ABT

In the past we have looked at the importance of a company’s ability to sustain its dividend. However, as an investor in dividend growth stocks, it is not enough to simply sustain the dividend – I want to own companies that are capable of sustained dividend growth. Needless to say, this is a little more difficult to evaluate, but here are few important things to consider…

Payback is the amount of time needed for an investment to earn its cost, undiscounted. For example, if you buy a dividend stock for $100 that pays a $5 annual dividend, the payback is 20 years (100/5). Though not very sophisticated, payback can still help you screen for good, solid dividend growth stocks. I learned this lesson the hard way…

My goal as a dividend growth investor is to build a steadily increasing income and not necessarily to outperform the market via capital gains. However, as numerous research projects have shown, a conservative dividend-based investment strategy has consistently outperformed the market over time.

Deferred gratification is a principle where one or more people choose to postpone near-term benefits in order to enhance their chances of greater benefits in the future. In our microwave society marked by the ‘I want it now’ attitude, it is unusual to find someone willing to wait.

KB Home (NYSE: KBH) reported net loss of $.40 per diluted share compared to a net loss of $1.03 per diluted share, in the year-earlier quarter. analysts average -$0.30. KBH misses by $0.10

The Company’s net loss narrowed 61% to $30.7 million in the second quarter of 2010, compared to a net loss of $78.4 million, in the year-earlier quarter.

When you purchase individual stocks, risk is inherit. Sometimes bad things sometimes happen to good stocks such as the Chicago Tylenol murders of 1982. This shook Johnson & Johnson’s (JNJ) , but eventually it prevailed. Sometimes it is difficult when a strong leader leaves a company and creates a void that just can’t be filled.

To succeed as a dividend growth investor you must identify and purchase stocks with sustainable dividend growth. Put another way, targeted companies must be both capable and willing to grow their dividends. Obviously, we can not look into the future and see who will and will not perform.

In an economic downturn many investors turn to dividend stocks which are sometimes referred to as defensive stocks. These stocks offer sustainable dividends providing the investor with a minimum level of positive return, which helps buffer the downward pressure from the market. But what happens when the market turns up?

Buyout activity is still healthy in health care (pun intended). This is more evidence that health care is a defensive sector in an overall secular bear market.

The Forbes Top 150 Companies list ranked by Magic Formula Statistics. Which large global companies are both cheap and highly efficient with capital?

Fair value is really a simple concept. Given some select information such as dividends, dividend growth, holding period, discount rate and few other inputs, one can easily calculate the fair value of a stock. As with most simple things, the devil is in the details – the inputs must be correct to calculate a reasonable fair value, otherwise, garbage in, garbage out.

Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a diversified line of healthcare products including: drugs, nutritional products, diabetes monitoring devices and diagnostics. Linked here is a detailed analysis and commentary.

Everyone loves a deal and loves getting something at a rock bottom price. Dividend investors are no different. However, as long-term buy-and-hold investors, we aren’t known for our ability (or desire) to time the market and call the bottom. That’s not to say we can’t enjoy the benefits of buying at the bottom. So, how does a long-term buy-and-hold investor accomplish this?

Everyone loves a deal and loves getting something at a rock bottom price. Dividend investors are no different. However, as long-term buy-and-hold investors, we aren’t known for our ability (or desire) to time the market and call the bottom. That’s not to say we can’t enjoy the benefits of buying at the bottom. So, how does a long-term buy-and-hold investor accomplish this?

I have often heard that a person’s character is determined by how they behave when no one else is looking and during difficult times. In much the same way, we can learn a lot about a company’s management when they face adversity. One metric I look at closely during a downturn is cash generation relative to earnings.