Thursday, September 29, 2016

Another Round Out Buy


26 September 2016: Bought 44 shares of UNP at $94.40 per share.

Founded in 1862, Omaha, Nebraska-based Union Pacific Corporation (NYSE:UNP) operates through its principal operating company, Union Pacific Railroad Company. The company operates the largest public railroad in North America, with 32,000 miles of track linking 23 states in the western two-thirds of the United States. UNP hauls coal, industrial products, intermodal containers, agricultural goods, chemicals, and automotive products. UNP owns a quarter of Mexican railroad Ferromex.

UNP is a Dividend Challenger with a 9-year streak of annual dividend increases. The company pays quarterly dividends of 55¢ per share in the months of March, June, September, and December. At my buy price of $94.40, the stock yields 2.33%.

Wednesday, September 28, 2016

Recent Sell: Texas Instruments Incorporated

Texas Instruments, Inc. (NASDAQ:TXN) designs, makes and sells semiconductors to electronics designers and manufacturers worldwide. The company operates mainly through two segments, Analog and Embedded Processing. It markets and sells products through a direct sales force and through distributors. TXN was founded in 1930 and is headquartered in Dallas, Texas.

I transferred shares of TXN into DivGro in December 2015. At the time, I listed several reasons for liking TXN, including the stock's yield of 2.62% and a 10-year dividend growth rate of 30%. Since then, TXN's yield has dropped to 2.19% on strong share price performance.

I'm very happy with my investment in TXN. The stock has performed very well, returning about 26% on an annualized basis in the 3 years I've owned shares. However, I've been preparing DivGro for options trading and I'm sacrificing this position for that goal.

Tuesday, September 27, 2016

Boosting Ford's Performance with Options


Founded in 1903 and based in Dearborn, Michigan, Ford Motor Company (F) manufactures and distributes automobiles worldwide. The company has 67 plants across the world and offers vehicles under the Ford and Lincoln brand names. Ford sells its products through distributors and dealers, as well as through dealerships to fleet customers. The company provides vehicle financing products through a wholly owned subsidiary, Ford Motor Credit Company LLC.

I own 600 shares of Ford at an average cost basis of $12.94 per share. As a dividend growth investor, I like Ford for its relatively high yield. I also like the stock because it allows me to boost that yield with covered calls. Ford is a popular stock for options trading – in August, the average daily volume of Ford options totaled nearly 7,200 contracts, about 4,500 of which were call contracts.

Sunday, September 25, 2016

9 Dividend Increases: September 19-23, 2016

 Summary

  • Companies can only increase their dividends regularly if earnings grow sufficiently.
  • I like monitoring dividend increases for stocks on my watch list of dividend growth stocks, because I consider such stocks to be candidates for further analysis.
  • Recently, 11 companies on my watch list decided to increase their dividends, including one of the stocks I hold in my portfolio.

Friday, September 23, 2016

Blogroll Renovations

Welcome to my 400th blog post! 

I have an extensive blogroll at DivGro. Maintaining the blogroll is a challenge, as blogs come and go. I rely on new bloggers to tell me about their new blog. Rarely, though, does a blogger plan to stop blogging. It just kind-of happens. And because it just happens, there's no way for me to know when it happens...

It is quite eerie to read the final post on abandoned blogs. Did the blogger have even a little sense that the post would be their last? As I get older, I think back about the last time I did various things, like seeing school friends or even distant family. At the time, I had no inkling that that would be the last time I would see them!

Anyway, enough about nostalgia. The fact of the matter is that I have to revisit my blogroll frequently to fix things, otherwise the page would become less useful fast!

Wednesday, September 21, 2016

11 Dividend Increases: September 5-16, 2016

 Summary

  • Companies can only increase their dividends regularly if earnings grow sufficiently.
  • I like monitoring dividend increases for stocks on my watch list of dividend growth stocks, because I consider such stocks to be candidates for further analysis.
  • Recently, 11 companies on my watch list decided to increase their dividends, including one of the stocks I hold in my portfolio.

Tuesday, September 20, 2016

Options Update: September 2016

Last month, I wrote my first article in a new monthly series about options trades in DivGro. These articles will follow option expiration Friday, usually the third Friday of the contract month.

As I mentioned last month, readers not interested in options can just skip these articles.

Personally, I'm interested in boosting my dividend income with options. By selling calls against stocks I own (covered calls) or selling puts on stocks I'd like to own at a preferred price (naked or cash-covered puts), I can collect option premiums and so boost my dividend income.

Wednesday, September 14, 2016

Stock Analysis: Hormel Foods Corporation

Hormel Foods Corporation (HRL) is a multinational manufacturer and marketer of consumer-branded food and meat products. The company sells its products through sales personnel, as well as through independent brokers and distributors. Customers include retailers, hospitals, nursing homes and marketers of nutritional products. HRL was founded in 1891 and is based in Austin, Minnesota.

HRL was the top ranked stock in the August edition of my 10 Dividend Growth Stocks series of articles on Seeking Alpha. The stock made the list again in the September edition, this time in second place. The stock is a Dividend Champion with a track record of 50 consecutive years of dividend increases and a 10-year dividend growth rate of 14.4%. HRL pays quarterly dividends of 14.5¢ per share in the months of February, May, August, and November.

Tuesday, September 13, 2016

DivGro Pulse: September 2016

Today I'm starting a new monthly article series. My goal is to monitor DivGro's health as a dividend growth portfolio – taking the proverbial pulse to determine if there are areas of concern that require attention.

My monthly review articles will continue to present a summary of the past month's activities along with a snapshot of DivGro's current state, including metrics such as projected annual dividend income (PADI), average yield on cost (YoC), percentage payback and projected annual yield.

In contrast, the pulse articles will be strategy focused. I'll provide updated fair value estimates for each stock. Comparing a stock's current price to its fair value estimate will help inform investment decisions. I'll also provide various charts to visualize recent performance, including one plotting current price relative to the 52-week trading range.

Wednesday, September 7, 2016

Home Run #6

I'm happy to report my sixth home run stock! Recall that I call a stock a home run stock when it passes the 100% profit mark taking total return into account.

While my goal with DivGro is to build a growing dividend income stream, its fun to see some stocks perform well enough to become home run stocks. These stocks present dividend growth investors with some tricky questions. Are the stocks suitable for further investment, or are they now overvalued? Is it appropriate to increase the average cost basis of a position by buying more shares?

When I look at my portfolio, I see many stocks that have gone up significantly after I bought shares. Buying more shares would increase my average cost basis, something I've tried to avoid so far. But is increasing average cost basis necessarily a bad thing?

Monday, September 5, 2016

10 Dividend Growth Stocks For September 2016

Summary

  • I rank a selection of the CCC dividend growth stocks every month. The top 10 ranked stocks are great candidates for further analysis. 
  • The CCC list is an invaluable source for dividend growth investors. Every month I use different screens to trim the list before doing a preliminary ranking.  
  • For the top ranked stocks, I do a final ranking using additional data and assign a 7-star rating.
  • This article reveals the top 10 ranked stocks for September, as well as their ratings.

Saturday, September 3, 2016

10 Dividend Increases: August 22-September 2, 2016

 Summary

  • Companies can only increase their dividends regularly if earnings grow sufficiently.
  • Monitoring dividend increases for stocks on my watch list helps me identify candidates for further analysis.
  • Recently, 10 companies on my watch list announced dividend increases, including 1 of my DivGro holdings.

Thursday, September 1, 2016

Monthly Review: August 2016

Over the past couple of months I've been positioning DivGro for option trading. To do so, I increased the number of shares of several positions to 100 or multiples thereof. My goal is to boost dividend income by selling covered calls against several of the stocks I own, collecting option premiums in return.

I closed five positions this month and increased my holdings of three positions to 100 shares each, readying them for option trading. I also initiated a position in Cisco Systems, Inc (CSCO), a great candidate for option trading!

DivGro's projected annual dividend income (PADI) decreased further this month. Nevertheless, I'm on schedule goal-wise and I'm confident to reach my goal of $12,000 before year's end. Good news is that I've achieved my goal of earning $10,800 for 2016.

Tuesday, August 30, 2016

Confessions Of A Recovering Trader

I did a bad thing.

I acted on an impulse and bought shares of a stock that wouldn't pass DivGro's selection criteria. In fact, I looked at the stock chart and based on what I saw, I decided to buy shares worth more than double the amount I usually spend on buys.

Before founding DivGro in January 2013 and subscribing to the philosophy of dividend growth investing, I was an avid trader. I looked at technicals and ignored fundamentals. I studied stock charts and trends, trying to determine the best entry points and looking for patterns that would suggest future price action.

Monday, August 29, 2016

Recent Sell: Digital Realty Trust, Inc


In July I celebrated adding 3 more home runs to DivGro. One of those home runs were Digital Realty Trust, Inc (DLR), a publicly-traded U.S. real estate investment trusts (REITs) that owns, acquires, repositions and manages technology-related real estate.

DLR's performance has been spectacular. The share price more than doubled from my buy price, though lately the REIT has pulled back to a just under $100 per share. DLR now yields 3.54%, much less than my initial yield on cost (YoC) of 6.30%. While DLR has paid and increased its dividend for 12 years running, dividend growth has slowed in recent years.

It is hard to say goodbye to a winner, so I'll just say good buy and move along!

Saturday, August 27, 2016

Options Update: August 2016

This article is the first in a new series of articles about my options trades in DivGro.

Some readers may not be interested in options, so they can just skip these articles. Others may be interested in learning about options or just following along. And I'm sure there are several dividend growth investors, who, like myself, are interested in boosting dividend income with options trades.

As for myself, this series will help me to track my options trades and to learn more about options. Certainly, some of the learning will come from research I do before writing articles, but I hope I'll also learn from questions and comments from those readers that share my interest in options trading.

Friday, August 26, 2016

Recent Sell: Deere & Company

I've parted ways with Deere & Company (NYSE:DE). The company has paid the same quarterly dividend of 60¢ per share for 9 straight quarters. While this does not constitute a dividend freeze, yet, I have some concerns about the company's fundamentals. Last week, DE announced Q3 earnings and the results reflect continued weakening in difficult construction and farming markets.

Last Friday, shares spiked up about 13% to over $87 per share after DE posted an earnings surprise and guiding higher for fiscal year 2016. While EPS (earnings per share) for Q3 of $1.55 beat the consensus forecast by 61¢ per share, revenue dropped 11% from the year-ago quarter. Aggressive cost cuts and share buy backs helped DE increase EPS by 2¢ from $1.53 in Q3 2015.

The market's response to DE's less bad news gives me an opportunity to exit my DE position at a slight gain. I'm happy to be out of this position – DE is now going for 22.7 times next year's earnings, a significantly inflated earnings multiple for a company with declining revenues.

Thursday, August 25, 2016

Recent Buy: Cisco Systems

Cisco Systems, Inc (CSCO) designs, manufactures, and sells internet protocol-based products and services and delivers integrated solutions to develop and connect networks around the world. The company serves businesses of various sizes, public institutions, governments, and communications service providers. CSCO sells its products directly, as well as through channel partners, such as systems integrators, service providers, other resellers, and distributors. The company was founded in 1984 and is headquartered in San Jose, California.

The stock is a Dividend Challenger with a track record of 6 consecutive years of dividend increases and a 3-year dividend growth rate of 31.6%. CSCO pays quarterly dividends of 26¢ per share in the months of January, April, July and October.

Tuesday, August 23, 2016

9 Dividend Increases: August 15-19, 2016

 Summary

  • Companies that regularly increase dividends show confidence in future earnings growth potential.
  • Monitoring dividend increases for stocks on my watch list helps me identify candidates for further analysis.
  • Recently, 9 companies on my watch list decided to increase their dividends.

Sunday, August 21, 2016

Closing Three More Positions

Regular readers will know that I'm busy preparing DivGro for options trading. I'm hoping to boost dividend income by selling call options against stock I own. The strategy is called covered call writing – typically, you sell one contract for every 100 shares you own and collect an option premium in return.

In the past 2 months, I've been closing some DivGro positions and using the cash to round out the number of shares of other DivGro positions. The idea is to own 100 shares (or multiples of 100 shares) of stocks so I can sell call options on these stocks and boost my dividend income.

Recently, I bought additional shares of 3 stocks and increased my share count to 100 shares, making these stocks eligible for options trades.

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