Paychex (PAYX): Safe 3.5% Dividend Yield, No Debt, and Excellent Business Consistency
Paychex (PAYX) has paid uninterrupted dividends since going public in 1988. While the company held its dividend flat during the financial crisis, it has otherwise increased its dividend every year since the mid-1990s and currently yields 3.5%. PAYX has a very durable business model that throws off predictable free cash flow. We believe its dividend is very safe and offers at least average growth prospects, making it a good fit for our Conservative Retirees dividend portfolio. Let’s take a closer look at the business. Business Overview PAYX was founded in 1971 and provides a range of payroll, human resource, and benefits outsourcing services to over 590,000 small and medium-sized businesses. It offers a wide range of services [...]
Suncor (SU): Warren Buffett’s Big Oil Bet Has a Safe 3.7% Dividend Yield
Published on 1/9/2016 Warren Buffett only owns two stocks in the energy sector, and they both pay a dividend – Suncor (SU) and Phillips 66 (PSX). SU’s dividend yield is 3.7%, and it has increased its dividend for 13 consecutive years. Buffett first bought into SU in 2013, investing around $500 million at the time. He subsequently purchased more shares during the third quarter of 2015, making SU close to his 20th largest holding. Depressed oil prices have most energy investors worried about the safety of their dividend payments, much less their future growth potential (which is expected to slow significantly in 2016). However, much like Buffett hopes a new stock purchase remains stagnant or even declines [...]
Compass Minerals (CMP): 12 Consecutive Years of Dividend Growth, 3.6% Yield, and Recession-Resistant Demand
Published on 1/8/2016 Compass Minerals (CMP) has increased its dividend every year since going public in 2003 and boasts an operating history dating back to 1844. Its businesses are simple to understand, largely uncorrelated with the economy, and meaningfully advantaged by a unique set of assets that is, in many cases, practically impossible to replicate. The stock also has an attractive dividend yield of 3.6%, a 10% historical dividend growth rate, a reasonable earnings multiple (14x), and meaningful free cash flow growth potential over the next five years. Temporary macro headwinds (the mild winter weather in the Midwest and weak agricultural markets) are impacting the business at the moment. In fact, CMP issued a press release yesterday evening [...]
Thomson Reuters (TRI): 22 Consecutive Years of Dividend Growth and a Safe 3.6% Yield
Published on 1/7/2016 Thomson Reuters (TRI) has raised its dividend for 22 straight years and is one of the most consistent free cash flow generators around. The company’s business benefits from significant amounts of recurring revenue (87% of sales), While TRI’s rate of dividend growth is modest, we believe the company’s 3.6% dividend yield and current valuation are attractive. For these reasons and more, we hold TRI in our Conservative Retirees dividend portfolio. Business Overview TRI was created when Thomson acquired Reuters (a 160-year-old global news and financial data service) for about $17 billion in early 2008. Many of the company’s solutions were assembled through hundreds of acquisitions made over the years. Today, TRI sells electronic content [...]
Sysco (SYY): A Dependable Dividend Aristocrat for Retirement Income
Sysco (SYY) is a holding in our Conservative Retirees dividend portfolio. The company is a dividend aristocrat that has paid dividends since 1970 and appears to offer a very safe 3% yield today. While SYY’s growth rate is very moderate, the company’s durability has been noteworthy. The pace of change in the foodservice distribution industry is really slow, and SYY derives several benefits from being the largest player in the market. Despite several years of sluggish growth and some pricing pressures, we believe SYY will keep plodding forward as it executes on its cost improvement plan and becomes even more competitive. A well-known activist investor also purchased 7% of the company in August 2015 and could help the [...]
Becton Dickinson (BDX): A Healthcare Dividend Aristocrat With Consistent Double-Digit Dividend Growth
Becton, Dickinson and Company (BDX) is a world leader in medication management and patient safety solutions. The company has been in operation for more than 115 years and has increased its dividend for 44 consecutive years. With a diverse portfolio of medical products, meaningful exposure to emerging markets and a large acquisition under its belt, BDX appears to be an excellent candidate for long-term dividend growth investors to consider. While the stock’s 1.7% dividend yield is too low for investors living off dividends in retirement, its total return potential appears to be attractive today. Business Overview BDX was founded in 1897 and manufactures a wide range of medical supplies, devices, lab equipment, and diagnostics products. Some of [...]
Diageo (DEO): A Safe 3.2% Dividend Yield in the Alcoholic Beverage Market
Diageo (DEO) is a leading player in the alcoholic beverages market. Up until the last few years, the company enjoyed great success. However, consumer trends have started to shift in DEO’s most profitable region – North America. The company has struggled to grow volumes and is now in a bit of a transitional period in an effort to strengthen its long-term growth prospects. For these reasons, the stock appears to be relatively cheap today and offers investors living off dividends in retirement a safe 3.2% dividend yield and mid-single digit dividend growth potential. However, is now the time to buy the stock given some of its challenges? Business Overview DEO is the largest producer of spirits [...]
Waste Management (WM): An Excellent Moat and 13 Years of Consecutive Dividend Increases
Waste Management (WM) is not widely known by dividend investors, but its moat and consistency are remarkable. As the largest integrated waste management company in the country, WM possesses several key advantages that have enabled it to increase its dividend for 13 consecutive years. While WM’s operating history isn’t as long as some other companies, its economies of scale, durability, unique assets, consistent free cash flow generation, and mission-critical services make the company one of our favorite blue chip dividend stocks. Business Overview WM is the biggest integrated waste management company in North America and serves more than 21 million residential, commercial, industrial, and municipal customers. The company makes money by entering into contracts with customers to [...]
Lowe’s (LOW): 50+ Consecutive Years of Dividend Growth
Lowe’s (LOW) has paid a dividend each quarter since going public in 1961. Even more impressive, the company has raised its dividend for 53 consecutive years – a feat achieved by fewer than 15 companies. Not surprisingly, LOW has a handful of competitive advantages that have enabled it to enjoy meaningful growth. While the stock is not currently in our Top 20 Dividend Stocks portfolio, it’s one that long-term dividend growth investors should keep on their radar. Let’s take a closer look at the business. Business Overview LOW was founded in 1946 and is the world’s second largest home improvement retailer. The company operates over 1,800 home improvement and hardware stores (almost all in the U.S.) and [...]
Aflac (AFL): A Dividend Aristocrat Trading For Less Than 10x Earnings
Aflac (AFL) is a well-known insurance company that has proven to be a very reliable dividend payer over the years. The company has increased its dividend for 33 consecutive years and has plenty of room for continued dividend growth. The insurance business has many attractive characteristics, but AFL’s high exposure to Japan has served as a meaningful headwind over the past few years. The stock currently trades at less than 10x forward earnings, and we hold the stock in our Top 20 Dividend Stocks portfolio. Business Overview AFL is the number one provider of individual voluntary insurance products at the worksite in the U.S. and protects one in four households in Japan. AFL provides insurance to more than [...]