The Dividend Pig

The Dividend Pig
Contributor since: 2011
I guess the president of the company is mistaken then...
"Based on our strong results, I’m pleased to announce that the Board of Directors has authorized the payment of twenty-five cents ($0.25) per share dividend payable September 2, 2011, to all shareholders of record on August 25, 2011. Additionally, the Board of Directors has declared their intention to consider paying dividends on a quarterly basis in the future."
This can be found on their website http://bit.ly/vLjhAJ
Oh, dream a dream....I would love to be able to buy more KO when it was trading in the $40's or Colgate in the $50's.
They definitely have a questionable history with acquisitions, and seeing how yahoo and skype play out will be interesting. I still think they are a solid company however.
thanks for the kind words richjoy403 - most appreciated!
Very good article. Well researched and articulated. I like the American tobacco market because of it's regulated monopoly and very loyal customers. A lot of focus is on MO and PM but I will look more into LO. Thanks
Thanks RAS - I chose 4 for the article, but there are a few more out there...
thanks for the info David. I look forward to the seeing the next dividend champions update - keep up the great work!
Maybe it's just me, but i still don't see anything exciting about LEG. Sure, they have shareholder friendly management and a long dividend history, but look at the past 10 years of dividend growth - those compounded numbers are kind of a fluke, because only two years (2007 and 2008) had large growth - the rest of the years are below 10%, and the past two have been below 4%.
Add on top of that wild fluctuations in earnings, an almost complete absence of sales growth, and a stagnant stock price, and I don't think a long dividend history is enough to make up for that. I love dividends, but I also like a growing, profitable, and stable businesses, none of which I see in LEG.
@ RAS - Many consumers do in fact loathe Walmart. There is even an entire wikipedia page devoted to "Criticism of Walmart" which can be found here - en.wikipedia.org/wiki/.... The page cites 115 sources. In addition, there is i-hate-walmart.com, an I hate Walmart facebook page, and walmartwatch.org.
As for the stock price, yes, many companies have had a difficult 10 years, through two major recessions. But not all of them have seen stagnant prices. ITW traded in the low 30's in 2001 and is now at $56. MCD was also in the 30's in the early 2000's, and is now at $80. These are just two companies, but they prove that capital appreciation, even for a stodgy old blue chip, was possible over the last decade.
And as for an overpriced company, I think yield and growth need to be balanced. Personally, I would sacrifice a 3% yield for say, a 2.7% yield if dividend growth was 12-15% a year, like Walmart. If growth was only 6-8%, then I would wait for a higher initial yield, like something over 3%.
mjk0259 - nice catch. That was my mistake, operating income should be in billions of dollars, not millions. Apologies.
@ Logical Thought - The headlines are actually written by the SeekingAlpha editors. The original headline was just Eli Lilly Dividend Stock Analysis, which I think is accurate.
@ just sayin - very interesting. Thanks for adding that informative comment to the discussion. I'll be sure to get your opinion for any beverage company analysis I do!
Thanks all for the comments, they are most appreciated! As for KO, QE2 ends this summer, so cross your fingers for a pullback...
@ JaxJaguar - I understand your feelings completely. I ask myself at times, why not buy in at 20x earnings or 22x earnings if it's a good company with great dividends. But as investors, we must maintain discipline. It's easy to fall in love with a stock and just throw money at it. Great returns are made when a stock is bought, not when it is sold, and for this reason, we must determine a target price, and stick to it.

When you start making compromises, it is a slippery slope. If you buy at $76, why not buy at $80, or $90, or $100? Every dollar you pay in a higher price is a dollar less you will receive as a return.

Let's say you were buying Walmart in the late 90's. You bought at 15x earnings, then 20x, and since you didn't want to miss the dividends, you bought at 25x and then 30x. What happened? Your money has barely budged in 10 years.

While I'm waiting for MCD to come down to my target price, I'm either buying another company I find reasonable, or I'm sitting on the cash and waiting for deals. Hope this helps.
I own JNJ and would like to add ABT soon. I do not own HGIC but a close friend of mine and fellow investor does. He feels good about them, but like clayking, only has a modest position.
@RDI - First off, I love that you involved John Burr Williams in your answer.
Second, I have a question. In your last paragraph you speak of fair valuation based on dividend growth. What is your formula for this valuation?
thanks for the update David! Always great to hear about another dividend increase.
It's definitely possible, but very difficult. That's why I've shifted some focus onto the Challengers. I'd love to catch a company in year 5-10 of a 25+ year streak.
I picked up INTC when it was trading between $18-19, and I think that's a great entry point.
I really cannot believe the number of responses to Cold Stone here. I've never owned a franchise, but I always thought the whole idea was that you were buying a "proven" business model, and the help of those who have been successful with it before.
It truly saddens me that this company has done such awful things to it's franchisee's. Bankruptcy, divorce, the list goes on. I personally vow to never again set foot in a Cold Stone.
Wow...I had no idea that Cold Stone Creamery was such a terrible business! I hope that those of you that invested or franchised with them can recover from the financial mess they put you in.
This is what's great about seeking alpha. I love how much it opens up dialogue and allows us to seek input and advice from others. I thank you all for the feedback.
I suggest you do your research nwacklm. According to their 3rd quarter earnings report, released Nov.3, 2010,
"Lincoln is pleased to announce that our Board of Directors has authorized an annual cash dividend of $1.00 per share to be paid at $0.25 per share per quarter, reflecting the Board's confidence in the Company's financial strength and cash generation capabilities of our business. The first dividend will be payable on December 31, 2010, to shareholders of record on December 15, 2010. Lincoln anticipates paying a cash dividend in each quarter of 2011"
Here is the earnings report investors.lincolneduca...=
tweedn - I agree with you that LOW is currently a better buy. I think HD may have jumped the gun a bit on this declaration, as it takes more than 1 good year to maintain a strong dividend growth rate. Just ask some of the aristocrats who have been at it for almost half a decade...it's a marathon, not a sprint.
@ alphaman991 - I would think as the "successful" hedge fund manager you are, you would understand that any article highlighting certain securities is just that - an emphasis on certain underlying fundamentals. This list is not a recommendation to buy any of these, it is merely a compilation of the highest yielding dividend achievers. I've read your many comments, and if you have so much hostility towards others writing, maybe you should post your own articles?
@ notbob - you raise a great point. Just because a company has a high yield does NOT mean that the dividend is safe, or the company is in good financial health. According to VGR's 2009 10-k, they paid out an annual dividend of $1.54 on diluted eps of $0.34. As recently as third quarter 2010, they paid out a $0.40 dividend on only $0.14 diluted eps, which is a 285% payout ratio. They also have debt levels through the roof...this is a great example of why due diligence is necessary before purchasing any stock, no matter how high a yield or low a p/e.
According to the terms of the agreement, PGN shareholders will receive 2.6125 shares of DUK common stock for each share of PGN they hold.
Great article, I'm a big fan of intel for all the reasons you mention above. You raise a really interesting point about protecting mobile computing and networked devices. That area is woefully under served at the moment, and Intels move to integrate security with it's chips for these devices is forward thinking. I think it will be successful over the long term.
I am long INTC
And best of all, it's free on his DRIP Investor site. Download it here dripinvesting.org/Tool...
@ Tweedn - Dividend Champions are another great list to search out top companies, and I used it frequently.
@ David Fish - Thank you for the information. Since the list is only update yearly, occasionally changes occur that take time to be reflected in the next publishing. With that said, I usually use a list compiled by an investing friend that is updated quarterly. He runs a great site, and the last update was Nov. 18, so he may have missed a few 4th quarter payments. Check it out at dynamicdividend.com. But thank you for pointing out those errors.
@Debtal - Don't feel awkward, you raise a very valid question. The answer is actually rather simple: money! While I wish I had the cash to buy all the securities I would like to invest in, I simply do not. But feel free to check out my blog, thedividendpig.com for a list of all my holdings.
@ YoYoMama - these are better than heaven, because imagine that yield on cost after 5 or 10 more dividend increases!
Hormel does have a lot of insider ownership, which is usually a bullish sign. This summer saw large volume of insider transactions, and I know the CEO picked up some shares as well. It was a good move, since the stock has risen by about 30% since then. Thanks for the tip on Seaboard, I'll have to check them out.
I haven't yet had the opportunity to analyze Dupont. What is it about them that you like?
I think a combination of last years growth and the recent market rally accounts for the 18.4 p/e of the stock, which also is pushing down it's yield. It may even be possible HRL's addition to the aristocrats excited investors at a time they were craving income and they bid up the price. Hopefully excitement will abate in the next year or two and the price will get to a more reasonable p/e below 15 or so.