When I first started dividend investing, I erroneously focused on current dividend yield. I was fortunate enough to accidentally buy some good dividend stocks and hold them long enough to figure out the "secret" of dividend investing. Dividend investing is about future yield, not current yield. It is not necessarily starting with a high-yield investment, but ending up with a high-yield investment. This usually occurs by buying investments with a moderate yield, a history of growing dividends and letting time do its job.
Here is a flock of companies that are building future yield for their shareholders by raising their cash dividends:
After running these companies through my D4L-PreScreen.xls model, EV with a NPV of MMA Differential of $87,621 justifies an more complete evaluation. MCHP has a large NPV of MMA Differential, which usually begs the question can it sustain its dividend. AFL is a stock that I own and am currently accumulating. BRO ($2,027) had a positive NPV of MMA Differential, but fell short of the $3,000 I look for from a company that is a Dividend Aristocrat. None of the others achieved the necessary NPV of MMA Differential to justify a full evaluation.
Disclosure: Long AFL.
(Photo: Steve Woods)
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Posted by D4L | Thursday, October 30, 2008 | commentary | 0 comments »________________________________________________________________
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