Dividend Growth Stocks: Are You Patient Enough To Be Wealthy? These 12 Dividend Stocks Will Help You Wait

Dividend Growth Stocks: Are You Patient Enough To Be Wealthy? These 12 Dividend Stocks Will Help You Wait

For most people fortunate enough to be born in the U.S., or any other industrialized country, they have access to the two main ingredients to achieve financial success: 1. Opportunity and 2.Time. Unfortunately, very few people are able to take advantage of the situation enough to even build a secure retirement. Here are some of the reasons people fail, and what you can do to not fall into that group...

Understand The Goal

There are two main subsets of the population have never given serious consideration to their financial future. The first group includes the altruistic dreamers that are trying to build a better world for society, and the second group is their counterpart, those consumed with living for today.

If financial success was never your goal, the inability to achieve it is technically not a failure. However, there are certain innate outcomes that are so universal that they don't have to be explicitly listed as goals; and I would put the financial wherewithal to meet your family's needs in retirement as an innate goal.

Define A Plan To Accomplish The Goal

This is actually the most difficult step. One could easily infer that everything a person needs to know to succeed financially, is out there freely available. This is true, but it is also true that there is a lot of miss-information that is freely available.

An individual must sort through what is good and what is bad information. If you don't have someone you trust to help you define your plan, it could involve some lessons from the school of hard knocks. The good news is that these lessons are rarely fatal, but create lasting experiences.

Use Time To Your Advantage

Time is your most valuable wealth building asset. Everyone is born with it. Few realize its importance until they lose most of it. The asset is so valuable it can’t be bought. As a value/dividend investor, I have learned that time can cure many mistakes and provide enormous investment leverage.

When you are young time is your fiend. It allows to recover from mistakes. It educates you and provides you with valuable experience. However, time is a double-edged sword that can also work against you. When you are young it is easy to say, 'I will start investing tomorrow - I have plenty of time.' Time can also create a false sense of urgency -' I held this stock for over a year and its price has gone nowhere.' Use time to your advantage start young and be patient.

Dividend Growth Stocks For Building Wealth

There are many valid ways to successfully build long-term wealth. Some involve more risk than others. Being relatively conservative, I have chosen Dividend Growth Stocks as a significant part of my financial plan. This is not a new strategy. Many of today's dividend growth stocks have provided investors financial security for decades. Here are a few of them, including their yield, dividend growth rate, years of consecutive dividend growth and the first year a dividend was paid:

Diebold, Inc. (DBD)| Yield: 3.0%
Div. Growth: 3.3% | Yrs of Growth: 58 | Since: 1954
Diebold, Inc. develops, makes, and services self-service transaction systems, electronic & physical security systems, and software used to equip bank facilities, voting terminals.

Emerson Electric Co. (EMR) | Yield: 2.3%
Div. Growth: 2.2% | Yrs of Growth: 55 | Since: 1947
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world.

Genuine Parts Company (GPC) | Yield: 3.4%
Div. Growth: 4.8% | Yrs of Growth: 55 | Since: 1948
Genuine Parts Co is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products.

Procter & Gamble (PG) | Yield: 3.0%
Div. Growth: 7.0% | Yrs of Growth: 54 | Since: 1891
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries.

3M Company (MMM) | Yield: 2.3%
Div. Growth: 3.3% | Yrs of Growth: 53 | Since: 1916
3M Co. provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives, and other chemical additives.

Coca-Cola Company (KO) | Yield: 2.8%
Div. Growth: 6.8% | Yrs of Growth: 49 | Since: 1893
The Coca-Cola Company is the world's largest soft drink company with a sizable fruit juice business.

Lowe's Companies, Inc. (LOW) | Yield: 1.6%
Div. Growth: 15.0% | Yrs of Growth: 48 | Since: 1961
Lowe's Companies, Inc. sells retail building materials and supplies, lumber, hardware and appliances through more than 1,700 stores in the U.S. and Canada.

Colgate-Palmolive (CL) | Yield: 2.5%
Div. Growth: 12.5% | Yrs of Growth: 47 | Since: 1895
Colgate-Palmolive Company (Colgate) is a major consumer products company that markets oral, personal and household care, and pet nutrition products in more than 200 countries and territories.

Hormel Foods Corp. (HRL) | Yield: 1.8%
Div. Growth: 10.6% | Yrs of Growth: 45 | Since: 1928
Hormel Foods Corp. company is a leading processor of branded, convenience meat products (primarily pork) for the consumer market.

CenturyLink, Inc. (CTL) | Yield: 7.3%
Div. Growth: 3.6% | Yrs of Growth: 37 | Since: 1974
CenturyLink, Inc. provides voice service to 6.5 million customers and Internet service to 2.4 million customers in rural towns as well as larger cities such as Las Vegas.

Walgreen Co. (WAG) | Yield: 1.6%
Div. Growth: 18.5% | Yrs of Growth: 36 | Since: 1933
Walgreen Co is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico.

McDonald's Corporation (MCD) | Yield: 3.2%
Div. Growth: 15.0% | Yrs of Growth: 35 | Since: 1976
McDonald's Corporation is the largest fast-food restaurant company in the world, with about 32,500 restaurants in 117 countries.

Obviously, no one can definitively say what any stock’s future will bring. At one time companies such as General Electric (GE) and Bank of America (BAC) had long strings of consecutive dividend increases. In building a long-term portfolio, it is important to follow a sound asset allocation model and continue to monitor your investments.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

Wikio

Dividend Growth Portfolio Review: Sherwin Williams Is Out - Seeking Alpha

The Dividend Growth Portfolio is a public “demonstration” portfolio to illustrate the practical application of principles that I use in dividend-growth investing. The portfolio contains real money and actual stock holdings. I publicly report on its results. That allows interested persons to see successes and mistakes, and to form judgments on whether the principles make sense and work in the real world. These articles let people comment on what they think about the principles, suggest improvements, and consider how my decision-making compares to what they would do.

I advocate semi-annual formal Portfolio Reviews. The reason is to establish a disciplined schedule of examining the portfolio, thinking about each stock, and taking appropriate actions. Formal portfolio reviews, along with paying attention to news about your companies on an ongoing basis, combine to create a buy-and-monitor habit that helps avoid the pitfalls of a more passive buy-and-forget approach.

All that said, this review is two months late, so there’s a blunder right there. Luckily, little or no harm was done by the delay.

Normally in dividend-growth investing, not much portfolio turnover is expected. Most stocks, once purchased, are held for a long time, ideally “forever.” But stuff happens, and during a Portfolio Review, each holding carries a burden of justifying its continued existence in the portfolio. As explained more fully in the first “Portfolio Forensics” article cited above, some of the questions for each stock are:

• What is its yield on cost (YOC)? The overall goal in this portfolio is to attain a YOC of 10% within 10 years of its creation in 2008. To get there, each stock must progress steadily via annual dividend increases. Price gains are nice but don’t help toward the central goal. Stocks that began with higher initial yields do not have to progress as fast to make it to the finish line on time, but they still need to advance. The formula for YOC is: Yield on Cost = (Current Yield x Current Price) / Acquisition Price. In other words, it is the yield on your cost.
• Should some profits be taken? If the company’s price has skyrocketed, that may present an opportunity to cash out some or all and purchase another stock selling at a better valuation and offering a higher yield.
• Is the safety of its dividend in question?
• Is there a chance to improve the portfolio by making a stock swap or adding a new position? Improvements can be made along various dimensions, such as increasing the total dividend stream, diversification, or gaining a higher expected rate of dividend growth.
• Has the dividend growth rate taken a turn for the worse? Is the stock no longer on track for reaching the 10%-in-10-years goal?

After the last review in August, 2010, I made decisions to sell three stocks: Diageo (DEO) because of an inconsistent pattern of dividend increases when translated to U.S. dollars; Emerson Electric (EMR) because of slow dividend growth; and Royal Bank of Canada (RY) because it froze its dividend. Those sales produced about $5800. I added about $600 in accumulated dividends, and used the proceeds to make two purchases:

• Added to existing position in Alliant Energy (LNT) ($3490)
• Initiated position in Johnson & Johnson (JNJ) ($2910)

The purchases have worked out great:

• The Alliant Energy purchase is up 11% in price, and its YOC has already advanced to 4.9%
• Johnson & Johnson has gone up 10% in price and its YOC stands at 3.8%

Here’s my current thinking on several positions in the portfolio.

Abbott Labs (ABT): I own three slugs, purchased in 2008, 2009, and 2011. (The latter purchase was made with accumulated dividends.) Their YOCs are 3.5%, 4.0%, and 4.0% respectively. The three slugs together make up 7% of the portfolio and have registered a tiny price gain. Abbott has already increased its dividend 9% for 2011 after a 10% increase in 2010. The stock is working fine. Decision: Hold

Alliant Energy (LNT): Two slugs, both purchased in 2010. They have a blended price gain of 13% and YOCs of 5.4% and 4.9% respectively. The position makes up about 10% of the portfolio. Alliant has already announced a dividend increase of about 8% for 2011. Decision: Hold.

Johnson & Johnson (JNJ): Position initiated in 2010 has worked out well so far: Up 10% in price and yielding 3.8%. This position makes up about 6% of the portfolio. The company increased its dividend 9% in 2010 and has not declared its increase for 2011 at this time. I do not expect JNJ’s well-publicized operational screw-ups and product recalls to have a long-term impact on the company. I believe the company will fix the problems.Decision: Hold.

Kinder Morgan Energy Partners (KMP): Purchased in 2008, KMP comprises about 8% of the portfolio. It is up 30% in price and YOC has reached 7.9%. Kinder Morgan Energy usually increases its distribution more than once per year. In 2011, KMP has increased its dividend twice for a total of about 3% so far. This is working fine. Decision: Hold.

McDonalds (MCD): MickeyD’s has been a real all-star. Purchased in 2008 and again in 2009, it comprises 13% of the portfolio. Its blended price increase is 31% and the YOCs are 4.1% and 4.6% respectively (up from 3.7% and 4.1% last August). Typically raises its dividend with the year’s final payment; last December’s increase was 11%. Decision: Hold.

Sherwin-Williams (SHW): The room I am sitting in was painted with SHW paint and it looks great, but I am going to sell the stock. Last August, I noted that its dividend increases had been just 1% for 2009 and 2010. The decision then was to hold but consider selling next time if the dividend increases did not improve. “Next time” is now. SHW’s increase for 2011 came in at 1% again. Its current yield is only 1.7% (which would not qualify it as a new purchase), and my YOC is only 2.5%. This was one of the portfolio’s original holdings in 2008, and it comprises 10% of the portfolio, but its time is up. It is unlikely that its YOC will reach anything close to 10% in the next six years. The good news is that I have a 47% price gain, so I will have about $5000 to deploy elsewhere. Decision: Sell.

The Dividend Growth Portfolio’s other holdings are Chevron (CVX), Realty Income (O), Pepsico (PEP), AT&T (T), and Telefonica (TEF). Without going into the details, the decisions on all of those are to continue holding. The unweighted simple average YOC of all of the portfolio’s holdings is 4.8%, up from 4.6% last time. The purchase of replacement(s) for SHW will probably hold the portfolio’s YOC at about the same level or improve it slightly. More importantly, they will position the portfolio for better future advances, since I will be looking for stocks with dividend increases better than 1% per year.

I am compiling a new Shopping List based on my e-book, Top 40 Dividend-Growth Stocks for 2011. Following normal practice, I will update the information on candidate stocks, especially their yields, valuations and dividend growth rates, before making any purchase. I do not anticipate difficulty in finding a stock or two that will improve the portfolio’s makeup and performance over the long haul. Thanks to Sherwin-Williams for a good try, but you are outta here.

This is the fifth article in a series about my Dividend Growth Portfolio. Earlier articles in the series are:

• Portfolio Forensics (August 31, 2010)
• Watching Dividends Rise: Putting Together a Focused Dividend-Growth Portfolio (February 1, 2011)
• Road Map for Managing a Dividend Growth Portfolio (February 23, 2011)
• The 5-Year Rule in Dividend Growth Investing (April 15, 2011)

Disclosure: I am long LNT, KMP, JNJ, MCD, ABT, SHW, CVX, O, T, PEP,TEF.

Additional disclosure: The position in SHW will be sold shortly and replaced with one or two other stocks.

Wikio

Top 20 Canadian Dividend Stocks

Top 20 Canadian Dividend Stocks

On the Canadian stock market, we find a lot of great dividend paying companies. Considering the economic context, I would rather invest in a Canadian corporation than any other companies. Since the banking system has proven to be as solid as rock, Canadian stocks have their feet on solid ground enabling them to jump even higher. If you had missed yesterday’s post, you will find the top 10 Canadian dividend stocks. In order to build the top 10 Canadian Dividend Stocks, we used some severe criteria (such as a minimum dividend growth requirement and dividend payout ratio under 70%).

Unfortunately, 10 Canadian dividend stocks might not be enough to build a solid dividend portfolio. In order to find more high quality dividend stocks, I have changed some of my search criteria. Here’s how I have created the best 20 Canadian Dividend Stocks:

- Dividend minimum yield: 3%

- Dividend maximum yield: no maximum

- Dividend payout ratio: under 80%

- P/E ratio: under 20

There are obviously some overlaps with the top 10 but it still gives you more options with softer search criteria. The goal of this list is to include stocks that might be overpriced or having a higher dividend payout ratio due to specific and known situations. This can enlarge your scope and give you more options to include Canadian dividend stocks in your portfolio.

***last edit April 18th 2011***

Ticker	Name	Price	Dividend Yield	Payout Ratio
MKP	MCAN Mortgage Corp	14.5	7.45	67.51
CTY	Calian Technologies Ltd	18.43	5.43	47.87
NPR-U	Northern Property Real Estate Investment Trust	28.53	5.36	57.54
SLF	Sun Life Financial Inc	29.738	4.84	50.94
SJR/B	Shaw Communications Inc	19.23	4.78	69.85
PNG	Pacific Northern Gas Ltd	26.4	4.55	60.85
GWO	Great-West Lifeco Inc	26.945	4.56	70.37
PWF	Power Financial Corp	30.97	4.52	66.64
BMO	Bank of Montreal	62.1	4.51	58.75
T	TELUS Corp	49.08	4.28	62.09
IGM	IGM Financial Inc	48.17	4.26	73.99
CM	Canadian Imperial Bank of Commerce/Canada	82.856	4.2	59.13
POW	Power Corp of Canada	28.4	4.09	61.32
X	TMX Group Inc	39.98	4.01	58.15
FTS	Fortis Inc/Canada	31.7	3.66	85.61
BNS	Bank of Nova Scotia	57.45	3.62	50.1
CJR/B	Corus Entertainment Inc	20.924	3.59	38.23
ADW/A	Andrew Peller Ltd	8.98	3.67	50.25
NA	National Bank of Canada	77.36	3.41	41.4
RY	Royal Bank of Canada	60.39	3.31	57.26

The first thing I liked when I pulled out the top 20 dividend paying stocks is that they are all over 3% (which is about the rate for a 5 years certificate of deposits). But what is even more interesting is that dividend income is less taxed than interest income. Therefore, the 3% dividend yield worth a lot more than the 3% from a CD.

Top Canadian Dividend Stocks = Financial Sector

Among the top 20 Canadian Dividend Stocks, you find a lot of financials. It is normal as the financial sector represent more than 20% of the Canadian Stock Market. Canadian Banks are heavily regulated and evolve in a ogopoly. These 2 factors contribute to make them some of the best Canadian Dividend payers on the stock market. Overtime, they have built a reputation of dividend stocks and now most Canadian investors count on banks in their portfolio to bring both capital growth and dividend growth. If you are looking to build a Canadian Dividend portfolio, Canadian banks should be place at the core of your investment account.

There are more to the Top 20 Canadian Dividend Stocks

However, you are also able to find other solid companies paying great dividends. After the 2008 stock market crash, others companies have proven that they are as solid as a rock. Communications and medias seem to be the next big dividend payer in Canada. They actualy evolve in a similar type of market as banks since they don’t have much competitors. Therefore, each of them have their fair share of the market and generate enough cash flow to constantly increase their dividend payouts. This is why they are among the best 20 Canadian Dividend Stocks.

Top Ten Canadian Dividend Stocks

Top Ten Canadian Dividend Stocks

So my fellow Canadian stock pickers, are you wondering what your next buy will be? I recently completed some research among the best dividend paying stocks on the TSX and pulled out the top 10 Canadian dividend stocks (I must say it helps a lot to have a friend working on a trading desk… a few seconds after having sent the email, I received the top 10 dividend stocks! Hahaha!).

In order to find the top 10 Canadian dividend stocks, I had to define important criteria for the selection of my stocks:

- Dividend minimum yield: 3% (so I ignore low dividend yield stocks)

- Dividend maximum yield: 7% (so I ignore abnormalities )

- Dividend payout ratio: under 70% (so I make sure that dividends will be paid consistently)

- Dividend growth: minimum of 5% annualized growth over 5 years

- P/E ratio: under 15

With these criteria, I know I will be able to find the best 10 Canadian Dividend Stocks of the moment. This list will be now updated quarterly and showed on the side bar in the must read section. We will be updating this list quarterly so some of the best canadian dividend stocks may not be there in a few months. Make sure to bookmark this page and take a look quartlerly.

***last edit April 18th 2011***

Ticker	Name	Price	Dividend Yield	Payout Ratio
CTY	Calian Technologies Ltd	18.43	5.43	47.87
NPR-U	Northern Property Real Estate Investment Trust	28.53	5.36	57.54
SLF	Sun Life Financial Inc	29.73	4.84	50.94
SJR/B	Shaw Communications Inc	19.22	4.78	69.85
PNG	Pacific Northern Gas Ltd	26.4	4.55	60.85
GWO	Great-West Lifeco Inc	26.94	4.56	70.37
PWF	Power Financial Corp	30.962	4.52	66.64
BMO	Bank of Montreal	62.09	4.51	58.75
CM	Canadian Imperial Bank of Commerce/Canada	82.89	4.2	59.13
POW	Power Corp of Canada	28.37	4.09	61.32

I have seen many investors buying dividend stocks over the past few months as they realized that most of those companies are very solid and will continue to pay their dividends. The 2008 crash gave us the great opportunity to buy some of the best companies at a fraction of their value. Even though the Canadian stock market gained more than 40% since March 2009, there is still a lot of room for stock appreciation. Another solid indicator is the high dividend yield offered by this top 10.

For example, bank dividends are usually only high enough to cover inflation (from 2 to 3%). But right now, most of them offer a dividend yield over 3% (and closed to 4%!). In the middle of the crisis (back in December-January), you could have bought banks giving 15% dividend yield. Wasn’t it the right time to buy back then?

If you want to take a look at the trend of the top 10 Canadian Dividend Stocks, you can use this free trend analysis tool:

Trend analysis is an investing tool showing you the trend (according to the moving average) of any Canadian stocks. You can track the progession of the top 10 Canadian Dividend Stocks and try to buy them when they cross their moving average and shows a uptrend.

If you are looking to open a brokerage account, I suggest you use Questrade. It is the cheapest broker in Canada so it’s perfect to buy a few shares of each of those top 10 Canadian Dividend Stocks: