Value Investing News

With the market getting overextended for several months now, and my unwillingness to chase many dividends stocks, it is time to reflect on whether I am doing the right thing or not. Some stocks such as Emerson Electric (EMR) and Realty Income (O) which I was going to add to either in March or in April are trading at valuations that seem richer than what I am willing to pay for at the time.

The most important dividend events of the past week included news that have regulators warned financial companies to restrict dividend increases and stock buybacks for the near future. According to Reuters, executives from Goldman Sachs (GS) and JP Morgan Chase (JPM) have had talks with regulators about returning more cash to shareholders.

THE TOP 40 DIVIDEND STOCKS FOR 2010 presents an exclusive list and exhaustive analysis of the 40 highest-rated dividend stocks for 2010, as well as a complete guide on how to build and maintain a dividend stock portfolio.

The Procter & Gamble Company engages in the manufacture and sale of consumer goods worldwide. The company operates in three global business units (GBUs): Beauty, Health and Well-Being, and Household Care. This dividend aristocrat has raised distributions for 53 consecutive years.

Kimberly-Clark Corporation (KMB), together with its subsidiaries, engages in the manufacture and marketing of health and hygiene products worldwide. Every day, 1.3 billion people - nearly a quarter of the world's population - trust K-C brands and the solutions they provide to enhance their health, hygiene and well-being.

Most global companies do have a presence in China however. Some of these companies have had operations in the country for years, and have also developed a strategy for expanding their business there, which would provide strong earnings and dividend growths for the future.

Dividend Investing is more than just selecting stocks that pay dividends. Successful dividend investing is about selecting stocks with strong fundamentals, which not only generate enough cash to reinvest in the growth of the business, but also generate excess cash to pay a rising payment over time.

Dividend investing should require intense scrutinizing of companies, in order to find the best stocks for ones portfolio. Otherwise, investors could end up getting whipsawed in and out of stocks, which would increase trading costs and would make them less likely to reach their goals.

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.

Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. It operates in two segments, Oral, Personal, and Home Care; and Pet Nutrition. The company recently increased its quarterly dividend by 20.40% to 53 cents/share. This is the forty-seventh consecutive dividend increase for Colgate-Palmolive, which is a dividend champion.

Warren Buffett is arguably the best investor in the world. His main holding, Berkshire Hathaway has delivered market beating returns during his leadership. Buffett’s strategy is characterized by purchasing stocks which have a long-term durable competitive advantage in a stable industry.

Three well-known dividend aristocrats raised dividends last week. The companies include Coca-Cola (KO), Abbott Labs (ABT) and Sherwin-Williams (SHW). Another promising dividend raiser included Swiss Company Nestle (NSRGY). In dividend investing it is important not only to concentrate on companies with solid competitive advantages, but also ones which grow earnings and dividends along the line.

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

Dividend investors are paid for holding common stocks, which is one reason why a company which keeps paying a stable or rising dividend does not fall as much during bear market declines. The dividend returns are always positive, which provides a safety cushion even in the worst times possible.

Several companies announced their intent to increase distributions to shareholders. I have separated the dividend raisers of the past week in three groups: dividend achievers, champions and aristocrats; master limited partnerships; and potential dividend achievers