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Chevron Corporation: Is Now The Right Time To Add To Your Position?

December 18, 2014 – Comments (0) | RELATED TICKERS: CVX , XOM , COP

Linked here is a detailed quantitative analysis of Chevron Corporation (CVX). Below are some highlights from the above linked analysis:

Company Description: Chevron Corporation is a global integrated oil company (formerly ChevronTexaco) has interests in exploration, production, refining and marketing, and petrochemicals.

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Cardinal Health, Inc. (CAH) Dividend Stock Analysis

December 17, 2014 – Comments (1) | RELATED TICKERS: CAH , ABC , MCK

Linked here is a detailed quantitative analysis of Cardinal Health, Inc. (CAH). Below are some highlights from the above linked analysis:

Company Description: Cardinal Health Inc. is one of the leading wholesale distributors of pharmaceuticals, medical/surgical supplies and related products to a broad range of health care customers.  [more]

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What's More Powerful Than Compound Interest?

December 16, 2014 – Comments (1) | RELATED TICKERS: KO , XOM , CVX

Simple interest is where interest is calculated on the original principal amount and unpaid interest is not added to the principal for future calculations. Compound interest is what occurs when interest previously earned and is unpaid is added to the principle and is considered when calculating future interest - i.e. earning interest on interest. This is an extraordinarily powerful wealth building tool.

Albert Einstein is attributed as the author of the following quotes:
Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.

Compound interest is the most powerful force in the universe.

Compound interest is the greatest mathematical discovery of all time. With a constant interest rate your earnings spiral up each and every year. Consider a $100 deposit earning 5%, compounded annually. In the first year you will earn $5, $5.25 in year 2, $5.51 in year 3, $5.79 in year 4, $6.08 in year 5, and so on.

So, back to the question. What's more powerful than compound interest, faster than an tax audit and able to leap a 1099 in a single bound? Compound Dividends!

Compound dividends are like compound interest on steroids. Let's revisit the above example and assume that instead of depositing money in an interest-bearing account, you instead purchase good dividend growth stock with a current yield of 5%. So, in the first year you will earn $5. Which is the same as the 5% interest-bearing account, but that is where the similarities end. Good dividend growth stocks increase their dividends each year. In this example, let's assume a 10% dividend growth rate. So you will earn $5.78 in year 2, $6.71 in year 3, $7.81 in year 4, $9.17 in year 5, and so on.

Comparing the above two scenarios over the 5-year period, you will earn $27.63 from the interest-bearing account as compared to $37.47 from the dividend stock. That is more than a 35% increase!

Can life get any better than this? Yes it can! Good dividend stocks' yield tends to stay within a given range, so if dividends are increasing each year, the only way to keep a consistent yield is for the price of the stock to go up. In order to have a 5% yield in our above example at the end of year 5, the stock would have to be worth $183.44 (9.17/183.44 = 5%).

We would all like to find a good dividend growth stock the yields 5% and grows 10% per year. Those are hard to come by these days. However, you might want to consider these dividend growth stocks with a dividend growth greater than 7%, a yield greater than 2.75% and has grown dividends for 25 or more consecutive years:

The Coca-Cola Company (KO) is the world's largest soft drink company, KO also has a sizable fruit juice business. The company has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 52 consecutive years.
Yield: 2.9% | Dividend Growth: 8.1%

Erie Indemnity Co. (ERIE) is a management services company that provides sales, underwriting, and policy issuance services to the policyholders of Erie Insurance Exchange in the United States. The company has paid a cash dividend to shareholders every year since 1991 and has increased its dividend payments for 25 consecutive years.
Yield: 3.0% | Dividend Growth: 7.2%

Abbvie Inc. (ABBV) is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013. AbbVie's key drug is Humira for rheumatoid arthritis. The company has paid a cash dividend to shareholders every year since 1926 and has increased its dividend payments for 42 consecutive years (including the years ABBV was part of ABT).
Yield: 2.9% | Dividend Growth: 10.1%

Exxon Mobil Corp. (XOM), formed through the merger of Exxon and Mobil in late 1999, is the world's largest publicly owned integrated oil company. The company has paid a cash dividend to shareholders every year since 1882 and has increased its dividend payments for 32 consecutive years. See full analysis here.
Yield: 3.1% | Dividend Growth: 9.6%

Chevron Corporation (CVX)  is a global integrated oil company (formerly ChevronTexaco) has interests in exploration, production, refining and marketing, and petrochemicals. The company has paid a cash dividend to shareholders every year since 1912 and has increased its dividend payments for 27 consecutive years.
Yield: 4.1% | Dividend Growth: 7.9%

If Einstein thought compound interest was the most powerful force in the universe, he would be blown away with compound dividends, relatively speaking. Dividend compounding, it doesn't get much better than that!

Full Disclosure: Long KO, ERIE, ABBV, XOM, CVX, in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

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8 Stocks Taking Their Dividends Up A Notch

December 15, 2014 – Comments (0) | RELATED TICKERS: BMY , VTR , EIX

Throughout history there have always been great companies that stand head-and-shoulders above their peers and the competition. They are loved by their shareholders, hated by the competition and known by all. Just as all great companies have something in common, great dividend companies also have something in common. All great dividend companies have at least one characteristic in common – they consistently raise their dividends each year.

Below are several companies stepping up with higher cash dividends...

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Dividend Income Progress Update - November 2014

December 12, 2014 – Comments (0) | RELATED TICKERS: NWN , AMLP

Once again it is time for a goals/progress update. I am pleased to report that annualized dividend income increased in November, extending the streak to 53 consecutive months of increases after June 2010's decline. Since I began publicly tracking annualized dividend income in November 2007, it has increased in 82 of the last 84 months.

My goals were defined in this December 1, 2007 Investing Goals post and last updated in my 2014 Investing Goals post. Below is an updated version of the table found in the original post.

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