Nucor (NUE): A Dividend Aristocrat Yielding 4.3%
Nucor (NUE) has increased its dividend for 43 consecutive years – every year since it first began paying dividends in 1973. For a company operating in the often-challenging steel market, such consistency is remarkable. The stock also offers the fifth highest dividend yield (4.3%) out of all the dividend aristocrats, perhaps making it an interesting candidate for investors living off dividends in retirement to consider. While the stock is not in our Top 20 Dividend Stocks portfolio today, the company possesses several competitive advantages that dividend growth investors should be aware of. Business Overview NUE manufactures steel products in the U.S. and Canada and began operating its first mini mill in the late 1960s. With production capacity [...]
W.W. Grainger (GWW): Counter-Cyclical Cash Flow and 44 Straight Years of Dividend Growth
W.W. Grainger (GWW) is a time-tested business that has rewarded investors with 44 consecutive years of dividend increases. Like many other industrial companies, weak energy markets, sluggish growth in China, and foreign currency headwinds are challenging GWW’s current business trends. As a result, the stock’s dividend yield sits at 2.6%, which is well above its five-year average dividend yield of 1.5%. With a sturdy business model, healthy free cash flow generation, and decent long-term growth potential, GWW is a dividend growth stock we are watching for our Top 20 Dividend Stocks portfolio. Business Overview GWW was founded in 1927 and is a leading distributor of maintenance, repair, and operating (MRO) products that include motors, lab supplies, power transmission, [...]
Dover (DOV): A Cheap Dividend King Hit by Energy Market Weakness
Dover (DOV) has increased its dividend for 60 consecutive years, trades at a dividend yield of 3.2%, and has a relatively low payout ratio of 30%. The stock also trades for just 13.5x forward earnings guidance. Why is this high quality industrial business looking so cheap? Energy markets. DOV generated over 30% of its earnings from its Energy segment in 2014, with most of its exposure coming from drilling and production operations in North America (one of the most vulnerable spaces in the energy sector right now). Energy headwinds are starting to create a compelling valuation case to add DOV to our Top 20 Dividend Stocks portfolio, but they could persist for much longer than investors expect. [...]
Clorox (CLX): A Reliable Dividend Aristocrat for any Economic Environment
Source: Los Angeles Times Clorox (CLX) has increased its dividend for nearly 40 straight years and owns some of the most well-known and recession-resistant consumer brands in the country. The company is a fraction of the size of P&G and has numerous growth opportunities to pursue over the coming years. While the stock might not be a bargain today, it shares many characteristics with some of the holdings in our Top 20 Dividend Stocks portfolio. Business Overview CLX started in 1913 with five people and one product in Clorox bleach. In fact, CLX remained a one-product company for its first 56 years. Today, the company has over 7,700 employees, sells its products in more than 100 [...]
V.F. Corporation (VFC): A Beaten Down Dividend Aristocrat With Strong Brands
V.F. Corporation (VFC) has been in business for more than 115 years and owns some of the most famous consumer apparel brands in the world (e.g. The North Face, Vans, Wrangler, Lee, etc.). Unseasonably warm winter weather, sluggish retail spending, unfavorable currency fluctuations, and several other transient factors have caused this dividend aristocrat to tumble nearly 30% since the end of July 2015. None of these factors seem to impact the company’s long-term earnings power, potentially setting up an attractive investment opportunity. VFC has increased its dividend for 43 consecutive years (2.7% yield) and appears to be trading at a very reasonable price (forward P/E multiple of 16) considering the quality of the business. These are the opportunities we [...]
Genuine Parts Company (GPC): Dividend King With a Safe 3.1% Yield
Genuine Parts Company (GPC) has grown its sales in 63 of the last 65 years and increased its profit in 50 of the last 54 years. How many of your holdings can make those claims? GPC also has a 3.1% dividend yield and has steadily increased its dividend for 59 consecutive years with dividend growth averaging 7% per year over the past decade. Very few companies have such a proven track record of steady growth, but GPC offers even more than that. This is the type of company we look for in our Top 20 Dividend Stocks portfolio. Business Overview GPC was founded in 1928 and distributes automotive replacement parts, industrial replacement parts, office products, and electrical [...]
Ecolab (ECL): A High Quality Dividend Aristocrat With Great Growth Potential
Ecolab (ECL) is one of the most reliable businesses that money can buy. Although its dividend yield is low (1.4%), the company’s long-term growth outlook is outstanding and supported by ECL’s moat (90% recurring revenue in the form of essential consumables; entrenched customer relationships; twice as large as its next biggest competitor; 25,000 customer-facing employees). We look for these types of business for our Long-term Dividend Growth portfolio and believe that weak energy markets, currency headwinds, and sluggish global growth could be providing a buying opportunity. Business Overview ECL’s sells a wide range of sanitizers, cleaners, lubricants, cleaning systems, dispensers, water treatment products, and on-site services that are used by customers in virtually every industry (e.g. restaurants, hotels, [...]
A Guide to Investing in Closed-End Funds
Closed-end funds can provide dividend investors with significantly more income compared to basic mutual funds, ETFs, and common stocks. However, closed-end funds are not well known by most investors and come with several complexities. A closed-end fund is a type of investment company whose shares are traded on a stock exchange or in the over-the-counter market. Its assets are actively managed by the fund’s portfolio managers and may be invested in equities, bonds, and other securities. However, closed-end funds have several important differences compared to the mutual funds you are likely more familiar with, which are known as open-end funds. What are the Differences between Closed-End Funds and Open-End Funds? There are two types of mutual funds – [...]
General Motors (GM) Raises Dividend by 6%, Increases Earnings Outlook for 2016
Favorable macro trends and company-specific improvement have helped General Motors (GM) remain a strong performing holding in our Top 20 Dividend Stocks portfolio. Earlier this morning, the company announced some good news for shareholders. GM raised its 2016 earnings outlook by 5%, boosted its dividend by 6%, and increased its share repurchase plan by 80%. Shares advanced by 2-3% in early morning trading. From a macro perspective, the auto industry is benefiting from record U.S. volumes, low borrowing costs, and strong consumer spending and employment. Low gas prices are also driving strong demand for GM’s trucks (38% of sales) and crossovers (25%). GM expects slow to modest growth in 2016, not unlike what the company experienced in [...]
Parker-Hannifin (PH): 59 Straight Dividend Increases and Plenty of Runway for Growth
Parker-Hannifin (PH) is a high quality industrial business with entrenched market positions and excellent cash flow generation. The company has increased its dividend for 59 consecutive years, making it a Dividend King, and offers a 2.8% dividend yield today. Its dividend has also compounded at a double-digit annual rate over the last decade and should continue putting up above-average growth, making it a good fit for our Long-term Dividend Growth portfolio. The strong dollar and sluggish industrial activity around the world are challenging the business today, but we don’t believe these issues affect PH’s long-term earnings power. Business Overview PH is a global leader in motion and control technology – anything that enables motions (e.g. hydraulics, mechanical pneumatics [...]