General Mills (GIS): A High Quality Dividend Stock Changing With the Times
The branded food manufacturing industry is experiencing meaningful change as consumers’ health consciousness and eating habits evolve, impacting all of the major players including General Mills (GIS). Several of GIS’s major product categories, such as cereal, have seen growth decline in recent years, weighing on the stock’s performance. Like many of its peers, GIS is shifting its mix to better align with new consumer trends that could shape the market for the next several decades. We believe in GIS’s business strategy, financial strength, and high quality dividend. For these reasons and more, GIS is a holding in our Conservative Retirees dividend portfolio. Business Overview GIS maintains a diversified sales mix of packaged meals, cereal, snacks, baking products, [...]
Archer Daniels Midland (ADM): A Dividend Aristocrat Yielding 3%
ADM’s stock sits near its 52-week low price and yields 3.1% after falling by more than 30% over the past year. Whenever we see dividend aristocrats such as ADM in these situations, we get excited – perhaps an excellent business is now on sale for long-term investors. After all, ADM has been around for more than 100 years and is a critical piece of the US agricultural landscape. People will keep eating, and volatile commodity prices will eventually return to more favorable levels. Right? Probably. However, after a closer inspection of the business, we uncovered several factors that complicate ADM’s investment case. In the research below, we analyze ADM’s business and evaluate its appropriateness for our Top 20 [...]
8 Master Limited Partnerships Risks
Master limited partnerships risks are increasingly in focus by dividend investors as energy prices remain depressed. The sector has attracted income investors thanks to its relatively high dividend yields, historically stable cash flows, and perceived protection from swings in commodity prices. However, with many energy master limited partnerships down over 30% in 2015, it’s time for investors to seriously revisit the topic of master limited partnerships risks. We identified a handful of the biggest risks facing master limited partnerships (MLPs) below. In addition to understanding MLPs unique corporate, legal, and tax structures, which we covered in our article, “What is a Master Limited Partnership?”, remaining aware of the risks facing the industry is extremely important. With that said, let’s [...]
Blue Chip Dividend Stocks
Blue chip dividend stocks can be some of the most appealing investment opportunities for income and capital appreciation. If you have ever wondered what blue chip dividend stocks are, why they are attractive, where you can find them, and what the best ones are, you have come to the right place. What are Blue Chip Dividend Stocks? The term “blue chip” is said to have originated in the 1920s by Dow Jones reporter Oliver Gingold. The story goes that Gingold was at a brokerage firm when he observed several trades that took place at high prices (e.g. $200 per share) and said to nearby securities analyst Lucien Hooper that he planned to write about these “blue chip stocks” when [...]
International Flavors (IFF): Your Everyday Dividend Growth Stock
You probably use several products every day that are touched by IFF. The company has a presence in thousands of consumer products, yet it has largely flown under the radar operating in the chemicals industry. We like boring, durable businesses that can predictably pay us more income every year, and IFF certainly checks these boxes. We added IFF to our Long-term Dividend Growth Portfolio earlier this year. While the stock trades at a premium relative to the market today, we continue to believe the company is a solid long-term holding that will reward investors with double-digit dividend growth for years to come. Business Overview IFF was founded over 125 years ago and is the behind-the-scenes company that works [...]
Four Safe Dividend Stocks Yielding At Least 4%
All too often, yield-starved investors give in to the temptation of high yield dividend stocks. Dividend yields greater than 5% look like an easy way to grab more current income on the surface, but dividend income is just part of the total return equation. If a stock with a 6% dividend yield sees its price cut in half, an investor living off dividends in retirement would have been better off purchasing a lower yielding stock with less business risk and volatility, occasionally selling shares to meet his or her cash flow needs. Remember, the market is quite efficient most of the time, so think first before chasing a high yield dividend stock that appears to be too good to be [...]
Is It Finally Time to Buy IBM’s 3.8% Dividend Yield?
IBM trades at a forward earnings multiple of 9x and has a dividend yield approaching 4%. The stock is either really cheap, or the market is sniffing out more trouble ahead with management’s current strategy. We aren’t ready to jump in just yet and keep the stock out of our Top 20 Dividend Stocks portfolio for now. However, Warren Buffett sees value and added to his position during the third quarter as IBM reported another disappointing set of results. IBM’s third quarter revenue declined for the 14th straight quarter and came in below all 17 analysts’ estimates. While there is plenty of talk about how the move to off-premise cloud computing is hurting many of IBM’s “old technology” [...]
GE’s Transformation Continues Building Momentum
Investors have long been frustrated with GE. The share price is lower than it was 10 years ago. The company has generally overpromised and under delivered for years, leading many to question whether or not CEO Jeff Immelt is still the right man for the job. And who can forgive and forget the 2009 dividend cut after the company had defended its dividend plan for months? We believed the pessimism surrounding GE was deserved but underappreciated the quality of GE's industrial services business and the chance for GE to "get it right" this time for shareholders with its portfolio transformation. As a result, we added GE to our Top 20 Dividend Stocks portfolio in July 2015 and, while [...]
What is a Master Limited Partnership?
They have surged in popularity over the past decade, but what is a master limited partnership (MLP)? The rise of MLPs has been driven by low interest rates and the massive build-out of new energy infrastructure in the United States to help deliver oil and gas from new shale plays. MLPs offer relatively high dividend yields, consistent cash flow, tax advantages, and the potential for capital appreciation, but they can be complicated investments to understand. A list of more than 130 MLPs can be found by clicking here, but read on to learn about investing in master limited partnerships. What is a Master Limited Partnership? MLPs are publicly traded partnerships, a type of tax-exempt company that was created by the [...]
Linear Technology (LLTC): Nearing Dividend Aristocrat Status
LLTC is a high quality dividend growth stock that will likely become a dividend aristocrat by 2019. Despite being a technology company, its business model has proven to be extremely durable and throws off substantial free cash flow. We believe these favorable characteristics will persist and continue to reward shareholders for years to come. LLTC's presence in industrial (40%+ of sales) and automotive (20%+) markets positions it to benefit over the next 10+ years as objects become smarter and more connected, demanding more of LLTC's products. While the stock doesn't appear to be a bargain today, it does appear to be a wonderful company trading at a reasonable price. Therefore, we added it to our Top 20 Dividend Stocks [...]