McDonald's Corporation Stock Analysis (Member of Dividend Aristocrat List)

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McDonald's Corporation (MCD) is a proud and long-term member of the Dividend Aristocrat list.  As we all know, they are a giant in the food industry and do an extremely large amount of business inside and outside our United borders.  During economic turmoil, people that want a cheap/quick meal head to the good old golden arches and munch on Dollar Menu items.  Their growth is still there as they explore further emerging market strategies.  Let's get to the analysis..


P/E Ratio: McDonald's current share price is $76.03 with an earnings per share of $4.58.  P/E breaks down to (76.03/4.58) 16.6.  Not incredible higher than the "15" that I like, it does fit in my range.  MorningStar places it against other in their industry with an average of 22.1.  Extremely undervalued when you compare it to it's top competitors.  Very attractive to an investor.

Potential Appreciation: McD's 52 week high stands at $80.94.  This currently gives it a ((80.94-76.03)/76.03) 6.5% appreciation upside based on the past history.  However, I wouldn't add MCD for appreciation to my portfolio.  I would add it based on the brand-sake and their beautiful dividend yield and consistency in that growth, to which I break into next..

Dividend Yield & Payout: Now McDonalds has consecutively paid and increased Dividends for over 34 years now and continues to do so at a nice increasing rate.  Their current yield of ($0.61*4) 3.21% is extremely attractive as it is over the 3% mark that I enjoy.  The payout ratio of $2.44/$4.58 = 53.27%; almost smack down in the middle of my 40-60% range = another thumb's up in my book.  Last increase  from 55 cent to 61 cents per share provided an 11% increase alone.  They paid a 33% increase back at the end of 2008 aka during one of the worst financial time periods we have endured.  Wow.  Really solid if I may say.

Conclusion: McDonald's is a great choice/pick to add to your portfolio.  With a market capitalization of close to $80Billion, no one comes close to them.  They currently are expanding their international business and are consistently increasing that beautiful dividend that us, as investors, love to see.  McDonald's, at any time, is a great way to start your dividend portfolio.  With their above 3% yield and consistent increases of over 10% to their payout, while maintaining a medium pay-out ratio, is extremely attractive.  Our waistlines may not enjoy the "Golden Arches" but our portfolio's sure do : )  Enjoy!

-Lanny B.

Disclosure: I do not recommend anything, please consult your own research. This is actual data, analysis, however I base no investor recommendation.  I am LONG MCD.  Thank you for your understanding.


Picture Location: http://www.stamp.umd.edu/food/mcdonalds.shtml

Southern Copper Corporation Stock Analysis

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Southern Copper Corporation (SCCO) is a large mining/producer of precious metals such as silver, gold, copper, etc.. and do a lot of business in Peru and Mexico (where large reserves are).  I wanted to keep this in line with the silver/oil/food discussion I spoke about earlier.  Analysis is as follows:



P/E Ratio: SCCO's Price currently is at $42.05 with earnings per share (EPS) at $1.83.  Therefore, the P/E stands at 22.98; higher than the S&P 500 average.  When comparing this to their industry of involvement (Basic Materials) on MorningStar, they are above the average of 17.  Therefore, it isn't as attractive in these terms.  However, there has been a declination in overall ounces of silver and the price of the metal has sky rocketed.  I am mixed on these stats.  Also to note - Morningstar shows the forward P/E is 12...

Potential Appreciation: SCCO's 52week high stands at $50.35, giving it a potential of ((50.35-42.05)/42.05) = 19.7% appreciation.  This has a lot of upside given its recent history.   Pair that with the increase of value of an ounce of silver, I can see this going above those marks.  **Note: past performance is not an indication of future performance

Dividend Yield & Payout: They pay 4 dividend payments per year.  Based on the last four, totaling 1.83, their yield is 4.35%.  This is much higher than the average of the market and provides a good incentive/attractiveness to potential and current investors.  Their current payout ratio: $1.83/1.83 = 100%.  This is how much they pay in dividends over how much they earn per share.  This is obviously extremely high and causes caution to investors.  Their last increase from 43 cents to 58 cents marks a 34% dividend increase.

Conclusion: I do like silver.  I have done a lot of research on the metal and it shows the declination of amount of silver that we have in stock today.  Silver value is increasing at an tremendous rate and I like to see what companies are in the trenches to mine this stuff out.  I like their yield and dividend payments, along with the industry they are in, but I will have to see what their next earnings release shows for the EPS; morningstar shows a forward P/E of 12.  Any thoughts on Silver/Oil/Food?  What companies do you like as we battle through this volatile market?  Please comment or message!

-Lanny B.

Disclosure: I do not recommend anything, please consult your own research. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.


Picture Location: http://www.mountainminingsilver.com/Home_Page.html

Monsanto Stock Analysis

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Monsanto (MON) is involved the agricultural industry and was spoken to me by my good friend in Chicago.  He is very excited about this company, given the economic climate circumstances with food and agricultural products current and upcoming rise in price.

P/E Ratio: Current Price of $70.91 with earning per share of $2.05.  This P/E equates out to 70.91/2.05 = 34.59.  This looks extremely high, I know.  The market has brought this down a few dollars as well, hopefully it continues.  HOWEVER, the industry average according to Morning Star is 34.3.  Therefore, this industry may have a higher price relative to their earnings.  I would like to see the price tick down a bit more though : )

Price Appreciation Potential: Their 52 week high is 77.28, providing a ((77.28-70.91)/70.91) 9% potential capital appreciation.  Their low is $44.61, showing they have come from a loooong way.  It's tough to dictate this, as food prices are going up and this could push the price over their high.  However, I haven't done that thorough of an analysis to decide.  I will reiterate - I'd like to see this come down a bit.

Dividend Yield & Payout: Their dividend payout per year is $1.12 per share or (1.12/70.91) 1.58%.  This yield is under the S&P on average.  If the price came down, this would push the yield up. Their payout ratio is (1.12/2.05) 54.63%.  It is perfectly in the range that I like to see.  That yield could be a little higher, but that is me being selfish I assume.  They have paid dividends for 10 years and based on a few resources, they have increased dividends by 20% annually.  Not too shabby on that end.

Conclusion: Things I like: They are at their average for P/E.  The Industry is going in an upward direction.  Dividend Payout is nice.  They do pay a dividend yield with an annual increase of 20% on average.  Thins I dislike: Uneasy with an appropriate conclusion on that P/E.  It is still high for my taste and would like price to creep down.  With a price decrease, their yield would also be more attractive.  However, I haven't done an intense analysis on Monsanto and may do so in the upcoming hours/days.

-Lanny B

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

PPL Corp Dividend Analysis

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Today on my agenda is PPL Corporation (PPL), a Utility Company based in Pennsylvania and also is involved internationally.  One reason why I like the Utility Industry is that we always will be using some sort of energy to carry out our daily activities, I mean what is going to brew that coffee as you are reading my blog!?

To begin - P/E Ratio: Price currently as of market close is $25.02 and their earnings are $2.23 per share, according to my pals at Google Finance.  This equates out to a: $25.02/2.23 = 11.22, well under the S&P 500 average.  This tells me that this utility company may be undervalued.  Morning star.com has shown that the industry average P/E is 11.1.  Therefore, they are right on with the industry.  There may be other companies that are more undervalued than others, which would need more analysis.

Appreciation from current price: Their 52 week high is $30.05.  Therefore, based on that historical fact and with them trading at $25.02, there is ((30.05-25.02)/25.02) = 20.1% appreciation possibility with the stock.

Dividend Yield & Payout Ratio:  Their dividend payout per year currently stands at (0.35*4) $1.40 annually per share.  $1.40/$25.02 = 5.60%.  This yield is very attractive and offers a great DRIP opportunity.  Most utility companies do offer a generous yield, and this one doesn't stray to far from the tree.  The payout ratio breaks down to 1.4/2.23 = another 63%er.  This isn't too alarming, just out of my 60% range.  Most utility companies pass on most of their earnings down to their investors, therefore this doesn't "turn me off" in the least bit, and they have been doing so for over 25 years.

Conclusion: If you don't own a utility company in your portfolio, this could be a great company to look at.  With usage of energy always being there and also an international protection, this could be a long-term stock one would hold.  They offer a great dividend yield and I believe they have room for appreciation.  Again, consult your own analysis and advisers to see if it fits your strategy.

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

Merck Stock Analysis

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Merck (MRK) has paid dividends, as crazy as it sounds, for over 40 years.  They are in a highly competitive industry - HealthCare and more specifically - Pharmaceuticals.  The industry can be very confusing with expiring patents, regulation issues, recalls on products etc.  The pipeline for a product to come to fruition also is very long.  However, I have noticed they all enjoy paying solid dividends.  

As always, lets start with price: as of the close on February 2nd 2011 they finished at $33.82.  Their 52 week high is $39.72, with a low of $30.70.  Therefore, based on their high - they are 14.9% away from it (39.72-33.82)/39.72 is what I used.  They are 3 bucks above their low, in a way showing there is more upside than downside currently.  However, that could be my opinion, which may be different from others. 

Price to Earnings Ratio: MRK has a current 12.1 P/E ratio, below the S&P average and according to Morning star is below the 14 average for the industry it is in.  Somewhat cheaper than the industry, Morningstar can also show you more ratios that it may be better or worse than the industry.  

Dividend Yield: Merck currently has a $1.52 annual dividend.  Thus, $1.52/$33.82 = roughly 4.5% yield.  Not too shabby.  Currently yields higher than Pfizer (PFE) and Abbot Lab. (ABT), their two big competitors.  One downside that I noticed - they did not raise their dividend last year.  One positive - they didn't slice/cut their dividend during the recession.  They still do have a track record of increasing their yield, I would lookout to see what they do with their dividend this year.  Their annual growth rate in their dividend is 10.37%, again this including a 0 increase for 2010.  I'm curious to see what they do this year. 

Payout Ratio: Their dividend is $1.52 per year and their EPS (Earnings Per Share) is $2.79.  Therefore, 1.52/2.79 = 54.5%, which is in my range of the 40-60% that I like.  It's almost smack dead in the middle, displaying they give more than half of their current earnings back to their shareholders and keep 45.5% for future growth in Research and Development (a typical large expense for pharmaceutical companies).  

Conclusion: Merck is one of the big players in the pharmaceutical industry, capturing more than 60Billion in market capitalization (Shares outstanding X Share price).  With solid earnings, solid dividend growth and a very median payout ratio - they seem very attractive, with a P/E ratio lower than the industry.  However, I want to see what Merck plans on doing with their dividend this year, as I do not want to see another 0 dividend increase.  I plan on waiting to see what they do with that issue. If you are looking for a pharmaceutical company or someone in the healthcare industry - you must include Merck in your analysis/options.  

I recommend doing your own due diligence before purchasing any investment, however, and I do not make a recommendation to anyone - I simply describe how I feel about the topic at hand.  Thanks for reading!

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

Friday Night Round Table

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Greetings everyone!  Today marks the end of the last official week of January and I wanted to share my thoughts on currently "big" companies that are undervalued or the stock price has taken a large hit recently, thus offering a higher yield than usual.  To begin my brief discussion we will start with:

Johnson and Johnson (JNJ): A dividend Aristocrat, their stock has dropped around $3 due to recalls on products, lawsuits being filed as well as a decrease in revenue and profits, year over year.  However, from a company standpoint - keeping your investors happy is what they need to do in this situation, thus their dividend, in my opinion, still stands strong and they have excess cash in storage.  Their price at $60.01, brings their yield to 3.60%; which based on my analysis 4 weeks ago, they had a yield of 3.49%.  Thus, it is an even more attractive investment for new/current shareholders.

Intel (INTC): Even after their stock price surged close to $22 after they announced their stock buyback plan and dividend increase, they had a pullback today, thus finishing off at $21.46 per share with a current yield of 3.37%.  With my previous article about INTC, their yield was 2.99%, thus it is much higher.

WWE (WWE): You read it.  The World Wrestling Entertainment has taken a beating due to disappointing earnings guidance.  However, with a dividend yield of 12.03% and the Royal Rumble coming and Wrestlemania, my brothers (die hard fans) say that this should help the company's revenue and that the loyal fan base is still there.  It will be interesting to see what will happen.  They are priced at $11.97, which is around $2 - $2.50 less than what it has normally traded at over the last 52 weeks or so.

AT&T (T): This is difficult.  Despite solid results, Verizon (VZ) and the Apple's (AAPL) iPhone seem to extremely threaten good old AT&T.  Their price has plummeted as well, finishing the week off at $27.49, pushing the yield to an astounding 6.26% (I analyzed them earlier when their yield was at 6.05%).  Does ATT last?  They are making now a bigger push for android phones, which is obvious due to the "non" exclusivity of the iPhone.  I know we are all about cell phone's and wireless coverage - but AT&T still has Cable, Internet, Land Line, U-Verse etc.  - question I have is - are these products of old age and are on a decline as well?  Being in the Dow 30, AT&T has to have something.

Lorillard (LO): They have dropped, in the last month, about $8 - roughly from mid $82 to $74.65, thus pumping the yield to 6.03% (According to google finance).  They are a cigarette company, and I know some people may be upset for me writing about them, but their yield is very strong.  I may do a further evaluation in the upcoming weeks on them.

Hudson City Bancorp (HCBK): They have dropped tremendously as well to $10.98 due to low mortgage interest rates and the uncertainty of these rate fluctuations in the future.  Their yield currently stands at 5.48%.

What do all of you think of these stocks?  Any other High dividend yielders that look attractive going into the weekend?

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

Intel Boosts Dividend & Authorizes BuyBack Plan

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Big News for Intel (INTC) today!

1.) They boosted their dividend by 15%, from .1575 to .1812 per share per quarter.  This led to their share price to rise by 2.02% today to $21.24 per share.  The dividend yield on Intel is: 0.7248/21.24 = 3.41%; much higher than their previous 3%!!

2.) Intel Authorized a $10Billion buyback plan.

What does this mean for shareholders?  Well, less outstanding shares = higher earnings per share, thus boosts the value of the common stock held by shareholders.  Pairing that up with a 15% increase in dividend and that sums up a great day if you are an Intel investor.  I wanted to add shares to my portfolio, now I have more of a reason too : )

This was a quick post and I just wanted to get the word out there.  For more on Intel, see my analysis.

-Lanny B

Chevron Stock Analysis

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Chevron (CVX) has paid dividends for 40 years and have consistently raised them for 20!! One of the longest that I have seen, that's for sure.  If you aren't aware, we are in the oil consumption age and even though we are trying to find other renewable energy sources, we will be using Oil for a very, very long time.  Why not have a company that is heavily involved and one of the biggest names in the Energy sector then? 

Their price: As of January 22nd 2011 the price is at $93.78. I know, I know - that is extremely high and I haven't even analyzed a company yet with such a high stock price, which may though off potential new investors.  Their 52 week low is $66.83 and their 52 week high is $93.94.  Hmph.  They are at their 52 week high and their trend is definitely ticked up over the last year.  I normally never buy a stock when its at its peak in any given time period.  This is the only con in my book for Chevron, but this isn't a company you buy one day and then hours/days later you sell it.  

Price to Earnings Ratio: Chevron currently has a P/E ratio of 11.19 (According to Google Finance), which of course is below the S&P average and according to Morning star is below the 14.5 P/E for the industry average. Therefore, Chevron's stock STILL is relatively CHEAP to its earnings and is currently undervalued against the average of both the industry and S&P index.

Dividend Yield: Oil companies like paying dividends back to their shareholders.  Their current dividend yield when trading at $93.78 is just over 3%.  A 3% yield on a $93 share price is pretty damn good if you ask me.  What's so surprising is that they can pay an above average dividend, present an above average yield on an incredible high-priced stock!  If Chevron's stock price dropped $10 to $83 per share, their yield would be 3.47%, just for measure.  Conclusion on their yield - it is extremely good, especially that they have had a track record of paying and increasing their dividend.  Now on to that growth rate on their cash flow to shareholders: their dividend yield growth rate is 7.1% according to my analysis since 1970.  That isn't too shabby if you ask me.  This allows them to keep raising their dividend on an annual basis, helping to keep up with an increasing share price.  

Payout Ratio: Their dividend is $2.88 per year and their EPS is $8.38. Therefore, 2.88/8.38 = 34.4%, just below my 40-60% range that I like.  What this means is that they tend to retain most of their earnings, to help grow their company, expand their stores and market and possible acquire other companies. As an investor, 34% payout isn't too bad, though I would like to see them provide back more of their earnings to their shareholders.  It is nice to note that they are earning a tremendous amount per share of common stock; a great sign of a strong and lasting corporation.  

Conclusion: Chevron is also an extremely sound company to add to your portfolio at any time.  Given it's current price, I would like to see it cheaper, but then again, I know with a DRIP that you will be able to catch it at occasional low points.  A reason why an oil company is great, is no matter what - you will be filling up your vehicle at the pump to go from point A to point B and as a country we will be using it tremendously, at least throughout the next few decades.  I do not have a position in Chevron, but would want to do more analysis on the corporation before adding a position.  Thank you for reading this brief analysis, good luck and take care.  

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

Walmart Stock Analysis

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Walmart (WMT) has paid dividends for 36+ years.  Walmart is one of the large and mighty powerful Dividend Aristocrats, meaning they have paid dividends and increased them for over 25 years.  A great stock if you ask me to have in your portfolio!  

Their price: as of January 20th 2011 (before the market has opened) the price is at $55.03. Their 52 week high is $56.27, giving just a 2.2% appreciation on the pricing giving its most recent high. Their low is $47.77 over the prior 52 weeks. Therefore, it is verrry close to the 52 week high.  Since they are extremely close to that 52 week high, I would personally like to see them drop a dollar or two.  However, since their track record shows, a dividend increase/raise for 25+ years hints to me that Walmart isn't a bad buy at anytime.  That is just my perspective, simply because I invest for cash flow from these companies : ) 

Price to Earnings Ratio: Walmart currently has a current 13.7 P/E ratio (According to Google Finance), which of course is a tad below the S&P average and according to Morning star is below the 14.8 P/E for the industry average. Therefore, Walmart's stock is relatively cheap to its earnings and is currently undervalued against the average of both the industry and S&P index.

Dividend Yield: Let us talk about their cash flow back to investors!  Their current dividend yield when trading at $55.03 is 2.20%.  I know what you all are thinking - THIS IS THE LOWEST out of all my analysis' that I have completed thus far.  However, it is STILL above the average of the S&P 500 and again - it is a Dividend Aristocrat, giving a pay/dividend raise for 25+ years.  Now if their price went down to say, $52 for example - their yield would be 2.32%, a little higher and a little cheaper.  Here is why this dividend yield doesn't turn my face away -  their dividend yield growth rate is an incredible 24.36% according to my analysis since 1974.   A 24.36% raise on average.  That is extremely high and definitely keeps their shareholders happy.  

Payout Ratio: Their dividend is $1.21 per year and their EPS is $4.02. Therefore, 1.21/4.02 = 30%, just below my 40-60% range that I like.  What this means is that they tend to retain most of their earnings, to help grow their company, expand their stores and market and possible acquire other companies. As an investor, 30% payout isn't too bad, though I would like to see them provide back more of their earnings to their shareholders.  

Conclusion: Walmart is an extremely sound company to add to your portfolio.  Given it's current price, I would like to see it maybe 2-3 dollars cheaper, but then again - that dividend growth rate on average of over 24% is amazing and the fact that they are an aristocrat with a proven track record of dividend increases is a plus.  The reason I like that is because even during a recession (which we just had) they still increase their dividends.  I also ask myself this - is Walmart going anywhere?  Most likely not, therefore this is a stock to hold for an extremely long-term in my perspective.  Thank you for reading this brief analysis, good luck and take care.  

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

AT&T Stock Analysis

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AT&T (T) has paid dividends for 26 years.  They have had at least 5 years of consecutive dividend increases and are a truly ruler in their area of the technology sector.

Their price: as of January 16th 2011 they are trading at $28.43. Their 52 week high is $30.10, giving a 5.55% appreciation on the pricing giving its most recent high. Their low is $23.78 over the prior 52 weeks. Therefore, it is close to the 52 week high.  I usually like to buy further away than that 52 week high, simply because I am cheap : ), but then again my preferences can be completely different than yours.  

Price to Earnings Ratio: AT&T has a current 8 P/E ratio (According to Google Finance), well below the S&P average and according to Morning star is far below the 15.8 P/E for the industry average. Therefore, AT&T's stock is relatively cheap to its earnings and is currently undervalued against the average of both the industry and S&P index.

Dividend Yield: Of course I am bringing up their dividend yield currently.  Their current dividend yield when trading at $28.43 is 6.05%.  Wow.  Pretty high if you ask me.  Most telecommunication stocks, however, do have high yields, therefore, this isn't unusual for this industry.  Also, their dividend yield growth rate is just over 5% according to my analysis since 1984.   That isn't as high as I typically like to see it, however the yield is high and increasing what they pay out by 5% every year still isn't too shabby : ) 

Payout Ratio: Their dividend is $1.72 per year and their EPS is $3.55. Therefore, 1.72/3.55 = 48.45%, right in the middle of where I like it (Between 40 and 60%)!!  This gives a great big thumbs up in my book as a close to 50% payout ratio tells me that basically they keep half of their earnings for growth or other means of action and they give half of them back to their investors!

Conclusion: AT&T is a great stock to add to your portfolio.  Given it's current price, I would like to see it maybe 50 cents to a dollar cheaper, as I think Verizon's deal with Apple for the iPhone could hinder AT&T's performance for the future.  However, one has to realize AT&T's total business - Internet, U-Verse (TV), Direct TV, Home Phone Lines, Business Lines, Mobile Devices, Publications etc., etc.  Therefore, they have different cash flow vehicles in their portfolio rather than just their mobile branch.  They have been around for a very long time period and I believe will be for the future.  

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

Intel Corporation Analysis

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Intel Corporation (INTC) has paid dividends now for 18+ years.  They have had at least 5 years of consecutive dividend increases and are a truly ruler in their area of the technology sector.

To start the analysis, I would like to look at their price: as of January 15th 2011 they are trading at $21.08. Their 52 week high is $24.37, giving a 13.5% chance of appreciation on the pricing giving its most recent high. Their low is just at $17.60 over the prior 52 weeks. Therefore, it is somewhere in between. Again, with Intel price is not necessarily the most important thing as you invest for cash flow, and their cash flow always grows every year.

Price to Earnings Ratio: INTC has a current 11.34 P/E ratio, well below the S&P average and according to Morning star is far below the 18 P/E for the industry average. Therefore, INT's stock is relatively cheap to its earnings and is currently undervalued against the average of both the industry and S&P index.

Dividend Yield: My favorite part. Their current dividend yield when trading at $21.08 is 2.99%. It may be a smaller dividend yields than those analyzed in the past but I think with increases in their dividend and their strong performance and strength in their sector, which companies RARELY offer a yield, that this is more than good.   Also, their dividend yield growth rate is an absolute amazing 24.29% since their first issuance back in October of 1992! Therefore, you get (on average) a 24.29% increase yearly to your dividend cash flow from INTC. I also ask - how many jobs have you had that give you a 24.29% increase every year on average?

Payout Ratio: Their dividend is $0.63 per year and their EPS is $1.86. Therefore, 0.63/1.86 = 34%, actual a somewhat low ratio. Since it is in the technology sector which grows at an astounding rate, they tend to retain more earnings to grow, but obviously they have enough earnings to consistently raise that dividend, which is exactly what we want!

Conclusion: Intel is a great pick in your portfolio. They have a strength-hold on the technology division that they are in (Market Cap is over 117 Billion!).  They are a great stock to own for its cash flow as they have recorded past history of amazing returns on their stock price and once placed into a Dividend Reinvestment Plan account, you can increase your cash flow dramatically year after year. At the given price, I would start a position in Intel based on their dividend growth alone and it doesn't hurt how dominant they are!

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

Bank of Montreal Analysis after their Downturn

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Bank of Montreal (BMO on the NYSE) is a large financial institution that has recently undergone an acquisition of M&I Corporation, thus pushing their stock price down.  As a little side note - when a company acquires a company, typically (but not always) the acquirer's (BMO in this case) stock usually drops due to the possibility that the acquirer overpaid on acquiring the acquireee (M&I).



The last 2 official trading days Bank of Montreal (BMO) has plunged from $61.66 on Thursday December 16th to $55.58 as of market close on December 20th.  This marks a 9.86% decline in their stock price, thus raising their dividend yield.  Their dividend per share is $2.80 per year and they have a 26.9% annualized dividend growth rate!  Using my basic tools, I will analyze Bank of Montreal.

Payout Ratio:  Their dividend per year, as stated, was $2.80/year per share.  Their Earnings Per Share (EPS) is at $4.94.  Thus: 2.80/4.94 = 56.68%, which falls in between my 40 and 60% preferred payout ratios.

P/E Ratio: Since they trade at $55.58 and their earnings per share is $4.94, the Price to Earnings ratio is - 55.58/4.94 = 11.25 P/E ratio.  This falls well below my preference for an under 15 P/E ratio.  This is also below the industry average, according to Morningstar.com, of 14.8.

Current Dividend Yield: Their current dividend yield, when trading at $55.58, is 4.98%.  This is higher than the S&P Average and higher than my preference for an above 3.5%.

Conclusion: They are solid when compared to the industry, they offer a higher yield than the S&P average and offer one of the highest in the financial service areas.  They have recently gone on sale due to the plunge of 9.86% and have payout ratio within my range.  They are a large company with a market capitalization of over 30 billion.  I personally would create a position in this company, as their dividend yield is favorable, they are an extremely large company with a similar amount of customers, have always paid a consistent dividend, have a high annualized dividend growth rate and the possibility for appreciate is there.  This is my basic analysis when seeing if a stock fits my portfolio, given the need for a financial institution.  Thank you for reading, please feel free to leave a comment or message below!

-Lanny B.

Disclosure: I do not hold nor recommend anything.  This is actual data, analysis, however I base no investor recommendation.  However, I personally would add/start a position on this firm, however my direction is different from anyone else's.  Thank you for your understanding.


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Dividend Increases

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Today, Pfizer increased its Dividend payout by 11%.  This brings its dividend per share, per quarter to 20 cents.  The reason this excites me is because I hold it in my portfolio and it stems a new lesson that I would like to talk about: Dividend Payout Increases

As we all know, there are two ways we can get a return from stock that we own - Dividends and Capital Appreciation (though you would have to sell your stock to even feel the benefit).  How would you like a cash flow stream from a company's stock that you own, to give you raises every year?  That is basically why I tend to hold Dividend paying Company's stock in my portfolio.  It just makes sense...

For Example: Say if you did own Pfizer and your Dividends normally received from them was $1,000 per year.  Now, from their new dividend increase, you receive $1,110 per year, a nice little $110 raise.  How much work did you have to do for that dividend raise?  Well, if your a small shareholder - besides the research and checking on the company every now and again you really haven't done much work for it.  Also, if you continue to reinvest those dividends, you are now putting more back into your portfolio and owning more of these dividend-paying and dividend-increasing shares; thus adding more to your cash flow.  Another tid-bit, typically when a firm increases their dividend payout - the share price will raise by the annual raise: Example - Pfizer increased their Dividend by 8 cents annually, therefore share price should increase by 8 cents at least (as of market close today 12/13/10 Pfizer finished up 17 cents for a 1% gain).  Therefore, you receive capital appreciate as well from an increase in dividend payout, which fulfills both shareholder returns.

Lessons Described Here: Dividend Paying and Dividend Increasing Companies will further add and grow your cash flow, effortlessly (Less research and keeping up to date with company) growing your portfolios value and possibly raising the value per share in terms of stock price.  The key terminology in the business world is Cash Flow, because that is what primarily determines the value of an asset.  I suggest doing research and finding those great dividend paying company's that annually/frequently increase their dividend payouts.

Disclosure: I do not hold nor recommend anything.  This is actual data, analysis, however I base no investor recommendation.  My position is LONG PFE.  Thank you for your understanding.

To Begin a Dividend Portfolio...

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To Begin that Cash Flowing Dividend Portfolio - A great way to start is through a Dividend Aristocrat that is paying a higher yield than the S&P is on average, which is currently 1.85% and has a lower Price to Earnings Ratio (P/E: Which can show undervaluation if low, low among competitors and industry) than the S&P average, which current mean is 16.38.  

What is a Dividend Aristocrat? - "Companies that have had an increase in dividends for 25 consecutive years." Thanks to Investopedia.com for that : )

What a better way to start a portfolio than with a company that has always paid a dividend, and not only that, but has INCREASED their payments for 25 years +.

Here is a list of a few companies that have had astounding presence in the world, have a yield larger than the S&P500 average yield and also produce an extremely phenomenal (above 10%) growth rate in their dividend yield

Johnson and Johnson (JNJ): Current Yield: 3.50%; Dividend Growth Rate Annualized: 14.58%; Dividend Payout Ratio: 44.35%; Price/Earnings: 12.82.  If you would have invested $1,000.00 on 12/1/1985:

Investment Date:	Original Shares:	Original Value:	Current Shares:	Current Value:	Percent Return:
Dec 1, 1985	20	$ 1,000.00	534	$ 32,887.96	3,188.80%

Source: JNJ Investor Relations






Abbott Laboratories (ABT): (Actually just did a huge investor analysis on this company along with 2 big competitors!) Current Yield: 3.80%; Dividend Growth Rate Annualized: 12.89%; Dividend Payout Ratio: 58.09%; Price/Earnings: 15.85
If You would have invested $1,000.00 on 11/30/1990 (As far as their Investors page allowed) Source: Abbott Investors: 

Date Requested	11/30/90
Closing Price	$10.25
Split Adjustment Factor	4.2562:1
Shares Today	975.64
Investment Value	$45,864.76
Percent Change	358.65

Cincinnati Financial (CINF): Current Yield: 5.30%; Dividend Growth Rate Annualized: 9.80%; Dividend Payout Ratio: 52.63%; Price/Earnings: 10.13; If you would have invested $1,000.00 on 11/29/1985.  Sources: CINF Investors:

Date Requested	11/29/1985
Closing Price	$5.10
Shares Today	1,959.32
Investment Value	$60,366.67
Percent Change	503.6

WOW!  The power of compounding and starting early pays off tremendously, especially in evidence from these 3 company's above.  These 3 are just some great examples that show undervaluation compared to the S&P 500 as a whole, a greater dividend yield than the market on average and also shows how consistent their dividend growths have been for over 25 years.  The reason I display these to possibly start a portfolio, is because they have extreme history on consistency and helps to possibly lower investor risk.  If you are looking for cash flow to build up over time, these dividend paying firms have proven their ability to do so.  Like I said, if you have one of these stocks in a DRIP (Dividend Reinvestment Plan), you will reap the benefits.  I hope you enjoyed this article and please do not hesitate to contact me and/or comment below.

-Lanny B.

Disclosure: I do not hold nor recommend anything.  This is actual data, analysis, however I base no investor recommendation.  However, I personally would add/start a position on these firms, however my direction is different from anyone else's.  Thank you for your understanding.
 
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As the Market Crumbles...

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Hey Everyone! As we have seen, the market has been stumbling, crumbling, falling, well - you know the rest. This is due to the European Bailout of Ireland and other talks across the world regarding different issues happening. What does that mean for an investor? Well - Bargains! This has been great for investors to pick up discounted stocks that produce even higher yields than before due to the decline. Who do I have my eyes on?

LMT: Lockheed Martin: Currently Trading at $68.20, it just boosted its dividend this quarter, and has done so for the last 10 years Plus! The dividend per share is at $3.00, giving it a 4.40% dividend yield. They are near their 52 week low and are actually a few dollars away from their 5year+ Low! Price to Earnings (P/E) is only 9.63 (I like something below 15 or the average of the S&P 500 Index) with an incredible earnings per share of $7.08. With a $3.00 dividend divided by a $7.08 earnings per share, this gives LMT a payout ratio of 42.4% (I like somewhere between a 40 an 60% range). This shows that they retain earnings for growth opportunities, but also love to give back to their shareholders. Lockheed Martin is in the aeronautics, defense, security sector, with its biggest competitor (according to Google Finance) being Boeing. Now why don't I talk about Boeing? I have nothing against them, but as a dividend investor, Lockheed provides a greater dividend yield and does have proof of incredible dividend growth over the longterm.

I will continue to keep my eye on Lockheed Martin Corporation (LMT) and also a few other companies such as Nokia (NOK) and Banco Santander (STD - Bank in Madrid Spain, has been hit hard due to the fact it is apart of the European Union countries, etc).

Disclosure: I do not make recommendations. This is simply full analysis of Companies. However, Lockheed Martin Corporation is priced right for me and I would consider placing a large investment into them, holding a Long Position. All information is from Google Finance as of 6:00 PM on 11/29/2010.  Thank you.

My Dividend Portfolio as of November 27, 2010

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Today I will display my holdings for individual stocks, their yields and annualized incomes from the stock. (The annualized portion is based on the amount of shares I own X the annual dividend per share.)
I will be displaying this on a frequent basis to show growth in my portfolio from DRIP and other purchases and analysis' that I make.  I am using this as a tool, also, for myself to see how my portfolio is growing.

Symbol Yield Current ShP Annual Income PFE 4.37% $16.49 38.04 CIM 17.73% $4.06 32.51 NGG 7.84% $45.24 62.93 V 0.79% $75.48 3.35 HRB 4.70% $12.77 9.48 ANH 14.08% $6.96 7.84 HIMX 11.57% $2.16 8.25 PRGN 4.26% $3.52 1.50 SHMR 5.83% $13.78 8.04 TOTAL 6.19% 171.93

As you can see, I have a mix of stocks, some speculative some very sound, but it is getting diverse.  I have been choosing individual stocks for about 6 months now and am seeing dramatic results in terms of share price return as well as dividend income growth.  I currently stand at $171.93 in dividend income per year and will post again in December to see if that number has grown - to which I will describe the growth: Dividend Reinvestment or New Funding from my own pocket for growth.

From seeing this simple chart, I see that Visa is a relatively low yield, to which I am not happy.  I purchased them in the mid-upper $60 range and will wait to see what the price does.  They did raise their dividend by 20% for this recent quarter from 12.5 cents to 15 cents per share.  I know it doesn't seem like a lot, but a 20% growth rate is phenomenal.  The reason why I hold on to them is because I feel there is more price appreciation that is there and I want to see if they will continue to make this growth pattern.

Pfizer: PFE, will be paying me dividends this December, as well as Visa (V), and Paragon Shipping (PRGN).  Thus, with dividend reinvestment, this should automatically raise my annualized dividend income, just as long as they continue to make at least the same dividend payment next quarter; this is due to the fact through Dividend Reinvestment I will be owning more shares.

I will report back on another analysis, enjoy the rest of Thanksgiving Break everyone!

-Lanny B.

Disclosure: I do not recommend any particular company. I am therefore Long on all stocks above, but do not provide this chart as a recommendation of any sort. Do your due diligence and find what is suitable for you. Thank You : )

Why Am I "Dividend Investing"?

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Why am I exactly "Dividend Investing" as most call it?

As of right now, my cash flow isn't that strong.  I am a dividend investor because, depending on which broker you use, I can REINVEST my dividends back into the company that provided them to me.  Therefore, I can make more contributions in a company without having to find a way to make that money.  I simply just click a check mark under Dividend Reinvestment online through my broker's website and the dividends are automatically reinvested for me.

What are my goals as a dividend investor one may ask?  To be honest, it is to someday have enough cash flow from dividends alone that they at least equal my monthly expenditures, so that I will not have to work the rat race any more aka the 9 - 5.  I know that it is a risk to rely on dividends, but that is what analysis is for and to always keep up with the companies or funds that you own.

Other reasons why I enjoy dividend investing are the tax benefits (hopefully to be extended after November of this year).  You are taxed either 0 or 15% for Qualified dividends, depending on your tax status (0% for tax brackets up to up to and including the 15% ordinary tax bracket).  Therefore, it's advantageous for dividend investing.

Also, depending on the market, you can receive more shares when you reinvest those dividends if the share price has dropped.  Which hinders back on my last post saying that, virtually if its a good/sound company, you want that share price to drop so that the company paying the *consistently Increasing* dividend can then be reinvested into more shares.

I will post later when they strike my mind on why else I dividend invest.  I will also analyze companies to see if they are worth investing into and post my responses.  Again, This is not advice.  Just merely what I do, Why I do and How I do things.  Thank you.

-Lanny B