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.

As an investor in the accumulation stage, I tend to focus on companies with yields of at least 3% and expectations of future dividend growth. Most of these companies have a history of consistent annual dividend increases which exceeds ten years.

SUPERVALU INC. operates as a grocery retailer in the United States. The company is member of the S&P 500 and the S&P Dividend Aristocrats indexes.
SUPERVALU INC. has paid dividends for more than 70 years and consistently increased payments to common shareholders every year for 35 years. The company announced a 1.5% dividend raise in May 2009, plus a $70 million stock buyback initiative.

Sometimes good companies aren’t good buys, and this is not always a bad thing. Often it is a result of the market over reacting in a positive direction. The stocks simply become overvalued, but their underlying fundamentals remain excellent. Below are a couple of companies that fall into this group:

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.

Several companies rewarded their patient investors with dividend raises.

For years Heinz ran commercials describing their product as ’slow good’. It was an obvious inference to ’so good’ and that it was worth waiting on. Investing in dividend stocks in very similar. You certainly won’t find sudden wealth on any given day, but over time the dividends will pay off.

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%.

SUPERVALU INC. is one of the largest U.S. food wholesalers, this company is also one of the biggest supermarket retailers in the U.S. Linked here is a detailed analysis and commentary.

In a previous post I outlined the 5 best performing year to date dividend aristocrats. The 5 worst performing dividend aristocrats so far in 2008 include:

Ever since the broad market indexes entered into bear market territory, I have been checking the dividend champions list for bargains. I came up with a list, using the follwoing screen criteria: