There has been a lot of debate over the past few weeks. Investing experts have been taking sides, are we in a bear market rally or have we already found a market bottom and begun a new bull run? The answer is in. We enjoyed a rally within a bear market, and it’s over. That’s right, I’m calling it. Just as there are corrections within a longer running bull market, there are rallies within bear markets. In my post on August 9, 2022, entitled “Yield Curve Inversion”, I put forth my own opinion – that we were already in a recession. This afternoon reinforced that notion.
This past weekend I narrowed my choice for this week’s acquisition to two companies. National Fuel Gas Company [NFG] and Computer Services Inc. [CSVI]. The deciding factor turned out to be that NFG had been rising in price this year and CSVI had been struggling. I assumed CSVI would be either the same price next week or perhaps even lower. So, I decided to add NFG to the portfolio and add CSVI later.
NFG dropped about a dollar by close of today. CSVI went up 50%.
I was kicking around on Yahoo! Finance, trying to tie back to their calculation of Beta for one of my holdings, Federal Realty Investment Trust [FRT], when I stumbled across a free article by Motley Fool on FRT. It was published on July 23rd, just a few hours before my own post where I stated my intent to acquire some shares of FRT. It’s always nice, when a respected institution confirms your thoughts on a matter. We’re on the same page with FRT.
Come back this weekend to find out which Dividend King I’ll be acquiring this coming Monday.
This past weekend, using Sure Dividend’s, Sure Analysis Research Database, I stumbled across a company with a 50-year streak of annual dividend increases whose name I did not recognize. I am pretty familiar with the complete list of Dividend Kings, and I knew this one wasn’t on the list. I contacted Sure Dividend about the inconsistency and their founder and CEO, Ben Reynolds, responded in less than 12 hours. He confirmed that it would be added to the list and surmised that it was the first non-U.S. Dividend King.
The universe of Dividend Kings is growing, and I am keeping my eye on a dozen or so that, barring any unforeseen circumstances, will make the list in the next two years. Nevertheless, it is always a pleasure to see another company make this exclusive list.
The S&P 500 Index is currently yielding 1.62%. This number is often used as a yardstick for assessing the magnitude of a stock’s dividend. If it is used, it should be used only as a floor or a minimum level, as it is very misleading as an average. Here’s why.
As of the time of this writing the following companies make up the top 25% of the S&P 500:
Apple, Inc. [AAPL] – 0.60%
Microsoft Corp [MSFT] – 0.95%
Amazon.com Inc [AMZN] – 0.0%
Meta Platforms Inc [META] – 0.0%
Alphabet Inc [GOOGL/GOOG] – 0.0%
Berkshire Hathaway Inc [BRK.B] – 0.0%
Tesla Inc [TSLA] – 0.0%
Those percentages aren’t adding to 25%, so they’re clearly not the weights. They are the current dividend yields! Only 2 of the 7 pay a dividend and they are paltry at that.
My goal is to gradually build a small portfolio of Dividend Kings and I hope you’ll follow right along. My intent is to acquire a core of 10 or 11 stocks over the next three months that together, represent a diversified1 portfolio with low expected volatility and a significant dividend yield. I may have narrowed the universe of stocks to Dividend Kings, but that in no way means we cannot achieve diversification. After that I will add to those positions or add additional stocks subject to some forthcoming limitations/constraints.
There are 44 Dividend Kings, all of whom have impressive histories, by default. Going forward, some of these companies could struggle, some could thrive. One thing we can reasonably rely on is that the dividends will keep coming in and that those dividends will increase each year. There are no guarantees. However, it is reasonable to believe that no CEO is willing to destroy such a legacy willy-nilly. They will take reasonable measures to counter or avoid any material threats to the dividend program.
There are many ways to invest and grow your wealth. Stocks, bonds, ETFs, mutual funds, index funds, options, precious metals, real estate, etc. Legos. Ok, you get the idea. Frankly, all of these have their merits, and each have their chance to shine in different economies and at different times. Gold outperformed the other asset classes over the past 20 years. Bonds have had relative underperformance over the past 10 years and certainly now in this rising interest rate environment. However, stocks have outperformed all of the other asset types over the very long haul up until now and still offer the most promise over the long haul going forward.
Within the category of stocks or equities, there are four broad categories: Business Development Companies (BDCs), Master Limited Partnerships (MLPs), Real Estate Investment Trusts (REITs), and corporations. In turn the stocks of these broad categories can be classified into Growth or Value. These classifications are blurry at best, but in the spirit of boiling things down: growth stocks offer more capital appreciation in lieu of current income and value stocks offer a greater current income and less capital appreciation.
You may have heard of the Dividend Aristocrats. They are members of the S&P 500 Index, meeting certain minimum size and liquidity requirements, and have raised their dividends for at least 25 consecutive years. You can find the official list is put out by S&P Global here.
Dividend Kings are stocks with 50 or more consecutive years of dividend increases. However, they are not just a subset of the Aristocrats as one might assume. While each King easily satisfies the consecutive dividend increase streak (twice over!), they aren’t required to be members of the S&P 500 Index. Now, because this collection of stocks isn’t an official index, there isn’t universal agreement on the exact number of stocks that qualify for this distinction.
Welcome to Royal Dividends. This site shows exactly how anyone can build a portfolio of stocks that grows and pays dividends for life. I will show you which stocks I am buying, how much I am paying, and when I place the order. All you need to do is follow along.
My secret weapon is simplicity. There are thousands of books, articles, and websites on investing and trading, targeting every possible perspective, technique, and asset type. Some of it is decent; a lot of it is useless. However, it is this site that is going to show you how to successfully invest in stocks in the simplest and safest manner possible. How? I boil everything down.
Out of the many hundreds of companies that pay dividends, there are less than 50 who have increased their dividend for at least 50 consecutive years! They are called Dividend Kings. Amazon, Netflix, Google haven’t even been around for 50 years and have never paid even one dividend. If you ever want any cash from these companies and so many others, you have to sell their shares (and hopefully for more than you paid for them). Not the Kings. The Kings drop cash into your account every 90 days forever and you never have to sell them. This is the universe from which I will build a portfolio for the ages. Stay tuned!
