There were several dividend cuts last week, including a notable one from a commodities company. A report from Deutsche Bank analysts predicted dividend cuts in several mining companies, including Alcoa (AA), Southern Copper (PCU), Cliffs Natural Resources (CLF) and Companhia Vale do Rio Doce (RIO), which further depressed investor sentiment, and sent basic materials stocks lower. The negative dividend news concerning the materials sectors shouldn’t really affect overall dividend sentiment, as the dividend payments that these companies pay are typically not as consistent and smooth in terms of size of payment, due to the cyclical nature of the commodities business. With metals prices dropping significantly off of their record highs over the past few months it is no surprise that Deutsche Bank is expecting dividend cuts in the above mentioned companies.
On December 3, Freeport-McMoRan Copper & Gold Inc. announced a reduction in its copper production and sales, capital spending and expenditures. Furthermore the company announced that it was suspending its dividends. The stock lost 9% from the day of the announcement until the end of the week.
The other three notable dividend cuts included property trusts
Ramco-Gershenson Properties Trust (RPT) announced on December 3rd a 50% dividend cut in its quarterly payment to shareholders to $0.2313/share. The stock lost only 3% by the end of the week on the negative news.
Medical Properties Trust, Inc. (MPW) announced on December 4th that its Board has approved a 25.9% reduction in its quarterly dividend from $0.27 to $0.20 per common share. The stock closed over 8% higher on the day.
Post Properties (PPS) announced on December 2nd that its Board has reduced the quarterly dividend rate on its common stock to $0.20 per share from $0.45/share. The company also announced a stock buyback program which would allow it to repurchase up to $200 million worth of its common and preferred stock until December 2010. Investors reacted positively to this news, sending the stock over 15% higher by the end of the week.
The most interesting story I am seeing evolve over the past couple of weeks is that sectors which have experienced the most in dividend cuts over the past year, are buckling conventional wisdom when it comes to dividend cuts and rally on the news. In terms of investor sentiment this could mark a significant shift from bearish to bullish expectations for many stock holders. Whether this will hold of course will remain to be seen. The best ways for dividend growth investors to exit positions which have cut or eliminated their payments is when the stocks are going higher as opposed to lower.
Sunday, December 9, 2007
Saturday, November 3, 2007
6 Dividend Stocks rewarding their shareholders with higher payouts
Last week was marked by more volatility which doesn’t seem to surprise anyone. Luckily this time the direction was up as the stock market had its best week since 1974, mainly fueled by the half a percentage point interest cut by the Federal Reserve as well the smaller than expected contraction in the GDP.
During those large swings up and down it is easy for investors to lose focus on the big picture and not sticking to their financial plan by converting all of their holdings to cash. Luckily there were several dividend companies that reminded their patient long-term holders that increasing dividend payments could help them out in increasing their total returns over time.
Vornado Realty (VNO) announced that its Board has approved a 5.60% increase in its quarterly dividend from $0.90 to $0.95 per common share. Vornado Realty is a dividend achiever having increased its dividends for over fifteen years. The stock currently yields 5.60%.
Home Properties (HME) announced that its Board has approved a 1.50% increase in its quarterly dividend from $0.66 to $0.67 per common share. Home Properties is a dividend achiever having increased its dividends for over one decade. The stock currently yields 7.20%.
Questar (STR) announced that its Board has approved a 2.00% increase in its quarterly dividend from $0.1225 to $0.1250 per common share. Questar is a dividend aristocrat having increased its dividends for 29 years. The stock currently yields 1.50%.
Williams Partners L.P. (WPZ) announced that its Board has approved a 15.00% increase in its quarterly distgributions from $0.55 paid in third quarter 2007 to $0.635 per unit. The partnership stock currently yields 12.10%.
Dominion Resources (D) management anticipates that in January it will recommend to the board of directors an annual dividend rate in 2009 of $1.75 per share, or a quarterly dividend rate of 43.75 cents per share. This represents nearly an 11 percent increase over the current annual dividend rate of $1.58 per share. This utility currently yields 4.40%.
The Hanover Insurance Group, Inc. (THG) announced that its Board has approved a 12.50% increase in its annual dividend from $0.40 to $0.45 per common share. The stock currently yields 1.30%.
This dividend increases list led me to put VNO and HME on my list for further research.
During those large swings up and down it is easy for investors to lose focus on the big picture and not sticking to their financial plan by converting all of their holdings to cash. Luckily there were several dividend companies that reminded their patient long-term holders that increasing dividend payments could help them out in increasing their total returns over time.
Vornado Realty (VNO) announced that its Board has approved a 5.60% increase in its quarterly dividend from $0.90 to $0.95 per common share. Vornado Realty is a dividend achiever having increased its dividends for over fifteen years. The stock currently yields 5.60%.
Home Properties (HME) announced that its Board has approved a 1.50% increase in its quarterly dividend from $0.66 to $0.67 per common share. Home Properties is a dividend achiever having increased its dividends for over one decade. The stock currently yields 7.20%.
Questar (STR) announced that its Board has approved a 2.00% increase in its quarterly dividend from $0.1225 to $0.1250 per common share. Questar is a dividend aristocrat having increased its dividends for 29 years. The stock currently yields 1.50%.
Williams Partners L.P. (WPZ) announced that its Board has approved a 15.00% increase in its quarterly distgributions from $0.55 paid in third quarter 2007 to $0.635 per unit. The partnership stock currently yields 12.10%.
Dominion Resources (D) management anticipates that in January it will recommend to the board of directors an annual dividend rate in 2009 of $1.75 per share, or a quarterly dividend rate of 43.75 cents per share. This represents nearly an 11 percent increase over the current annual dividend rate of $1.58 per share. This utility currently yields 4.40%.
The Hanover Insurance Group, Inc. (THG) announced that its Board has approved a 12.50% increase in its annual dividend from $0.40 to $0.45 per common share. The stock currently yields 1.30%.
This dividend increases list led me to put VNO and HME on my list for further research.
Tuesday, September 4, 2007
SYSCO (SYY) Dividend Stock Analysis
SYSCO Corporation, through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily for foodservice industry in the United States and Canada.
SYSCO is a dividend champion as well as a component of the S&P 500 index. It has been increasing its stock dividends for the past 37 consecutive years. From the end of 1997 up until August 2008 this dividend growth stock has delivered an annual average total return of 11.60 % to its shareholders.
At the same time company has managed to deliver a 14.40% average annual increase in its EPS since 1998.
The ROE increased from the 25% to over 40% before falling down slightly to 33% in 2007.
Annual dividend payments have increased over the past 10 years by an average of 17.90% annually, which is higher than the growth in EPS. Using the rule of 72 an 18% growth in dividends translates into the dividend payment doubling almost every four years. If we look at historical data, going as far back as 1989, SYY has indeed managed to double its dividend payment every four years on average.
If we invested $100,000 in SYY on December 31, 1997 we would have bought 8780 shares (Adjusted for two 2:1 stock splits). In March 1998 your quarterly dividend income would have been $395.10. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to $2279 by July 2008. For a period of 10 years, your quarterly dividend payments would have increased by 389%. If you reinvested it though, your quarterly dividend payments would have increased by 477%.
The dividend payout ratio has slowly increased from upper teens to mid twenties over our study period. A lower dividend payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
I think that SYY is attractively valued with its low price/earnings multiple of 17.50 and low dividend payout ratio as well as an attractive dividend yield at 2.80%. The current dividend yield is pretty attractive based off historical standards. The current P/E is also attractive relative to what it has been over the past decade.
Friday, June 1, 2007
Carnivals, Festivals and Blogs- May 31, 2008
Carnivals and Festivals
My article Kinder Morgan Energy Partners (KMP) Dividend Analysis, was selected to appear on 90th edition of The Festival of Stocks May 26, 2008, hosted by Circle of Competence.
My post on Why Do I Like Dividend Achievers, was selected to appear on the 154th edition of Carnival of Personal Finance #154, hosted by Canadian Dream Free at 45.
My post TEPPCO Partners (TPP) Dividend Analysis. was selected to appear on The 14th Money Hacks Carnival - Weird Golf Facts Edition, hosted by PTMoney.
My post Dividend Champions Watchlist was included in the Carnival of Everything Finance: # 18, hosted byEverything Finance.
Blogs
FireFinance published his monthly list of the Top 100 Personal Finance Blogs. My blog is ranked #41 according to sitemeter and #50 according to quantcast.
Dividends4Life presented Stock Analysis: PepsiCo, Inc. (PEP). I myself am a fan of the company. You could read about my opinion here and here.
DividendMoney posted How To Develop Your Investing Style.
The Money Gardener presented BNS earnings down, dividend up. It's always nice to find a company which consistently increases its dividends twice per year.
Million Dollar Journey posted updates on his investing in Smith Manoeuvre Portfolio - May 2008.
I also enjoyed the chart in The Dividend Guy’s May Dividend Portfolio Review.
DivGuy is getting pretty good at finding buyout opportunities to invest in. I enjoyed reading his postAnother buyout offer on one of my stocks: Calpine (CPN).
Passive Family Income is Creating a new Income Stream using Prosper.
Articles
My article Kinder Morgan Energy Partners (KMP) Dividend Analysis, was selected to appear on 90th edition of The Festival of Stocks May 26, 2008, hosted by Circle of Competence.
My post on Why Do I Like Dividend Achievers, was selected to appear on the 154th edition of Carnival of Personal Finance #154, hosted by Canadian Dream Free at 45.
My post TEPPCO Partners (TPP) Dividend Analysis. was selected to appear on The 14th Money Hacks Carnival - Weird Golf Facts Edition, hosted by PTMoney.
My post Dividend Champions Watchlist was included in the Carnival of Everything Finance: # 18, hosted byEverything Finance.
Blogs
FireFinance published his monthly list of the Top 100 Personal Finance Blogs. My blog is ranked #41 according to sitemeter and #50 according to quantcast.
Dividends4Life presented Stock Analysis: PepsiCo, Inc. (PEP). I myself am a fan of the company. You could read about my opinion here and here.
DividendMoney posted How To Develop Your Investing Style.
The Money Gardener presented BNS earnings down, dividend up. It's always nice to find a company which consistently increases its dividends twice per year.
Million Dollar Journey posted updates on his investing in Smith Manoeuvre Portfolio - May 2008.
I also enjoyed the chart in The Dividend Guy’s May Dividend Portfolio Review.
DivGuy is getting pretty good at finding buyout opportunities to invest in. I enjoyed reading his postAnother buyout offer on one of my stocks: Calpine (CPN).
Passive Family Income is Creating a new Income Stream using Prosper.
Articles
I enjoyed reading America's hottest investor. Being the contrarian that I am, I bet that CGM Focus fund will significantly underperform over the next 5 years.
I also enjoyed reading about The next Buffetts at Canadian Business. In his first book Peter Lynch mentions that whenever someone refers to a stock as the next big thing, then you should stay away from it. In other words, putting money on LNUX, which was touted as the next Microsoft in 1999, would have been a disastrous investment.Guest Articles
My post Automatic Data Processing (ADP) Dividend analysis marked the 100th post on Dividend Growth Investor. I am very interested in collaborating with fellow personal finance and investment bloggers. To celebrate my centennial, if you are an aspiring writer, and you have an opinion on Personal Finance, Investing, Retirement Planning or a similar money related story, and you want to get more exposure I would love to receive and publish your article on my blog.
Feel free to send the articles to my e-mail address at dividendgrowthinvestor at gmail dot com.
I would be considering only original articles, which haven't been posted anywhere else before. You could place up to 3 links to your blog/website in the article. the material shouldn't be offensive and should be ok to be read by all audiences ( no R rated stuff please).
One week from today, I would let you know if I would be including your article or not. If I publish it, you could also publish it on your blog/website on the same day as me. If its not chosen, you could publish it whenever you wish to.
Wednesday, May 2, 2007
Leveraged Investments
I have always been intrigued by the power of leverage. Using leverage means borrowing money to invest in something for the purpose of magnifying your profit potential.
When you are right, leverage works in your favor. When you are wrong though, leverage could result in disastrous results and bankruptcy.
An interesting leveraged instrument is SSO, which generates double the daily return of the S&P 500 through investments in stock index futures. If the S&P 500 rises by 1 %, SSO will increase by about 2%. The changes are never EXACTLY twice the rate of change for S&P 500 due to tracking errors.
I gathered daily data for S&P 500 going back to 1950. I then calculated the returns for the 58 year period for twice the daily changes in the index. I didn’t account for taxes, commissions, dividends and interest for simplicity purposes. The results are truly astonishing.
Investors who could have stomached the extra volatility from the increased exposure to the S&P 500 could have enjoyed average annual returns of almost 14.33% annually. The worst drawdown in annualreturns occurred from 1972-1974 -68.60%, and 69.50% during the 2000 - 2003 bear markets. In addition to that, investors who bought the back tested index at the end of 1999 are still underwater by 37%.Here are the results per decade:
Year $1 invested at the beginning of the decade grows to: at the end of the decade
1950's $ 11.32
1960's $ 2.13
1970's $ 1.14
1980's $ 7.77
1990's $ 14.14
2000's $ 0.78
For example if you invested $1 in the SSO at the end of 1980, your investment would have grown to $55 by the end of 2007. On the other hand, the same $1 investment in an S&P index fund would have grown to $22.50.
So how should investors incorporate leverage in their portfolios? I believe that a 5% to 10% of ones portfolio could be invested in a leveraged instrument like SSO as a long-term investment. Over time this investment should boost your profitability overall.
When you are right, leverage works in your favor. When you are wrong though, leverage could result in disastrous results and bankruptcy.
An interesting leveraged instrument is SSO, which generates double the daily return of the S&P 500 through investments in stock index futures. If the S&P 500 rises by 1 %, SSO will increase by about 2%. The changes are never EXACTLY twice the rate of change for S&P 500 due to tracking errors.
I gathered daily data for S&P 500 going back to 1950. I then calculated the returns for the 58 year period for twice the daily changes in the index. I didn’t account for taxes, commissions, dividends and interest for simplicity purposes. The results are truly astonishing.
Investors who could have stomached the extra volatility from the increased exposure to the S&P 500 could have enjoyed average annual returns of almost 14.33% annually. The worst drawdown in annualreturns occurred from 1972-1974 -68.60%, and 69.50% during the 2000 - 2003 bear markets. In addition to that, investors who bought the back tested index at the end of 1999 are still underwater by 37%.Here are the results per decade:
Year $1 invested at the beginning of the decade grows to: at the end of the decade
1950's $ 11.32
1960's $ 2.13
1970's $ 1.14
1980's $ 7.77
1990's $ 14.14
2000's $ 0.78
For example if you invested $1 in the SSO at the end of 1980, your investment would have grown to $55 by the end of 2007. On the other hand, the same $1 investment in an S&P index fund would have grown to $22.50.
So how should investors incorporate leverage in their portfolios? I believe that a 5% to 10% of ones portfolio could be invested in a leveraged instrument like SSO as a long-term investment. Over time this investment should boost your profitability overall.
Saturday, March 3, 2007
Dividend Growth Investor Hosts the 78th Festival of Stocks
I am honored to host my first edition of Festival of Stocks. Special thanks to George at Fat Pitch Financialsfor giving me this opportunity. Here are this week’s submissions that I selected for this edition. Take a look and enjoy!
Once you are done reading through don’t forget to Subscribe to my Feed .
George presents Consistent Cash Creators, Part 2: Linear vs. Exponential Growth posted at Fat Pitch Financials.
The Dividend Guy presents Dividend Stock Wednesday: Automatic Data Processing (ADP-NYSE) posted atThe Dividend Guy Blog.
Dividends4Life presents My Dirty Little Secret posted at Dividends4Life. Having his house referred to as "his single largest asset" always grated him. It usually was because the people that made that statement usually were trying to sell him something he really didn't want.
Nate Tobik presents Do software companies have moats? posted at Stock Value Finder.
American Dividend Investor presents his analysis of Citigroup posted at American Dividend Investor.
Alex G presents Is Monsanto worth more than Home Depot? posted at Contrarian Value Investing.
John Crenshaw presents Pay Off Mortgage Tips posted at Truthful Lending Mortgage, Refinance Advice. There's been quite a bit of debate lately over whether or not you should pay off your mortgage or investany extra money. This article explores the different mortgage payoff methods and will help you decide which, if any, are right for you.
Tyler presents How Not To Make Money In Stocks Guaranteed! posted at Dividend Money.
Steve Alexander presents Cherokee Inc - Store Brands To Go posted at MagicDiligence - Optimizing Joel Greenblatts Value Stock Investing Strategy, saying that Cherokee is an incredibly profitable small cap paying a 9% dividend yield.
Jose DeJesus MD presents Improve Investment and Financial Results - Simplify and Conquer posted atPhysician Entrepreneur.
Dorian Wales presents Inflation Rearing Its Ugly Head posted at The Personal Financier.
FIRE Finance presents Tax FREE Money Market Mutual Funds! posted at FIRE Finance.
Thomas Ott presents EMCOR Group Inc. (EME) posted at Neural Market Trends .
Rocko presents Stock Market Downside Bets posted at Days Of A Neophyte Mathematician.
debbie presents Gold: A Bad Investment » American Consumer News posted at American Consumer News.
Vlada Kynsky presents StockWeb: Tech stocks technically posted at StockWeb.
Raymond presents The Best Online Discount Investment Brokers posted at Money Blue Book.
Super Saver presents 2/25/08 Stock Purchase Update - Trimming The Portfolio posted at My Wealth Builder.
Michael Bass presents The Economics of Gold Investments posted at Debt Prison, saying that the real question is whether a discretionary paper currency managed by Central Bankers perform can perform as well a gold standard.
Silicon Valley Blogger presents Beat The Average Investor's Returns With The Simplest Investment Portfolio posted at The Digerati Life.
KcLau presents Credit Cards: From Foes to Friends posted at KCLau's Money Tips. His article is discussing what a credit card is all about and how one can avoid credit card debts. It also touches on how one can actually make money from his credit cards.
That concludes this edition. Submit your blog article to the next edition of festival of stocks using ourcarnival submission form. Past posts and future hosts can be found on our Festival of Stocks Index Page.
Once you are done reading through don’t forget to Subscribe to my Feed .
George presents Consistent Cash Creators, Part 2: Linear vs. Exponential Growth posted at Fat Pitch Financials.
The Dividend Guy presents Dividend Stock Wednesday: Automatic Data Processing (ADP-NYSE) posted atThe Dividend Guy Blog.
Dividends4Life presents My Dirty Little Secret posted at Dividends4Life. Having his house referred to as "his single largest asset" always grated him. It usually was because the people that made that statement usually were trying to sell him something he really didn't want.
Nate Tobik presents Do software companies have moats? posted at Stock Value Finder.
American Dividend Investor presents his analysis of Citigroup posted at American Dividend Investor.
Alex G presents Is Monsanto worth more than Home Depot? posted at Contrarian Value Investing.
John Crenshaw presents Pay Off Mortgage Tips posted at Truthful Lending Mortgage, Refinance Advice. There's been quite a bit of debate lately over whether or not you should pay off your mortgage or investany extra money. This article explores the different mortgage payoff methods and will help you decide which, if any, are right for you.
Tyler presents How Not To Make Money In Stocks Guaranteed! posted at Dividend Money.
Steve Alexander presents Cherokee Inc - Store Brands To Go posted at MagicDiligence - Optimizing Joel Greenblatts Value Stock Investing Strategy, saying that Cherokee is an incredibly profitable small cap paying a 9% dividend yield.
Jose DeJesus MD presents Improve Investment and Financial Results - Simplify and Conquer posted atPhysician Entrepreneur.
Dorian Wales presents Inflation Rearing Its Ugly Head posted at The Personal Financier.
FIRE Finance presents Tax FREE Money Market Mutual Funds! posted at FIRE Finance.
Thomas Ott presents EMCOR Group Inc. (EME) posted at Neural Market Trends .
Rocko presents Stock Market Downside Bets posted at Days Of A Neophyte Mathematician.
debbie presents Gold: A Bad Investment » American Consumer News posted at American Consumer News.
Vlada Kynsky presents StockWeb: Tech stocks technically posted at StockWeb.
Raymond presents The Best Online Discount Investment Brokers posted at Money Blue Book.
Super Saver presents 2/25/08 Stock Purchase Update - Trimming The Portfolio posted at My Wealth Builder.
Michael Bass presents The Economics of Gold Investments posted at Debt Prison, saying that the real question is whether a discretionary paper currency managed by Central Bankers perform can perform as well a gold standard.
Silicon Valley Blogger presents Beat The Average Investor's Returns With The Simplest Investment Portfolio posted at The Digerati Life.
KcLau presents Credit Cards: From Foes to Friends posted at KCLau's Money Tips. His article is discussing what a credit card is all about and how one can avoid credit card debts. It also touches on how one can actually make money from his credit cards.
That concludes this edition. Submit your blog article to the next edition of festival of stocks using ourcarnival submission form. Past posts and future hosts can be found on our Festival of Stocks Index Page.
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