Linked here is a PDF copy of my detailed analysis of AFLAC Inc. (AFL) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Aflac Incorporated engages in the marketing and sale of supplemental health and life insurance plans in the United States and Japan.
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. AFL is trading at a discount to 1.) and 2.) above. If I exclude the high and low valuation, and average the remaining two valuations, AFL is trading at a 0.1% premium. AFL earns a Star for 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. AFL earned a Star in 1.), 2.) and 3.) above. With a 20% average dividend increase, AFL will more than double its dividend every 5 years. It's 2008 dividend increase was 24%.
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. AFL did not earn any Stars in this section. At its current yield of 1.50% it would take 11 years for it to earn in excess of a 4.61% MMA. AFL's NPV MMA Diff. of $9,599 is slightly below the $10,000 I like to see.
Other: AFL is a S&P 500 Dividend Aristocrat and is a member of The Broad Dividend Achievers™ Index. It has increased its quarterly cash dividend payments for 26 consecutive years.
Conclusion: AFL earned one Star in the Fair Value section, three Stars in the Dividend Analytical Data section and no Stars in the Dividend Income vs. MMA section for a total of four Stars, which rates it as a 4 Star-Buy.
AFL is your traditional dividend investment with a low current yield (1.5%) and high dividend growth (20%). Management's ability to execute its business plan and provide a steady dividend increases makes this one of my favorite long-term stocks. I will continue to increase my position in AFL as my allocation allows until circumstances dictate a change.
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 own shares of AFL (3.4% of my Income Portfolio).
What are your thoughts on AFL?
Recent Stock Analyses:
________________________________________________________________
The walls came down! In last weeks episode of Extreme Makeover: Home Edition, Ty and his crew visited the D4L Channel for a complete renovation. Nothing was left but the foundation. No trip to Disney World for us. We'll keep the programing going while cleaning up the last few items.
Next week is going to be a wild one. There's going to be name calling and personal attacks happening in studio. Jerry Springer, you better step back it could get tense around here.
If it walks like a duck, quacks like a duck, then it must be a good dividend investment, right? We'll see, 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 thriller. You may want to tune in to a few of these classic episodes:
- Yield on Cost: Measuring for Success
- 5 Lessons Learned About Investing
- The Winning Score - Part 2 of 2
- MMA Rates Falling, What are You Going to Do?
- Dividends4Life Toolbox
________________________________________________________________
Last night I updated Dividends4Life's template. Though I liked the previous template, it had several short-comings that would be difficult to overcome. I am excited about the new template. It addresses most, if not all, of the old template's short-comings including:
- A white background that is easy on the eyes and allows for a smaller font.
- An earth tone color scheme that is easy on the eyes
- Resizable side bar columns, that minimizes wasted space
- A section that combines the two smaller sidebars into a single larger side bar
I have been working on this template for many weeks on a test blog. Unlike the last upgrade (going from 2 columns to 3), this installation went smoothly. I will continue to make adjustments over the next week or so. If you see something that doesn't look right or isn't working please leave me a comment or email me at bbkjbbkj@gmail.com.
For those subscribing the Dividends4Life via email or a reader, click on the title of this message title and check out the setup. As always, I appreciate your interest in Dividends4Life!
Related Articles:
- Time is My Friend
- Share Buybacks - Do they really help?
- Fishing in the Bathtub
- When Is A Lot of Cash A Bad Thing?
- Dynamic Dividend Investing
________________________________________________________________
Each Friday I highlight the Carnivals I participated in over the past week, along with any notable articles that I come across. 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: Dividends Are Gold in a Down Market
- Festival of Stocks published: How To Increase Your Portfolio's Return
- Carnival of Financial Planning published: Tools To Calculate Investment Returns
- Amateur Asset Allocator presented Mutual Fund Companies Often Make Better Investments Than The Funds They Manage
- The Tweedy, Browne Worldwide High Dividend Yield Value Fund and It’s Holdings
- Building Equity in Toronto presented Dividend Achievers with the longest history of consecutive dividend growth
- The Penny Mine presented Teaching Kids the Importance of a Dollar.
- American Dividend Investor presented Stock Selection Process
________________________________________________________________
An interesting observation (albeit non-scientific) I've made over the years, is that opposites really do attract. It seems that in many, if not most, marriages there is one relatively frugal person and one person that, well, likes to spend a little more freely. It is not a male/female thing, but seems to be evenly dispersed with maybe a slight lean to females being the more frugal ones. I guess this is the way the good Lord takes care of us. Consider the other combinations:
- Frugal + Frugal: This would be an awesome wealth building machine. Taken to the extreme this would not be good for the economy. In a world made up of people like me, there would be little spending on consumer goods. There would be no upgrading of houses, cars, appliances, etc. Eventually, the economy would grind to a standstill.
- Spender + Spender: It doesn't take long to see where this one is going. Can you say 'bankruptcy'? Like Frugal + Frugal, taken to the extreme this too would not be good for the economy. If everyone spends themselves into bankruptcy then retires with nothing, our financial system would collapse trying to care for the broke retirees. Also, if you are bankrupt, you can't spend so once again the economy would grind to a standstill.
Related Articles:
- Passing the Torch - Part 1 of 2
- On The Shelf
- State of the Dividend Address
- Charlie Munger's 10 Rules for Investment Success
- The Winning Score - Part 1 of 2
________________________________________________________________
You can't spend earnings. At first glance, this probably seems like an odd statement, possibly even incorrect. However, it is not only correct, but an important investing axiom for any type of investor. Let me explain.
Earnings are that which is derived from the exchange of a product, service or other, less associated expenses. Ultimately, it is our desire that earnings are converted to something that can be spent, such as cash. You may be thinking that is just semantics, but is it? In the article "The Most Important Financial Statement", I mentioned that cash flow is what ultimately drives the value of any financial asset, yet there is sometimes a disconnect between earnings and cash.
Through fraud and manipulation an income statement can be made to look quite impressive. There is not a shortage of stories where expenses are moved to the balance sheet as assets in order to artificially inflate earnings. However, a management team does not have to be dishonest for an income statement to misrepresent the company's true financial condition. Given complex accounting rules, a company can generate huge paper gains that may never be converted to cash.
I take great comfort in a company with a strong cash flows and a consistent history of increasing cash dividends. An increasing cash dividend keeps pressure on management to ensure the company is well run. If there are too many missteps, then eventually a dividend will slip. This can be disastrous for a company's stock price.
Earnings can be manufactured, cash can not. Always follow the cash and it just might lead you to a great company.
Related Articles:
- Dividends Are Gold in a Down Market
- Pre-Screening Dividend Stocks - Part I
- Sometimes Things Aren't As They Appear
- A Strong Bias for Action
- My Unique Investing Process
________________________________________________________________
Conventional wisdom would tell you that funds and ETFs would be safer and less volatile than owning individual stocks, and there is certainly some truth in that statement. However, in my personal portfolio in 2008, my income EFTs and funds have been more volatile and produced lower returns. Through March 24th, my income stocks total YTD return is a loss of (-0.6%) versus a loss of (-1.9%) for my income ETFs/funds.
It is no surprise that my Vanguard Financials ETF (VFH) is the biggest loser. VFH has a YTD total return loss of (-4.8%). I was more surprised by the performance of SPDR S&P Dividend ETF (SDY). Going into the weekend it was my second biggest loser, but has recovered some on Monday. Once I checked its sector breakdown on Morningstar, I understood what was driving it down. SDY is 35.54% weighted in financials.
In a recent MarketWatch article, "Dividend ETFs yield to pain in financials stocks", Matthew Hougan, editor at IndexUniverse.com, said it's important for investors to study the differences in the dividend ETFs' approaches before committing money. He went on to say:
"These dividend ETFs were to an extent presented as alternatives to traditional market exposure," he said. "They were put out there as a mainstream way to go after the whole market, but the poor returns recently have showed what you could have found out with a little digging -- these ETFs can have significant sector bets."He noted that iShares Dow Jones Select Dividend has almost 70% of assets concentrated in just two sectors: financials and utilities."Investors have to be aware of the sector allocations," Hougan said. "Maybe this is a wakeup call that these dividend ETFs shouldn't be considered mainstream funds."
Like all my investments, ETFs are periodically reviewed to determine their performance versus my benchmark. As mentioned in an earlier post, I am in the midst of a comprehensive project to calculate my asset allocation across all my investments. This project should be complete in early to mid-April and I will post the results here when available.
Related Articles:
- Dividend Investing With ETFs
- Process Overview and Asset Allocation
- It Was An Odd Odyssey
- Sometimes Being Right Is Just Wrong
- My Unique Investing Process
________________________________________________________________
Linked here is a PDF copy of my detailed analysis of BP Plc (BP) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: This supermajor integrated oil company (formerly BP Amoco p.l.c.) is the world's second largest publicly owned oil company and the fourth largest U.S. refiner.
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. BP is trading at a discount to all but 4.) above. If I exclude the high and low valuation, and average the remaining two valuations, BP is trading at a 26.3% discount. BP earns a Star for 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. BP earned a Star in 4.) above. It's one year dividend growth exceeded its 5-year growth rate. This could indicate the dividend growth rate is accelerating.
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. BP earned both available Stars in this section. Its current yield of 5.40% is in excess of the high-yield MMA rate of 4.61% and its NPV MMA Diff. is $22,113.
Other: BP is NOT an S&P 500 Dividend Aristocrat or a member of The Broad Dividend Achievers™ Index. It has increased its quarterly cash dividend payments for 8 consecutive years.
Conclusion: BP earned one Star in the Fair Value section, one Star in the Dividend Analytical Data section and two Stars in the Dividend Income vs. MMA section for a total of four Stars, which rates it as a 4 Star-Buy.
For some time now I have been looking for a suitable energy company to add to my dividend income portfolio. The numbers have not worked for the companies reviewed up to this point. Though not perfect, BP's numbers have been the best so far. BP's primary blemish is a dividend cut of 20% in 2000 after a 26% dividend increase in 1999. One other concern is the 10-year average historic payout ratio is 60%. However, the last four years payout rate have been reasonable in the 30's. I will continue to perform a qualitative assessment of BP, but early indications are pointing toward a possible April purchase.
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 BP (0.0% of my Income Portfolio).
What are your thoughts on BP?
Recent Stock Analyses:
________________________________________________________________
Thanks, to all that participated!It's been an exciting week! Next week is going to be another exciting one. Don't risk missing a minute of it. You can have it all packaged and delivered directly to you by clicking here and subscribing 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:
- Rev-up Your Portfolio With Asset Allocation
- My Dirty Little Secret
- Reaching Your 10-Year Investing Goal
- Investing In What's Important
- Process Overview and Asset Allocation
________________________________________________________________
Easter is one of my favorite holidays. I have fond memories of Easter as a child and spending time with my own children. One of the Easter festivities that my kids enjoy the most, is an Easter egg hunt. I thought it would be fun if we had an electronic Easter egg hunt here at Dividends4Life.
Webopedia defines Easter Egg as such:
A secret message or screen buried in an application. Typically, Easter eggs are used to display the credits for the development team or to display a humorous message. To see an Easter egg, you need to know a special procedure or sequence of keystrokes.
Easter eggs in computer games are quite common and may be funny scenes, hidden levels, or other extras gamers might discover while playing.
Since December, each time you have gone to the Dividends4life site, an Easter Egg has been staring at you. Have you seen it? Here are some hints:
- It is a clickable link, not a keystroke
- Go to http://dividends4life.blogspot.com/
- Maximize the screen
- The Easter egg is now fully visible. Can you see it?
- You don't have to scroll or go anywhere else to see it
- Once you see it, it will be a "Oh, yeah, I never really noticed that..." moment
- D4L at Dividends4Life (http://dividends4life.blogspot.com/)
Happy Easter!
Related Articles:
- My Top 3 Investing Mistakes
- Morningstar Dividend Leaders Index
- Is It Time To Upgrade Your Portfolio?
- Tracking Yield On Cost
- The Canadian Connection
________________________________________________________________
Each Friday I highlight the Carnivals I participated in over the past week, along with any notable articles that I come across. 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: A Strong Bias for Action
- Carnival of Everything Finance published: Time is My Friend
- Festival of Stocks published: Stock Analysis: Consolidated Edison, Inc. (ED)
- Carnival of Financial Planning published: Ready or Not, Here He Comes!
- The Dividend Guy presented: A Valuation Exercise: The Dividend Aristocrats
- My Dollar Plan presented: The Five Fundamentals of Financial Success
- Fire Finance presented: Three Good Habits of Successful Retirees
- Millionaire Money Habits presented: What’s so Bad About Volatility in the Stock Market?
- Five Cent Nickel presented: Middle-Class Millionaires?
- The Personal Financier presented: 10 Sure Ways to lose 50% of your investment
- Millionaire Mommy Next Door presented: Is the Perfect Financial Storm Brewing?
- Dividend Growth Investor presented: The case for dividend investing in retirement
________________________________________________________________
The ability to track and calculate a total rate of return for your your portfolio, and subsets of it, is an important management tool. To calculate an annual and life-to-date rate of return for an individual stock, I will refer you to my article "The Winning Score - Part 2 of 2". This same technique could be used for calculating a return on an entire portfolio, or subsets of it; however, it would be extremely cumbersome and time consuming. Besides, there are much better tools to do it such as the one I use, MSN's Deluxe Portfolio at MoneyCentral (MSNDP).
If you have not yet selected a portfolio manager, I would recommend you take MSNDP for a test drive. It is by far the best online portfolio manager that I have found. MSNDP is fully customizable by the user. By my count, there are 83 unique items that can be tracked per security ranging from the usual symbol, price, volume, change, high, low, to the unusual % cash, % debt, % equity (for funds), bond type, coupon, yield to maturity (for bonds), low target price, beta, industry, risk, shares outstanding, (for equities), grant date, exercises, expirations (for employee stock options).
In addition, you can combine assets into accounts and track them as a group. I have set up the following asset groups in MSNDP:
- Company Stock & Peers: Performance Shares issued to me by my employer and shares of peer companies that I have purchased
- Company LTI: Share-based long-term incentives, such as company stock options and unvested restricted stock
- Core: My core mutual fund holdings
- Income Stocks: My dividend income stocks
- Income ETFs: Income focused Exchange-Traded-Funds
- Asset Allocation: Asset allocation focused ETFs
- Roth IRA: My Roth Individual Retirement Account
With MSNDP year-to-date and life-to-date annualized returns can be calculated for the portfolio as a whole, the groups above, an individual holdings and a combination of the groups above. I often will look at Income Stocks and Income ETFs as a combined group. You view combined groups by hiding all groups except the ones you want to combine.
As discussed in yesterday's post "How To Increase Your Portfolio's Return", I never remove sold securities. However, MSNDP will allow me to temporarily hide them and view the returns as if I had never bought and sold them (if only life had this option).
For me the most useful feature of MSNDP is the ability to export all the financial information to Excel. This information drives my two massive financial spreadsheets. MSNDP has so many more features that time won't allow me to go into. One caveat though, being part of the Microsoft family, MSNDP does not work with Firefox. I use both IE and Firefox, so this is not a big deal for me.
What do you use to track and manage your portfolio?
Related Articles:
- My Unique Investing Process
- Fishing in the Bathtub
- Dividend Investing With ETFs
- When Is A Lot of Cash A Bad Thing?
- Dynamic Dividend Investing
________________________________________________________________
There is a way to increase your portfolio's calculated total return. In some cases this trick will double, triple, quadruple or increase it by even more. It is a simple trick that you may already be doing because it is easier to do than not. What is this trick? Not counting your sales/losses in the calculation of your total return.
This is NOT a trick that I employ. I do not think it is appropriate to pull out sales/losses when calculating total return. By not counting the results in your portfolio you are saying in effect 'I do not like the outcome, therefore I am no longer recognizing the existence of that transaction.' Just to be clear, I never remove sales losses from my portfolio, even when rolling to a new year.
As mentioned in "5 Lessons Learned About Investing", when I started dividend investing I went after yield and made some very poor decisions. Now I have to look at the losses every time I review my portfolio. For example, the biggest biggest dollar loser in my dividend portfolio is a mortgage REIT, NovaStar Financial (NFI). I bought it in 2005 for $133/share (reverse split adjusted basis), added to my position in 2006 at $120/share and sold it an enormous loss in 2007 at $20/share. It is now trading for about $2/share. Over the period I owned NFI its annualized return to me was (-57%).
I am a highly competitive person and I want to beat my benchmark. However, I want to do beat it fairly on a level playing field. Keeping the sales/losses in my portfolio is a reality check for me. If I can't beat my benchmark over time, I will concede and buy it.
Tomorrow, I will discuss some of the tools I use to calculate returns for my portfolio.
Related Articles:
- My Top 3 Investing Mistakes
- MMA Rates Falling, What are You Going to Do?
- Time is My Friend
- Share Buybacks - Do they really help?
- Dividends4Life Toolbox
________________________________________________________________
I am certainly not the first to recognize the power of buying good dividend stocks when they are down. The 'Dogs of the Dow' is probably the most popular implementation of this strategy. Michael O’Higgins popularized this strategy in his book, Beating the Dow (1991 and 2000). In O’Higgins' implementation he invests in the 10 highest yielding securities in the Dow Jones Industrial Average (Dow), and rebalances annually. He back-tested the strategy by looking at the 26-year period from 1973 to 1998. During that period the 'Dogs of the Dow' outperformed the Dow, earning 17.9% annually versus 13.0% for the Dow.
Granted the 'Dogs of the Dow' strategy is not a traditional buy and hold dividend investing strategy, but it does emphasize the power of dividends when combined with good solid companies. For a more traditional dividend investing example let's look at one of my favorite companies, General Electric (GE), and consider these facts:
2000 $60.50 $0.57 0.9%
2003 $32.42 $0.77 2.4%
2008 $34.33 $1.24 3.6%
For 2000 and 2003 above, Price represents GE's high stock price for the year. For 2008 Price is GE's closing price on 3/17/2008. For all three years, Divi. is the annual dividend paid per share and Yield is Divi./Price.
I included 2000 above since that was the year GE's stock hit its 10-year high at $60.50. The current yield of 3.6% on 3/17/2008 is four times the 0.9% in 2000 at the stock's high. GE was an excellent company in 2000, as it is today, but now the dividend is quadruple the 2000 level.
What if you purchased GE 5 years ago at 2003's high of $32.42? You would have purchased it when the yield was a decent 2.4%, but you would have only seen 5.9% share appreciation (in absolute terms). However, the Yield On Cost (YOC) goes from 2.4% in 2003 to very respectable 3.8% in 2008, slightly above 2008 current yield of 3.6%. This increase was a result of GE increasing its dividend 10% on average from 2000-2008. Hypothetically, if GE were to increase its dividend 10% a year for the next 10 years the dividend would be $3.22 in 2018, with a YOC of 9.4% on shares purchased in 2008. Not bad for top tier company.
It is easy to see why a down market does not depress me. There's gold in them-there hills!
Related Articles:
- Investment Dating Before Marriage
- Ready or Not, Here He Comes!
- Yield on Cost: Measuring for Success
- 5 Lessons Learned About Investing
- The Winning Score - Part 2 of 2
________________________________________________________________
Linked here is a PDF copy of my detailed analysis of Pfizer Inc. (PFE) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Pfizer, Inc. engages in the discovery, development, manufacture, and marketing of prescription medicines for humans and animals in the United States, Europe, Canada, Asia, and Latin America.
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. PFE is trading at a discount to all but 4.) above. If I exclude the high and low valuation, and average the remaining two valuations, PFE is trading at a 16.7% discount. PFE earns a Star for 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. PFE earned a Star in 3.) above. It has increased its dividend for 10+ years. However, a Star is deducted because the current dividend payout of 96% exceeds 10-year average of 77% by more than 15 points.
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. PFE earned both available Stars in this section. Its current yield of 6.04% is in excess of the high-yield MMA rate of 4.61% and its NPV MMA Diff. is $37,063.
Other: PFE is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. It has increased its quarterly cash dividend payments for 41 consecutive years. PFE recently raised its dividend 10%.
Conclusion: PFE earned one Star in the Fair Value section, a net of zero Stars in the Dividend Analytical Data section and two Stars in the Dividend Income vs. MMA section for a total of three Stars, which rates it as a 3 Star-Hold.
PFE is at a cross-road. Earnings have declined somewhat as key drugs come off patent. Its Lipitor patent expires in 2010. Lipitor accounts for about a fourth PFE's sales. PFE has not introduced a "home-run" drug for sometime. However, the near-term (~2 years) outlook is good. I continue to add PFE in modest amounts as my allocation and PFE's valuation allows .
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 own shares of PFE (2.4% of my Income Portfolio).
What are your thoughts on PFE?
Recent Stock Analyses:
- Stock Analysis: Consolidated Edison, Inc. (ED)
- Stock Analysis: BB&T Corporation (BBT)
- Stock Analysis: Procter & Gamble Co. (PG)
- Stock Analysis: American Capital Strategies, Ltd. (ACAS)
- More Stock Analyses
________________________________________________________________
Coming up next, the D4L Channel is invaded by a cash rich drug dealer. He's on the run, and he's not quite as quick and nimble as he once was. He has recently upped the ante in this high stakes chase. Can he avoid being sold down the river? Stay tuned to find out...
You can't TiVo this story, or any of the others on the D4L Channel. There is only one way to ensure you don't miss a one of them, and that's by clicking here and claim your free subscription.
Thanks for watching the D4L Channel!
While waiting for this week's presentations. You may want to tune in to a few of these classic episodes:
- Charlie Munger's 10 Rules for Investment Success
- The Winning Score - Part 1 of 2
- Is Your Portfolio Average?
- Tech Stocks in a Dividend Portfolio?!
- You're Fired!
________________________________________________________________
This page is now obsolete. To see my "On The Shelf" holdings please view the Dividend Stock Holdings page. On The Shelf Holdings are highlighted in gray.
_______________
Presented below are my dividend stock holdings that I have put "On The Shelf". If a security is not performing at the desired level for additional purchases, but is not performing badly enough to warrant a sale, then I will put it "on the shelf". By that I mean it will be set aside within my income portfolio with no additional purchases made until its outlook improves or deteriorates to the point it should be sold.
This is not a recommendation to buy or sell these stocks. Disclaimer: Before buying or selling any stock or ETF/CEF you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Click here to view my Dividend Stock Holdings.
Click here to view my Dividend ETF/CEF Holdings.
Click here to view my Pocket Change Portfolio Holdings.
________________________________________________________________
Each Friday I highlight the Carnivals I participated in over the past week, along with any notable articles that I come across. 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: MMA Rates are Falling, What are You Going to Do?
- Carnival of Financial Planning published: Morningstar Dividend Leaders Index
- Festival of Stocks published: My Top 3 Investing Mistakes
Articles I enjoyed reading included (in no particular order):
- Fat Pitch Financial presented Great Businesses According to Buffett
- The Simple Dollar presented How I Turned That Ship Around: Another Look At My Financial Meltdown … And The Aftermath
- Aussie Investor presented Great Stock Market Investing Minds - Benjamin Graham
- Dividend Money presented Lessons Learned In Real Estate
- Money Under Thirty presented Four Reasons We Spend More Than We Should
- Financial Jungle presented How Heavy Is Your Portfolio On The Sin Scale?
________________________________________________________________
Markets this year have been highly volatile and directionally down. This is depressing for short-term investors, but for us dividend investors it is an exciting buying opportunity! I have been able to increase my position in GE and initiate a position in JNJ. I have been able to increase positions in high yield securities like ACAS, AOD and several banks.
Now a declining market is only good if the companies continue to perform and raise their dividend as expected. Sometimes, for various reasons, that doesn't happen. In yesterday's article "On The Shelf", I described a new concept that I have adopted. In short, if a security is not performing at the desired level for additional purchases, but also is not performing badly enough to warrant a sale, then I will put it "on the shelf". By that I mean it will be set aside within my income portfolio with no additional purchases made until its outlook improves or deteriorates to the point it should be sold.
Let's take a look at several securities that are candidates for the shelf:
Home Depot (HD)
The decline in residential construction has hit HD hard. It has struggled as of late and this has been reflected in its dividend. HD has held its dividend constant at $0.225/share for the last six quarters. Its dividend yield of 3.6% does not allow me to look the other way. Assuming it increases its dividend within a year, the stock could be salvaged, depending on the magnitude of the increase.
Verdict: On The Shelf
Walmart (WMT)
WMT this week raised their quarterly dividend from $0.22/share to $0.2375/share. The market rejoiced and ran WMT's price up. It was one of my few black stocks on that red day, but I was not happy! This was only an 8.0% increase and when I dropped the new dividend rate into my model the NPV MMA Diff. went negative (-2,444). Under the current circumstances WMT was no longer a buy.
Verdict: On The Shelf
SunTrust Bank (STI)
As discussed in my article "Time is My Friend", STI recently raised its quarterly dividend from $0.73/share to $0.77/share. This lowered its growth rate to 5.5% from 10%. Its NPV MMA Dif. is still positive at $9,447. I suspect most of the other banks will significantly lower their growth rate so, as noted in the article, I am taking a wait and see approach to the banks I hold.
Verdict: On The Shelf
M&T Bank Corporation (MTB)
When I started writing "Time is My Friend" I expected the outcome to be a sell for MTB. On a return basis it has been the poorest performer of the banks that I hold. My gut tells me it still may be the first to go once all the dividend increase data is in. As such, I do not think it is appropriate to purchase additional shares at this time.
Verdict: On The Shelf
It is important to continue evaluate your holdings to determine if they merit a buy, hold or sell. I plan to add another section in my holdings for "On the Shelf" securities. These four will be the first to move in. I have an ETF that is eying the neighborhood as well, so stay tuned...
Related Articles:
- Dynamic Dividend Investing
- Is It Time To Upgrade Your Portfolio?
- It Was An Odd Odyssey
- Sometimes Being Right Is Just Wrong
- My Unique Investing Process
________________________________________________________________
When we don't have an immediate need for something we put it on a shelf. This gets it out out sight and out of our way until we need it or otherwise evaluate its usefulness. Sometimes it is the first step to the garbage, while other times the item works its way back into our everyday life. I have expanded my investing process to include a shelf.
If a security is not performing at the desired level for additional purchases, but also is not performing badly enough to warrant a sale, then I will put it "on the shelf". By that I mean it will be set aside within my income portfolio with no additional purchases made until its outlook improves or deteriorates to the point it should be sold. This is a tactic that I will use to help overcome my strong bias for action.
Tomorrow in my "State of the Dividend Address" I will look at several stocks in my portfolio that I am not satisfied with, for one reason or another. Decisions will be made as to their future direction. Some will involve the "shelf".
Related Articles:
- My Unique Investing Process
- Sometimes Being Right Is Just Wrong
- Pre-Screening Dividend Stocks - Part I
- Sometimes Things Aren't As They Appear
- Passing the Torch - Part 1 of 2
________________________________________________________________
I love to play chess. The strategy, the conflict, the ability to maneuver and attack all invigorates me. There is a great adrenaline rush when when my opponent realizes he is losing and there is nothing he can do about it. Unfortunately, I don't experience this rush often. Though I love to play chess, I am not very good at it. The primary reason for my poor performance is that I love to attack relentlessly. I usually don't play with my head and end up making bad moves.
A strong bias for action. That's what my HR professionals tell me I have. It is not always a bad thing. We are the doers, the ones that get things done and, unfortunately, we are the ones also that sometimes dramatically crash and burn. The latter is what often scares some to inaction. I work with managers (and executives) that have a hard time pulling the trigger and making a decision, then executing.
As noted in yesterday's Consolidated Edison (ED) stock analysis, my perspective toward this stock has changed. Back in December when I reviewed ED, I was quite harsh toward it and made statements such as "ED is not a stock I want to hold in my portfolio" and "I do (embarrassingly) own shares of ED". I was about to rip the whole investment out by its roots and rid my portfolio of it. Then I stopped, and thought, why did I buy it in the first place. It was a safe investment that would act as a counter-balance to some of my more riskier investments. I did not allow myself to sell anymore after that. Given its valuation in December it was not a good buy then, but I would buy it today if my allocation needed it.
As mentioned in Saturday's post "Time is My Friend", I have determined I want to own three to four banks in my portfolio. That means I need to divest two or three stocks. I will over-come my urge for action and patiently wait until it is evident which stocks should be divested. In the same vein, I have determined that I need to own two or three utilities. I will look for good buying opportunities to add to my positions, when appropriate, and evaluate the possibility of adding a third utility to my portfolio. Good things will come to those who wait (and think while they are waiting).
Checkmate!
Related Articles:
- Rev-up Your Portfolio With Asset Allocation
- Investing In What's Important
- Reaching Your 10-Year Investing Goal
- My Dirty Little Secret
- It Was An Odd Odyssey
________________________________________________________________
Linked here is a PDF copy of my detailed analysis of Consolidated Edison, Inc. (ED) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Consolidated Edison, Inc., through its subsidiaries, provides electric, gas, and steam utility services in the United States.
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. ED is trading at a discount to 3.) and 4.) above. If I exclude the high and low valuation, and average the remaining two valuations, ED is trading at a 9.9% discount. ED earns a Star for 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. ED earned a Star in 3.) above. It has increased its dividend for 10+ 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)? 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. ED earned one Star in this section. Its current yield of 5.62% is in excess of the high-yield MMA rate of 4.61%.
Other: ED is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. It has increased its quarterly cash dividend payments for 34 consecutive years.
Conclusion: ED earned one Star in the Fair Value section, one Star in the Dividend Analytical Data section and one Star in the Dividend Income vs. MMA section for a total of three Stars, which rates it as a 3 Star-Hold.
Back in December I reviewed ED and was quite harsh toward it. My perspective has changed. Tomorrow I will discuss the reason for the change.
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 own shares of ED (3.6% of my Income Portfolio).
What are your thoughts on ED?
Recent Stock Analyses:
- Stock Analysis: BB&T Corporation (BBT)
- Stock Analysis: Procter & Gamble Co. (PG)
- Stock Analysis: American Capital Strategies, Ltd. (ACAS)
- Stock Analysis: Johnson & Johnson (JNJ)
- More Stock Analyses
________________________________________________________________
Coming up next week on the D4L Channel is the world premier of Super-Tanker. The intriguing story of a former fighter pilot who was accustomed to instant maneuverability, but now finds himself the captain of slow, steady super tanker that is not designed to change directions quickly. Will he learn to cope with the slow and steady super tanker? Tune in next week and see!
It's going to be another memorable week. Don't risk missing a minute of it. You can have it all packaged and delivered directly to you by clicking here and subscribing to the D4L Channel.
While waiting for this week's featured presentations, you may want to tune in to a few of these classic episodes:
- Morningstar Dividend Leaders Index
- Is It Time To Upgrade Your Portfolio?
- Tracking Yield On Cost
- The Canadian Connection
- Process Overview and Asset Allocation
________________________________________________________________
It is good to periodically review the make-up of your portfolio and determine if it is meeting your expectations and is properly allocated. I've determined that I have too many bank stocks. There are currently six, in my dividend portfolio. If I want to limit my dividend stock portfolio to 25 equities, six bank stocks are too many. Three to four banks are appropriate for my portfolio. I have decided the weakest of the six must go. So who will be asked to leave. Let's compare based on March 6, 2008 closing data:
| Description | BAC | BBT | MTB | RY | STI | USB |
| NPV MMA Diff. | 98,490 | 28,293 | 34,311 | 304,230 | 8,812 | 76,113 |
| Yield | 6.82% | 5.91% | 3.56% | 4.18% | 5.46% | 5.35% |
| Div. Growth | 12.4% | 9.5% | 15.6% | 20.0% | 5.5% | 14.1% |
| (Disc.)/Prem. | -15.9% | -17.8% | -20.2 | -17.2 | -2.9% | -4.2% |
| Stars | 4 | 5 | 5 | 5 | 2 | 4 |
STI may seem like a logical choice for dropping due to its low rating. However, the low rating is due to its most recently announced dividend increase to $0.77/share, which lowered its growth rate to 5.5% from 10%. I suspect most of the other banks will significantly lower their growth rate. Let's consider what happens if the dividend growth rate drops to 5%, and 10% for those above 10%:
BAC:
- Dropping the dividend growth rate to 10% drops the NPV MMA Diff. to $47,993
- Dropping the dividend growth rate to 5% drops the NPV MMA Diff. to $14,803
BBT:
- Dropping the dividend growth rate to 5% drops the NPV MMA Diff. to $9,963
MTB:
- Dropping the dividend growth rate to 10% drops the NPV MMA Diff. to $7,395
- Dropping the dividend growth rate to 5% drops the NPV MMA Diff. to $835
RY:
- Dropping the dividend growth rate to 10% drops the NPV MMA Diff. to $12,104
- Dropping the dividend growth rate to 5% drops the NPV MMA Diff. to $2,853
USB:
- Dropping the dividend growth rate to 10% drops the NPV MMA Diff. to $12,104
- Dropping the dividend growth rate to 5% drops the NPV MMA Diff. to $2,853
Based on the above, it appears that STI and MTB are the weak links. However, when I reviewed the cash flow statements MTB and STI's were the strongest. At the beginning of this week and this post, I had full intentions of selling a bank stock. But after this limited review, I have opted to wait. I am confident that one will slip and fall behind the others, and when it does I will ponce on it like a lion and cast it from my portfolio. Sometimes the best move is no move at all. In time the appropriate stocks to divest will begin to reveal themselves. Time is my friend.
Related Articles:
- Share Buybacks - Do they really help?
- Fishing in the Bathtub
- Dividend Investing With ETFs
- When Is A Lot of Cash A Bad Thing?
- Dynamic Dividend Investing
________________________________________________________________
Each Friday I highlight the Carnivals I participated in over the past week, along with any notable articles that I come across. 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: Tracking Yield On Cost
- Carnival of Everything Finance published: The Winning Score - Part 2 of 2
- Festival of Stocks published: My Dirty Little Secret
Articles I enjoyed reading included (in no particular order):
- The Digerati Life presented Beat The Average Investor's Returns With The Simplest Investment Portfolio
- Wise Money Decisions presented Using Allowance to Teach Kids About Money
- The Financial Blogger presented The Sad Truth About Investing
- Monevator.com presented Who’s your Star Wars money hero?
- The Dividend Guy presented My Current Effective Dividend Yield: General Electric
- Donaldson Capital presented Dividends Are Not Signalling Recession
________________________________________________________________
Monday, The Dividend Guy Posted "My Top 3 Investing Mistakes and a Challenge to Other Bloggers" and tagged me to list mine. There are only few things in life that I consider myself an expert in, but when it comes to making investing mistakes I have earned several PhDs.
My Top 3 Investing Mistakes
1. Waiting Too Long Before Starting To Invest
Time is the investors most powerful tool. With time a multitude of mistakes can be overcome and fortunes can be built. If you do not begin investing until your 30's, 40's or 50's then there is less room for mistakes. I have always saved, but I wish that I began to aggressively invest when I was in my teens. As noted in my post "Passing the Torch - Part 1 of 2", you can start investing early, quit and still retire a multi-millionaire.
2. Focusing On Current Yield and Not Future Yield
As noted in "5 Lessons Learned About Investing ", I erroneously focused on current dividend yield when I first started dividend investing. I was fortunate enough to accidentally buy some good dividend stocks and hold them long enough to figure out the "secret" of dividend investing. Dividend investing is about future yield, not current yield. It is not necessarily starting with a high-yield investment, but ending up with a high-yield investment. This usually occurs by buying investments with a moderate yield, a history of growing dividends and letting time do its job (see #1 above).
3. Not Doing Your Homework Before Buying a Company
Quantitative analysis is easy - just download the numbers and crunch them. Qualitative analysis takes time and can't be automated. Getting to know a company is like getting to know a person - they are all unique and will likely require you doing something different to gain a full understanding of the company. As a former-growth investor, I lived by my stock screens to generate a buy list. I was buying a symbol to be flipped when it hit a predefined target. As noted in "Sometimes Things Aren't As They Appear" you may get a quantitative yes, but after some additional analysis effort it could turn out to be a qualitative no.
Tag You Are It…
To keep this going, I want to tag the following four bloggers (ok, so I couldn't stop at 3) with their choices for their top 3 investing mistakes. I also challenge them to tag 3 other bloggers to see how long we can keep this going.
1. Financial Jungle you are tagged
2. Dividend Money you are tagged
3. The Div Guy you are tagged
4. The Money Gardener you are tagged
Many thanks to The Dividend Guy, it was fun!
Related Articles:
- 5 Lessons Learned About Investing
- My Unique Investing Process
- Sometimes Things Aren't As They Appear
- Passing the Torch - Part 1 of 2
- Charlie Munger's 10 Rules for Investment Success
________________________________________________________________
Let me state the obvious: Since year-end, money market rates have been in a free fall. At the end of the year my best money market account (MMA) was earning 5.11% APY. That same account still has my highest rate, but it is now earning a measly 3.75%. So what's a guy to do? Here are a couple of actions that I have taken:
- I put a floor on my comparative money market rate used to evaluate dividend stocks. As described in my "Updating the MMA Rate" post, the correct rate to use would be the effective rate over the next 20 years. I think using the current rate as a proxy for the next 20 years is fraught with errors. In periods of high rates, certain investments would be precluded due to the above average rate; while in periods of low rates, as we are in now, undeserving companies would potentially qualify as a buy.
- I have accelerated the pace of moving funds from my money market account to my stock investments. When my yield on cost (YOC) was less than 5% and my insured MMA was earning 5.11%, I was not necessarily in a hurry to move my funds out of the MMA into equities. Stock prices of good companies continue to fall, which in turn raises their yield. As reported in "Progress Update - Feb. 2008", my February 2008 YOC was 5.13% which is strong when compared to the 3.75% MMA rate. My employer pays bonuses in March. I usually put it in my MMA and use it, along with the interest it earns, over the following year to purchase equities. In addition, a portion of my base pay also goes into the MMA to fund equity purchases. Prior to the above acceleration, my purchase rate had dropped to a level where I was only seeing a slight monthly decrease in my MMA account.
Related Articles:
- Yield on Cost: Measuring for Success
- Tracking Yield On Cost
- 5 Lessons Learned About Investing
- The Winning Score - Part 2 of 2
- Dividends4Life Toolbox
________________________________________________________________
In the U.S., public companies have 60 days from the end of their fiscal year to file form 10-K with the Securities and Exchange Commission (SEC). For companies on a calendar year, day 60 was Friday February 29th - the day we filed my employer's 10-K. My staff and I celebrated with a small party Friday afternoon. Since this was the first weekend off in 2008 for most of my department, I threw in Monday as a free-day they could take off. I took it also.
So what did I do on my first long weekend of the year. I must say none of it involved fun or pleasure. I mowed the weeds and put out pre-emergent, albeit a little late and generally caught up on several 'honey-dos' that have been accumulating. I didn't mind any of this. It was good to see the family again. But then Monday came, a beautiful day in the low 70's with low humidity (this doesn't happen much in the south). It was perfect weather to get out and enjoy the day, but unfortunately I had to begin working on that which haunts me. Like a gremlin in the night 'The Tax Man Cometh' on April 15th (U.S.) whether we are ready or not.
It's not that I mind paying my fair share (my opinion on what's my 'fair share' could be an entire article/series, so I won't go there), but I detest having to gather the information and calculate the inputs. I have never been this far behind.
As I have mentioned before, I am an accountant. Most people wrongly assume all accountants are into taxes. That would be like assuming your proctologist could help you with a sore throat (I hope you washed that before you stuck it in my mouth). This accountant is not into taxes.
My friends tell me to hire someone to prepare my taxes. Entering the information into Turbo Tax is not the difficult part. Calculating the inputs is what is nasty. If I hired someone, they would be looking for the same inputs. Here are some of the things I am working with:
- A 14-page 1099 from Scottrade: Page 1 (1099-DIV) breaks dividends into 13 boxes (ordinary, qualified, capital gain distributions, section 1250, section 1202, 28% rate, nondividend distributions, tax withheld, investment expenses, foreign tax paid, et. al.) Since I invest in REITs, I have numbers in most of these boxes. Other than nondividend distributions, this is really not bad.
- Nondividend distributions: If it looks like a dividend, walks like a dividend and quacks like a dividend, be careful - it could be a return of capital. The good news is these are not currently taxed as ordinary income, but are treated a reduction in your basis and are taxed as a capital gain when you sell the security. The bad news is you have to go back and adjust every dividend you entered into your portfolio software and adjust your basis. I have over a page of these this year.
- A 4-page K-1: For those not familiar with K-1's, they are issued by Master Limited Partnerships (MLP), who are not taxed. In effect the K-1 is your portion of the tax form the MLP would have filed if it was taxable. You incorporate every line into your tax form. You are also responsible for filing a tax form in every state that the MLP does business. Not to worry it comes with a 15 page instruction booklet. For tax reasons, I will never knowingly buy a MLP. Periodically, I will not do all my homework and accidentally buy one. To make matters worse, I usually don't discover it is a MLP until the 1099 arrives in January, so it becomes a two year process of getting rid of it.
- All the normal W-2's, various 1099's, contribution receipts, etc.: After dealing with the above these seem like a piece of cake.
"No dear, I am still working on my taxes. I am not 'playing' on my blog."
Oops, gotta go.
How do feel about your taxes?
Related Articles:
- The Winning Score - Part 1 of 2
- Is Your Portfolio Average?
- Tech Stocks in a Dividend Portfolio?!
- You're Fired!
- Investment Dating Before Marriage
________________________________________________________________
Linked here is a PDF copy of my analysis of BB&T Corporation (BBT) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: The BB&T Corporation operates as a holding company for Branch Banking and Trust Company that provides commercial banking and trust services for small and mid-size businesses, public agencies, local governments, and individuals in the United States.
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. BBT is trading at a discount to 1.) and 3.) above. If I exclude the high and low valuation, and average the remaining two valuations, BBT is trading at a 14.2% discount. BBT earns a Star for 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. BBT earned Stars in 3.) and 4.) above. It has increased its dividend for 10+ years and its 1-year dividend rate growth exceeded its 5-year dividend 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. BBT earned both available Stars in this section. Its current yield of 5.62% is in excess of the high-yield MMA rate of 4.61% and the NPV MMA Diff. is impressive at $24,628.
Other: BBT is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. It has paid a cash dividend to shareholders every year since 1903 and has increased its quarterly cash dividend payments for 36 consecutive years.
Conclusion: BBT earned one Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and two Stars in the Dividend Income vs. MMA section for a total of five Stars, which rates it as a 5-Star Strong Buy.
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 own shares of BBT (2.9% of my Income Portfolio).
What are your thoughts on BBT?
Recent Stock Analyses:
- Stock Analysis: Procter & Gamble Co. (PG)
- Stock Analysis: American Capital Strategies, Ltd. (ACAS)
- Stock Analysis: Johnson & Johnson (JNJ)
- Stock Analysis: Lowe's Companies, Inc. (LOW)
- More Stock Analyses
________________________________________________________________
This week on the D4L Channel we bring back classic variety programming. Here are a few items coming your way:
- The Classic Horror Flick: What’s scarier than the beast from beyond? It makes less sense than Psycho. They are among us now, and the clock is ticking. In about six weeks they’re coming for us. We better be prepared... tick, tick, tick, tick ....
- Survivor: There are currently five slots and six contestants. Someone will be asked to leave, and it won't be pretty!
- Branded!: A tagged man on a mission...
While waiting for this week's classics, you may want to tune in to a few of these featured episodes:
- My Dirty Little Secret
- It Was An Odd Odyssey
- Sometimes Being Right Is Just Wrong
- Pre-Screening Dividend Stocks - Part I
- Rev-up Your Portfolio With Asset Allocation
________________________________________________________________
