{"id":36520,"date":"2013-02-27T14:39:23","date_gmt":"2013-02-27T19:39:23","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=36520"},"modified":"2013-03-10T21:46:49","modified_gmt":"2013-03-11T01:46:49","slug":"why-i-love-dividend-achievers","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/02\/27\/why-i-love-dividend-achievers\/","title":{"rendered":"Why I Love Dividend Achievers"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/a> <\/p>\n

I spend quite a bit of time extolling the virtues of Dividend Achievers, companies with a long history of raising their dividends.\u00a0 I consider them the single best long-term investment you can make, and not purely because of the income.\u00a0 In fact, the income is often secondary.<\/p>\n

That statement generally gets me a few raised eyebrows, but hear me out. A company with a history of raising its dividend consistently over time is a healthy company with stable and growing cash flows.\u00a0 The discipline involved with paying a dividend also discourages money-wasting empire building by management or, even more importantly, financial or accounting shenanigans that mask the true financial condition of a company.<\/p>\n

And particularly in the post-2008 world, a company that is able to raise its dividend throughout a once-in-a-lifetime financial crisis is a company that can survive Armageddon because, frankly, it already has.<\/p>\n

Here are a handful of my favorite Dividend Achievers:<\/p>\n

Wal-Mart (NYSE:$<\/span>WMT<\/a>)<\/b> created a stir earlier this month when an email from one of its executives was leaked to the press that said that February sales for the world\u2019s largest retailer were \u201ca total disaster.\u201d<\/p>\n

Vice President of Finance Jerry Murray, the executive whose email was leaked, reported that Wal-Mart was off to its worst start in seven years.\u00a0 Yet management must not have been too worried because just days later Wal-Mart announced it was hiking its dividend by 18 percent.<\/strong><\/em><\/p>\n

Wal-Mart\u2019s annual dividend\u2014which it has increased every year since 1974\u2014was increased to $1.88 per share from $1.59.\u00a0 The stock now yields a respectable 2.7% in cash dividends, and this says nothing of share repurchases.\u00a0 Barron\u2019s <\/i>calculates<\/a> that the combined value of dividends and stock buybacks over the past five years add up to more than a fourth of the Wal-Mart\u2019s current market value.<\/p>\n

Intel (Nasdaq:$<\/span>INTC<\/a>)<\/b> is another company that has had a rough start to 2013.\u00a0 A bad earnings release, an outright decline in PC sales, and a large planned expansion of its manufacturing capacity at a time of weak demand have led investors to abandon the stock, sending it into negative territory for the year.<\/p>\n

Yet Intel has been a dividend-boosting powerhouse in recent years.\u00a0 In 2003 Intel paid out $0.08 per share in dividend; in 2013, Intel will pay out $0.90 in dividends.\u00a0 Over the course of a decade, Intel has raised its dividend by a factor of 11, and again, I haven\u2019t said anything about share repurchases yet.\u00a0 From 2008 to 2012, Intel shrunk its share count by 11%.<\/p>\n

Intel may not be the growth engine it was a decade ago, but as the company has matured it has become far more shareholder friendly.\u00a0 And there is plenty of room for more.\u00a0 Intel\u2019s dividend payout is a modest 41% of profits.<\/p>\n

At current prices Intel yields 4.3%, making it one of the highest-yielding stocks in the S&P 500.<\/p>\n

Another company that has embraced shareholder friendliness over the past decade is Intel\u2019s fellow PC dominator Microsoft (Nasdaq:$<\/span>MSFT<\/a>)<\/b>.\u00a0 Since initiating a $0.32 annual dividend in 2003, Microsoft has nearly tripled its payout to $0.92 in 2013.\u00a0 And there was a large special dividend of $3.00 per share along the way.<\/p>\n

Microsoft has also been busy on the share repurchase front after announcing a $40 billion buyback program in 2008.\u00a0 Since then, the company has shrunk its share count by 10%.\u00a0 Given Microsoft\u2019s cash hoard and its relatively low payout ratio of 45% (on depressed earnings, I might add), I expect more to come.<\/p>\n

I should note that Wal-Mart is the only company of the three that is currently on the \u201cofficial\u201d Dividend Achievers list as published by Indxis<\/a>. Intel and Microsoft just barely fell short of the 10-consecutive years criteria the last time the index was constituted, but I expect they will be added soon enough.<\/p>\n

Disclosures: Sizemore Capital holds positions in WMT, INTC, and MSFT in its Dividend Growth Portfolio<\/a>. \u00a0This article first appeared on MarketWatch<\/a>.<\/p>\n

SUBSCRIBE\u00a0<\/a><\/strong>to\u00a0Sizemore Insights<\/em>\u00a0via e-mail today.<\/p>\n

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The post Why I Love Dividend Achievers<\/a> appeared first on Sizemore Insights<\/a>.<\/p>\n

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