I know I have missed a few days since my last post but it has been for good reason. I am happy to announce that after almost six years of marriage a new baby DivHut entered the world on March 6. Happy to announce that both mother, father and baby boy are all doing well and adjusting to the first days of parenthood. We are very fortunate to have family nearby to assist us in these first few weeks and beyond.
As you can imagine both mother and father are very excited after trying all these years to have a child and are now finally blessed. These are the events that truly help put all our ‘first world’ problems into perspective and helps you realize what is truly important in this world and what is simply noise.
I debated sharing this news on my blog for several months as having a child is a very close and personal affair. But after much internal debate I obviously opted to share this news. With all the transparency among the dividend bloggers sharing debt, income, expenses and net worth I felt comfortable sharing this joyous news with you. Of course, being a dividend blog I just wanted to share a few dividend names that have interacted with us while staying in the hospital.
First up is a name that has circulated among the dividend bloggers quite a bit several months ago, Covidien plc (COV). Though COV was recently bought out by Medtronic (MDT) for $42.9 billion, their namesake products were all over the labor/deliver and recovery room. MDT has a current yield of 1.59% with a low payout ratio of 27.9% based on an EPS of 3.12. This name is a dividend workhorse raising payments for over 37 years and has a ten year annualized dividend growth rate of 17.27%. From a dividend perspective this stock seems to be firing on all cylinders. Though only yielding a current 1.59% this stock has an impressive ten year yield on cost of 6.65%. From a valuation standpoint, MDT has a PE of 22.3 which is high relative to its five year average. Forward PE looks more enticing at 18.1. Not too shabby if you ask me.
A non-health sector name that was prevalent in both our rooms was 3M Company (MMM). From bandages to tapes and other wraps, 3M products were readily being used. Currently yielding 2.46% with a moderate payout ratio of 50.1% based on an EPS of 7.47, MMM also has a very long history of raising dividends that extends more than half a century. The ten year annualized dividend growth rate of MMM is a healthy 9.04%. Need more reason to look into this conglomerate stalwart then consider the ten year yield on cost of 4.17%. The current PE of MMM is 22.3 which is well above its five year average suggesting a relatively expensive stock at current prices. As with MDT, forward PE looks a lot more enticing at 18.1 but still high relative to its five year average PE of 16.8.
Finally, we were surrounded by many consumer products from Abbott Laboratories (ABT). ABT yields 2.05% with a moderate payout ratio of 44.7% based on an EPS of 1.13. This stock was made very famous several years ago when Grace Groner passed away in 2010 and it was revealed that her estate totaled in excess of seven million dollars largely from her 1935 purchase of three shares of ABT. Decades upon decades of stock splits, dividend raises and reinvestment has turned a one time modest investment into multi-millions. Just another real world example of the power of dividends. ABT has raised its dividend for well over forty years and with a manageable payout ratio and cash flow it appears that dividend raises are likely to continue. From a valuation perspective ABT has a current PE of 41.4 which is well above its five year average PE of 18.0. This stock price looks like it has jumped well ahead of earnings in recent times. Might be prudent to wait before pulling the trigger on this one.
This just goes to show that great dividend paying companies surround our everyday lives no matter where we are. From consumer names that we use each day to industrial products and health items. From my perspective there’s no reason to ever invest in any type of stock other than solid dividend payers. The ubiquitous nature of these companies can help ensure their longevity.
Again, I’m excited to share the news of baby DivHut with you. I appreciate all the support, words of encouragement and comments received from this community. Are any of the names above in your dividend portfolio? Please let me know below.
Disclosure: Long MMM, ABT