New Buy: Analog Devices Inc. (ADI)

With record breaking S&P and Nasdaq performance I find it increasingly hard to find dividend growth stocks within a suitable buy range. The majority of companies on my watch list are too expensive for my taste at the moment.

Case in point: I had my eyes set on a utility to add to my portfolio, NextEra Energy (NEE). In recent weeks I saw the price climbing and climbing – well above the 130-135 range I was looking for. For comparison – the stock was trading at a much more attractive price of 120 at just the beginning of the year.

However, leaving NextEra aside for now, I came across a buy opportunity in the Internet of Things (IoT) realm – one of the industries of the future.

On May 15 I bought 20 shares of Analog Devices Inc. (ADI) for a total of $1,583. 

In this post I explain the reasons why I made this addition to my portfolio and what this means for my forward dividend income. 

Analog Devices, Inc. designs, manufactures, and markets a portfolio of solutions that leverage analog, mixed-signal, and digital signal processing technology, including integrated circuits (ICs), algorithms, software, and subsystems.

It offers data converter products, which translate real-world analog signals into digital data, as well as translates digital data into analog signals; high-performance amplifiers to condition analog signals; and radio frequency ICs to support cellular infrastructure. isolation in patient monitors; and smart metering and satellite applications.

‘Analog’ might sound like your grandfather’s tech – but is actually a vital component of the IoT. Analog technology plays an important role in growth segments such as the ‘connected car‘ or the ‘intelligent factory‘.

As can be seen in the chart below the share price has steadily increased over the past year, from below 60 to around 80 dollars. Lately the appreciation stalled somewhat over concerns that the company’s tech would be left out in the next generation iPhone.

Given Analog Devices‘s attractive dividend features I used that modest pullback to initiate a position.

ADI is a dividend contender with an impressive 15 year streak of dividend increases. The current yield is  2.29% – lower than the average 3.5% yield I strive for in building my portfolio.

The payout ratio is at 61%, leaving room for continued dividend growth. The 5 year dividend growth is a decent 10.24%.

Comparing Analog Devices‘s Earnings per Share (EPS) in the last quarter versus the same quarter in the prior year shows a 32.69% increase. Current year EPS versus last year equals a 30.68% increase.

The stock is by no means cheap. The Price/Earnings (P/E) ratio is 26.8, above the 5 year average of 23.6, but slightly below the industry’s 5 year average of 27.3.

In their May 13 report CFRA marks Analog Devices Inc. as a 4 star buy with a 12 month target price of $87 – about 10% above my buying price.

Given Analog Device’s yearly dividend of $1.80 per share this purchase increased my forward annual dividend income by $36.

What do you think about Analog Devices? Are you still able to find attractive buys in this market? Leave a comment/reply to share your thoughts!

Dividend Update: April 2017

It’s time for my favorite type of post: a tally of the dividends I received in the prior month. Given my strategy of DGI, it is really the dividend payouts that I care about. For each of the companies I invest in, I like to see a steady and growing stream of dividend payouts.

So how did I do in April?

Last month 11 companies sent me a dividend payout, adding up to a total of $221.

Not bad for an ‘off month’ – it’s usually March, June, September and December that provide the most dividend paychecks. With the exception of February – so far every month of 2017 was a $200+ monthly dividend payout for me.

Receiving over $200 dollars each month in dividends makes buying my next addition to the portfolio a little easier. You could say that my own little version of ‘The Snowball’ is starting to pick up some pace!

The following table shows the tickers of the companies that made a April 2017 dividend payout to my portfolio. It features the dividend amount I received and any change in payout as compared to the last payout moment.

 

Some wild figures in there! The dividend growth numbers are all over the place this month. Let’s take a closer look…

South32 (SOUHY) raised it’s dividend by 260%. Unfortunately South32 is a very small position in my portfolio and is the result of a spin-off from BHP Billiton back in 2015. While the increase looks great, the absolute numbers are slightly less impressive – from now on I will receive $1.80 every six months from South32. Ah well, I’ll take it!

My Diageo (DEO) dividend came down by almost 7%. This was not due to a decrease of their payout (or my consumption of their famous Guinness brand), but has to do with the Pound/Dollar exchange rate. Bank of Nova Scotia’s (BNS) was also (slightly) reduced to exchange rates.

Finally: a small increase by WPC and a very nice double digit increase from Cisco (CSCO).

Comparing the dividend payout of April 2016 to April 2017 (below) shows an increase from $115 to $221- YoY growth of 48%.

How was your April and its dividend?  Leave a comment/reply to share your thoughts!

Portfolio Update: April 2017

To paraphrase the great philosopher Justin Timberlake: it’s gonna be May which means April is already in the books. In fact; when this post is live it will be May already. So no more time to waste – let’s check in on what happened with my portfolio in the past month of April.

In my last post I went over the three purchases I made last month – adding to existing positions in Delta Airlines (DAL), CVS (CVS) and initiating a new one in International Paper (IP).

Three buys in one month is pretty exceptional for me, but I actually kept going and made two more purchases on the last trading day of April. I will cover these final two April purchases in an upcoming post.

By now it should be clear that I have a spending problem – although I think it’s the best kind. Reason being, with each new stock purchase I increase my forward dividend income and get closer to achieving my investment goals.

At the end of April 2016 my portfolio consisted of 27 positions with a total value of $33,106.  At the end of March 2017 my portfolio consisted of 41 positions with a total market value of $79,066 – a Year-on-Year (YoY) increase of 138%.

This YoY increase is shown in the graph below.

How was your April? Leave a comment/reply to share your thoughts!