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Thinking caps on! Here's the hypothetical:
You own no individual stocks of any kind at all. You have to put all of your investment money into a single dividend growth stock at today's prices. And you will not be able to sell for at least ten years. So which one stock is it? Please explain your answer.
I'll add my own answer after the thread has gotten going. (Although if you've read enough of my posts, you can probably guess where I'd land.)
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09-16-2013, 08:10 AM
(This post was last modified: 09-16-2013, 08:53 AM by Horace Cugle.)
At today's prices and for my situation, if I could only hold one stock it would be MO. The stock is a real anomaly; solid dividend increases like KO, PG or JNJ and nearly twice the yield. Tough to beat cigarettes and beer! And then you have the e-cigs and weed on the horizon. I imagine half the country smoking Marlboro Blunts!
I know this: I guess it was the late 60's (I was in high school) when everyone started getting all jacked up about cigarettes, they stopped advertising and started putting warning labels on cigarettes and lawsuits, etc. Forty-five years later nothing has really changed and MO is still knocking it out of the park.
If I was younger I'd be looking for something with more growth. Yield wouldn't matter very much. Something like WAG.
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I was also going to say MO for all the reasons Horace mentioned. If I was looking at 20 years rather than 10, I might say PM instead, but I don't think the return on PM will pass MO in that shorter time frame.
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I was thinking PM.
Global tobacco player rather than relying strictly on the whims of U.S. government.
Dividend is a bit lower right now, but is growing at 10% plus per year.
I'm going to be with the rest of the group and say MO. 20 years out I would go with either PM, MCD, or KO. Better growers, but to make up the initial yield in just 10 years is too much.
Kermin, even though I would go with MO for the next 10 year stock. Another one you might consider that could beat them over 10 years is SBSI. Current yield of 3.08% and this isn't including their large dividend that they pay in December of every year. Last Dec the dividend was $0.53. Also they pay a 5% stock dividend each year. So you're getting a greater than 10% dividend. A few things to consider is that this is a very small cap stock (less than $500 million) and this is a bank stock. One that can possibly beat MO over the next 10 years, but it does have a lot more risk than MO. Weird to say that a cigarette company is a safer stock.
One Stock "You've Owned" or "Might Own". Hind site is easy it's the other that's hard. That's why I believe DG is the way to invest. We cant forsee what will happen but at least we can use historical dividend history as the best possible guide.
In canada I probably say ENB Enbridge, but currently its expensive.
Dan Mac @DGSInvesting
Unregistered
Alright, I'm going to be different and go with Coca-Cola Company (KO). KO has tons of great brands including Coke, Diet Coke, Fanta, Sprite, Dasani, Vitaminwater, Poweraide and Minutemaid. They have a dividend growth streak of 51 years! They have a 10 year compounded annual dividend growth rate of just under 10%, a 10 year compounded annual EPS growth rate around 9%, similar story with net income and sales growth.
They have a great balance sheet and wonderful historical operating results. If they can continue this into the future (and why doubt that they can since they have been doing this for many many years) then shareholders should be very happy with the results of investing in this company. Only thing I don't like that much is the dividend yield is slightly lower than 3%. But I'll let that slide since they are such a great company!
