a stock that rises and falls in step with the economy.

Timing is important when buying an industrial stock. If you buy when business is booming you will likely pay too much, which means a very low yield. Most stocks in this sector are currently overpriced. The average yield on Industrial Sector stocks that I follow is only 1.7%. This includes only 3 stocks yielding in the 3% range., with all the others sub-3%. Several of these sub-3% companies were yielding in excess of 4% in 2008 when the world looked bleak for Industrial stocks.

Industrial Materials Companies

Below are several leading Industrial Materials companies that I follow. The companies selected have a dividend yield of 2.00%, or higher, and have raised their dividends for at least 15 years.

RPM International Inc. (RPM)
Yield: 3.5% | Growth:2.5 % | Years: 38
RPM International Inc. 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.

MDU Resources Group Inc. (MDU)
Yield: 3.0% | Growth: 1.9% | Years: 20
MDU Resources Group Inc. is involved in electric and natural gas distribution, natural gas storage, gathering and transmission, construction materials and mining, and oil and natural gas production.

Nucor Corporation (NUE)
Yield: 3.0% | Growth: 0.8% | Years: 37
Nucor Corporation is the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas.

PPG Industries, Inc. (PPG)
Yield: 2.5% | Growth: 1.9% | Years: 37
PPG is a leading manufacturer of coatings and resins, flat and fiber glass, and industrial and specialty chemicals.

Illinois Tool Works Inc. (ITW)
Yield: 2.3% | Growth: 4.8% | Years: 47
Illinois Tool Works Inc. is a diversified manufacturer that operates a portfolio of about 840 industrial and consumer businesses throughout the world.

3M Company (MMM)
Yield: 2.3% | Growth: 2.5% | Years: 52
3M Co. provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives, and other chemical additives.

Harsco Corporation (HSC)
Yield: 2.3% | Growth: 1.9% | Years: 20
Harsco Corp. is a global industrial service provider and manufacturer has operations in steel mill services and access services, as well as construction.

Emerson Electric Co. (EMR)
Yield: 2.2% | Growth: 2.2% | Years: 55
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world.

Air Products And Chemicals Inc. (APD)
Yield: 2.2% | Growth: 2.1% | Years: 29
Air Products and Chemicals Inc. is a major producer of industrial gases and electronics and specialty chemicals and also has interests in environmental and energy-related businesses.

General Dynamics (GD)
Yield: 2.1% | Growth: 10.1% | Years: 19
General Dynamics is the world’s fifth largest military contractor and also one of the world’s biggest makers of corporate jets.

United Technologies Corp. (UTX)
Yield: 2.0% | Growth: 10.4% | Years: 18
United Technologies Corp. portfolio includes Pratt & Whitney jet engines, Sikorsky helicopters, Otis elevators and Carrier air conditioners, among other products.

Pentair, Inc. (PNR)
Yield: 2.0% | Growth: 5.6% | Years: 34
Pentair Inc. makes and markets water and fluid control devices, and electrical and electronic enclosures.

Conclusion

The Industrial Materials Sector is the largest sector in my database of dividend stocks. Of the 198 stocks that I track, it currently is represented by 34 stocks (17%). As noted above, this is not a sector I am in a position to buy often, but when the time is right, I plan on taking full advantage of the opportunity. Two of my largest annualized returns (IRR) come from industrial stocks: 3M (MMM) at 46.5% and Emerson Electric Co. (EMR) at 49.7%. I wouldn’t buy them at their current valuation, but based on where they were when I purchased them, I am enjoying a healthy yield-on-cost.

Full Disclosure: Long NUE, ITW, MMM, EMR, GD, UTX. See a list of all my income holdings here.

(Photo Credit)

20 CEO’s Showing Confidence With Increased Dividends *

D4L — Fri, 11 Feb 2011 07:30:26 +0000

A person’s character is determined by how they behave when no one else is looking and during difficult times. In much the same way, we can learn a lot about a company’s management when they face adversity. One metric I look at closely during a downturn is cash generation relative to earnings. The ability of a company to grow its dividend throughout the economic cycle is highly dependent on the management’s ability to generate cash in a downturn.

Below are several select companies with a management confident enough to increase their cash dividends:

Calamos Asset Management, Inc. (CLMS) is a globally diversified investment firm offering equity, convertible, defensive equity, fixed- income and alternative investment strategies, among others. February 3rd the company increased its quarterly dividend 27% to $0.095/share. The dividend is payable on March 4, 2011 to shareholders of record on February 18, 2011. The yield based on the new payout is 2.3%.

Aetna (AET) is one of the nation’s leading diversified health care benefits companies, serving approximately 35.4 million people. February 4th the company raised its quarterly dividend to $0.15/share, up from an annual dividend of $0.04/share. The dividend is payable on April 29, 2011 to all shareholders of record as of the close of business on April 14, 2011. The yield based on the new payout is 1.6%.

Temple-Inland Inc. (TIN) is a manufacturing company focused on corrugated packaging and building products. February 4th the company increased its quarterly dividend 18% to $0.13/share, payable March 15, 2011, to shareholders of record March 1, 2011. The yield based on the new payout is 2.2%.

Bemis Company, Inc. (BMS) is a major supplier of flexible packaging and pressure sensitive materials used by leading food, consumer products, healthcare, and other companies worldwide. February 4th the company raised its quarterly dividend 4.3% to $0.24/share. The dividend is payable on March 1, 2011, to shareholders of record at the close of business on February 15, 2011. This marks the 28th consecutive year that the Company has increased its dividend payment. The yield based on the new payout is 2.9%.

Avista Corp. (AVA) is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. February 4th the company increased its quarterly dividend to $0.275/share. The common stock dividend is payable March 15, 2011, to shareholders of record at the close of business on Feb. 18, 2011. The yield based on the new payout is 4.7%.

Jack Henry & Associates, Inc. (JKHY) is a leading provider of computer systems and electronic payment solutions primarily for financial services organizations. February 4th the company increased its quarterly dividend 11% to $0.105/share. The dividend is payable on March 10, 2011, to stockholders of record as of February 22, 2011. The yield based on the new payout is 1.3%.

Owens & Minor, Inc. (OMI) is a leading national distributor of name-brand medical and surgical supplies and a healthcare supply-chain management company. February 7th the company increased its quarterly dividend 13% to $0.20/share. The dividend is payable on March 31, 2011, to shareholders of record as of March 15, 2011. The yield based on the new payout is 2.6%.

Boardwalk Pipeline Partners, LP (BWP) provides interstate transportation and storage of natural gas. February 7th the partnership raised its quarterly distribution to $0.52/unit. The distribution is payable on February 24, 2011, to unitholders of record as of February 17, 2011. The yield based on the new payout is 6.3%.

Infinity Property and Casualty Corporation (IPCC) is a national provider of personal automobile insurance with a concentration on nonstandard auto insurance. February 8th the company increased its quarterly dividend 28.6% to $0.18/share. The dividend is payable on March 25, 2011 to holders of record on March 11, 2011. The yield based on the new payout is 1.2%.

Nationwide Health Properties, Inc. (NHP) is a real estate investment trust (REIT) that invests primarily in healthcare real estate in the United States. February 8th the company raised its quarterly dividend to $0.48/share. The dividend will be paid on March 4, 2011 to stockholders of record on February 18, 2011. The yield based on the new payout is 5.1%.

L-3 Communications (LLL) is a prime contractor in C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems, aircraft modernization and maintenance, and government services. February 8th the company increased its quarterly dividend 12.5% $0.45/share. This is the seventh consecutive annual increase in L-3’s quarterly dividend rate. The board has also declared the next dividend payable on March 15, 2011 to shareholders of record at the close of business on March 1, 2011. The yield based on the new payout is 2.2%.

3M (MMM) operates as a diversified technology company worldwide. February 8th the company raised its quarterly dividend 5% to $0.55/share. The dividend is payable on March 12, 2011, to shareholders of record at the close of business on February 18, 2011. The yield based on the new payout is 2.5%.

The Northeast Utilities (NU) engages in the energy delivery business for residential, commercial, and industrial customers in Connecticut, New Hampshire, and western Massachusetts. February 8th the company raised its quarterly dividend to $0.275/share. The dividend is payable on March 31, 2011, to shareholders of record as of the close of business on March 1, 2011. The yield based on the new payout is 3.3%.

Wyndham Worldwide Corporation (WYN) encompasses approximately 7,210 franchised hotels and approximately 612,700 hotel rooms worldwide. February 9th the company increased its quarterly dividend 25% to $0.15/share. The yield based on the new payout is 2.0%.

Service Corporation International (SCI) is the largest provider of deathcare products and services in North America. February 9th the company increased its quarterly dividend 25% to $0.05/share. The dividend is payable on April 29, 2011 to shareholders of record at the close of business on April 15, 2011. The yield based on the new payout is 2.2%.

Diebold, Inc. (DBD) is a global leader in providing integrated self-service delivery and security systems and services. February 9th the company increased its quarterly dividend 3.7% to $0.28/share. The dividend is payable on March 7 to shareholders of record on February 21. This marks the company’s 58th consecutive annual increase. The yield based on the new payout is 3.5%.

Occidental Petroleum Corporation (OXY), the fourth largest U.S. oil and gas company, is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions. February 9th the company raised its quarterly dividend 21% to $0.46 per share quarterly dividend will be payable on April 15, 2011, to stockholders of record as of March 10, 2011. Oxy has raised the dividend every year since 2002, raising it 268 percent over the period. The increase brings the company’s compound annual dividend growth rate since 2002 to 15.6 percent. Oxy has paid quarterly dividends continuously since 1975. The yield based on the new payout is 1.9%.

Thomson Reuters (TRI) is the world’s leading source of information for businesses and professionals in the financial, legal, tax and accounting, healthcare, science, and media markets worldwide. February 10th the company increased its quarterly dividend to $0.31/share. The dividend is payable on March 15, 2011 to shareholders of record as of February 22, 2011. This dividend increase marks the 18th consecutive annual dividend increase by the company. The yield based on the new payout is 3.1%.

Textainer Group Holdings Limited (TGH) is the world’s largest lessor of intermodal containers based on fleet size. February 10th the company raised its quarterly dividend 7.4% to $0.29/share. In continuing our record of providing shareholders with sizeable and increasing cash distributions, we have now raised our quarterly payout a total of seven times since going public in October 2007 for a cumulative dividend of $3.29 per common share. The yield based on the new payout is 3.4%.

AGL Resources Inc. (AGL) is an Atlanta-based energy services company, serves approximately 2.3 million customers in six states. February 10th the company raised its quarterly dividend to $0.45 per share is effective for the dividend payable March 1, 2011 to shareholders of record at the close of business on February 18, 2011. The yield based on the new payout is 4.8%.

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 MMM. See a list of all my income holdings here.

(Photo Credit)

The 2011 Dividend Aristocrats *

D4L — Wed, 15 Dec 2010 07:30:21 +0000

The S&P 500 Dividend Aristocrats is the most prestigious list of dividend stocks. The Dividend Aristocrats index is designed to measure the performance of S&P 500 constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. This index is a member of the S&P Dividend Aristocrats index series.

Dividend Aristocrats constituents exhibit the following characteristics:

- Underlying Indices – S&P 500
- Weighting – Equally weighted; Constituents re-weighted quarterly
- Reconstitution – Reviewed annually in December

Among others, Dividend Aristocrats include these highly recognizable names, with years of consecutive dividend increases shown:

- 3M Co. (MMM) – 52 years
- Abbott Laboratories (ABT) – 38 years
- Clorox Co (CLX) – 35 years
- Coca-Cola Co (KO) – 48 years
- Exxon (XOM) – 28 years
- Johnson & Johnson (JNJ) – 48 years
- McDonald’s Corp (MCD) – 34 years
- Procter & Gamble (PG) – 54 years
- Wal-Mart Stores (WMT) – 36 years

Members may be deleted during the December rebalance if calendar-year dividends did not increase from the previous year, or intra-year if the stock is removed from the underlying S&P 500.

On December 2nd, S&P announced changes to the Dividend Aristocrats Index. Standard & Poor’s will perform the annual reconstitution of the S&P 500 Dividend Aristocrats Index after the close of trading on Friday, December 17, 2010.

The following stocks will be added to the Dividend Aristocrats:

- McCormick & Company (MKC)
- Hormel Foods Corp. (HRL)
- Ecolab Inc. (ECL)

The following stocks will be dropped from the Dividend Aristocrats:

- Eli Lilly And Company (LLY)
- SUPERVALU Inc. (SVU)
- Integrys Energy Group, Inc. (TEG)

After last year’s significant decline, it is good see the membership number level off. The previous two years were difficult for dividend stocks, but that is not necessarily a bad thing. During good times it is easy for companies to increase dividends, and many companies were added to the index. It is during times of adversity that we learn who the real aristocrats are.

Full Disclosure: Long MMM, ABT, CLX, KO, JNJ, LLY, MCD, PG, TEG, WMT. See a list of all my income holdings here.

(Photo Credit)

12 Stocks Sending A Strong Message With Higher Dividends *

D4L — Fri, 15 Oct 2010 07:30:54 +0000

One of the many reasons I like dividend stocks is because they provide continuous feedback. As time passes, dividend investors see their income grow steadily. You don’t have to wait five to ten years to determine if the strategy is working. Each dividend and dividend increase provides reassurance that the strategy is working. When companies like 3M Company (MMM), Emerson Electric (EMR) and Dover Corp. (DOV) put together a string of consecutive dividend increases in excess of 50 years, they are sending a strong message to their shareholders.

Below are a few companies with not quite the legacy of those above, but nevertheless are providing positive feedback to their investors by with higher cash dividends:

Targa Resources (NGLS) is a natural gas midstream operator engaged in the business of gathering, compressing, treating, processing and selling natural gas and fractionating and selling natural gas liquids, or NGLs, and NGL products. October 8th the company increased its quarterly distribution to $0.5375/unit. The distribution is payable on November 12 to unitholders of record on October 18. The yield based on the new payout is 7.16%.

PAA Natural Gas Storage (PNG) is engaged in the business of acquisition, development, operation and commercial management of natural gas storage facilities. October 12th the company raised its quarterly distribution 58.8% to $0.3375/share. The distribution is payable on November 12, 2010, to holders of record of such units at the close of business on November 2, 2010. The ex-distribution date is October 29, 2010. The yield based on the new payout is 5.55%.

Bladex (BLX) is a Panama-based company that offers financial services for banks and corporations in Latin American and Caribbean. October 12th the company increased its quarterly cash dividend to $0.17/share. The dividend is payable on November 1, 2010 to stockholders registered as of October 22, 2010. The yield based on the new payout is 4.63%.

Goodrich (GR) is one of the world’s largest providers of equipment, parts and services to the large commercial, regional, business and military jet markets. October 12th the company raised its quarterly dividend 7% to $0.29/share. The dividend is payable December 30, 2010 to shareholders of record as of December 1, 2010. The yield based on the new payout is 1.51%.

Healthcare Services Group (HCSG) provides housekeeping, laundry, linen, facility maintenance and food services to hospitals and other health care facilities. October 12th the company increased its quarterly dividend 1% to $0.2325/share. The company also announced a 3-for-2 stock split. The yield based on the new payout is 3.80%.

Genesis Energy (GEL) operates crude oil common carrier pipelines, is an independent gatherer and marketer of crude oil, and operates a wholesale CO2 business. October 13th the company raised its quarterly distribution 3.3% to $0.3875/unit. The distribution will be paid on November 12, 2010, to unitholders of record at the close of business on November 2, 2010. The ex-distribution date is October 29, 2010. The yield based on the new payout is 6.15%

Calumet Specialty Products (CLMT) is an independent U.S. refiner and marketer that operates refineries in Louisiana and facilities in Pennsylvania and Texas, and distributes product throughout North America. October 13th the company increased its quarterly dividend to $0.46/unit. The distribution is payable on Nov. 12 to shareholders of record on Nov. 2. The ex-dividend date is Oct. 29. The yield based on the new payout is 8.79%.

Enterprise Products Partners L.P. (EPD) is an integrated provider of natural gas and natural gas liquids services, including processing, fractionation, storage, transportation, and terminalling. October 14th the partnership raised its quarterly distribution 1.3% to $0.5825/unit. The quarterly distribution will be paid on November 8, 2010, to unitholders of record as of the close of business on October 29, 2010. The ex-distribution date is October 27, 2010. EPD is a Dividend Achiever and has raised its dividend for 12 consecutive years. The yield based on the new payout is 5.60%.

Duncan Energy (DEP) gathers, transports, markets, and stores natural gas, as well as in transporting and storing natural gas liquids (NGLs) and petrochemicals in the U.S. October 14th the company raised its quarterly distribution to $0.4525/unit. The distribution is payable on Monday, November 8, 2010, to unitholders of record at the close of business on Friday, October 29, 2010. The ex-distribution date is October 27, 2010. The yield based on the new payout is 5.47%.

Enterprise GP Holdings (EPE) owns the general partner of Enterprise Products Partners, L.P. (EPD), a North American midstream energy company. October 14th the partnership increased its quarterly distribution 2.7% to $0.575/unit. The distribution is payable on November 8, 2010, to unitholders of record as of the close of business on October 29, 2010. The ex-distribution date is October 27, 2010. The yield based on the new payout is 3.63%.

A. Schulman (SHLM) sells plastic resins in various forms, which are used as raw materials by its customers, who include manufacturers, custom molders, processors and extruders. October 14th the company raised its quarterly dividend 3.3% to $0.155/share. The dividend is payable November 1, 2010, to shareholders of record on October 25, 2010. The ex-dividend date is October 21, 2010. The yield based on the new payout is 2.99%.

Omega Healthcare (OHI) invests in and provides financing to the long-term care industry. Its portfolio includes health care facilities in 27 states. October 14th the company increased its quarterly dividend 2.8% to $0.37/share. The dividend is payable November 15, 2010 to common stockholders of record on October 29, 2010. The ex-dividend date is October 27, 2010. The yield based on the new payout is 6.41%.

Full Disclosure: Long MMM, EMR. See a list of all my income holdings here.

(Photo Credit)

12 Dividend Stocks Delivering The Secret To Success *

D4L — Wed, 13 Oct 2010 07:30:11 +0000

We all want to learn the secret to success. Many get-rich-now infomercials have preyed on this desire while making the sellers wealthy at the expense of the buyers. I have good news for you, there really is a secret to success, and what is even better news is that the secret is not hard to discover. It has been right there in front of you all this this time. Your parents likely taught it to you in the form of a fable. Let’s explore this secret to success a little more…

As a child most of heard (or watched) Aesop’s fable The Tortoise and the Hare. The story is about confident hare that brags about how fast he can run while poking fun at a slow-moving tortoise. The tortoise having tired of the hare’s fodder challenges him to a race. The hare jumps out to an early lead and decides to take a nap midway through the race. When he awakes, he finds that the tortoise made steady progress and beat him to the finish line.

Have you ever stopped to ponder just where are all these get-rich-now infomercial millionaires? I know several people who have purchased one or more of these get-rich-now kits, but I don’t know of anyone who actually got rich from purchasing the kit. Warren Buffett and Bill Gates didn’t build their fortunes with a get-rich-now kit. They worked hard built it steadily over time.

In much the same way, a disciplined approach to investing, such as dividend growth stocks, can be highly effective. Though it may seem boring to many, I find it exciting to see my income growing as the finish line approaches. Consider these slow and steady growers:

	Current	Dividend	Yrs of
Company	Yield	Growth	Growth
Wal-Mart Stores (WMT)	2.22%	11.01%	36
Pepsico, Inc. (PEP)	2.87%	6.48%	38
Sysco Corp. (SYY)	3.43%	6.52%	39
Federal Realty (FRT)	3.22%	1.53%	42
Colgate (CL)	2.71%	12.48%	47
Illinois Tool Works (ITW)	2.68%	4.84%	47
J&J (JNJ)	3.34%	8.42%	48
Coca-Cola (KO)	2.96%	7.32%	48
3M Company (MMM)	2.36%	2.47%	52
Emerson Electric (EMR)	2.51%	1.52%	53
Genuine Parts (GPC)	3.64%	2.50%	54
Procter & Gamble (PG)	3.12%	6.96%	54

There are really no shortcuts to long-term wealth. Many of those that win the lottery end up losing the money through mismanagement (or worse.) Dividend growth stocks may be slow, but they are also steady; and slow and steady wins the race.

Full Disclosure: Long WMT, PEP, SYY, CL, ITW, JNJ, KO, MMM, EMR, GPC, PG. See a list of all my income holdings here.

(Photo: Photo Credit)

When To Sell A Dividend Stock *

D4L — Wed, 25 Aug 2010 07:30:47 +0000

As a long-term buy-and-hold investor, most of my evaluation efforts are aimed at determining when to buy a stock. Sometimes it is necessary to sell a stock and we need to be equally adept at identifying those times. I have stated on numerous occasions that I have one hard and fast sell rule for my individual dividend stocks: When an individual stock held as a dividend investment lowers its dividend, immediately sell it. However, there are other times it makes sense to sell. Consider these:

Significant Price Run-up Distorting Dividend Fundamentals

When you buy a dividend stock at a depressed level it will eventually return to its norm. However, at its normal level the dividend fundamentals could be so bad that you would be better off putting the money to work somewhere else. For this evaluation, my primary indicator is the NPV MMA Differential. When this metric goes negative, it in effect is saying you are better off putting the into a money market account for the next 20 years. When this occurs I look for a way to exit the position and retrieve my original investment, leaving the portion attributable to capital appreciation. Examples of stocks that I hold with these characteristics (or close to it) are:

Dividend Freeze Leading to Poor Dividend Fundamentals

When a company fails to raise its dividend (dividend freeze), the dividend fundamentals quickly deteriorate if its yield is low. It is easier to be patient when the yield is higher and the stock is still earning its way. However, as dividend growth investors, ultimately we expect our dividends to grow: Below are several stocks that failed to raise their dividends at the expected time:

Historical Performance Is Not Indicative Of Expected Results

Sometimes historical results are indicating the stock is a good investment, but something just doesn’t seem right. In situations like this there is probably a reason for the uneasiness and it is in our best interest to understand why we feel that way. Usually we know something that is not reflected in the financials.

This recently occurred with my AFLAC Inc. (AFL) position. I had been closely watching AFL since the time it first failed to raise its dividend. For a stock with a yield as low as AFL, dividend growth is paramount for its long-term success. My model’s calculated dividend growth rate was higher than what I expected going forward, at least for the near term. Its annual dividend growth has been declining since 2008, with 2010 growth only 3.6% (considering 2 dividends at $0.28 and two at $0.30). This was the only single digit increase in the last 10 years. When considering AFL’s most recent increase, the NPV MMA differential is under-performing its target. AFL has a large exposure to hybrid bonds (particularly European banks) and exposure to European sovereign debt. This makes them more risky than many other Financial Services companies. I have been looking to reallocate a portion of my financial Financial Services holdings (currently in excess of 10%) and I considered AFL one of my weaker financial stocks, so I sold it.

Substantial Change In The Business

Sometimes the world changes and what you were selling yesterday at a premium you can’t give away today. This phenomenon has been played out since the beginning of time. Rock gathers were replace with club makers who were replaced with spear makers who were replaced with arrow makers who were replaced with musket makers who were replaced with rifle makers, and so on. We see this happening today with the print media. Companies like Courier Corporation (CRRC) that publishes, prints and sells books, and Gannett Co., Inc. (GCI) an international media company that owns USA Today have struggled recently as people have moved from print media to online. Both companies were unable to continue the string of consecutive dividend increases.

Other times a catastrophe will shake a company to it very foundation. This has been most evident with the recent oil disaster in the Gulf. BP (BP) was not prepared for a situation like it faced. As the damage claims mounted, investors lost confidence in management to stop the oil flow and began to sell off the stock. A dividend cut soon followed.

Buy-And-Hold Not Buy-And-Forget

All investors need to be vigilant and keep a close watch on their investments. There are few certainties in an uncertain world. Things change and adjustments must be made. Buy-and-hold is a successful investment strategy; buy-and-forget is a recipe for disaster.

Full Disclosure: Long MMM, EMR, GPC, ITW, PAYX, LLY, PGN, TEG. See a list of all my income holdings here.

(Photo: sanja gjenero)

My Top 6 Performing Dividend Stocks Just Might Surprise You *

D4L — Wed, 18 Aug 2010 07:30:37 +0000

As I have stated many times, my goal is to create an ever growing income stream from dividend stocks. Secondarily, it is my desire to beat the S&P 500 over time. With that said, I rarely look at the capital performance of individual stocks. However, I recently sorted my portfolio by Total Gain % (total gain/basis) and was mildly surprised at the top performers.

It is important to note that dividends paid are not factored in the Total Gain % calculation. Therefore, the total return is actually higher than the numbers reported. The holding periods differ for each, so I have noted the purchase dates.

6. Realty Income Corp. (O) – Yield: 5.4% | Total Gain: 24.91%
Purchases: 5/2006, 11/2006, 12/2006, 2/2007, 6/2007
Realty Income Corporation engages in the acquisition and ownership of commercial retail real estate properties in United States.

5. Canadian National Railway Company (CNI) – Yield: 1.7% | Total Gain: 26.14%
Purchases: 11/2007, 7/2008
Canadian National Railway Company (CNI) operates Canada’s largest railroad, linking customers in Canada, the U.S., and Mexico through approximately 20,400 miles of track.

4. Integrys Energy Group, Inc. (TEG) – Yield: 5.7% | Total Gain: 26.22%
Purchases: 11/2008, 2/2009
Integrys Energy Group, Inc., serves about 485,000 regulated electric and 1,674,000 regulated gas customers. The company also operates an unregulated retail marketing business.

3. CenturyLink, Inc. (CTL) – Yield: 8.1% | Total Gain: 27.87%
Purchases: 11/2008, 1/2009, 5/2009
CenturyLink, Inc. acquired larger telecom peer Embarq in a stock deal in July 2009. Combined, the company provides voice service to 7 million customers and Internet service to 2 million customers in both rural towns and larger cities, like Las Vegas.

2. Emerson Electric Co. (EMR) – Yield: 2.8% | Total Gain: 35.87%
Purchases: 7/2009, 10/2009
Emerson Electric Co. designs and supplies product technology and delivers engineering services and solutions to a wide range of industrial, commercial and consumer markets around the world.

1. 3M Co. (MMM) – Yield: 2.5% | Total Gain: 73.72%
Purchases: 3/2009
3M Co. is a diversified technology company with a presence in various businesses, including industrial & transportation, healthcare, display & graphics, consumer & office, safety, security & protection services, and electro and communications.

Each of these gains were a direct result of applying a value approach to dividend investing by taking advantage of opportunities when the stock is trading well below its fair value. A dividend growth and value strategy are well aligned often provide the conservative investors with a double benefit. Consider the MMM case:

I purchased MMM near its low in March 2009 at $48.88. At the time I calculated MMM’s Mid-2 fair value to be $84.06 and saw no fundamental reason for the stock to be trading so low. Trading at 41% of its fair value, MMM had tremendous potential for capital gain. However, I don’t purchase stocks for my income portfolio based on capital gain potential. Fortunately, the same forces providing capital gain opportunities were at work on the income side. The low price produced an eye-popping 4.25% yield on the day the stock was purchased. This was for a stock that had only yielded in the mid 2% range, on average, over the prior 10 years.

In the interest of full disclosure, I think it only fair to also mention the stocks at the other end of the spectrum. Again there were several surprises here also:

6. Harleysville Group Inc. (HGIC) – Yield: 4.6% | Total Loss: (3.39%)
Purchases: 1/2010
Harleysville Group Inc. 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.

5. Eli Lilly & Co. (LLY) – Yield: 5.4% | Total Loss: (3.89%)
Purchases: 10/2008, 1/2009
Eli Lilly and Company discovers, develops, manufactures and sells prescription drugs that offers a wide range of treatments for neurological disorders, diabetes, cancer, and other conditions. The company also sells animal health products.

4. Nucor Corporation (NUE) – Yield: 3.7% | Total Loss: (4.16%)
Purchases: 10/2008, 7/2009, 11/2009
Nucor Corporation 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.

3. Johnson & Johnson (JNJ) – Yield: 3.7% | Total Loss: (5.91%)
Purchases: 2/2008, 4/2008, 6/2009, 12/2009
Johnson & Johnson engages in the manufacture and sale of various products in the health care field worldwide.

2. Colgate-Palmolive Co. (CL) – Yield: 2.8% | Total Loss: (8.54%)
Purchases: 5/2010
Colgate-Palmolive Company (Colgate) 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.

1. Paychex Inc. (PAYX) – Yield: 5.0% | Total Loss: (34.43%)
Purchases: 11/2007, 1/2008,
Paychex Inc. provides payroll accounting services to small- and medium-sized concerns throughout the U.S.

As noted above, Total Loss % is only measuring capital loss. With the exception of PAYX, the other stocks are well positioned for quick turnaround. LLY and NUE have a positive return when dividends are factored in. HGIC and JNJ have small negative returns as a result of the more recent purchases. CL’s negative return is also result of its recent purchase. Having a portfolio where your bottom stocks’ performance isn’t really that bad, is one of the things I love about dividend stock investing.

Full Disclosure: Long O, CNI, TEG, CTL, EMR, MMM, HGIC, LLY, NUE, JNJ, CL, PAYX. See a list of all my income holdings here.