The goal of every dividend investor is to build a portfolio of quality income producing companies, which provide enough in income for them to live off of. It is also very important to focus on those dividend stock companies that can afford to increase dividends over time, in order to maintain the purchasing power of your income.
In order to achieve that, investors go through a lot of screening, analyzing companies in detail, and waiting for the right valuations, in order to build that portfolio brick by brick. Once purchased, it is also of utmost importance to keep monitoring the companies you own for major developments such as earnings releases, merger and acquisitions and dividend increases.
This monitoring process could also help you identify hidden dividend gems, before they hit the lists of dividend achievers or dividend champions.
Beverage company Coca-Cola (KO) engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. This dividend king approved its 52nd consecutive annual dividend increase, after hiking quarterly distributions by 9% to 30.50 cents per share.
Over the past decade, Coca-Cola has managed to increase dividends by 9.80%/year. Currently, the stock is close to the top of my acceptable valuation range at 19.30 times earnings and a current yield of 3.30%. Despite headwinds the company seems to be facing, it seems investors overreacted to its forward guidance, where currency fluctuations were expected to shave off 7% of earnings per share. I generally see currency fluctuations as a wash, and I also do not think one should focus only on revenues, but on earnings per share.
Hence, I will keep holding on to my stock, and might add another big chunk in early 2015, if my naked puts get exercised. Check my analysis of Coca-Cola.
Wal-Mart (WMT) operates retail stores in various formats worldwide. The company disappointed investors last week it’s the slowest rate of dividend increases ever as it boosted distributions by 2% to 48 cents/share.
In contrast, over the past five years, Wal-Mart has managed to increase dividends by 14.20%/year on average. This was nevertheless the 41st consecutive annual dividend increase for this dividend champion. While the latest increase was disappointing, I am maintaining a wait and see attitude with the company and would continue holding on to my shares.
However, I do not plan on adding more to the stock and would be deploying dividends elsewhere. Currently, the stock is cheap at 14 times earnings and yields 2.60%. Check my analysis of Wal-Mart.
Genuine Parts (GPC) distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, the Dominican Republic, Mexico, and Canada. The company raised its quarterly dividend by 7% to 57.50 cents per share. This marked the 58th consecutive annual dividend increase for this dividend king.
Over the past decade, Genuine Parts Company has manage to increase dividends by 6.20% per year. Currently, the stock is close to the top of my acceptable valuation of 19.60 times earnings and yields 2.70%. I might considering initiating a position in the company, unless of course there aren’t better values at the time I have investable cash. Check my analysis of Genuine Parts Company.
NextEra Energy (NEE), through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. The company raised its quarterly distributions by 9.80% to 72.50 cents per share. This marked the 20th consecutive year of dividend increases for this dividend achiever.
Over the past decade, NextEra has managed to increase dividends by 8.20%/year. Currently the shares are trading at 17.40 times forward earnings with an yield 3.10%, which is not attractive valuation for an utility. Check my analysis of NextEra.
AbbVie (ABBV), a research-based biopharmaceutical company, engages in the discovery, development, manufacture, and sale of pharmaceutical products worldwide. The company increased its quarterly dividends by 5% to 42 cents per share. The company was formed after Abbott Laboratories split into two firms – AbbVie and Abbott Laboratories (ABT). Prior to the split, the original Abbott Labs had managed to raise dividends for 40 years in a row.
After the split, I decided to hold on to both companies, and have been satisfied with the results so far. Currently, Abbvie is priced at the top of my acceptable valuation range of 19.90 times earnings although it yields 3.30%.
However, I am not interested in adding more there, because of the patent cliff that drug Humira faces later this decade. Check my analysis of the split for more information.
Full Disclosure: Long KO, WMT, ABBV, ABT