Qualcomm (QCOM): Safe, Growing Dividends and a Solid Yield
Qualcomm (QCOM) has metrics that make many dividend investors salivate. The company offers a 3.4% yield, has increased its dividend every year since 2003, and has recorded annual dividend growth in excess of 20% over the last five years. Furthermore, Qualcomm’s stock is down roughly 25% from its 2014 highs and trades around 16.5x 2016 estimated earnings. These are the types of characteristics we like to see for investments in our Top 20 Dividend Stocks portfolio. However, with technology trends changing more rapidly and becoming harder to identify, should Qualcomm make the cut? Business Analysis Qualcomm is a leader in the development and commercialization of digital communication technologies called CDMA (Code Division Multiple Access) and OFDMA (Orthogonal [...]
Wells Fargo’s Reputation Takes a Hit: Now What?
If there is one thing I have learned about investing in stocks, it is to expect the unexpected. Life is filled with uncertainty and surprises, and companies in our investment portfolios are no different. I steer clear of most investment opportunities because they are outside of my (limited) circle of competence. For this reason, I largely avoid the financial sector because I have no good way of understanding the quality of loans on a bank's balance sheet or an insurer's level of underwriting risk. Given the opaque nature of most financial firms' financial statements, any investment requires a lot of trust in the management team to appropriately price and manage risk. Financial leverage used by banks [...]
Meredith (MDP): 23 Straight Years of Dividend Growth and a High Yield
Meredith Corporation (MDP) has never exactly been a household name, but many of its brands are. The company is an old school magazine business that has been a chameleon over the years, constantly evolving and growing into a $1.6 billion multimedia powerhouse with a lineup of television stations, magazines, websites, and online apps. For income investors, Meredith has been a reliable dividend-paying stock since 1947 and increased its payout for 23 consecutive years. Furthermore, the stock offers an above-average 3.9% dividend yield and has seen its dividend compound by 12.6% per year over the last decade. Higher-yielding dividend stocks usually do not record strong dividend growth, and MDP’s stock also trades at a modest 14x forward [...]
Annuities: Pros and Cons Versus Dividend Stocks
Protecting the money you’ve worked so hard to save is one of the most important priorities, particularly if you are nearing, or have already begun, your retirement. Considering the myriad of available investment options, it’s easy to become confused and overwhelmed. Two of the most common choices for maximizing retirement savings are dividend stocks and annuities. That being said, having at least a basic understanding of how annuities work, the pros and cons of annuities, and how they compare to dividend stocks, will reduce potential confusion and help with better planning. What are Annuities? To put it simply, annuities are retirement investments offered by life insurance companies. Several types of annuities exist, each with its own [...]
Apple (AAPL): Reviewing One of Warren Buffett’s New Dividend Stocks
Apple (AAPL) is a blue chip stock that recently reinstated the dividend. Since becoming a dividend payer again in 2012 (it was suspended from 1996-2011), they have increased the quarterly dividend by 50% from 38 cents per share to 57 cents. With a relatively low payout ratio, high returns on invested capital, and an extremely valuable consumer brand, Apple looks undervalued at only 13x 2016 earnings. Warren Buffet’s lieutenants certainty agree as Berkshire invested over a billion dollars in the company this year. However, in a world where technology trends change drastically quickly, should investors count on Apple to deliver sustainable dividend growth? Business Analysis Apple is a global technology company with a rich history of product innovation. In [...]
Disney (DIS): 3 Risks to Consider Despite the Strong Dividend Growth
Disney (DIS) is one of the most iconic companies in the world and has rewarded shareholders with 11.7% annual dividend growth over the last 20 years. However, that hasn’t stopped the stock from slumping more than 20% since hitting an all-time high in late 2015. Today, Disney’s stock trades for about 15.3x forward earnings estimates. It’s unusual to find such a high quality business trading at a seemingly reasonable price. I wrote my initial thesis on Disney in mid-February 2016 (click here to read it). With the stock’s continued slump, now is a good time to dig deeper into some of the concerns I have with the business. Let’s take a closer look at the [...]
C.H. Robinson (CHRW): Quality Dividend Growth at a Reasonable Price
C.H. Robinson (CHRW) has raised its dividend for 18 consecutive years and rewarded shareholders with double-digit annual dividend growth over the last decade. The company’s dividend scores strong marks for safety and growth, and its business model generates excellent free cash flow in practically every economic environment. With large and fragmented markets and numerous competitive advantages, C.H. Robinson has potential to deliver double-digit earnings per share growth going forward. Let’s take a closer look at the business to determine if it could be an attractive dividend growth investment today. Business Overview C.H. Robinson is one of the largest third-party logistics companies in the world and has been in business for more than 110 years. The business essentially [...]
REIT Taxes: A Short Lesson on Real Estate Investment Trust Taxation
Since their inception in 1960, Real Estate Investment Trusts, or REITs, have become an extremely popular option for income investors because of their reliable payouts and immense capital appreciation potential. However, REIT taxes are an important issue to understand. Conservative investors often favor REITs over traditional stocks because variables that typically have a negative impact on the broader market tend to have a less powerful effect on REITs. They’re not completely insulated, but it usually takes a down market longer to hit a REIT thanks to rising rental prices and the historic appreciation of real estate in general. Before diving in to REIT taxation, let's quickly review what REITs are. What Is a Real Estate [...]
Gilead Sciences (GILD): Cheap Dividend Growth or Value Trap?
Gilead Sciences (GILD), the dominant antiviral and hepatitis drug company, is starting to draw a lot of attention from value oriented investors due to its decline of 23% over the past year. Gilead’s stock now trades at a high-single digit price-to-earnings multiple which typically has many bargain hunters salivating, especially in a market where many quality blue-chip stocks and dividend aristocrats trade at over 20x earnings. Furthermore, Gilead initiated a dividend in the second quarter of 2015 for the first time since the company’s founding in 1987 and now yields 2.4% with strong dividend growth potential. With a low payout ratio, cheap P/E multiple, and a history of phenomenal growth, should dividend investors jump on the opportunity to [...]
Dividend Safety Analysis: Southern Company (SO)
This week, I will be taking a look at the dividend safety of Southern Company (SO). If there are other companies you would like me to analyze for dividend safety, please leave a comment at the bottom of this article. My full thesis on Southern can be seen here, but I will be focusing on the company’s Dividend Safety Score in this article. Before analyzing Southern’s dividend, let’s review how the company makes money. After all, the most effective investors understand that one of the best pieces of investing advice is to only invest in simple, easy-to-understand businesses. Southern Company has been in business for more than a century and is a major producer of electricity in [...]