Each Friday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. However, this week I have moved it to Wednesday since I will be out of pocket for the next few days. I do have articles scheduled to post while I am out, so hopefully Dividends4Life won't miss a beat. Next week, the Weekly Carnival and Article Review will move back to its normal Friday slot.

For those readers not familiar with carnivals, it's where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.

Below are the carnivals that I participated in this week, along with a link to my article:

• Carnival of Personal Finance published: Stock Dividends - The Gift of Nothing
• Festival of Stocks published: Stock Analysis: The Coca-Cola Company (KO)

Articles I enjoyed reading included (in no particular order):

Dividend Articles

• The Dividend Guy presented Using Suggested Portfolios to Build Your Portfolio
• Dividend Growth Investor presented PEP looks attractive
• Dividend Money presented Why You Need Dividend Growth To Beat Inflation
• Financial Jungle presented Birthday Goodies Challenge in Vancouver
• The Div Guy presented PepsiCo (PEP) Increases Dividend 13%
• the moneygardener presented yellow pages Q1
• The Dividend Investing Blog presented Inflation Beatdown (Week 21)

The Wealth, Money & Life Network Featured Articles

• How I Save Money.net presented How I Save Money Gives Credit Report Advice
• Living Off Dividends & Passive Income presented Reporting From Omaha 2: The Annual Berkshire Meeting
• Saving For A Home Of My Own presented Book Review: Millionaire by Thirty
• Dollar Frugal presented Why We Only Have $10K in Our Emergency Fund
• Just Personal Finance presented Enginero Questions Prosper
• Her Every Cent Counts presented Care to Prosper? P2P Lending Update

Other Articles

• No Debt Plan presented 10 Steps to Avoid Becoming a Millionaire
• basicfinancial presented How to have fun and stay frugal
• Free From Broke presented Don’t Waste Money On Oil Changes
• Money Blue Book presented Warren Buffett’s Single Most Important Piece Of Advice For Stock Market Investors
• Fire Finance presented Closed End Mutual Funds - Should We Stay Away From Them?

There are some really good articles there, please take time and read a few of them.

The research linking rising dividends with superior long-term returns continues. The latest is from a recent report from Ned Davis Research, described in the Wall Street Journal article "Look for Firms That Raise Dividends". Below are some highlights of the article:

• Since 1972, S&P 500 stocks that consistently increased their dividends returned 10.4% total return (dividends + share price appreciation) while those that did not increase their dividends returned only 8.2%.
• The 2.2% advantage of the dividend raisers would equate to an additional $1,802 per $100 invested in 1972.
• "A board that raises dividends, year in, year out, shows it is confident that the company's outlook is strong," says Rick Helm, manager of Cohen & Steers Dividend Value.

The article rightfully noted that a history of rising dividends doesn't guarantee the company can sustain the increases. After the sub-prime melt-down there are a significant number of companies that could not maintain their dividend such as Citi (C) and Washington Mutual (WM). Investors must perform their own due diligence to determine if a company can sustain its dividend.

Dividends are an excellent measure of the quality-of-earnings; cash is hard to fake!

Related Articles:

• Harvest the Fruit
• Time is My Friend
• Share Buybacks - Do they really help?
• Fishing in the Bathtub
• When Is A Lot of Cash A Bad Thing?

Advertisement

MoneyExchange is like PayPal, but FREE of fees. Free to signup, send money, receive money, transfer money to and from your bank account. Use this link to signup today up and get a FREE $25.

Linked here is a PDF copy of my detailed analysis of Harley-Davidson Inc (HOG) (alt.1, alt.2). Below are some highlights from the above linked analysis:

Company Description: Harley-Davidson, Inc., through its subsidiaries, produces heavyweight motorcycles, and various motorcycle parts and related accessories in the United States and internationally.

Fair Value: I consider 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 and 4.) Graham Number. HOG is trading at a discount to all but 4.) above. If I exclude the high and low valuation, and average the remaining two valuations, HOG is trading at a 37.4% discount. A Star is added since HOG is trading at a fair value.

Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description: 1.) Rolling 4-yr Div. > 15%, 2.) Dividend Growth Rate, 3.) Years of Div. Growth, 4.) 1-Yr. > 5-Yr Growth and 5.) Payout 15% of avg. HOG earned three Stars in this section for 1.), 2.) and 3.) above. HOG's rolling 4-yr dividend growth averaged over 15%, it has grown dividends for at least 10 years (14+ years) and its 1-year growth rate is greater than its 5-year growth rate.

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)? 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. and 2.) Years to >MMA. HOG earned 2 Stars in this section. HOG's NPV MMA Diff. is $144,456, which far exceeds the $10,000 I look for. Future dividend growth will likely decrease from the 20+% HOG shareholders' have recently enjoyed, lowering the future NPV MMA Diff.

Other: HOG is a member of the S&P 500, is not an Aristocrat, but is an Achiever. 2007 was a tough year for HOG. Sales revenues declined 9% and earnings per share dropped 5%. Sales in the U.S. will likely be weak in 2008. Large inventories will likely remain an issue as consumers face concerns about slower economic growth and job security. Free cash flow and cash reserves at 3/31/08 are should sufficient to maintain HOG's dividend through 2008.

Conclusion: HOG earned a Star in the Fair Value section, picked up three Stars in the Dividend Analytical Data section and earned 2 Stars in the Dividend Income vs. MMA section for a net total of six Stars. However, my scale tops out at five Stars, which rates HOG as a 5-Star BUY.

This is an interesting stock with a strong international brand, but definitely cyclical (people don't buy motorcycles when they are concerned about losing their jobs). It is a stock worthy of future consideration. I have added HOG to my watch list.

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 do not own shares of HOG (0.0% of my Income Portfolio).

What are your thoughts on HOG?


Recent Stock Analyses:

• Stock Analysis: The Coca-Cola Company (KO)
• Stock Analysis: The Hershey Company (HSY)
• Stock Analysis: Canadian National Railway Company (CNI)
• Stock Analysis: National Retail Properties, Inc. (NNN)
• More Stock Analyses

Advertisement

MoneyExchange is like PayPal, but FREE of fees. Free to signup, send money, receive money, transfer money to and from your bank account. Use this link to signup today up and get a FREE $25.

In their youth, they were feared. Their appearance, and the sounds they made were unlike any other in this world. Nearly alien. Like a swarm of locust, they would descend on a town wreaking havoc and fear on the good citizens. Their culture and behavior was neither civilized nor acceptable. They've changed, society has changed, and both met somewhere in the middle. They are older, graying, wealthier and much more subdued. Our culture has accepted them, but should I accept these former rebels into my dividend portfolio? Only one way to find out, stay tuned...

Are you looking for excitement in your life? You can have all the exhilaration you need delivered directly to you by clicking here and claiming your free subscription to the D4L Channel.

While waiting for this week's feature presentations, you may want to tune in to a few of these classic episodes:

• How To Increase Your Portfolio's Return
• The Canadian Connection
• Investing In What's Important
• Dividends Under Attack, Again...
• Reaching Your 10-Year Investing Goal

Advertisement

MoneyExchange is like PayPal, but FREE of fees. Free to signup, send money, receive money, transfer money to and from your bank account. Use this link to signup today up and get a FREE $25.