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.

Cardinal Health is one of the "big 3" pharmaceutical distributors. With a stable, recession-proof business and limited competition, along with a solid dividend with room for growth, Cardinal is a good, conservative Magic Formula stock.

As the year draws to a close there were very few companies of note increasing their dividends this week. With that, I thought it would be interesting to see who might be the big dividend raisers in 2010. Here are seven companies for your consideration:

MagicDiligence puts 3 competitors, all Magic Formula stocks, up against each other in this face-off of pharmaceutical distribution companies.

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.

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:

Sequoia's (Ruane, Cunniff & Goldfarb) Q2 portfolio has been filed. New or increased positions include SJM, HDB, UPL, GIS, T, PCP, WAG, CHK, DHR, V, BRKb, MTD, KO, PM, JNJ, IRS, MA, JPM, IBM, PG, PEP, FELE, KFT, etc.

A question I often get is, “What do you think of the market? Where’s it headed?” Normally, I politely respond as expected, but occasionally I will startle the person with a reply like, “I don’t know. For me it really doesn’t matter much.” My investing goals are not defined by movements in the market.

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.

Walgreen Co is the nation's largest drugstore chain with fiscal 2008 sales of $59 billion. The company operates 6,902 drugstores in all 50 states, the District of Columbia and Puerto Rico. The company is member of the S&P 500 and was a recent addition to the S&P Dividend Aristocrats index.

Walgreen was the only dividend raiser last week, which is not surprising during the slow summer season. Walgreen, which operates the largest chain of drugstores in the United States, raised its dividend by 22.2% to 13.75 cents/share. The company is a member of the elite dividend aristocrats index, and has increased its quarterly dividends for 34 consecutive years.

A person’s character is defined not in the good times, but how they react in the time of a crisis. In much the same way, dividend investors in the future will look back at the 2008-2009 economic crisis and judge the character of dividend companies by how they reacted.

Several companies raised their distributions over the past week:
Despite the slow week for dividend increases, I am looking forward to a relatively busy July, since historically some well-known dividend aristocrats like Walgreen (WAG) and Stanley Works (SWK) tend to raise their dividends during the current month.