Dividend Growth Investor

7 Dividend Stocks to Prove Buy-and-Hold Isn't Dead

Buy and hold is not dead. It never was and never will. Any advisor that recommends that you switch in and out of stocks frequently is only after your money either in terms of selling you subscription services, charging you money for handling your investments or charging you for trades ( brokers).

One should however implement a sound buy and hold strategy that works for them and this strategy should include sound diversification, dollar cost averaging and selective dividend reinvestment. Consistent Dividend growth should be supported by sustainable earnings growth over time as well.

Buy and hold investors should also have an exit plan in case things don't go as expected. For me, when a company which has raised distributions for over a decade starts cutting dividends I exit the position and moce my business in more promising candidates.

3 Telecom Stocks with High Yield Dividends

I bought some AT&T a few weeks ago as part of a dividend strategy test. However I don't like the competitive nature of the telecom business, the high capex requirements and the suspiciously high dividend payout ratios.

Here's my analysis of Verizon:

www.dividendgrowthinve...

In 2008 cash flow was $7.57 per share. The capital expenditures required to maintain the business run at about $6/share. This leaves all remaining cash flow for dividends.

My analysis of AT&T:

www.dividendgrowthinve...

The company has the cash to pay the dividend at the moment. Since telecoms in general need a lot of cash to sustain their networks, the credit crunch could affect the payment down the road.

Overall I have a hold on both AT&T and Verizon...

Consumer Staple Co. Supervalu Cuts Dividend

Funny thing is, the raised dividend back in May and also announced an increase to their stock buyback. I don't own any SVU stock, although I was considering purchasing some..

15 Attractive Stocks for Increasing Dividends

Well, it does help you to monitor dividend increasers over time. Companies cannot control the yield, but can control only the dividend payment. If you find a solid stock yielding 2% which has raised dividends for 10 years in a row and keep raising them every year for the next few decades, you could simpyl add it to your watchlist. If the stock dips on negative news, the economy, some other factor which doesn't affect the company's moat, then you could accumulate it.
Of course the waiting part is the toughest, since you do not know if you are ever going to get into the stock at your required entry price..

8 Dividend Stocks with Wide Moats

Well it is important not only to purchase great stocks, but also to purchase them on dips or if you can wait accumulate them at attractive valuations..

Fewer and fewer stocks are fitting my entry criteria these days... The market is overextended, which doesn't mean however that it can't get much more overextended easily..

I do like the picks and the article however. You can't go wrong by selecting the best dividend growth stocks from different industries and hold on for the long run.

Dividend Aristocrats: 3 to Watch

I would substitute XOM for CVX or some other of the big oil majors ( I own CVX, not XOM). The mere fact that XOM doesn't pay most of the funds to shareholders as dividends, but as stock repurchases ( which I view similarly to special dividends) is because they probably are not confident enough that their future earnings would sustain a higher dividend payment in the future..

As for WMT, I think that even if the company stops expanding so rapidly, they would keep raising the dividend payment. The main issue of course is whether you want to own "any" retailer or whether you want to own THE BEST retailer at the moment. Do not forget capital gains as well. Despite the fact that WMT has paid a small dividend yield over the past decade, the total return is still better than S&P 500...

As for LLY, i am thinking of purchasing the stock some time next year.. The problem with big pharma stocks is that most of their drugs could face patent expirations in a few years, while major blockbuster discoveries are expensive and tough to uncover..

Good Debt Coverage for Sustainable Dividends

LTW,

Did you actually read the article?

Here are some highlights for you:

Some investors typically focus on debt to total assets to gain a perspective on the amount of the leverage the company has. While this method is widely accepted by some investors, I believe that it has some shortcomings, which might prevent investors from seeing the bigger picture. Most importantly comparing debt to total assets does not tell whether a company could service its debt obligations or not.


Dividend investors should generally look for a higher coverage ratio of interest payments. A lower coverage indicates that a decline in earnings could generally make it difficult for the company to service its debt, which could not only jeopardize its dividend payments but also could lead to bankruptcy down the road.


On Oct 14 09:27 PM long term wag holder wrote:

> I don'tunderstand this article. I understand a lot about debt, but
> the numbers in this chart are not explained very well

Investing in High-Yield Dividend Stocks

I agree that most people end up chasing highest yielding stocks, and they do project current yields onto the future, without taking into account how sustainable the actual dividend payment is.

I have found that a balanced approach between dividend growth and capital gains works best for me; I do enjoy having stable dividend payments over time which are increasing at least once/year. Having fluctuations in dividend payments makes it tougher to budget your monthly expenses...

Dividend Boosts for 3 Big Names

Actually the reason for COP's "negative earnings" in 2008 was a goodwill impairment , which is a non cash charge. Companies these days are required to evaluate their goodwill versus the carrying value of the goodwill to determine if an impairment is necessary. Without this item, COP would have achieved record earnings in 2008..


On Oct 11 01:04 AM Shishir Nigam wrote:

> Some additional colour on the 3 companies that you've talked about:
>
>
> Reynolds - $0.90 provides a very impressive yield on a common stock.
> However, $0.90 dividend per quarter implies a dividend/share of $3.60
> annually. Going by their latest financials, their LTM EPS was $2.13/share.
> That implies a 169% payout ratio. Even if I use the EPS for the year
> ended Dec 31, 2008 so as to leave out the bad quarters, it's a payout
> ratio of 79%. I hope they have some serious profits coming up in
> Q3 results to justify that dividend increase!
>
> ConocoPhillips - As for COP, they haven't had a full year of positive
> earnings in either the 12 months ending June 30, 09 or even 12 months
> ending in Dec 31, 08. Going by the latest quarter alone, a $0.50
> payout implies a payout ratio of 58%. Though COP has a good amount
> of cash cushion on its balance sheet.
>
> RPM - RPM has an EPS of $0.958 for the year ending Aug 31, 09, implying
> a payout ratio of about 86%, again a pretty high payout.
>
> Increasing dividends can reflect confidence in the future but are
> just as likely the result of over-optimistic management projections.
>
>
> For more analysis, check out my blog: youngandinvested.com

How Companies Create Shareholder Value

I agree that dividends are great, although to have a rising and sustainbale stream of dividends you need to have a sound business model that produces rising earnings.

As for buybacks, I treat them just like special dividends - it's nice to have them but don't rely too much on them..

10 Dividend Stocks to Buy Now

So are you planning on purchasing these stocks in the future? I noticed you only owned NWN...

TransDigm Group: Quick Cash from Special Dividends

A 15.9% return you say.. And of course you do not expect the stock price to fall by 7.65/share on the ex-dividend day, do you?

Three Dividend Stocks with a Perfect Risk Score

I think that if you have a strategy to pick good dividend growth stocks, it should take care of things like dividend cuts, diversification, dividend reinvestment and buying and selling stocks. I don't like assigning "risk points" to stocks however, as I am always afraid that using shortcuts would prevent me from seeing problems in the future.

As for the dividend payout ratio, I agree that the dividend sustainability of certain types of stocks like REITs should be adjusted to reflect the fact that they are required to distribute most of their earnings out to shareholders.

The payout ratio in general has prevented me from buying stocks like BAC, USB, PFE, which ended up cutting their distributions. I understand that investors should expect changes in the fundamentals of the companies they have invested with. Also, no matter how great of a stock picker you are, and how awesome your system is, you would still have at least one dividend cut/year for a portfolio of 30-40 stocks. If you hold less than 10-15 stocks in a portfolio this dividend cut would really hurt, which is why I advocate strong diversification.

I agree with David that most investors seem to hang on to the highest yielding stocks, without considering whether dividend payment is sustainable or not.

Six Double Digit Dividend Stocks Increasing Their Yields

I completely agree with you that successful dividend investing is not about picking the highest yielding stocks, but the ones that would provide you with a rising stream of dividend income.
Another issue is that some of these companies do not have a long history of raising and paying out dividends..

MCD on the other hand is a true dividend aristocrat, having raised dividends for several decades now..The dividend is up 46.7% for the past 2 years.

Dividend Stocks vs. Fixed Income: Which Is Better for Retirement?

NFC,

I had US Fed Govt obligations in mind. I should have made that clearer.

I disagree that stocks are not good vehicles to own during higher inflationary periods. Stocks did much better than bonds in the 1970s and they also provided a decent increase in dividends paid over that decade.
I guess it truly depends on what you consider a high inflation environment however. I read somewhere that in Zimbabwe, which had a huge hyper inflation, stocks managed to provide positive total inflation adjusted returns.

I guess I could have also written about TIPS, although this would certainly cause a discussion of whether the CPI accurately reflects inflation or not, which is not the purpose of this article.


On Sep 23 12:12 PM No Free Cake wrote:

> "Fixed income securities guarantee a return of your investment some
> time in the future, whereas stocks don’t provide that."
>
> Not true. You could argue that US Treasuries and US agency bonds
> "guarantee" a return but that's certainly not true for other fixed
> income securities.
>
> I'd also take exception to your statement of "Stocks are great vehicles
> to own during average and high inflationary periods, ...".
>
> You need only look at the US in the 1970's, which is the most recent
> period of high inflation, to realize that equities performed poorly
> during high inflation. I agree that modest inflation doesn't impair
> equities.