Value Investing News

Any company could afford to boost distributions in a single year. Any type of business could also have a high yield, especially if it distributes all of its cash flows to shareholders. It takes a special kind of a business model to afford a proper balance between investing back into the business and distributing excess profits to shareholders.

For dividend growth investors, there are certain attributes of investments that are more relevant than others, such as yield and dividend growth. To illustrate the power of dividend growth consider that an investment’s yield-on-cost will double every 5 years if they grow their dividend by 15%/year or 7 years at 10%/year or 14 years at 5%/year.

Universal Corporation (UVV), together with its subsidiaries, operates as the leaf tobacco merchants and processors worldwide. It engages in selecting, procuring, buying, processing, packing, storing, supplying, shipping, and financing leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products. This dividend champion has raised dividends for 39 consecutive years.

5 current Magic Formula stocks that look like excellent long-term dividend plays.

Altria Group Inc. (NYSE: MO) is scheduled to release its fourth-quarter financial results before the closing bell on Thursday, January 28, 2009. Analysts, on average, currently expect the company to report earnings of 40 cents a share on revenue of $4.14 billion.

Investors who are worried about inflation but want to protect their principal are often told to invest in Treasury Inflation Protected Securities, which are indexed for inflation. In other words, investors yield and principal are indexed to the CPI and adjusted as the CPI rises over time. This sounds like the perfect deal of a lifetime, except for two caveats.

Vector Group is a holding company with the main operating unit being Liggett Group, the maker of discount cigarette brands Liggett Select and Grand Prix. A dividend play with a 11% yield, does this stock look like a good Magic Formula choice?

A list of the valuations that were added or updated on ModernGraham this week.

Most novice dividend investors typically are under the impression that successful dividend investing entails finding and purchasing the highest yielding stocks. This strategy is flawed, because it does not take into account the sustainability of the dividend. A company, which yields 20%, might generate a much lower yield on cost over time.

Back at the end of 2008, I was invited to participate in a stock picking competition by selecting 4 stocks. At the time I simply included the highest yielding stocks in my portfolio – Con Edison (ED), Realty Income (O), Phillip Morris International (PM) and Kinder Morgan (KMP).

Many retirees who are seeking current income from their assets invest in fixed income securities, most of which provide a stable stream of income. Fixed income investments do have some disadvantages relative to stocks that pay dividends, and thus retirees which fail to account for these, could end up with no income at the worst time possible .

Most analysts are divided on whether the 6 month advance is over or not. Dividend investors on the other hand however are not so concerned about the overall state of the market, as long as dividends are being paid indeed. The main problem with a rising market however is that it leaves fewer attractively valued stocks to enter or reinvest dividends.

Kraft Foods Inc., together with its subsidiaries, manufactures and markets packaged food products and grocery products worldwide. The company has consistently raised dividends since it went public in 2001. It was a part of tobacco conglomerate Altria Group (MO), until Kraft was spun off in May 2007.

When companies decide to share a portion of their earnings with their shareholders, it is a sign of prudent fiscal discipline. Shareholders who are rewarded on a timely basis in the form of dividend payments are less likely to sell their holdings, even during a steep market correction.

It appears many people were not confident and secure in their investing process. Many investors who lost confidence and exited the market missed the significant rally over the last couple of months.