Value Investing News

The dividend aristocrats list includes companies which have increased dividends for over 25 years in a row. It is equally weighted and re-balanced once an year. Over the past 3,5 and 7 years the index of elite dividend stocks has managed to outperform the S&P 500 by 5%, 3.7% and 4.40% respectively.

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.

One way in which to uncover stock investments is to run stock screens. Once resulting stocks are uncovered, one should track the performance of the screen before investing any real dollars. Additionally, conducting fundamental and detailed research on each stock is recommended before investing. This article contains a stock screen that incorporates some of Warren Buffett's criteria.

I currently track 100 dividend stocks in my D4L-Dashboard and have determined some of the lower rated stocks could be buys if the companies simply chose to increase their dividends. For various reasons their management has elected keep a low payout ratio and deploy the excess cash elsewhere.

I have selected several prominent dividend growth stocks, whose earnings and cash flows provide adequate coverage for their dividends:

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.

The dividend aristocrats whose ability to pay a dividend with such regularity, while other companies have had to either cut or eliminate their dividend payments, speaks volumes about their business model. In addition to that, the diversification and careful management of these companies’ resources has provided shareholders with long-term sustainable results.

What do you do when the economy tanks and the stock market follows suit, but you are still generating a lot of cash? Many people would look for bargains in the market. Wal-Mart (WMT) [analysis] has done just that.

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%.