05-12-2014, 08:28 PM
Tough choices in a way. For me it would be a no-brainer.
So what does DD have going for it? It's a large corporation that's been around for a long time. Management hasn't been too generous to the shareholders; longrundata lists their 5, 10 and 25 year dividend growth rates all under 4.5% and the shorter the time frame, the lower the growth. Yet they've had a nice rebound in price since the Great Recession. It's in a cyclical business, TD's web site and FinViz both have the P/E around 22, the dividend yield is 2.6% and the payout ratio is around 55%.
I didn't research it but what is management saying about the spinoff? Dividend policy post spinoff? Expected earnings trends?
Now let's look at your alternative choices.
JNJ is a Dividend Champion and a Dividend Aristocrat; longrundata shows the dividend growth rate for 5, 10 and 25 years as 7%, 10% and 13% respectively and the payout ratio is around 50%. JNJ's S&P Quality rating is A- and the dividend yield is around 2.7%. The P/E is hovering around 20. A little overpriced for me right here but a limit order or selling an OTM put can bring the price down. I'd like it better closer to or under $90.
CVX is also a Dividend Champion but don't know if it's on the Aristocrat list; longrundata lists the DGR of 9%, 10%, 7% for the three time periods already mentioned and the payout ratio is around 39%. The P/E is around 12 which is at the high end of what it's been trading at for the last few years but the yield is around 3.4%. I like it better around $110 but you missed that dip. It's not grossly overvalued, IMO.
Since I don't know much about you, I can't even hazard a guess about time frame, age, tax situation, etc. You have to weigh it for yourself. One thing that interests me is even with the low dividend growth rate, DD seems to have given you a nice capital gain.
In the meantime, why don't you tell us a little more about your goals and any other information you think is pertinent in the Introductions section. It's hard to make a recommendation without knowing where you're at.
So what does DD have going for it? It's a large corporation that's been around for a long time. Management hasn't been too generous to the shareholders; longrundata lists their 5, 10 and 25 year dividend growth rates all under 4.5% and the shorter the time frame, the lower the growth. Yet they've had a nice rebound in price since the Great Recession. It's in a cyclical business, TD's web site and FinViz both have the P/E around 22, the dividend yield is 2.6% and the payout ratio is around 55%.
I didn't research it but what is management saying about the spinoff? Dividend policy post spinoff? Expected earnings trends?
Now let's look at your alternative choices.
JNJ is a Dividend Champion and a Dividend Aristocrat; longrundata shows the dividend growth rate for 5, 10 and 25 years as 7%, 10% and 13% respectively and the payout ratio is around 50%. JNJ's S&P Quality rating is A- and the dividend yield is around 2.7%. The P/E is hovering around 20. A little overpriced for me right here but a limit order or selling an OTM put can bring the price down. I'd like it better closer to or under $90.
CVX is also a Dividend Champion but don't know if it's on the Aristocrat list; longrundata lists the DGR of 9%, 10%, 7% for the three time periods already mentioned and the payout ratio is around 39%. The P/E is around 12 which is at the high end of what it's been trading at for the last few years but the yield is around 3.4%. I like it better around $110 but you missed that dip. It's not grossly overvalued, IMO.
Since I don't know much about you, I can't even hazard a guess about time frame, age, tax situation, etc. You have to weigh it for yourself. One thing that interests me is even with the low dividend growth rate, DD seems to have given you a nice capital gain.
In the meantime, why don't you tell us a little more about your goals and any other information you think is pertinent in the Introductions section. It's hard to make a recommendation without knowing where you're at.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan