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Dividends4Life (42.29)

September 2011

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Walgreen Co. (WAG) Dividend Stock Analysis

September 30, 2011 – Comments (0) | RELATED TICKERS: WAG , CVS , WMT

Linked here is a detailed quantitative analysis of Walgreen Co. (WAG). Below are some highlights from the above linked analysis:

Company Description: Walgreen Co. 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.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these 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

WAG is trading at a discount to 1.) and 3.) above. The stock is trading at a 25.2% discount to its calculated fair value of $46.67. WAG earned a Star in this section since it is trading at a fair value.

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%

WAG 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%. WAG 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 (2001-2004, 2002-2005, 2003-2006, 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 1933 and has increased its dividend payments for 36 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) or Treasury bond? 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

WAG earned a Star in this section for its NPV MMA Diff. of the $9,017. This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as WAG has. If WAG grows its dividend at 18.8% per year, it will take 5 years to equal a MMA yielding an estimated 20-year average rate of 4.1%.

Memberships and Peers: WAG is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: CVS Caremark Corporation (CVS) with a 1.4% yield, Rite Aid Corp. (RAD) with a 0.0% yield and Wal-Mart Stores Inc. (WMT) with a 2.9% yield.

Conclusion: WAG earned one Star 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 four Stars. This quantitatively ranks WAG as a 4 Star-Strong stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $92.33 before WAG's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 36 years of consecutive dividend increases. At that price the stock would yield 0.8%.

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 10.1%. This dividend growth rate is well below the 18.8% used in this analysis, thus providing a significant margin of safety. WAG has a risk rating of 1.50 which classifies it as a Low risk stock.

With over 8,000 drugstores, WAG offers unmatched convenience with one of the the most recognized brand names in the retail pharmacy business. The company enjoys a strong market share within the relatively stable U.S. retail drug industry.

However, pressures from non-traditional competitors and potential adverse legislation affecting reimbursements could quickly weaken WAG’s advantages. Although the stock is trading well below my $46.67 fair value price, the 2.1% dividend yield will prevent any near–term purchases.

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 held no position in WAG (0.0% of my Dividend Growth Portfolio) and was long in WMT. See a list of all my dividend growth holdings here.

Related Articles:
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- General Dynamics (GD) Dividend Stock Analysis
- Owens & Minor, Inc. (OMI) Dividend Stock Analysis
- Diebold, Inc. (DBD) Dividend Stock Analysis
- More Stock Analysis  [more]

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T. Rowe Price Group Inc. (TROW) Dividend Stock Analysis

September 29, 2011 – Comments (0) | RELATED TICKERS: TROW , EV , BLK

Linked here is a detailed quantitative analysis of T. Rowe Price Group Inc. (TROW). Below are some highlights from the above linked analysis:  [more]

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Buy And Hold Is Not Buy And Forget

September 28, 2011 – Comments (3) | RELATED TICKERS: WMT , MCD , GE

We have all heard it. Mainstream media pundits talking about 'the lost decade' and that 'buy-and-hold as a strategy is dead and gone, if ever it was a viable strategy.' Sorry folks, but I am not buying or holding their position on buy-and-hold. Buy-and-hold is neither dead, gone or even sick, but I will concede - it is misunderstood.  [more]

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6 Tech Stocks With A History of Growing Their Dividends

September 27, 2011 – Comments (0) | RELATED TICKERS: INTC , MSFT , IBM

When you hear the words "tech stocks", many investors think back to the tech bubble in the late 90s. A company's goal then was to plow back every penny into the business and grow the business. The entire focus was on capital gains. During this era companies that paid dividends were looked down on as inferior.   [more]

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11 Dividend Stocks Delivering What's Important

September 26, 2011 – Comments (0) | RELATED TICKERS: MCD , LMT , MSFT

We all know what surprising The Street will do to a stock’s price. The street focuses on quarterly revenue, EPS, EBIT, EBITDA and margins. The income statement is where you find all the metrics that The Street loves. It therefore must be the most important financial statement. Not! That title goes to the lowly cash flow statement. Ultimately cash flow is what drives the value of any financial asset, including dividend stocks.   [more]

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Pepsico, Inc. (PEP) Dividend Stock Analysis

September 23, 2011 – Comments (0) | RELATED TICKERS: PEP , KO , DPS

Linked here is a detailed quantitative analysis of Pepsico, Inc. (PEP). Below are some highlights from the above linked analysis:  [more]

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General Dynamics (GD) Dividend Stock Analysis

September 22, 2011 – Comments (0) | RELATED TICKERS: GD , BA , LMT

Linked here is a detailed quantitative analysis of General Dynamics (GD). Below are some highlights from the above linked analysis:  [more]

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6 Higher-Yielding Consumer Stocks With A History of Rising Dividends

September 21, 2011 – Comments (0) | RELATED TICKERS: PEP , PG , HNZ.DL

When it comes to investing in Dividend Growth Stocks certain sectors have been more favorable to investors than others. Historically, the sectors most popular with dividend investors include Financial Services, Healthcare and Consumer Defensive. Each has provided good yields and growth over the years.  [more]

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9 Dividend Stocks With A Low P/B Ratio

September 20, 2011 – Comments (0) | RELATED TICKERS: ADM , COP , LOW

A declining market is what value and dividend investors long for. There have been times in the past where I struggled to find stocks worthy of purchasing. Now, the challenge is to pick the best available stocks that will maximize my chances of future success. When looking for value priced stocks, the Price-To-Book (P/B) ratio is one that I like to focus on.  [more]

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10 Dividend Stocks Increasing Dividends Like A Champion

September 19, 2011 – Comments (0) | RELATED TICKERS: TXN , YUM , BRC

There are winners and there are champions in every walk of life. The difference is subtle, but very real. A champion is driven for success and will not let anything stand in its way. Some dividend stocks can be classified as champions. A bad economy, tight credit markets and a dark cloud of uncertainty are enough send some dividend companies running for the exit. However, these are the times that champions stand firm.   [more]

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Owens & Minor, Inc. (OMI) Dividend Stock Analysis

September 16, 2011 – Comments (0) | RELATED TICKERS: OMI , CAH , MCK

Linked here is a detailed quantitative analysis of Owens & Minor, Inc. (OMI). Below are some highlights from the above linked analysis:  [more]

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Diebold, Inc. (DBD) Dividend Stock Analysis

September 15, 2011 – Comments (0) | RELATED TICKERS: DBD , NCR , SSYS

Linked here is a detailed quantitative analysis of Diebold, Inc. (DBD). Below are some highlights from the above linked analysis:  [more]

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7 Small-Cap Dividend Stocks For Yield And Growth

September 14, 2011 – Comments (0) | RELATED TICKERS: OHI , HGIC.DL , AVA

Once a company reaches a certain size, significant growth is difficult to sustain. It is often easier achieve 10% growth in a $10 million company than growing a $10 billion dollar company 10%. Knowing this, savvy investors looking for growth will turn to small-cap stocks.  [more]

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10 Dividend Stocks Beating the S&P With Positive Returns

September 13, 2011 – Comments (0) | RELATED TICKERS: ABT , CVX , MCD

It is my goal to create an ever-increasing income stream from dividend growth stocks, while it is my desire to beat the S&P 500 index over the long-term. If you have too many goals, often they will start to conflict with each other. We need to determine what is most important, then set those aside as goals and leave everything else as desires.  [more]

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Dividend Income Progress Update - August 2011

September 12, 2011 – Comments (0) | RELATED TICKERS: CTBI , CVX , MDT

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in August, extending the streak to 14 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 43 of the last 45 months.  [more]

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Lowe's Companies, Inc. (LOW) Dividend Stock Analysis

September 08, 2011 – Comments (0) | RELATED TICKERS: LOW , HD , KGFHY

Linked here is a detailed quantitative analysis of Lowe's Companies, Inc. (LOW). Below are some highlights from the above linked analysis:  [more]

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5 Higher-Yielding Healthcare Stocks With Increasing Dividends

September 07, 2011 – Comments (0) | RELATED TICKERS: MDT , JNJ , ABT

As we age, our need for medical services, devices and medications seems to increase as each year passes. Sometimes the medical product or service that meets our needs will provide a better quality of life, and often they are also life sustaining. We rely on companies in the Healthcare Sector to supply the medical needs of our population.  [more]

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7 High Quality, Low Beta Dividend Stocks

September 06, 2011 – Comments (1) | RELATED TICKERS: T , KO , MCD

Dividend stocks are sometimes referred to as defensive stocks since many investors flee to them in an economic downturn. Their dividends, if sustainable, provide a minimum level of positive return. This cushions the downward pressure from the market. But what happens when the market turns up?  [more]

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7 Dividend Stocks Building A Higher Yield On Cost

September 05, 2011 – Comments (0) | RELATED TICKERS: VZ , EAT , MO

Most casual income investors focus on current yield, which is important. However, if your objective as an income investor is to build a portfolio of securities with increasing income, then Yield on Cost is an excellent metric to measure your progress. Yield on Cost is simply the annual dividend rate times number of shares owned divided by what you paid for the investment (basis). As companies increase their dividend, your yield-on-cost goes up.  [more]

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United Technologies Corp. (UTX) Dividend Stock Analysis

September 02, 2011 – Comments (0) | RELATED TICKERS: UTX , BA , GE

Linked here is a detailed quantitative analysis of United Technologies Corp. (UTX). Below are some highlights from the above linked analysis:  [more]

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Harleysville Group Inc. (HGIC) Dividend Stock Analysis

September 01, 2011 – Comments (0) | RELATED TICKERS: HGIC.DL , CB , MCY

Linked here is a detailed quantitative analysis of Harleysville Group Inc. (HGIC). Below are some highlights from the above linked analysis:

Company Description: Harleysville Group Inc. underwrites a broad array of personal and commercial coverages. These insurance coverages are marketed primarily in the Eastern and Midwestern United States.  [more]

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