Value Investing News

Utility dividend stocks. When you hear those words what do you think of? Long considered the domain for "widows and orphans", utilities have developed a somewhat stodgy reputation. Why are utilities considered good for widows and orphans? Here a few reasons:

If your goal is to accumulate wealth for a comfortable retirement, then there is no risk-free path. Yield and risk tend to follow each other. As risk increases, the investor demands more yield to compensate for that risk. Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk.

Commitment is a word often thrown around, but rarely backed up with actions. Salesmen are committed to your needs until you sign on the dotted line - then they are committed to next unsigned contract. A true measure of character is how committed are you to doing right when the times are hard and you are tempted to go astray?

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In the U.S. and Canada, most companies pay dividends quarterly. In other parts of the world, it is not uncommon for companies to pay an annual or a semi-annual dividend. That is not to say that North American companies sometimes choose not to pay quarterly dividends.

While the S&P 500 Dividend Aristocrats may be the most recognized list of dividend stocks, it is certainty not the largest. Since the Dividend Aristocrats list is limited to only stocks included in the S&P 500 Index, many smaller stocks are excluded. To expand the population of potential investments, many investors look at the dividend growth stocks included in Broad Dividend Achievers™ list.

Vectren Corp. is an energy holding company that delivers gas and/or electricity to more than one million utility customers in Indiana and Ohio, and offers other energy related products and services. Linked here is a detailed analysis and commentary.

The recent turbulence in the market has provided income investors first hand experience in managing their dividend growth portfolio in a declining market. Here are some things that will help you succeed and thrive when the bear puts his paw print on the market:

If your goal is to accumulate wealth for a comfortable retirement, then there is no risk-free path. Throughout time every angle has been tried and failed. Inherently, individual stocks will carry higher risk due to the lack of diversification when evaluated on a stand-alone basis.

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It’s human nature for new income investors to focus on yield. Many eventually learn that above average yields often carry an above average risk of a dividend cut, loss of invested capital or both. People involved in extreme sports/hobbies, such as base jumping, hang gliding and shark diving, do things to minimize risk and protect themselves.

I was amazed to find several companies on the champions list, which have raised distributions for over 50 consecutive years. The companies include: