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Should I invest in General Mills?

October 17, 2017 – Comments (0) | RELATED TICKERS: GIS , CPB , K

General Mills, Inc. is a manufacturer and marketer of branded consumer foods sold through retail stores. The Company is a supplier of branded and unbranded food products to the North American foodservice and commercial baking industries. The Company has three segments: U.S. Retail, International, and Convenience Stores and Foodservice.

Today we are going to evaluate General Mills (GIS) against these simple four filters. In general:

1. I look for quality companies (evidenced by a long streak annual dividend increases)
2. I want them at an attractive valuation
3. I want EPS growth, to ensure future dividend growth and growth in intrinsic value over time
4. I want an adequate margin of safety in dividends

General Mills is a dividend achiever which has increased dividends to shareholders for 14 years in a row. The company and its predecessors have paid dividends without interruption for 119 years. Over the past decade, General Mills has managed to hike annual dividends at a rate of 10.40%/year. 
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How To Determine If Your Dividends Are Safe

October 12, 2017 – Comments (0) | RELATED TICKERS: MMM , PG , TGT

As dividend growth investors, our goal is to buy shares in a company that will shower us with cash for decades to come.

One of the important things to look out for in our evaluation of companies involves determining the safety of that dividend payment.

A quick check to determine dividend safety is by looking at the dividend payout ratio. This metric shows what percentage of earnings are paid out in dividends to shareholders. 

In general, the lower this metric, the better. As a quick rule of thumb, I view dividend payout ratios below 60% as sustainable. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.

For example, dividend king 3M (MMM) earned $8.16/share in 2016 and paid out $4.44 in annual dividend income per share. The dividend payout ratio is a safe 54%. This means that this dividend king is likely to continue rewarding its long-term shareholders with a dividend increase into the future. This will further extend 3M's streak of 59 consecutive annual dividend increases.

However, there are exceptions to the 60% payout ratio rule.   [more]

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Two Dividend Growth Stocks On My Radar

October 11, 2017 – Comments (0) | RELATED TICKERS: CVS , WBA , MCD

As part of my process, I tend to screen the list of dividend growth stocks regularly, in order to identify companies for further research. I also skim company press releases for announcements related to earnings and dividends. I was able to identify two dividend growth stocks, which seem to have been punished excessively as of recently. Those companies include Walgreens (WBA) and CVS (CVS).  [more]

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Three Companies Rewarding Shareholders With A Raise

October 09, 2017 – Comments (0) | RELATED TICKERS: RPM , NWN , HON

As dividend growth investors we are trying to identify quality companies with an established track record of annual dividend dividend increases, which are growing earnings, have sustainable dividends, and are available at an attractive valuation. If we identify enough such companies to add to our portfolio, we will be able to generate a sufficient stream of income to live off in retirement.

I identify such companies as part of my screening process, and as part of my monitoring process.

As part of my monitoring process, I review the list of dividend increases every week. I go through this exercise, in order to check if the companies I own are going to pay me more for owning them. I also use it to uncover hidden dividend gems for further research. Most importantly, this exercise is helpful as an educational tool, used best to reiterate what we are really looking for as investors.

The companies that recently announced their intention to reward shareholders with a raise include....  [more]

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Four Dividend Growth Stocks to Consider on Dips

October 04, 2017 – Comments (0) | RELATED TICKERS: SJM , HRL , DIS

I was able to identify a few dividend growth stocks that I find to be attractively valued today. That doesn’t mean that these companies will not decline further in share prices from here. It also doesn’t mean that those are recommendations for you to act upon. These are just a few companies that I believe are attractively valued today, and are likely to grow earnings and dividends over the next decade or so. If that thesis plays out, it is also likely that share prices will grow over time.

The companies include:

The J. M. Smucker Company (SJM) is a manufacturer and marketer of branded food and beverage products and pet food and pet snacks in North America. The Company's segments include U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International and Foodservice. The company is a dividend achiever, which has managed to increase dividends for 20 years in a row. Over the past decade, it has managed to boost dividends at a rate of 9.80%/year. Earnings per share grew from $3.03 in 2008 to $5.11 in 2017. The company is expected to earn $7.72/share in 2018. It is selling for close to 20 times earnings and yields 3%. It could be an interesting idea below $102 - $103/share. Check my analysis of J.M. Smucker for more information about the company.

Hormel Foods Corporation (HRL) is engaged in the production of a range of meat and food products. The Company operates through five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store (JOTS), Specialty Foods,, and International & Other. The company is a dividend king, which has managed to increase dividends for 51 years in a row. Over the past decade, it has managed to boost dividends at a rate of 15.30%/year. Earnings per share grew from $0.55 in 2007 to $1.68 in 2016. The company is expected to earn $1.56/share in 2017. It is selling for close to 20 times earnings and yields 2.10% It could be an interesting idea below $33 - $34/share. Check my analysis of Hormel Foods for more information about the company.

The Walt Disney Company (DIS) is an entertainment company. The Company operates in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media. The company is a dividend challenger, which has managed to increase dividends for seven years in a row. Over the past decade, it has managed to boost dividends at a rate of 18.80%/year. Earnings per share grew from $2.34 in 2007 to $5.76 in 2016. The company is expected to earn $5.81/share in 2017. It is selling for less than 20 times earnings and yields 1.60%. It could be an interesting idea below $105 - $106/share. Check my analysis of Walt Disney for more information about the company.

Altria Group, Inc.(MO) manufactures and sells cigarettes, smokeless products, and wine in the United States. The company is a dividend champion, which has managed to increase dividends for 48 years in a row. Over the past decade, it has managed to boost dividends at a rate of 11.60%/year. Earnings per share grew from $1.49 in 2007 to $3.03 in 2016. The company is expected to earn $3.26/share in 2017. It is selling for less than 20 times forward earnings and yields 4.10%. It could be an interesting idea around $61 - $63/share, or below. Check my analysis of Altria for more information about the company.

Relevant Articles:

How to become a successful dividend investor
Dividend Kings List for 2017
How to value dividend stocks
Why do I use a P/E below 20 for valuation purposes?
Rising Earnings – The Source of Future Dividend Growth  [more]

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