Dividend Inc

Top Dividend Stocks to Accumulate Now

Great list of companies and agree with most comments. I think that McDonald's (MCD) looks the best of the bunch. However, after a 74% run up, I find McGrawHill (MHP) hard to justify at this point. I mean, MHP has got to revert to the mean at some point, and soon. I guess that explains why the stock has traced out a top since May 2009.

Dividend Achievers: How Have They Performed?

Greetings THofler,

Your point is 100% on topic. In fact, your cursory analysis was proven in Jeremy Siegel's Nifty Fifty Revisited (www.jeremysiegel.com/i...)

Furthermore, the article echo's your analysis on MO, which for some has meant early retirement. MO has really been that good. I hope you get to benefit further from you matter of fact approach to viewing stock investing.

Regards,
Touc


On Nov 17 02:29 PM THofler wrote:

> A slightly off topic comment:
>
> My wife & I were talking about the investing that we should have
> done long ago but didn't. So we picked the date when she first had
> some available money (1984) and asked what single "obvious" stock
> should have a person have bought then?
>
> I like dividend achievers, so my list of obvious stocks was: XOM,
> KO, PEP, MCD, MO, & PG. Later I used the Yahoo "Historical"
> price tables with adjusments for dividends reinvested.
>
> The top gain factors I got were: MO at 96X; PEP at 54X; KO at 46X;
> XOM at 38X; and MCD at 36X. I'm not confident of the MO number given
> the impact of all of the acquisitions and spinoffs. But I was mightly
> impressed by Pepsi's number, even though I don't expect it to be
> hitting on all 12 cylinders going forward.
>
> PS: PEP, KO, and MCD all have had sizeable dividend increases in
> the last year. (I am long the three.)

Dividend Achievers: How Have They Performed?

Greetings Van Knapp,

Your contribution to my articles is quite valuable and highly appreciated.

My only reason for injecting the word sell at all is because the word never comes up from the institutional side. 97% of all stock recommendations are buy or hold. Sell considerations are only put in place 3% of the time regardless of the market conditions.

Personally, I'm a believer in the approach that you espouse. However, if the word sell is never uttered then we're left with impression that you shouldn't think about your investments after you have bought them.

I take the risk of being called a market timer and/or a speculator (dirty words in market parlance) to keep those who are uninitiated on their toes. Since buy and hold is entrenched as the standard by which all good investment strategy is measured by, I wouldn't be overturning the apple cart by advocating the selling of stocks.

However, it should be noted that if investors understood that above and below mean returns require some action, either selling or buying, there would be a lot more successful investors out there. I have witnessed too many invest-and-forget investors who ended up getting gutted on stocks that had provided exceptional above mean returns.

Judging from your comments Mr. Van Knapp, I am in total agreement with your well-founded, scientifically immutable law of compounding of dividends for long term wealth. However, playing the devil's advocate without harming the portfolio is necessary for novice investors as well as seasoned "pros" to think while they do. Otherwise, complacency will kick in and the above mean gains will turn into market beating losses.

Respectfully,

Touc

The 10 Best U.S. Dividend Stocks

Greetings D4L,

It would be good to review the performance of your recommendation since this article was first published. Although some would argue that a person should invest and forget when it comes to dividend paying stocks, I would say that knowing your winners and losers helps to keep your selection trim and fit. The average return of the stocks selected in my top ten has been 4.39% since 10/9/2009. I'd love to know your take on the performance since your last recommendation on October 7th.

Below is the full article link to my update on the top ten stocks.
dividendinc.blogspot.c...

Best regards,

Touc
Dividend Inc.

Dividend Achievers: How Have They Performed?

On March 10 and March 20 I wrote two important articles, the March 10 article recommended a specific stock while the March 20 article indicated that, based on several barometers, the market was on a path upwards.

The March 10 recommendation of Helmerich and Payne (HP) was at $22.55. Today the stock is at $37.86. Although I made recommendations to sell the stock with gains of 15%, those who have held the stock have gained 67%. I personally do not care to achieve the 67% with only 3% of my portfolio. Instead, I would rather have 50% of my portfolio taking advantage of the 15% move.

If you do the math, the smaller percentage change with half of the portfolio far exceeds the larger percentage move with only a small portion of the portfolio. In fact, with a portfolio of $10,000, 3% invested only contributes $201 with a return of 67%. Whereas, 50% invested contributes $500 with a return of 10%.

Although I have bought the stock and sold the stock, the general point is that these conservative stocks (Dividend Achievers) can generate the performance which you would expect in a growth stock.

10 Dividend Stocks to Buy Now

Greetings Shishir,

If you get a chance, take a look at the research and sell recommendations on my blog. Using my approach did not come up with the names of GE, Dow Chemicals, Textron, Motorola and Pfizer as prospective investment candidates. As noted on my research recommendation list, none of the stocks appeared as candidate to buy. In fact, I have been fairly outspoken about GE in particular as part of the due diligence that is necessary.

Your critical analysis my research recommendations will conclude that a history of dividend increases is only the first of many parameters in determining the quality of a stock. In that regard we are in perfect agreement.

Again, the list that I generated was solely for the purpose of responding to Dividend4Life article asking for my own list. Ordinarily, I do not provide a wholesale list of "buy" recommendations.

-Touc


On Oct 10 11:44 PM Shishir Nigam wrote:

> As I have commented on Dividend4Life's approach, I don't believe
> the approach to selecting dividend stocks should be merely to choose
> the ones with the longest history of dividend increases along with
> a conservative payout ratio.
>
> Over this cycle, we have seen so many big/stable companies cut their
> dividends that the selection methodology itself needs looking at.
> If you had come up with this list in Oct, 08...you would most likely
> have GE, Dow Chemicals, Textron, Motorola and Pfizer all on your
> list - they were most definitely at their 52 week low and had been
> providing stable/increasing dividends for years. As you might know,
> since then, each one of those companies has slashed their dividends.
>
>
> Doing some "stress testing" or just simple analysis of how a company's
> business model may fare under adverse conditions can shed some light
> on what was to come for these companies. Something along those lines
> needs to be incorporated into any sort of dividend stock analysis.
>
>
> For more analysis, check out my blog: youngandinvested.com

10 Dividend Stocks to Buy Now

Greetings Jrham,

I'm going on the data provided to me by Mergent's Dividend Achievers Summer edition 2009.

-Touc


On Oct 10 12:39 PM jrham wrote:

> I noticed you indicated that WMT has paid a dividend for 33 years.
> When did Sam Walton take Walmart public? I see to recall it was 1972.

10 Dividend Stocks to Buy Now

Greetings Walt17,

Thanks for your thoughts on my work.

Since I don't control the title of the articles that are posted on Seeking Alpha, I have to take what they give me. Therefore, the exuberant title may be completely misleading. My Research Recommendations go to only those stocks that are compelling to me personally and that are within 10% of the 52-week low. However, this does not bar me from reviewing or buying any and all the companies that are approaching the 10% parameter.

As an example, my most recent research recommendation was NWN. As the stock was getting closer to the low I was ramping up the research. Data and analysis was coming from my site indicating that I was running the numbers. It wasn't until I had enough compelling factors to hold this stock for the "long term," if forced to, was I able to commit to issuing a research recommendation.

Although I have 10% as a parameter, your comments and evidence suggests that I widening the range to 20% as a means to cast my net wider. I have accounted for this fact on another investment blog that I'm currently co-authoring at New Low Observer www.newlowobserver.blo.... Based on your point, I may actually make the change from 10% to 20%. However, the current article was a response to Dividend4Life's seekingalpha.com/artic... request of my top ten dividend picks.

Regarding your comment that 10 year dividend history might not be so important if I'm swing trading. History means everything when investing in stocks. The purpose of investing with these stocks is to have a backstop provision in case I have to hold the stock longer than anticipated. By using this approach, I'm assuming that whenever I enter into a position, the stock price is going to fall. From this perspective, I better have plan to account for such a reality and likelihood. In this case, I must be compensated for the wait otherwise I'm not investing. I say this even though conventional wisdom suggests that I'm trading instead of investing.

As I've said numerous times before, this approach has provided outstanding results after transaction costs (in a tax deferred account) since 2004.

Thanks for your thoughtful comments Walt17. You may have made the difference in changing my mind on the 10% parameter.

-Touc

On Oct 10 10:21 AM Walt17 wrote:

> I find your methodology interesting. And am considering some of your
> points for incorporating into my own strategy. But it seems that
> some of your picks violate your rules. Specifically, "A stock is
> only considered a "Research Recommendation" when it has fallen within
> 10% of the 1-year low."
>
> Also, since you are essentially swing trading, it would seem that
> a 10 year dividend history is less important than current yield.
>
>
> Thanks for your ideas.

10 Dividend Stocks to Buy Now

Greetings David Van Knapp,

Thank you for reading and commenting on my article.

The virture of such a method to investing is that it eliminates much of the guesswork associated with the stocks of interest. Dividend Achievers and Dividend Aristocrats are both part of the the mix of stocks that I invest in. This leaves me with approximately 300 companies to focus on.

Additionally, I'm focused on relative values rather than absolute values. In the books Relative Dividend Yield by Anthony Spare and Dividends Don't Lie by Geraldine Weiss, the emphasis is on the importance of selling when a stock is at a historical high end of the range and to buy when a stock is at a historical low end of the range. I have pre-empted this process by buying at or near the low end of the range while not selling until a better alternative presents itself. This is in contrast to the idea of selling at some arbitrary point in the future. This concept is drawn out even further when we consided Edson Gould's altimeter which I have presented on my site with various stocks and the Dow Industrials.

Another issue that I've tried to deal with is the matter of the "long term." In my opinion, the long term has been maligned though discussions of what a person could make when investing. All examples of the long term exceed the investment time frame of each individual investor. This means that, in reality, the long term is probably a period of 10 to 15 years. Few people have the ability to 1) have a method that they'll stick to and 2) that can be applied over 30 to 100 years.

Even Warren Buffett is no longer the investor he was back in the 60's. Buffett's massive wealth doesn't allow him to get the same mileage out of his investments. In fact, the recent 10% yielding deals that he was able to work out with JPM and Goldman Sach demonstrates his inabilty to invest the way he really wants to. In a matter of 20-30 years Warren Buffett is no longer a player in the investment arena, albeit a stupendously wealthy non-participant.

Finally, the issue of seeking high current yield often masks the amount of time that you'll wait for the equivalent return from an equally undervalued stock with a low dividend yield. As mentioned before, the low yield might actually be, on a relative basis, a better value than a company with a high yield.

The tendancy is that a high yield acts like a fishhook, it draws you in with the lure of a high dividend yield and keeps you in with the anticipation of the next payment. This could be in direct contrast to the relative value component of the stock you're holding and more logical investment opportunities that are present at any given time.

Again, thanks for your contribution.

-Touc

10 Dividend Stocks to Buy Now

Thanks for the question...I respect the work that you generate on your site.

I just bought NWN (25%) and CEPH (25%) today. In addition, I'm holding BOH (50%)... a dividend achiever of 31 years. As outlined in my blog, I only hold a maximum of 5 stocks at a time, however I prefer to hold 3 stocks at a time.

At this point, it is a close race between CAH and WMT right now. CAH and other healthcare stocks, as an industry group, are severely underpriced. How I would fund my next transaction is by selling either my 25% in CEPH (considered a speculation) or half of my position in BOH. BOH is in the positive column for me right now, so the transactional costs are easily offset. Of course, I'm hoping for further declines in any one of the stocks above.

I tend to rotate in and out of gains versus the best alternative that is hitting a new low. I have already rotated in and out of CAH and BCR profitably (10% in less than 5 months each) this year. Last year and prior years were quite profitable using this approach as noted in my sell recommendation page. I was able to exceed the annual dividend yields by a wide margin while compounding the profits into new, less expensive alternatives.

My approach sounds inconsistent with the staid dividend approach but my battle scars have been relatively few since 2004.

Your thoughts are appreciated.

-Touc


On Oct 09 07:19 PM Dividend Growth Investor wrote:

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

The 10 Best U.S. Dividend Stocks

From bottom to top, my Dividend companies are:


10. Exxon Mobil (XOM): XOM has increased its dividend every year for 26 years in a row. Additionally, the company is within 23% of 52-week low with a dividend payout ratio of 41%.


9. Abbott Laboratories (ABT): ABT has increased its dividend every year for 36 years in a row. ABT is within 22% of the 52-week low with a dividend payout ratio of 41%. I have written about ABT on September 21, 2009 displaying the altimeter for ABT on a long term basis.


8. McCormick & Co. (MKC): MKC has increased its dividend every year for 22 years in a row. Also, MKC is within 20% of the 52-week low with dividend payout ratio of 42%.


7. Becton Dickinson (BDX): BDX has increased its dividend every year for 36 years in a row. BDX is within 19% of the 52-week low with a dividend payout ratio of 27%. I mentioned BDX on May 4, 2009, suggesting that this stock should be bought. On August 19, 2009, I reiterated my claim that BDX was worthy of consideration, especially after Warren Buffett himself had jumped on board after our May 4th posting.


6. Piedmont Natural Gas (PNY): PNY has increased its dividend every year for 29 years in a row. PNY is within 16% of the 52-week low with a dividend payout ratio of 69%.


5. Northwest Natural Gas (NWN): NWN has increased its dividend every year for 54 years in a row. NWN is within 16% of the 52-week low with a dividend payout ratio of 59%. NWN has been presented by me on September 22, 2009 and finally on October 3, 2009.


4. Bard Inc. (BCR): BCR has increased its dividend every year for 54 years in a row. BCR is within 14% of the 52-week low with a dividend payout ratio of 13%. Bard Inc. was first mentioned on Dividend Inc. on April 23, 2009. At the time, I mentioned that BCR has a very low debt level which allows the company to weather further economic declines. On August 26, 2009, after gaining 10.11% in 4 months, I recommended selling this stock.


3. Weyco Group (WEYS): WEYS has increased its dividend every year for 28 years in a row. WEYS is within 13% of the 52-week low with a dividend payout ratio of 54%. Weyco, the maker of Florsheim shoes, was featured on Dividend Inc. on July 6, 2009. Two negatives for this company are that there payout ratio is so high and stock is not very liquid.


2. Cardinal Health (CAH): CAH has increased its dividend every year for 16 years in a row. CAH is within 10% of the 52-week low with a dividend payout ratio of 32%. CAH was featured on June 4, 2009 and is considered, in my opinion, one of the most underpriced healthcare stocks out there. The current low price of CAH is due to the spinoff of the CareFusion (CFN) unit. However, the upside projections of CAH are, at minimum, in the $40 range.


1. Wal-Mart (WMT): WMT has increased its dividend every year for 33 years in a row. WMT is within 8% of the 52-week low with a dividend payout ratio of 30%. WMT was first mentioned on June 18, 2009 when I pointed out the fact that with such an extended range bound price for the stock there has to be value accruing in the stock. A further examination of WMT was done on September 19, 2009, in that assessment I determined that, on a price-to-dividend basis, WMT is poised in increase in value. One significant downside for this stock is the large increase in shares outstanding in the last few years. Touc.

Stock Checkup: Meridian Bioscience (VIVO)

Hi User 54079,

According to the article, the author states quite clearly that as a value investor, he buys below what he considers fair value and tries to sell at or above fair value. Holding for 3 months isn't exactly day trading.

Additionally, not having a selling strategy wastes valuable capital and time as some people found out from October 2007 to March 2009. Suggesting a strictly buy and hold strategy implies that nothing has been learned in the last year and a half.

While transactional costs are a significant part of why traders lose money, the fact that if you had bought VIVO on the date of the recommendation, or the day after, you would have walked away with a gain of nearly 27% is quite reasonable.

Although this is clearly a cyclical bull market (or bear market rally) within a secular bear market, I would opt for the meager bird in the hand (25% gain) rather than the bird in the bush (upcoming flu season, new products in the pipeline.) Your mention of the prospects for the future relies too much on hope rather than the reality of the present.

Also, I think that the author was referencing the closing price of Thursday August 6, 2009 and not trying to predict the future. By the way, Meridian is a great company with pristine managment.

When Timing Meets Opportunity: Which Dividend Achievers Are at a 52-Week Low?

Greetings BlueOkie,

I have backtested this approach since 1994 and actually used this method since 2004. Essentially, I took 10 years of testing and countless number of timesbacktesting this approach. My method obviously isn't the answer however it has returned double digit positive gains since 2004.

Greetings Larrysyr,

I totally agree with you about the viability of this method for the long term. However, when you visit my blog you'll see clear indications of when I issue a sellrecommendation. Additionally, I attempt to " seek fair profits" by holding only as long as it takes to beat "guaranteed" sources of income like treasuries or CDs. My "About This Site" section is much more clear on this concept.

Another matter to consider, if the return from the stock exceeds the dividend that could have been received within a year then the investor should seek betteralternatives. As as example, if a stock yields 5% but the price increases 10% in 6 months then the justification for holding the stock any longer has dissipated. I wouldn't sell the stock but I would definitely research any stocks that are within 10% of the 52-week low seeking to switch from one to another.

Another matter that is critical to my approach as listed on the blog is that I don't follow traditional diversification orthodoxy. I only hold 2 to 5 stocks at a time. This mean that 20% to 50% of investable funds will go into one stock. My attempt at explaining this concept can be found in the article titled "Diversification Doesn't Matter."

Elliot_Mllr,

Personally, I de-emphasis the matter of dividend yield. Dividend yield is the red herring in investment decision making among Dividend Achievers. Almost any company can pay out anoutsized dividend long enough to draw in new investors. More important to me is the earnings power and quality management behind the dividend yield. As far as I'm concerned the consistency of dividend increase is proof of both. As an example, when I issued my research recommendation of Helmerich & Payne in 2006 the dividend yield was less than 1%. However, if the stock was bought at or near the date of the recommendation the short and long term gains that followed were beyond what could have been received through any high dividend yield.