Value Investing News

The S&P 500 Dividend Aristocrats is the most prestigious list of dividend stocks. It is designed to measure the performance of S&P 500 stocks that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years.

Most companies use debt for a variety of reasons in their operations. It could be either short term or long-term obligations. If there’s anything the 2007-2009 financial crisis has taught us, it is that excessively leveraged companies could easily blow up after a chain of negative events. Thus it pays to know what the debt situation for a particular company you are investing in actually is.

Despite Avery Dennison's recent dividend cut,the dividend aristocrats index appears to be business as usual in 2009.The dividend aristocrats represent S&P 500 members which have consistently raised their dividends for more than 25 consecutive years. At the end of 2008, there were 52 constituents in the index.

Avery Dennison (AVY) just declared a quarterly dividend of 0.20/share, which represents a 50% decrease from last quarter’s payment of 0.41/share. The company reduced its dividend to support debt reduction efforts. The company also reported $0.56 in 2Q earnings per share, which didn’t provide sufficient coverage for the dividend.

There are several stocks, which offer tempting current high yields, which are less likely to be sustained. Most of the companies mentioned below are members of the elite S&P Dividend Aristocrats index for now.

As a dividend growth investor, my goal is to generate a rising stream of dividend income. Thus I would have to be selective not only about picking individual stocks, but also about selecting companies from a variety of industries, countries and size, in order to avoid a widespread implosion in overall dividend income.

S&P 500, which is the benchmark against which most money managers track their performance, lost 11.67% in the first quarter of 2009. The S&P Dividend Aristocrats however underperformed the benchmark by almost 2% after losing 13.84% in the first quarter. Now if we add dividends to the picture the S&P 500 loss drops to 11.01% while the loss for Dividend Aristocrats decreases to 12.90%.

There are two things that are certain in life- death and taxes. When investors sell a stock for a gain, they must pay either a long term or a short-term capital gains tax.

A roundup of last week's stock related blog posts.

Avery Dennison Corp. is a leading worldwide manufacturer of pressure-sensitive adhesives and materials, office products, labels, retail systems and specialty chemicals. Linked here is a detailed stock analysis and commentary.