WEC Energy Group (WEC): A High Quality, High Dividend Growth Utility
Regulated utilities have long been a core staple in dividend portfolios, courtesy of their high-yields, safe payouts, slow but steady dividend growth, and very low volatility. But while most people focus on the biggest and well-known names in the sector, such as Duke Energy (DUK), Southern Company (SO), and Consolidated Edison (ED), there are a select few faster growing, less known gems hidden in this otherwise boring industry. Let’s examine one such name, WEC Energy Group (WEC), to see if this fast growing utility has what it takes to be one of the top dividend growth performers in this steady, defensive industry. More importantly find out whether or not now could be the right time to add [...]
Emerson Electric (EMR): A Dividend King With 60 Consecutive Years of Dividend Increases
When it comes to world class long-term wealth compounders, often the best choice isn’t the next great hyper-growth tech stock, but something far duller. Take, for example, industrial companies such as 3M (MMM), which have legendary track records of consistent outperformance and dividend growth that span over half a century. Emerson Electric (EMR) is another such legend, a venerable dividend king with 60 consecutive years of payout growth to its name. Investors can view data on all of the dividend kings here. However, in recent years Emerson has faced some very serious growth headwinds. Let’s take a closer look to see just what has made Emerson such a great business in decades past, what investors can expect [...]
Cummins (CMI): A Blue Chip Dividend Growth Stock on the Rebound
Historically, industrial dividend growth stocks such as engine maker Cummins (CMI) have done a great job of enriching long-term investors, especially if you’ve reinvested the dividends. For example, Cummins has delivered an annualized total return of 15.4% since mid-1995, nearly doubling the S&P 500’s 8.5% annual total return. However, Cummins has fallen on hard times in recent years while its share price has returned over 70% since early 2016, creating potential concerns for value-focused investors. Let’s take a closer look under the hood of this venerable blue chip dividend stock to see if and when its business fortunes may turn around. More importantly, find out if Cummins is an attractive dividend growth stock at today’s share [...]
Nordic American Tankers (NAT) Cuts Dividend, and More Bad News Could Be Ahead
With interest rates still near record lows income investors are naturally drawn to super high-yield stocks, such as Nordic American Tankers (NAT), which until recently was offering a seemingly mouth-watering payout of 10.8%. But one of the most important factors to successful long-term dividend investing is risk management, and the realization that Wall Street generally doesn’t offer such high-yields without a very good reason. Let’s take a look at the cautionary tale of Nordic American Tankers to see just why this recent dividend cut wasn’t at all a surprise and actually could have been avoided by income investors. In fact, the company is a classic high-yield “value trap,” meaning that the business model is fundamentally flawed. [...]
Dividend Reinvestment Plans: A Guide to DRIPs
Dividend reinvestment plans, or DRIPs, are one of the most effective tools for income investors to build wealth. History has shown that a long-term, buy-and-hold approach to stocks is hands down the best way for regular people to grow their investment accounts and achieve financial independence. But what many people don’t realize is the importance of dividends to achieving these impressive results. As you can see, since 1871 over half of the stock market’s returns have come from dividends. However, dividend reinvestment is the real fuel to the market's long-term compounding. To that end, dividend reinvestment plans are a great way to ensure that your money is working as hard as possible for you. Strategy S&P [...]
Consolidated Edison (ED): A High Yield Dividend Aristocrat Down 10% Since July
When it comes to high-yield dividend stocks, regulated utilities are a favorite among conservative investors living off dividends in retirement and for good reason. They usually offer generous, secure, and consistently (albeit slowly) growing yields; as well as some of the lowest volatility you can find in the stock market. But nearly a decade of record low interest rates has resulted in yield-starved investors plowing money into the sector, searching for quality bond alternatives. This has resulted in a precarious position for value-focused investors, with unattractive valuations threatening to result in years of poorer performance for the utilities sector going forward. Let’s take a closer look at Consolidated Edison (ED), one of the most popular regulated [...]
Target (TGT) Drops 8% on Another Disappointing Report – An Update for Dividend Investors
Target (TGT) is a popular holding across many dividend growth investors' portfolios. After all, few companies can match Target's impressive track record. With over 100 years of operating history, Target has proven to be one of the most durable companies in the world. The company also holds the title of being a dividend aristocrat, rewarding shareholders with 49 consecutive years of payout raises. You can view analysis on all of the dividend aristocrats here. Despite Target’s impressive history, the company has fallen on hard times recently. Once fourth quarter results are finalized, Target’s revenue will have declined year-over-year for five consecutive quarters. Source: Simply Safe Dividends Target’s stock has disappointed investors as [...]
Pearson (PSO) Shares Plunge 30% on Surprise Dividend Cut – It Could Have Been Avoided
Pearson (PSO) is one of the largest publishers of education textbooks and materials in the world. The iconic company’s roots can be traced back to 1844, and its well-known publishing operations began in the 1920s. In addition to its extensive operating history, Pearson had increased its dividend above the rate of inflation for 24 consecutive years through 2015, garnering a high level of trust with conservative income investors (especially those living off dividends in retirement). However, that all changed this week. Pearson announced very disappointing results for the fourth quarter and slashed its outlook for 2017 and 2018. Management froze Pearson’s 2016 dividend and will “rebase” future dividend payments in response to the firm’s weakening profits. [...]
Cincinnati Financial (CINF): Will Catastrophe Events Jeopardize Its Dividend?
Catastrophes such as hurricanes, tornados, and floods are never pleasant, and they can make or break insurance companies. The year 2016 saw its fair share of disasters, including record-breaking snowfall throughout the East Coast in January, severe flooding in Louisiana, wildfires in California, and Hurricane Matthew. Cincinnati Financial (CINF) is an insurer that has seen its fair share of disasters with an operating history stretching all the way back to 1950 (see my full thesis on the company here). However, investors were spooked last week when the company announced its preliminary estimate for fourth quarter catastrophe losses, which are expected to total roughly $135 million (almost half of the total amount of dividends Cincinnati Financial is expected [...]
T. Rowe Price (TROW): A Quality Dividend Aristocrat Trading at a Discount
Asset management is a great business, given that the stock market has historically risen by a 9.1% CAGR since 1871. In other words, the assets from which management fees are derived are generally rising, allowing for exponential growth in earnings and cash flow - the building blocks of any great dividend growth stock. Of course, those same giant pools of money can create conflicts of interest between management and shareholders, in which employees of the company end up trying to enrich themselves with the kinds of giant bonuses that Wall Street has become legendary for. This is why shareholders need to be very selective, only buying shares of time-tested, shareholder-friendly asset managers, such as T. Rowe Price. [...]