April Was A Great Month! by Brian Nelson, CFA
I’m very excited about this edition of the Dividend Growth Newsletter!
For starters, two of the holdings in the Dividend Growth portfolio – Johnson & Johnson (JNJ) and Kinder Morgan Energy Partners (KMP) – increased their respective payouts since the last update. Kinder Morgan Energy Partners now yields in excess of 7%, while Johnson & Johnson has been such an excellent performer, surpassing $100 per share, that its yield is now just shy of 3% (following the raise). We’re very happy about the pace of income growth from portfolio constituents and expect this to continue.
In this edition, we highlight Abbott (ABT), as one of the ideas that we’re hoping to add to the portfolio on any material pullback (page 2). We’ve had fantastic performance from the portfolio’s healthcare constituents, including Medtronic (MDT), and we think Abbott would be a great addition at the right price. In this edition of the newsletter, we also walk through ‘Earnings from 15 Dividend Growth Giants’ beginning on page 3. Out of those 15, we think 3M (MMM) is overpriced, another healthcare giant Baxter (BAX) is worth a look, and if you’re not aware of our long-term thesis on portfolio holding Altria (MO) regarding its financial flexibility, it’s a must read. Very few firms have such a valuable (and hidden) asset in the form of a material stake in SABMiller like the tobacco firm.
We’re also very pleased with the performance of the Dividend Growth portfolio since the last update. Thanks in part to fantastic performance from recent Dividend Growth portfolio additions Apple (AAPL) and Realty Income (O), the portfolio’s annualized performance advanced to 16.1%, now nearly 9 percentage points greater than the mid-to-high single-digit annualized goal. We’re still expecting fantastic total return prospects from Apple and Realty Income, and we’ve just started to see the market recognize the material upside potential of portfolio holding General Electric (GE). The industrial giant continues to capitalize on its massive backlog as it sheds risky financial operations. Investors should expect GE to look to add to its industrial exposure via non-US assets, namely France’s Alstom, and we think pricing upside above $30 per share is reasonably fair. We’re also expecting big things from portfolio holding Microsoft (MSFT), both with respect to dividend growth and capital appreciation. We peg the software giant’s fair value at nearly $50 per share.
I hope you enjoy this edition of the Dividend Growth Newsletter, and please don’t forget to access the 16-page stock and dividend reports of desired companies on our website. Thank you for your membership!
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INSIDE THIS ISSUE
1 April Was A Great Month!
2 Keeping a Close Eye on Abbott (ticker: ABT)
3 Earnings from 15 Dividend Growth Giants (see article for tickers)
5 Our Dividend Growth Portfolio
8 Another New High for GE’s Industrial Backlog (ticker: GE)
9 Johnson & Johnson’s Patent Expiration Profile is Fantastic (ticker: JNJ)
10 Stocks with High VBI Ratings and Strong Dividend Growth Prospects (see article for tickers)
11 Our Dividend Growth Watch List
12 Yields to Avoid
13 Intel Continues Its Move to $30 Per Share (tickers: INTC, QCOM)
15 Apple in the News (ticker: AAPL)
17 The Cola Wars (tickers: DPS, GMCR, KO, PEP, SBUX, SODA)
19 About Our Dividend Cushion™
22 Featured Reports: O, GE, MSFT, ABT
26 Valuentum Definitions