tag:blogger.com,1999:blog-28000290952437261872024-03-13T22:39:54.329-04:00Dividend Growth MachineDividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.comBlogger246125tag:blogger.com,1999:blog-2800029095243726187.post-38307322607783411192014-07-08T11:24:00.001-04:002014-07-08T11:24:05.638-04:00A Real Dividend Growth Machine: Q2 2014 ReviewA new article of mine has been published on the investing website Seeking Alpha. The article is entitled <a href="http://seekingalpha.com/article/2303905-a-real-dividend-growth-machine-q2-2014-review">A Real Dividend Growth Machine: Q2 2014 Review</a> and it provides a review of my dividend growth investing progress in the second quarter of 2014.<br><br>
As indicated by my review, I continue to build and maintain my portfolio, but I do not have time for regular blogging anymore. However, I am still around and I try to stay updated on what is happening with my fellow dividend growth investors.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com17tag:blogger.com,1999:blog-2800029095243726187.post-67151640595021496142014-04-25T08:36:00.000-04:002014-04-25T08:36:21.065-04:00My First DoubleUpon checking my portfolio this morning, I noticed that I had my first double -- a stock with an unrealized capital gain of 100%:<br><br>
<div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-s8wGrCSxdTo/U1pUUjzKDsI/AAAAAAAAARU/RaPHndm6lbc/s1600/itw.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://3.bp.blogspot.com/-s8wGrCSxdTo/U1pUUjzKDsI/AAAAAAAAARU/RaPHndm6lbc/s1600/itw.png" /></a></div><br>
The stock is Illinois Tool Works (ITW), a diversified machinery company that is a Dividend Champion. My one and only purchase of ITW occurred in November 2011 when I was in the process of transitioning to a 100% dividend growth stock portfolio. At the time, I doubt I would have predicted that ITW would be my first two-bagger, but I am happy that it has performed well in terms of dividend growth and total return.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com27tag:blogger.com,1999:blog-2800029095243726187.post-82437209679443226432014-04-18T23:13:00.001-04:002014-04-18T23:13:58.949-04:00A Real Dividend Growth Machine: Q1 2014 ReviewA new article of mine has been published on the investing website Seeking Alpha. The article is entitled <a href="http://seekingalpha.com/article/2147713-a-real-dividend-growth-machine-q1-2014-review">A Real Dividend Growth Machine: Q1 2014 Review</a> and it provides a review of my dividend growth investing progress in the first quarter of 2014.<br><br>
I hope this quarterly review provides my blog readers with a decent update of my investing over the past few months. My job continues to absorb much of my time, but I am making good progress at work in terms of both research and teaching, so I think it is time well spent. Unfortunately, little time is left over for other activities, such as investing. As indicated by my review, I continue to build and maintain my portfolio, and I also keep up with company news, earnings reports, and dividend increases. However, I have had to cut back almost entirely on blogging and commenting activity, though I do continue to visit other investors' blogs periodically to stay updated on their progress.<br><br>
I hope everyone is off to a good start with their investing in 2014!Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com6tag:blogger.com,1999:blog-2800029095243726187.post-64981814495169166142014-02-03T21:20:00.000-05:002014-02-03T21:20:04.903-05:00HiatusSome of you may have noticed lately that I have been slow to respond to comments, my posts about new purchases are delayed, and I have been generally inactive in commenting on the blogs of other dividend growth investors. The reason: I have been very busy with work since the start of the new year. On the teaching front, this semester I have to prepare more lectures each week -- from scratch -- than I did last semester, which consumes a great deal of my time. On the research front, for the first time I have several undergraduate students working in my lab during the semester, resulting in considerable time and effort spent on training and managing them. Moreover, I am still solely responsible for designing, setting up, analyzing, interpreting, and writing up various research projects. Unlike some 9-to-5 jobs where work can be left at the workplace, in my job there are things that simply need to get done in a timely manner regardless of what else is happening, so I have been putting in long hours during the week and spending time at work on the weekends. As a result, it has been difficult to find spare time and energy for blogging activities, over and above the time spent monitoring my portfolio.<br><br>
In consideration of this situation, I have decided to take a break from blogging for a while. My blog will remain online, but I will not be updating it for an indefinite time period -- until I can achieve a better work-life balance. Even though my blog will be inactive, I want to assure you that there will be no change in my dividend growth investing: I plan to continue regularly investing new capital in attractively valued dividend growth stocks to build a rising stream of dividend income.<br><br>
Finally, I want to say thanks to everyone who has visited this blog (over 200,000 pageviews since January 2012) and posted comments. I appreciate your support of my dividend growth investing efforts and I wish you all the best in your own investing endeavors!Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com20tag:blogger.com,1999:blog-2800029095243726187.post-62155376950125109462014-01-30T18:43:00.000-05:002014-01-30T18:43:26.332-05:00Dividend Increase: HCPHCP, Inc. (<a href="http://finance.yahoo.com/q?s=HCP">HCP</a>) is increasing its quarterly dividend by 3.8%, from $0.525 to $0.545 per share, putting the company on track for its 29th consecutive year of dividend growth (<a href="http://ir.hcpi.com/phoenix.zhtml?c=67541&p=irol-newsArticle&ID=1895576">news release</a>). Given that I own 115 shares of HCP, my quarterly dividend increases from $60.38 to $62.68 and my yield on cost becomes 5.50%. The extra $9.20 in annual dividend income raises my forward 12-month dividend total to $4,269.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com7tag:blogger.com,1999:blog-2800029095243726187.post-57118443125171085792014-01-30T18:20:00.001-05:002014-01-30T18:20:06.887-05:00Dividend Increase: CNICanadian National Railway (<a href="http://finance.yahoo.com/q?s=CNI">CNI</a>) is increasing its quarterly dividend by 16.3%, from C$0.215 to C$0.25 per share, putting the company on track for its 18th consecutive year of dividend growth (<a href="http://www.cn.ca/en/investors/2014/01/cn-declares-first-quarter-2014-dividend">news release</a>). Given that I own 40 shares of CNI, my quarterly dividend (before tax withholding) increases from $8.60 to $10.00 and my yield on cost becomes 2.65%. The extra $4.76 in annual dividend income (after tax withholding) raises my forward 12-month dividend total to $4,259.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com3tag:blogger.com,1999:blog-2800029095243726187.post-50385699650574002922014-01-29T08:55:00.000-05:002014-01-29T08:55:24.926-05:00Dividend Increase: NVSNovartis (<a href="http://finance.yahoo.com/q?s=NVS">NVS</a>) is increasing its annual dividend by 6.5%, from CHF 2.30 to CHF 2.45 per share, putting the company on track for its 17th consecutive year of dividend growth in its home currency of Swiss francs (<a href="http://www.novartis.com/newsroom/media-releases/en/2014/1757594.shtml">news release</a>). Due to exchange rate fluctuations, it is difficult to determine the exact amount of the forthcoming dividend, which is usually paid in April. However, the exchange rate is better now than it was at this time last year (i.e., CHF is stronger), so the effective dividend increase in USD will likely be slightly higher than 6.5%.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com7tag:blogger.com,1999:blog-2800029095243726187.post-41680576461584006162014-01-27T18:41:00.002-05:002014-01-27T18:41:53.773-05:00Stock Bought: MCDToday I bought shares of <a href="http://www.mcdonalds.com/">McDonald's</a> (<a href="http://finance.yahoo.com/q?s=MCD">MCD</a>), one of the largest restaurant chains in the world. My most recent previous purchase of MCD was in <a href="http://dgmachine.blogspot.com/2013/12/stock-bought-mcd.html">December 2013</a>. The stock continues to be weighed down by sluggish sales growth, but I think the company is taking appropriate actions to address the issue, such as revamping its dollar menu to attract value-focused customers and renovating hundreds of restaurants to improve the dining experience. In addition, the company's sponsorship of the Winter Olympics and World Cup this year may give a short-term boost to sales.<br><br>
I think MCD is slightly undervalued at the current price. It has a P/E of 17.0 (vs. a 5-year historical average of 16.8), P/S of 3.4 (vs. 3.3), P/B of 6.2 (vs. 5.7), and dividend yield of 3.4% (vs. 2.9%). Using a Dividend Discount Model with a dividend growth rate of 7% (lower than the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $100.54. Morningstar gives a fair value of $105.00 and a 4-star rating. The average of those two estimates is $102.77, which implies an 8.6% margin of safety at my purchase price.<br><br>
I bought 15 shares of MCD at the price of $93.96 per share plus commission, giving me a 3.43% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $12.15 from this purchase, which will add a total of $48.60 to my annual dividend income. This purchase was made in my Roth IRA using rollover money and it reduced the cost basis of my MCD position in that account by 0.5%. I now have a total of 80 shares of MCD and I will receive combined quarterly dividends of $64.80. My forward 12-month dividend total increases to $4,255.<br><br>
As I did with my previous purchase of MCD, I celebrated this investment with a Big Mac meal on my way home from work. :)<br><br>
I have now invested all of the rollover money in my Roth IRA, which means my investing activity going forward will return to the normal level of one or two purchases per month. I just contributed $2,500 in new capital to my Roth IRA, with the goal of maxing it out for 2014 by the end of the first quarter. Once I achieve that goal, I will likely turn on Scottrade's flexible dividend reinvestment program for the remaining three quarters of the year and steer my dividend reinvestment toward whichever stock I deem to be attractively valued. I will then resume contributions of new capital to my taxable account.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com9tag:blogger.com,1999:blog-2800029095243726187.post-41546691561056527682014-01-25T15:01:00.001-05:002014-01-25T15:01:55.969-05:00Stock Bought: PMMy third (and final) purchase during this past week occurred mid-afternoon on Friday, when I bought shares of <a href="http://www.pmi.com/">Philip Morris International</a> (<a href="http://finance.yahoo.com/q?s=PM">PM</a>), one of the largest tobacco companies in the world. My most recent previous purchase of PM was over two years ago (October 2011), before I had started this blog.<br><br>
I think PM is slightly undervalued at the current price. It has a P/E of 15.9 (vs. a 5-year historical average of 15.1), P/S of 4.3 (vs. 1.6), and dividend yield of 4.6% (vs. 4.0%). Using a Dividend Discount Model with a dividend growth rate of 7% (lower than the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $87.47. Morningstar gives a fair value of $93.00 and a 4-star rating. The average of those two estimates is $90.24, which implies a 9.4% margin of safety at my purchase price.<br><br>
Josh Peters, Editor of Morningstar's <i>DividendInvestor</i> newsletter, considers PM to be a "top pick" for this year. The stock is profiled in the latest issue of the monthly newsletter, where it is acknowledged that 2014 will be a tough year for the company. However, Peters thinks the short-term slowdown in growth is already reflected in the stock's price, resulting in an excellent buying opportunity. Coincidentally, I had independently reached the same conclusion before reading the newsletter article.<br><br>
I bought 20 shares of PM at the price of $81.75 per share plus commission, giving me a 4.58% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $18.80 from this purchase, which will add a total of $75.20 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 70 shares of PM and I will receive combined quarterly dividends of $65.80. My forward 12-month dividend total increases to $4,206.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com18tag:blogger.com,1999:blog-2800029095243726187.post-10031347186028083902014-01-25T14:07:00.000-05:002014-01-25T14:07:33.437-05:00Stock Bought: CVX (Again)My second purchase during this past week occurred on Friday, when I bought shares of <a href="http://www.chevron.com/">Chevron</a> (<a href="http://finance.yahoo.com/q?s=CVX">CVX</a>), one of the largest integrated oil and gas companies in the world. My most recent previous purchase of CVX was just <a href="http://dgmachine.blogspot.com/2014/01/stock-bought-cvx.html">two weeks ago</a>. A further decline in the stock price motivated me to make another purchase.<br><br>
I think CVX is slightly undervalued at the current price. It has a P/E of 9.6 (vs. a 5-year historical average of 9.3), P/S of 1.1 (vs. 0.8), P/B of 1.6 (vs. 1.7), and dividend yield of 3.4% (vs. 3.2%). Using a Dividend Discount Model with a dividend growth rate of 8.5% (slightly lower than recent dividend increases) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $127.10. Morningstar gives a fair value of $130.00 and a 4-star rating. The average of those two estimates is $128.55, which implies an 8.9% margin of safety at my purchase price.<br><br>
I bought 15 shares of CVX at the price of $117.14 per share plus commission, giving me a 3.40% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $15.00 from this purchase, which will add a total of $60.00 to my annual dividend income. This purchase was made in my Roth IRA using rollover money and it reduced the cost basis for my CVX position in that account by 1.5%. I now have a total of 70 shares of CVX and I will receive combined quarterly dividends of $70.00. My forward 12-month dividend total increases to $4,131.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com2tag:blogger.com,1999:blog-2800029095243726187.post-16798010712791411842014-01-25T13:49:00.000-05:002014-01-25T13:49:12.737-05:00Stock Bought: WMTI made three purchases during this past week. My first purchase occurred on Tuesday, when I bought shares of <a href="http://www.walmart.com/">Wal-Mart Stores</a> (<a href="http://finance.yahoo.com/q?s=WMT">WMT</a>), the largest retailer in the world by revenue. My most recent previous purchase of WMT was in <a href="http://dgmachine.blogspot.com/2013/10/stock-bought-wmt.html">October 2013</a> and I wrote an <a href="http://seekingalpha.com/article/1726802-wal-mart-stores-a-retail-heavyweight-for-my-dividend-growth-machine">article about it</a> for Seeking Alpha at that time.<br><br>
I think WMT is fairly valued to slightly undervalued at the current price. It has a P/E of 14.5 (vs. a 5-year historical average of 14.5), P/S of 0.5 (vs. 0.5), P/B of 3.3 (vs. 3.1), and dividend yield of 2.5% (vs. 2.1%). Using a Dividend Discount Model with a dividend growth rate of 10% (lower than the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $83.16. Morningstar gives a fair value of $80.00 and a 4-star rating. The average of those two estimates is $81.58, which implies a 7.3% margin of safety at my purchase price.<br><br>
I bought 20 shares of WMT at the price of $75.60 per share plus commission, giving me a 2.48% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $9.40 from this purchase, which will add a total of $37.60 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 45 shares of WMT and I will receive combined quarterly dividends of $21.15. My forward 12-month dividend total increases to $4,071.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com2tag:blogger.com,1999:blog-2800029095243726187.post-63436836518512302302014-01-24T08:19:00.000-05:002014-01-24T08:19:22.434-05:00Dividend Increase: ARCPAmerican Realty Capital Properties (<a href="http://finance.yahoo.com/q?s=ARCP">ARCP</a>) is increasing its monthly dividend by 6.4%, from $0.07833 to $0.08333 per share, in light of the pending closing of its merger with Cole Real Estate Investments (<a href="http://ir.americanrealtycapitalproperties.com/file.aspx?IID=4280143&FID=21756558">news release</a>). Given that I own 170 shares of ARCP, my monthly dividend increases from $13.32 to $14.17 and my yield on cost becomes 7.72%. The extra $10.20 in annual dividend income raises my forward 12-month dividend total to $4,033.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com8tag:blogger.com,1999:blog-2800029095243726187.post-73410487149331002372014-01-21T20:46:00.001-05:002014-01-21T20:46:53.829-05:00Dividend Increase: NSCNorfolk Southern (<a href="http://finance.yahoo.com/q?s=NSC">NSC</a>) is increasing its quarterly dividend by 3.8%, from $0.52 to $0.54 per share, putting the company on track for its 13th consecutive year of dividend growth (<a href="http://www.nscorp.com/content/nscorp/en/news/norfolk-southern-raises-quarterly-dividend0.html">news release</a>). This increase comes just two quarters after the company's previous increase, announced in July 2013. Given that I own 95 shares of NSC, my quarterly dividend increases from $49.40 to $51.30 and my yield on cost becomes 3.21%. The extra $7.60 in annual dividend income raises my forward 12-month dividend total to $4,023.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com4tag:blogger.com,1999:blog-2800029095243726187.post-54182665816844368602014-01-14T12:52:00.002-05:002014-01-14T12:52:29.120-05:00A Real Dividend Growth Machine: 2013 ReviewA new article of mine has been published on the investing website Seeking Alpha. The article is entitled <a href="http://seekingalpha.com/article/1944691-a-real-dividend-growth-machine-2013-review">A Real Dividend Growth Machine: 2013 Review</a> and it provides a review of my dividend growth investing progress in 2013.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com13tag:blogger.com,1999:blog-2800029095243726187.post-88446348587593302382014-01-13T17:39:00.000-05:002014-01-13T17:39:19.861-05:00Stock Bought: TGTToday I bought shares of <a href="http://www.target.com/">Target</a> (<a href="http://finance.yahoo.com/q?s=TGT">TGT</a>), operator of over 1,800 retail stores selling general merchandise in the United States and now Canada. My most recent previous purchase of TGT was in <a href="http://dgmachine.blogspot.com/2013/11/stock-bought-tgt.html">November 2013</a>. The stock price has floundered recently after the company revealed in December that hackers had stolen credit/debit card data and personal information of millions of customers. While this kind of security breach is embarrassing and a PR nightmare, I view it as a short-term problem that will eventually fade away. For example, TJ Maxx shows no lasting ill effects of a massive security breach revealed in 2007 that affected the credit/debit card data of over 45 million customers. I expect that Target will recover from the current debacle in due course.<br><br>
I think TGT is slightly undervalued at the current price. It has a P/E of 16.4 (vs. a 5-year historical average of 13.6), P/S of 0.5 (vs. 0.5), P/B of 2.4 (vs. 2.4), and dividend yield of 2.8% (vs. 1.8%). The current P/E ratio is a bit misleading because earnings have been hurt in recent quarters due to Target's struggles with its expansion into Canada. Using a Dividend Discount Model with a dividend growth rate of 10% (half of the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $67.65. Morningstar gives a fair value of $64.00 and a 3-star rating. The average of those two estimates is $65.83, which implies a 6.6% margin of safety at my purchase price.<br><br>
I bought 25 shares of TGT at the price of $61.50 per share plus commission, giving me a 2.78% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $10.75 from this purchase, which will add a total of $43.00 to my annual dividend income. This purchase was made in my Roth IRA using rollover money and I was able to reduce my cost basis by 1.6%. I now have a total of 55 shares of TGT and I will receive combined quarterly dividends of $23.65. My forward 12-month dividend total increases to $4,015.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com20tag:blogger.com,1999:blog-2800029095243726187.post-91698778912819255032014-01-11T19:15:00.000-05:002014-01-11T19:15:44.957-05:00Stock Bought: CVXYesterday I bought shares of <a href="http://www.chevron.com/">Chevron</a> (<a href="http://finance.yahoo.com/q?s=CVX">CVX</a>), one of the largest integrated oil and gas companies in the world. My most recent previous purchase of CVX was in <a href="http://dgmachine.blogspot.com/2013/11/stock-bought-cvx.html">November 2013</a>. The stock price dipped after the company released an interim update on Thursday in which they stated that "earnings for the fourth quarter 2013 are expected to be comparable with third quarter 2013 results." Evidently, this news disappointed some investors and traders.<br><br>
I think CVX is slightly undervalued at the current price. It has a P/E of 9.9 (vs. a 5-year historical average of 9.3), P/S of 1.1 (vs. 0.8), P/B of 1.6 (vs. 1.7), and dividend yield of 3.3% (vs. 3.2%). Using a Dividend Discount Model with a dividend growth rate of 8.5% (slightly lower than recent dividend increases) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $131.00. Morningstar gives a fair value of $130.00 and a 4-star rating. The average of those two estimates is $130.50, which implies a 7.5% margin of safety at my purchase price.<br><br>
I bought 15 shares of CVX at the price of $120.74 per share plus commission, giving me a 3.30% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $15.00 from this purchase, which will add a total of $60.00 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 55 shares of CVX and I will receive combined quarterly dividends of $55.00. My forward 12-month dividend total increases to $3,972.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com13tag:blogger.com,1999:blog-2800029095243726187.post-17967494284910312032014-01-09T09:08:00.000-05:002014-01-09T09:08:46.188-05:00Monthly Review: December 2013Here is a review of what happened in December:<br><br>
<b>Dividends</b>: I received a total of $365.16 in dividends from 15 stocks, as indicated on my <a href="http://dgmachine.blogspot.com/p/dividends.html">Dividends</a> page. This represents a 53.8% increase compared with the same month a year ago. My 2013 dividend total ended up at $2,509.20, which is 52.1% higher than my 2012 dividend total.<br><br>
<b>Dividend Increases</b>: I was pleased to see dividend increases announced for the following stocks (click on each stock to see my post about the increase):
<ul>
<li><a href="http://dgmachine.blogspot.com/2013/12/dividend-increase-vtr.html">VTR</a>: 8.2% increase, $8.80 more in annual dividend income
<li><a href="http://dgmachine.blogspot.com/2013/12/dividend-increase-t.html">T</a>: 2.2%, $2.20
<li><a href="http://dgmachine.blogspot.com/2013/12/dividend-increase-o.html">O</a>: 0.2%, $0.48
</ul>
Dividend increases occurred for 34 of the 35 stocks in my portfolio in 2013.<br><br>
<b>Contributions</b>: I contributed $1,475 in new capital for investment, which was deposited in my taxable account. My 2013 contribution total was $18,965 (excluding rollover money), which is an average of $1,580 per month. Despite variation in my contributions during the year, I managed to slightly exceed the $18,300 total that I contributed in 2012.<br><br>
<b>Transactions</b>: I made four purchases during the month (click on the transactions to see my posts about them):
<ul>
<li><a href="http://dgmachine.blogspot.com/2013/12/stock-bought-vtr.html">40 shares of VTR [R]</a>
<li><a href="http://dgmachine.blogspot.com/2013/12/stock-bought-kmi.html">50 shares of KMI</a>
<li><a href="http://dgmachine.blogspot.com/2013/12/stock-bought-arcp.html">170 shares of ARCP [R]</a>
<li><a href="http://dgmachine.blogspot.com/2013/12/stock-bought-mcd.html">15 shares of MCD [R]</a>
</ul>
It was nice to put more of my rollover money to work and diversify my REIT exposure by purchasing ARCP and VTR. I also appreciated the opportunity to average down on the KMI position in my taxable account. These purchases will increase my annual dividend income by $397.60. My forward 12-month dividend total is $3,912.<br><br>
<b>Portfolio</b>: My portfolio (taxable account and Roth IRA together) consists of 35 stocks and has a market value of $133,393.47 (including cash), which is a 3.2% increase over last month's value. The combined value of my 403(b) and 401(a) retirement plans is $5,577.94, all of which is invested in a low-cost S&P 500 index fund.<br><br>
<b>Seeking Alpha</b>: I did not publish any new articles on the investing website <a href="http://seekingalpha.com/author/dividend-growth-machine/articles">Seeking Alpha</a>. However, I earned $8.62 from page views of previous articles, increasing my Q4 total to $178.29 (to be paid in January) and my 2013 total to $1,149.30. Given that I wrote nine articles in 2013, that works out to average earnings of $127.70 per article.<br><br>
<b>Looking Ahead</b>: January's dividend total will be more than double what I received in the same month a year ago. Dividend increases might be announced by CNI and HCP before month's end. I will likely contribute some new capital to my taxable account, but I still have over $9,700 in cash sitting in my Roth IRA. None of the stocks on my watch list are currently at my target prices, although a few stocks are getting close (within 3%), so I am not sure when (or what) my next purchase will be. With the start of earnings season, I am hoping that Mr. Market knocks on my door with a few good investment opportunities.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com18tag:blogger.com,1999:blog-2800029095243726187.post-44120644821485884762013-12-19T14:02:00.000-05:002013-12-19T14:02:06.416-05:00Dividend Increase: ORealty Income (<a href="http://finance.yahoo.com/q?s=O">O</a>) is increasing its monthly dividend by 0.2%, from $0.1818542 to $0.1821667 per share, which represents the company's 74th dividend increase since 1994 (<a href="http://www.realtyincome.com/pdfs/pr/12-17-13-DivIncr.pdf">news release [PDF]</a>). Effective with January's payment, this counts as a dividend increase for 2014. Given that I own 110 shares of O, my monthly dividend increases from $20.00 to $20.04 and my yield on cost becomes 5.61%. The extra $0.48 in annual dividend income keeps my forward 12-month dividend total at $3,912.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com7tag:blogger.com,1999:blog-2800029095243726187.post-13594206825000327222013-12-17T14:22:00.002-05:002013-12-17T14:22:59.534-05:00Holiday NoticeI just wanted to let readers know that I will be away over the next two weeks to visit family and friends for the holidays. I will still have internet access, but I will not be spending much time on investing activities, so I might be silent on the blogging front for a while. However, if I happen to buy something before the end of the month, then I will write a quick post about it. I wish everyone all the best as 2013 comes to a close and I look forward to sharing my investing progress with you in 2014. Happy holidays!Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com14tag:blogger.com,1999:blog-2800029095243726187.post-36660681816842128222013-12-13T13:57:00.000-05:002013-12-13T13:57:08.388-05:00Dividend Increase: TAT&T (<a href="http://finance.yahoo.com/q?s=T">T</a>) is increasing its quarterly dividend by 2.2%, from $0.45 to $0.46 per share, putting the company on track for its 30th consecutive year of dividend growth (<a href="http://seekingalpha.com/news-article/8455091-at-t-increases-dividend-2-2-percent">news release</a>). Given that I own 55 shares of T, my quarterly dividend increases from $24.75 to $25.30 and my yield on cost becomes 6.70%. The extra $2.20 in annual dividend income raises my forward 12-month dividend total to $3,912.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com7tag:blogger.com,1999:blog-2800029095243726187.post-39246728981003699512013-12-12T21:08:00.001-05:002013-12-12T21:08:47.253-05:00Stock Bought: MCDToday I bought shares of <a href="http://www.mcdonalds.com/">McDonald's</a> (<a href="http://finance.yahoo.com/q?s=MCD">MCD</a>), one of the largest restaurant chains in the world. My most recent previous purchase of MCD occurred over a year and a half ago (May 8, 2012), so I was pleased to get an opportunity to increase my position.<br><br>
McDonald's has experienced sluggish sales growth in 2013, which has weighed on its stock price and was reflected in the most recent dividend increase being only 5.2% (announced on September 18). However, the company has taken steps to address this short-term weakness. It introduced new menu items (e.g., Mighty Wings) over the past year, revamped its dollar menu (now called the "Dollar Menu & More"), and is working on improving efficiency. Store modernization continues to occur; in fact, a McDonald's near my workplace recently finished extensive interior and exterior renovations. It looks great inside and I noticed new technology at the counter, such as electronic displays for the menu (instead of printed placards) and for orders (the order number appears on a screen when it is ready for pick-up). Outside of the U.S., the company continues its expansion in China, announcing a significant hiring initiative earlier this year. For these reasons, I continue to be optimistic about the company's growth prospects.<br><br>
I think MCD is slightly undervalued to fairly valued at the current price. It has a P/E of 17.1 (vs. a 5-year historical average of 16.8), P/S of 3.4 (vs. 3.3), P/B of 6.2 (vs. 5.7), and dividend yield of 3.4% (vs. 2.9%). Using a Dividend Discount Model with a dividend growth rate of 7% (lower than the 5-year historical rate and Value Line's estimate of 9%) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $101.48. Morningstar gives a fair value of $105.00 and a 4-star rating. The average of those two estimates is $103.24, which implies an 8% margin of safety at my purchase price.<br><br>
I bought 15 shares of MCD at the price of $94.84 per share plus commission, giving me a 3.40% yield on cost. (I had set a limit order a few days ago that was executed this morning before a much greater intraday decline occurred.) At the current dividend rate, I can expect to receive quarterly dividends of $12.15 from this purchase, which will add a total of $48.60 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 65 shares of MCD and I will receive combined quarterly dividends of $52.65. My forward 12-month dividend total increases to $3,910.<br><br>
To celebrate this purchase, today I bought a Big Mac meal on my way home from work. :)<br><br>
I would consider making another similar-sized purchase of MCD if the stock price declines further. It is one of the few consumer-related stocks that is trading at a decent valuation right now. I noticed that the REITs continue to sell off -- it sure is tempting to buy more of them! However, a few of the non-REIT stocks on my watch list are near my target prices, and I might buy another one before the month ends.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com7tag:blogger.com,1999:blog-2800029095243726187.post-10619262054927345952013-12-09T13:17:00.000-05:002013-12-09T13:17:45.115-05:00Dividend Increase: VTRVentas (<a href="http://finance.yahoo.com/q?s=VTR">VTR</a>) is increasing its quarterly dividend by 8.2%, from $0.67 to $0.725 per share (<a href="http://phx.corporate-ir.net/phoenix.zhtml?c=73172&p=irol-newsArticle_Print&ID=1882958">news release</a>). The dividend increase is effective with the December payment and represents the second increase in 2013 (there was an 8.1% increase back in February). Given that I own 40 shares of VTR, my quarterly dividend increases from $26.80 to $29.00 and my yield on cost becomes 5.17%. The extra $8.80 in annual dividend income raises my forward 12-month dividend total to $3,861.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com6tag:blogger.com,1999:blog-2800029095243726187.post-81231748062795284362013-12-08T17:55:00.001-05:002013-12-08T17:58:05.103-05:00Stock Bought: ARCPI mentioned previously that I made two purchases last Thursday, the first being KMI. For my second purchase I bought shares of <a href="http://www.arcpreit.com/">American Realty Capital Properties</a> (<a href="http://finance.yahoo.com/q?s=ARCP">ARCP</a>), an equity REIT that has undergone tremendous growth over the past year. It will become the world's largest net lease REIT once its pending merger with Cole Real Estate Investments is completed in the first half of 2014. The company will own over 3,700 properties that are geographically diverse and leased to major tenants such as Walgreens, AT&T, CVS, Dollar General, and FedEx. The occupancy rate is 99% and investment grade credit ratings are held by 47% of tenants (by rent).<br><br>
There is not much information available about ARCP because it is a relatively new company and has changed substantially in a short time period. Only five analysts cover the company (versus an average of 21 analysts for its peers) and it is not a member of the S&P 500 (yet). It has not been around long enough to establish much of a dividend track record that would attract income investors. For those reasons, its stock seems undervalued at the current price. It has a P/FFO of just 11.4 (using the low point of the company's FFO guidance for 2014), which is less than peer ratios. It has a dividend yield above 7%, which is greater than peer yields. Beyond peer comparisons, I admit that it is difficult to come up with a fair value estimate for ARCP and get a firm handle on its risk profile. However, based on everything I have read, the stock appears to be undervalued at the moment and represents a compelling risk/reward opportunity.<br><br>
Interested readers can find additional information about ARCP in two recent articles on Seeking Alpha and in an investor presentation about the Cole merger from last month:
<ul>
<li><a href="http://seekingalpha.com/article/1877511-american-realty-capital-properties-a-monthly-dividend-alternative-to-realty-income">American Realty Capital Properties: A 'Monthly Dividend Alternative' To Realty Income</a> by Achilles Research, published December 4, 2013
<li><a href="http://seekingalpha.com/article/1857711-american-realty-capital-properties-7-dividend-is-nothing-but-net">American Realty Capital Properties 7% Dividend Is Nothing But Net</a> by Brad Thomas, published November 22, 2013
<li><a href="http://ir.americanrealtycapitalproperties.com/file.aspx?IID=4280143&FID=1001180496">Revised ARCP/Merger Presentation</a>, November 12, 2013 (PDF file)
</ul><br>
I bought 170 shares of ARCP at the price of $12.92 per share plus commission, giving me a 7.25% yield on cost. At the current dividend rate, I can expect to receive <i>monthly</i> dividends of $13.32 from this purchase, which will add a total of $159.80 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. ARCP becomes the 35th stock in my portfolio and the 4th REIT, giving me further diversification in the real estate sector. My forward 12-month dividend total increases to $3,852.<br><br>
At this point I have a nice set of four REITs in my Roth IRA that make up 9.7% of my overall portfolio by market value. I mentioned in a previous post that I would cap my REIT exposure at 10%, so I will be looking at non-REIT opportunities for my next few purchases. I hope to make one or two more purchases before the end of the year, but it will depend on what Mr. Market decides to do with the stocks on my watch list.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com11tag:blogger.com,1999:blog-2800029095243726187.post-80903827147971646732013-12-06T11:38:00.002-05:002013-12-06T11:42:00.788-05:00Stock Bought: KMIYesterday I made two purchases; I will report one now and the other this weekend, when I have more time. For my first purchase I bought shares of <a href="http://www.kindermorgan.com/">Kinder Morgan, Inc.</a> (<a href="http://finance.yahoo.com/q?s=KMI">KMI</a>), the fourth-largest energy company in North America and operator of an extensive network of pipelines for transporting natural gas, crude oil, and petroleum products. This was my fifth purchase of KMI in 2013.<br><br>
The stock price declined sharply this week after management released its financial expectations for 2014 (<a href="http://phx.corporate-ir.net/phoenix.zhtml?c=93621&p=irol-newsArticle&ID=1881651">news release</a>). Management expects high, mid, and low single-digit percent dividend/distribution growth for KMI, KMP, and EPB, respectively, in 2014. There seem to be two reasons for the sell-off among those stocks. First, the dividend/distribution growth projections were apparently lower than expected by some analysts. Second, the relatively flat revenue and distribution projections for EPB were disappointing to some investors. I think the sell-off was an over-reaction and the Kinder Morgan family of companies remains well-positioned for the future. I deemed KMI to be undervalued before the sell-off, so this decline made it even more undervalued (in my opinion).<br><br>
I bought 50 shares of KMI at the price of $32.835 per share plus commission, giving me a 4.97% yield on cost for this purchase and reducing the cost basis of KMI in my taxable account (which is where I bought these shares) by 4.3%. I combined $1,475 of new capital with existing cash in the account to make the purchase. At the current dividend rate, I can expect to receive quarterly dividends of $20.50 from this purchase, which will add a total of $82.00 to my annual dividend income. I now have a total of 275 shares of KMI (130 in my taxable account and 145 in my Roth IRA) and I will receive combined quarterly dividends of $112.75. My forward 12-month dividend total increases to $3,693. Kinder Morgan is now the largest position in my portfolio (7.0% weight), with NSC dropping to second place. Given its size in my portfolio, I will likely refrain from buying additional shares of KMI for a while.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com21tag:blogger.com,1999:blog-2800029095243726187.post-7629235308574832942013-12-03T21:15:00.000-05:002013-12-03T21:15:40.211-05:00Stock Bought: VTRToday I bought shares of <a href="http://www.ventasreit.com/">Ventas</a> (<a href="http://finance.yahoo.com/q?s=VTR">VTR</a>), a diversified healthcare REIT. The company owns over 1,400 properties and its net operating income (NOI) comes from seniors housing (27%), seniors housing operating assets (27%), skilled nursing facilities (20%), medical office buildings (17%), hospitals (7%), and loan assets (3%). Over half of its NOI comes from triple-net leases and 84% of revenue comes from private pay sources. Ventas is well-positioned to capitalize on the higher healthcare needs of the increasing population of seniors in the United States over the next few decades.<br><br>
Ventas has a pretty good dividend track record. The 5- and 10-year dividend growth rates are 5.5% and 9.6%, respectively, and the most recent dividend increase was 8.1%, announced in February 2013. The company does not appear on the Dividend Champions, Contenders, and Challengers list because it froze its dividend in 2009, breaking a string of dividend increases that dated back to 2001. However, with a current streak of four consecutive years of dividend growth, Ventas will rejoin the Dividend Challengers with an increase in 2014. The company is in a good position for future dividend growth, with high single-digit percent growth in funds from operations (FFO) and a payout ratio (based on FFO) of just 65%, which is relatively low among REITs.<br><br>
The company has a stable balance sheet, with a debt/capitalization ratio of 49% and adequate interest coverage. It has investment grade credit ratings from all the major agencies, allowing it to issue debt at low interest rates to fund new acquisitions. Value Line gives the company financial strength and safety ratings of B+ and 3, respectively.<br><br>
I think VTR is undervalued at the current price. It has a P/FFO of 13.5 (using the estimated FFO for 2013), a P/S of 6.0 (vs. a 5-year historical average of 7.0), P/B of 1.8 (vs. 2.5), and dividend yield of 4.8% (vs. 4.4%). Using a Dividend Discount Model with a dividend growth rate of 5.5% (matching the 5-year historical rate) and a discount rate equal to the current yield plus the dividend growth rate, I calculate a fair value of $58.97. Morningstar gives a more generous fair value of $70.00 and a 4-star rating. The average of those two estimates is $64.49, which implies a 13% margin of safety at my purchase price.<br><br>
Interested readers can find additional information about Ventas in two recent articles on Seeking Alpha and in an investor presentation from last month:
<ul>
<li><a href="http://seekingalpha.com/article/1870721-ventas-get-blue-chip-quality-without-paying-for-it">Ventas: Get Blue Chip Quality Without Paying For It</a> by Dane Bowler, published December 2, 2013
<li><a href="http://seekingalpha.com/article/1744952-ventas-is-pound-for-pound-one-of-the-best-reits-around">Ventas Is 'Pound For Pound' One Of The Best REITs Around</a> by Brad Thomas, published October 15, 2013
<li><a href="http://www.ventasreit.com/images/company-presentations/VTR%20Investor%20Presentation%20-%20NAREIT%20REITWorld.pdf">Ventas Presentation - NAREIT REITWorld</a>, November 2013 (PDF file)
</ul><br>
I bought 40 shares of VTR at the price of $55.90 per share plus commission, giving me a 4.78% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $26.80 from this purchase, which will add a total of $107.20 to my annual dividend income. The next dividend should be declared any day now and paid in late December, so I will not have to wait long for my first payment. This purchase was made in my Roth IRA using rollover money. Ventas becomes the 34th stock in my portfolio and the third REIT; I think it nicely complements my HCP position in the specialty area of healthcare REITs. My forward 12-month dividend total increases to $3,611.Dividend Growth Machinehttp://www.blogger.com/profile/13304571550687216360noreply@blogger.com21