Johnson & Johnson (JNJ): A Dividend King That’s Built to Last

Founded in 1885, Johnson & Johnson is the world’s largest medical conglomerate. With more than 250 subsidiaries operating in over 60 countries, Johnson & Johnson’s three major business units provide it with a very diversified mix of revenue, earnings, and cash flow.   Here are the company’s operating segments:   Pharmaceuticals (47% of 2016 sales; 62% of pretax profit): dozens of patented drugs and vaccines to treat oncology, cardiovascular, immunological, neurological, infectious diseases, and diabetes. Remicade, a treatment for a number of immune-mediated inflammatory diseases, is Johnson & Johnson’s largest drug and accounted for 9.7% of company-wide revenue in 2016.   Medical Devices (35% of 2016 sales; 26% of pretax profit): surgical, orthopedic, endomechanical (i.e. hip replacements), and sterilization equipment. [...]

January 20th, 2018|

Procter & Gamble (PG): Paying Dividends Since 1890, but What Does the Future Hold with Activist Nelson Peltz?

In business since 1837, Procter & Gamble has grown into one of the world’s largest consumer goods manufacturers, advertisers, and distributors. It currently sells 65 products in more than 180 countries.   Some of its leading brands are Luvs, Pampers, Tampax, Charmin, Downy, Tide, Cascade, Dawn, Febreze, Head & Shoulders, Old Spice, Pantene, Gillette, Braun, Crest, and Oral-B. Here’s a look at Procter & Gamble’s segments. Over 70% of its earnings are accounted for by Fabric & Home Care (27%); Baby, Feminine & Family Care (25%), and Beauty (19%). Source: Procter & Gamble, Simply Safe Dividends Procter & Gamble's business is very diversified geographically. North America accounted for 45% of sales in fiscal 2017, followed by Europe (23%), Asia Pacific [...]

January 20th, 2018|

Target (TGT): Can This Dividend King Thrive in the Age of Amazon?

Target was founded in 1902 in Minneapolis, Minnesota, but the first discount Target store didn't open until 1962. Today, Target is one of America's largest retailers with annual sales of approximately $70 billion and more than 1,800 stores across the country.   Target’s stores focus on convenient one-stop shopping and competitive discount prices, offering a broad range of product categories including personal care, beauty, electronics, apparel, food, furniture, appliances, baby care, movies, and much more. Approximately 33% of Target's revenue is generated from its own private label brands, and groceries account for 15% of total sales.   Target’s typical customer is 40 years old, has a median household income of $64,000, and is more likely than not college educated.   [...]

January 20th, 2018|

Emerson Electric (EMR): A Quality Dividend King Benefiting From Industrial Automation

Founded in 1890, Emerson Electric is a global industrial conglomerate that serves the oil and gas, refining, chemicals, power generation, pharma, food and beverages, pulp and paper, metal and mining, and municipal water supply sectors.   Emerson Electric brings together technology and engineering to provide solutions for customers in the process, industrial, commercial, and residential markets.   Whether it’s monitoring food temperatures throughout the supply chain or replacing a deteriorating valve that could cause costly downtime, the company helps customers optimize their operations and increase reliability, efficiency, and safety.   Emerson completed a number of strategic actions in recent years to streamline its portfolio and refocus on its core businesses. The company divested more than $5 billion worth of operations, [...]

January 20th, 2018|

What Does Altria’s (MO) Future Hold for Conservative Dividend Investors?

Despite operating in one of the most controversial and heavily regulated industries in America, tobacco stocks have historically been excellent long-term, high-yield dividend growth investments.   In fact, Altria (MO) has been the best performing stock of the last 50 years, generating 20.6% annual returns and increasing shareholder wealth a remarkable 6,638 fold.   Along the way, Altria has raised its dividend for 48 consecutive years, making it not only a dividend aristocrat, but poised to become a dividend king in 2019.   Let's take a look at how Altria has managed to generate such remarkably consistent dividend growth and market crushing total returns in a declining industry.   More importantly, find out if Altria is likely to continue generating healthy [...]

January 10th, 2018|

Texas Roadhouse (TXRH): An Impressive Dividend Grower in a Tough Industry

Restaurants can be a potentially great but also very challenging industry for dividend growth investors to do well in.   After all, a steady expansion of store counts can lead to highly predictable growth.   But on the other hand, a ruthlessly competitive environment, shifting consumer tastes, and numerous cost uncertainties can make it challenging for restaurants to generate the kind of strong margins, earnings, and cash flow that typically back safe and steadily-rising dividends.   Texas Roadhouse (TXRH) is one of the few national chains that is flourishing in a highly challenging industry environment, which has allowed the fast-growing company to generate impressive six-year dividend growth of 17.5% per year.   Let's take a look at the secret sauce [...]

January 9th, 2018|

TJX Companies (TJX): 21 Straight Years of Fast Dividend Growth and Plans for Expansion

Brick-and-mortar retail has been struggling in recent years as consumers increasingly turn to online shopping. In fact, e-commerce sales have grown seven times faster than brick and mortar retail since 2005 (14% annually vs 2%).   That being said, brick-and-mortar shopping is far from dead, with most physical stores still seeing slow but steady growth in recent years.   Among traditional retailers, TJX Companies (TJX) in particular has proven itself to be arguably the best in the industry thanks to: An impressive 28-year dividend growth rate of 14.7% annually 21 consecutive years of dividend increases (TJX will become a dividend aristocrat in 2021) Market-beating returns over the last two decades (23.1% total returns vs 9.1% for S&P 500) Let's take a look [...]

January 9th, 2018|

Smucker’s (SJM): A Future Dividend Aristocrat Trading at a Historically High Yield

There's a school of thought popularized by Peter Lynch that investors should "invest in what you know."   In other words, buy companies that make products that you use and understand well.   This is one reason why food and beverage companies are popular, especially those that produce household brands that consumers buy on a frequent basis.   In addition, food companies are usually defensive, meaning recession-resistant (everyone's got to eat), and often have strong dividend growth track records thanks to their resilient cash flows.   Unfortunately, because of their stability and strong brand values, many of the most well-known food and beverage companies, such as Coca-Cola (KO), and Hormel Foods (HRL), usually trade at a premium, especially in today's market.   Let's take a look at [...]

January 9th, 2018|

Coca-Cola (KO): Are the Best Days Behind This Buffett-Owned Dividend King?

When it comes to high-quality dividend growth stocks, investors naturally gravitate to blue chips like dividend aristocrats and dividend kings. After all, no company can increase its dividend for at least 25 or 50 years in a row without a certain combination of highly admirable characteristics.   These traits tend to include stable and predictable cash flows, strong competitive advantages, good profitability, modest amounts of debt, and of course a very shareholder-friendly corporate culture.   In addition, Warren Buffett, history's greatest value investor, has made his fortune buying "wonderful companies at a fair price." So naturally, any company that Berkshire Hathaway (BRK.B) owns a large position in (Coke is 9.5% of Berkshire's portfolio) is seen as a defacto high-quality blue chip. [...]

January 9th, 2018|

3M (MMM): A Dividend King With a Wide Moat

While fast-growing momentum stocks might get the headlines, some of the best long-term investments are often far less exciting dividend growth stalwarts such as 3M (MMM).   This industrial powerhouse has made countless investors amazingly wealthy over the years (12.9% total returns vs 9.1% for the S&P 500 over the last 22 years) thanks to its disciplined and steady growth strategy, which includes 59 straight years of dividend increases at a double-digit annualized rate.   Let's take a look at what has made this venerable dividend king one of the best choices for almost any long-term income growth portfolio and if 3M's valuation looks attractive today.   Business Overview Minnesota Mining and Manufacturing, or 3M, was founded in 1902 in St. Paul, Minnesota. The global industrial [...]

January 9th, 2018|