Dividends Value » NUE

15 Dividend Stocks With A 15% Yield In 15 Years *

D4L — Wed, 13 Apr 2011 07:30:02 +0000

“I skate to where the puck is going to be, not where it has been.”
- Wayne Gretzky

I know very little about hockey, but I have always loved this quote. It can be applied to so many things in life, including investing. Just as Gretzky has a vision as to where the puck is going, investors need to have a similar vision, and not get caught up on short-sighted distractions. Investing in dividend growth stocks requires a long-term vision. It is easy to run a screen and find stocks that are paying a 15% yield today; but how long will they be able to sustain it? Instead you may want to skate to where the future 15% yielders are going to be. To do that, here are some things you need to know…

Tracking Yield On Cost

Yield-on-cost (YOC) is simply Current Annual Dividend dividend by Original Cost Per Share. YOC not a substitute for calculating an internal rate of return (IRR). The IRR calculation takes into account both capital appreciation and the timing of cash flows (purchases, sells and dividends). However, as a dividend growth investor, my primary focus is on dividend growth and since my desired holding period is forever, capital appreciation is little more than an interesting side note. YOC is much better suited for tracking dividend growth since it is individually tied to a stock and takes into account all the variations of growth rates over time, along with the timing of purchases. Also, it is useful when trying to explain to our income investor brethren why we chose the stock yielding 3% over ‘Amalgamated Risk’ at 8%.

My D4L-Data model includes projections of YOC after 5, 10, 15 and 20 years. These projections are derived by growing the current yield using the dividend growth rate. As for the dividend growth rate, I use the minimum of the 1, 3, 5, 7 or 10 year compound annual growth rates; or 15% if in every consecutive 4-year period dividends grew on average in excess of 15%.

15 Dividend Stocks With A 15% Yield In 15 Years

Sorting the stocks in my D4L-Data model by their 15 Year YOC and throwing out some bad apples, we are left with these 15 stocks that are projected to have a 15% YOC in 15 years:

T. Rowe Price Group Inc. (TROW) operates one of the largest no-load mutual fund complexes in the United States.
Yield: 1.8% | Growth: 15.0% | 15 Year YOC: 15.0%

Cardinal Health Inc. (CAH) is one of the leading wholesale distributors of pharmaceuticals, medical/surgical supplies and related products to a broad range of health care customers.
Yield: 1.8% | Growth: 15.0% | 15 Year YOC: 15.0%

Owens & Minor Inc. (OMI) is a leading domestic distributor of medical and surgical supplies to the acute care market, a health care supply chain management company, and a direct-to-consumer (DTC) supplier of testing and monitoring supplies for diabetes.
Yield: 2.4% | Growth: 13.2% | 15 Year YOC: 15.6%

Praxair Inc. (PX) is the largest producer of industrial gases in North and South America, and the second largest worldwide. It also provides ceramic and metallic coatings.
Yield: 2.0% | Growth: 15.0% | 15 Year YOC: 15.9%

Aflac Incorporated (AFL) provides supplemental health and life insurance in the U.S. and Japan. Products are marketed at worksites and help fill gaps in primary insurance coverage. Approximately 80% of earnings comes from Japan and 20% from the U.S.
Yield: 2.3% | Growth: 15.0% | 15 Year YOC: 18.2%

Stryker Corp. (SYK) makes specialty surgical and medical products such as orthopedic implants, endoscopic items, and hospital beds.
Yield: 1.2% | Growth: 20.0% | 15 Year YOC: 18.6%

Casey’s General Stores Inc. (CASY) has over 1,500 convenience stores in the Midwest, selling food, beverage, health and automotive products.
Yield: 1.3% | Growth: 19.8% | 15 Year YOC: 19.4%

Weyco Group, Inc. (WEYS) distributes, wholesale & retail, men’s branded footwear in the U.S., Canada, Europe; it offers casual footwear, dress shoes and accessories under Florsheim, other brands.
Yield: 2.6% | Growth: 15.0% | 15 Year YOC: 21.0%

Walgreen Co. (WAG) is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico.
Yield: 1.7% | Growth: 18.5% | 15 Year YOC: 21.7%

Nucor Corporation (NUE) is the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas.
Yield: 3.1% | Growth: 15.0% | 15 Year YOC: 25.5%

McDonald’s Corporation (MCD) is the largest fast-food restaurant company in the world, with about 32,500 restaurants in 117 countries.
Yield: 3.2% | Growth: 15.0% | 15 Year YOC: 26.1%

ConocoPhillips Co. (COP) is the fourth largest integrated oil company in the world, and the second largest in the U.S.
Yield: 3.3% | Growth: 15.0% | 15 Year YOC: 26.6%

People’s United Financial Inc. (PBCT) provides a full range of banking and financial service products to individuals, corporations and municipal customers in the U.S. Northeast.
Yield: 6.0% | Growth: 11.3% | 15 Year YOC: 30.0%

Southside Bancshares Inc. (SBSI) primarily provides financial services to individuals, businesses, municipal entities, and non-profit organizations.
Yield: 3.7% | Growth: 16.6% | 15 Year YOC: 36.9%

Old Republic Intl (ORI) writes property and liability, mortgage guaranty, title and life, and disability insurance.
Yield: 5.4% | Growth: 15.0% | 15 Year YOC: 43.6%

One key component of current yield is risk. If Treasuries (risk free) were paying 7%, 8% or 9%, many income investors and a significant number of dividend growth investors would divert a portion of their portfolios to them.

You will note that most of the above stocks are yielding under 4%. It is also important to note that I do not believe that all the above stocks will achieve their 15 year YOC. In much the same way high-yielding stocks often end up cutting their dividends, many of the above stocks will end up cutting their dividend growth rate. Put another way, there is risk associated low-yield high-dividend-growth stocks. However, for the high dividend growth stocks that perform well over the next 15 years, the rewards are potentially much higher than those of a high-yield, low growth stock.

Full Disclosure: Long OMI, NUE, MCD, COP. See a list of all my income holdings here.

(Photo Credit)

February 2011 Pocket Change Portfolio Performance Update *

D4L — Tue, 22 Mar 2011 11:30:23 +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 $350.13, consisting of:

$96.32 AT&T, Inc. (T)
$42.40 Cincinnati Financial Corp. (CINF)
$ 9.43 Nucor Corporation (NUE)
$54.56 Abbott Laboratories (ABT)
$33.92 Colgate-Palmolive Co. (CL)
$36.65 Procter & Gamble Co. (PG)
$76.85 CenturyLink, Inc. (CTL)

Securities Purchased

The following securities were purchased during the month:

32 Shares Cincinnati Financial Corp. (CINF) providing $51.20 in annual dividend income
106 Shares CenturyLink, Inc. (CTL) providing $307.40 in annual dividend income

Annualized Dividend Income

Including the above purchases, my annual PCP dividend income is now $3,714.41 at the current dividend rates. This is up $367.82 from last month’s $3,346.59 amount. The PCP has never experienced a monthly decline in annualized dividend income.

Portfolio Returns

Month: 1.53%
Year-to-date: 0.83%
Life-to-date: 14.85% (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-April.

Full Disclosure: Long all the aforementioned securities. See a list of all my income holdings here.

(Photo: Arcelia Vanasse)

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)

Don’t Give Up On Nucor Just Yet *

D4L — Tue, 01 Mar 2011 07:30:09 +0000

Nucor (NUE) is a different kind of company. A line worker at NUE’s plant in Darlington, S.C. sent John J. Ferriola, the company’s chief operating officer, a note that simply said “Thank you for caring about me and my family.” NUE’s top management have received hundreds of similar cards and e-mails from their staff of 22,000. If you think this is different and somewhat odd, it is for other companies, but not NUE.

The company came into its own about the time people said that steel production in the U.S. was dead. However, NUE could be facing its greatest challenge ….

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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)

Nucor Corporation (NUE) Dividend Stock Analysis *

D4L — Mon, 10 Jan 2011 07:30:22 +0000

This article originally appeared on The DIV-Net January 3, 2011.

Linked here is a detailed quantitative analysis of Nucor Corporation (NUE). Below are some highlights from the above linked analysis:

Company Description: 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.

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

NUE is trading at a discount to only 1.) above. The stock is trading at a 142.9% premium to its calculated fair value of $18.30. NUE did not earn any Stars in this section.

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%

NUE earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. NUE earned a Star for having an acceptable score in at least two of the four Key Metrics measured. Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (2000-2003, 2001-2004, 2002-2005, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 37 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

NUE earned a Star in this section for its NPV MMA Diff. of the $9,571. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as NUE has. If NUE grows its dividend at 15.0% per year, it will take 1 years to equal a MMA yielding an estimated 20-year average rate of 3.4%. NUE earned a check for the Key Metric ‘Years to >MMA’ since its 1 years is less than the 5 year target.

Memberships and Peers: NUE is a member of the S&P 500 and a member of the Broad Dividend Achievers™ Index. The company’s peer group includes: Commercial Metals Company (CMC) with a 2.8% yield, Steel Dynamics Inc. (STLD) with a 1.6% yield and United States Steel Corp. (X) with a 0.3% yield.

Conclusion: NUE did not earn any Stars 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 three Stars. This quantitatively ranks NUE as a 3 Star-Hold.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $130.82 before NUE’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 37 years of consecutive dividend increases. At that price the stock would yield 1.10%.

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 4.9%. This dividend growth rate is significantly below the 15.0% used in this analysis, thus providing a margin of safety. NUE has a risk rating of 1.75 which classifies it as a medium risk stock.

Like many cyclical industrials, NUE’s earnings and cash flow have struggled over the last two years. However, the company is well managed with a solid share in its markets, a very low ratio of total debt to capital percentage and a very diverse product mix. The company’s pay-for-performance and low-cost operations have helped mitigate weak demand in the most recent downturn. Longer term, industry consolidation and lower raw material costs should lead to higher earnings. The stock is currently trading well above my fair value price of $18.30. NUE is a great company, but this is not a great time to buy. NUE will remain on my watch list as I watch for an upturn in the company’s business. 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 NUE (2.0% of my Income Portfolio). See a list of all my income holdings here.

Related Articles:

- Cincinnati Financial Corp. (CINF) Dividend Stock Analysis
- McDonald’s Corporation (MCD) Dividend Stock Analysis
- Johnson & Johnson (JNJ) Dividend Stock Analysis
- Owens & Minor, Inc. (OMI) Dividend Stock Analysis
- More Stock Analysis

15 Stocks Growing Their Cash Dividends *

D4L — Fri, 10 Dec 2010 07:30:44 +0000

Throughout history there have always been great companies that stand head-and-shoulders above their peers and the competition. They are loved by their shareholders, hated by the competition and known by all. Just as all great companies have have something in common, great dividend companies also have something in common – they consistently raise their dividends each year.

Below are several companies stepping it up with higher cash dividends:

Hillenbrand (HI) manufactures and sells gasketed caskets made of carbon steel, stainless steel, copper & bronze; offers a cremation marketing system for funeral service professionals. December 3rd the company increased its quarterly dividend 1.3% to $0.19/share. The dividend is payable December 31, 2010, to shareholders of record at the close of business on December 15, 2010. The ex-dividend date is December 13, 2010. The yield based on the new payout is 3.9%.

Graco (GGG) is a U.S.-based global producer of industrial pumps, valves, meters, and accessories. December 3rd the company raised its quarterly dividend 5% to $0.21/share. The dividend is payable on February 2, 2011, to shareholders of record at the close of business on January 18, 2011. The ex-dividend date is January 14, 2010. GGG is a Dividend Achiever and has raised its dividend for 12 consecutive years. The yield based on the new payout is 2.2%.

Erie Indemnity (ERIE) provides sales, underwriting, and policy issuance services to the policyholders of Erie Insurance Exchange in the United States. December 7th the company increased its quarterly dividend 7.3% to $0.515/share. The dividend is payable on Jan. 20 to shareholders of record on Jan. 5. The ex-dividend date is Jan. 3. ERIE is a Dividend Achiever and has raised its dividend for 21 consecutive years. The yield based on the new payout is 3.27%.

Lawson Products (LAWS) manufactures, sells and distributes production and specialized component parts to the original equipment marketplace (OEM). December 7th the company raised its quarterly dividend to $0.12/share. The dividend is payable January 18, 2011, to stockholders of record on January 4, 2011. The yield based on the new payout is 2.1%.

CapLease (LSE) invests primarily in single tenant commercial real estate assets. December 8th the company raised its quarterly dividend 8% to $0.065/share. The dividend is payable on January 18, 2011 to stockholders of record as of December 31, 2010. The ex-dividend date is December 29, 2010. The yield based on the new payout is 4.2%.

Nucor (NUE) is largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas. December 8th the company increased its quarterly dividend 0.7% to $0.3625/share. The dividend is payable on February 11, 2011 to stockholders of record on December 31, 2010. The ex-dividend date is December 29, 2010. NUE is a Dividend Achiever and has raised its dividend for 38 consecutive years. The yield based on the new payout is 3.5%.

Stryker (SYK) makes specialty surgical and medical products such as orthopedic implants, endoscopic items, and hospital beds. December 8th the company increases its quarterly dividend 20% to $0.18/share. The dividend is payable on January 31, 2011, to shareholders of record at the close of business on December 31, 2010. The ex-dividend date is December 29, 2010. SYK is a Dividend Achiever and has raised its dividend for 18 consecutive years. The yield based on the new payout is 1.4%.

One Liberty (OLP) invests primarily in improved commercial real estate under long-term net leases. December 8th the company increased its quarterly dividend 10% to $0.33/share. The dividend is payable January 4, 2011 to stockholders of record on December 23, 2010. The ex-dividend date is December 21, 2010. The yield based on the new payout is 8.2%.

Western Union (WU) is a leading independent provider of consumer money transfer services. December 8th the company raised its quarterly dividend 17% to $0.07/share. The dividend is payable December 31, 2010 to shareholders of record at the close of business on December 20, 2010. The ex-dividend date is December 16, 2010. The yield based on the new payout is 1.5%.

Freeport-McMoRan (FCX) is the world’s second largest copper producer and a major producer of gold and molybdenum. December 9th the company increased its quarterly dividend to $0.50/share, announced a $1.00/share supplemental dividend and also announced a 2-for-1 stock split. The yield based on the new payout is 1.8%.

W. P. Carey (WPC) is an investment firm that provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. December 9th the company raised its quarterly dividend 0.5% to $0.51/share. The dividend is payable on January 15, 2011 to shareholders of record as of December 31, 2010. The ex-dividend date is December 29, 2010. The yield based on the new payout is 6.9%.

Taubman Centers (TCO) is the general partner of The Taubman Realty Group L.P., an operating partnership that owns, operates and develops regional shopping centers across the U.S. December 9th the company increased its quarterly dividend 5.4% to $0.4375/share/share. The dividends are payable on Dec. 31 to shareholders of record on Dec. 17. The ex-dividend date is Dec. 15. The yield based on the new payout is 3.63%.

C.H. Robinson (CHRW) is a global provider of multimodal transportation and logistics solutions has a network of over 230 offices in North America, South America, Europe, and Asia. December 9th the company raised its quarterly dividend 16% to $0.29/share. The dividend is payable on January 3, 2011, to shareholders of record on December 20, 2010. The ex-dividend date is December 16, 2010. CHRW is a Dividend Achiever and has raised its dividend for 12 consecutive years. The yield based on the new payout is 1.5%.

Edison Int’l (EIX) is the holding company for Southern California Edison. Other businesses include electric power generation, financial investments, and real estate development. December 9th the company increased its quarterly dividend 1.6% to $0.32/share. The dividend is payable January 31, 2011, to shareholders of record on December 31, 2010. The ex-dividend date is December 29, 2010. The yield based on the new payout is 3.4%.

IAMGOLD (IAG) is a Canada-based mining and exploration company. December 9th the company raised its quarterly dividend 33% to $0.08/share. The dividend is payable January 14, 2011 to shareholders of record as of the close of trading on December 24, 2010. The ex-dividend date is December 22, 2010. In future, the Company plans to pay its dividend semi-annually. The yield based on the new payout is 1.9%.

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

(Photo Credit)

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.

(Photo Credit)

Where To Find Great Dividend Stocks *

D4L — Wed, 21 Jul 2010 07:30:26 +0000

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

I. Consumer Goods (13%)

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

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

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

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

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

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

II. Financial Services (17%)

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

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

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

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

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

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

III. Industrial Materials (18%)

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

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

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

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

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

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

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

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

(Photo Credit)

8 Dividend Stocks With Above Market Performance *

D4L — Wed, 14 Jul 2010 07:30:38 +0000

My goal as a dividend growth investor is to build a steadily increasing income and not necessarily to outperform the market via capital gains. However, as numerous research projects have shown, a conservative dividend-based investment strategy has consistently outperformed the market over time. Now that we are passed mid-year, let’s take a look at some of the above average dividend performers for the first six months.

As a benchmark, the S&P 500 (SPY) was down 6.93% on a dividend adjusted basis. The following dividend growth stocks were able to best the S&P and provide a positive return:

Procter & Gamble Co. (PG) is focused on providing branded consumer goods products. The Company markets its products in more than 180 countries.
- YTD Dividend Adjusted Return: 0.40%
- Current Yield: 3.10%

Pepsico, Inc. (PEP) is a global snack and beverage company. The Company manufactures, markets and sells a range of salty, convenient, sweet and grain-based snacks, carbonated and non-carbonated beverages and foods.
- YTD Dividend Adjusted Return: 1.74%
- Current Yield: 3.00%

Clorox Corporation (CLX) is a diversified producer of household cleaning, grocery and specialty food products and is also a leading producer of natural personal care products.
- YTD Dividend Adjusted Return: 3.55%
- Current Yield: 3.40%

Sysco Corp. (SYY) engages in the marketing and distribution of a range of food and related products primarily for foodservice industry in the United States and Canada.
- YTD Dividend Adjusted Return: 4.00%
- Current Yield: 3.40%

Genuine Parts Company (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products.
- YTD Dividend Adjusted Return: 6.08%
- Current Yield: 4.00%

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.
- YTD Dividend Adjusted Return: 6.54%
- Current Yield: 1.80%

McDonald’s Corp. (MCD) is the largest fast-food restaurant company in the world. Its restaurants serve a varied, yet limited, value-priced menu in more than 100 countries around the world.
- YTD Dividend Adjusted Return: 7.28%
- Current Yield: 3.20%

Realty Income Corp. (O) engages in the acquisition and ownership of commercial retail real estate properties in United States.
- YTD Dividend Adjusted Return: 20.45%
- Current Yield: 5.50%

Obviously, not all dividend stocks outperformed the S&P. Below are some high-profile under-performers during the first 6-months of 2010:

Chevron Corp. (CVX) is a global integrated oil company that has interests in exploration, production, refining and marketing, and petrochemicals.
- YTD Dividend Adjusted Return: Down (10.18%)
- Current Yield: 4.00%

The Coca-Cola Company (KO) The Coca-Cola Company is the world’s largest soft drink company. It engages in the manufacture, distribution, and marketing of nonalcoholic beverage concentrates, fruit juices and syrups worldwide.
- YTD Dividend Adjusted Return: Down (10.60%)
- Current Yield: 3.40%

Abbott Laboratories (ABT) is engaged in the discovery, development, manufacture and sale of a diversified line of healthcare products including: drugs, nutritional products, diabetes monitoring devices and diagnostics.
- YTD Dividend Adjusted Return: Down (11.99%)
- Current Yield: 3.70%

Nucor Corporation (NUE) is engaged in the manufacture and sale of steel and steel products. As the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas.
- YTD Dividend Adjusted Return: Down (16.56%)
- Current Yield: 3.60%

So what does all this mean? For me, the more relevant list is the latter. When a stock under performs the market (assuming there is not a fundamental reason for doing so), two important things are happening: 1.) it is becoming relatively cheaper and 2.) its dividend is becoming more attractive relative to the market. The opposite is occurring for the stocks listed in the first group.

Full Disclosure: Long PG, PEP, CLX, SYY, GPC, MCD, O, CVX, KO, ABT, NUE. See a list of all my income holdings here.