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Cabot Investors Conference 2013www.cabot.net How to Pick Safe, Winning, Dividend-Paying Stocks Chloe Lutts Jensen Editor, Dick Davis Digests

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Presentation on theme: "Cabot Investors Conference 2013www.cabot.net How to Pick Safe, Winning, Dividend-Paying Stocks Chloe Lutts Jensen Editor, Dick Davis Digests"— Presentation transcript:

1 Cabot Investors Conference 2013www.cabot.net How to Pick Safe, Winning, Dividend-Paying Stocks Chloe Lutts Jensen Editor, Dick Davis Digests chloe@cabot.net

2 Cabot Investors Conference 2013www.cabot.net What Characteristics should you look for in a Dividend-Paying Stock? Safety (Capital Preservation) Dividend Safety Dividend Growth Capital Appreciation Potential

3 Cabot Investors Conference 2013www.cabot.net Indicators of Safety (of Capital) Low Volatility Established Business in Growing or Stable Industry – Red Flag Industries Shrinking Faddish Very Cyclical

4 Cabot Investors Conference 2013www.cabot.net Indicators of Dividend Safety Dividend History – Many Years of Dividend Payments – Multiple Dividend Increases a Plus – No Dividend Cuts, Especially Recently Low Payout Ratio – 20% to 50%

5 Cabot Investors Conference 2013www.cabot.net Indicators of Dividend Growth Potential History of Dividend Growth Earnings Growth Low Payout Ratio

6 Cabot Investors Conference 2013www.cabot.net Indicators of Capital Appreciation Potential Valuation Technical Strength Institutional Support Earnings Growth

7 Cabot Investors Conference 2013www.cabot.net Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  Institutional Support  Earnings Growth  etc.

8 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc.

9 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Capital Safety Beta: 0.45

10 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Capital Safety Beta: 0.45

11 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Dividend Safety Dividends Since 1890 (123 yrs) No Dividend Cuts in a Decade

12 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Dividend Safety Dividends Since 1890 (123 yrs) No Dividend Cuts in a Decade Payout Ratio: 59%

13 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Est. Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Dividend Safety Dividends Since 1890 (123 yrs) No Dividend Cuts in a Decade Payout Ratio: 59% 200420052006200720082009201020112012 40.238.743.642.139.845.851.050.168.5

14 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Dividend Safety Dividends Since 1890 (123 yrs) No Dividend Cuts in a Decade Payout Ratio: 59% 200420052006200720082009201020112012 40.238.743.642.139.845.851.050.168.5

15 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Dividend Growth Dividend Aristocrat

16 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Dividend Growth Dividend Aristocrat Free Cash Flow/Share: 200420052006200720082009201020112012 2.632.402.653.073.853.704.203.313.15

17 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  etc. Dividend Growth Dividend Aristocrat Free Cash Flow/Share Payout Ratio 200420052006200720082009201020112012 40.238.743.642.139.845.851.050.168.5

18 Cabot Investors Conference 2013www.cabot.net Procter & Gamble (PG) Capital Safety  Low Volatility  Established Business Dividend Safety  Long Dividend History  Dividend Cuts?  Payout Ratio Dividend Growth  Past Increases  Cash Flow Growth  Payout Ratio Growth Potential  Valuation  Technical Strength  Turnaround Capital Appreciation (Growth) Potential P/E: 20 (5-yr avg. = 17, industry avg. = 20) Technical Situation: Mediocre + Earnings: 3-yr Trend is Down but Turnaround is Helping YOY Comparisons in 2013

19 Cabot Investors Conference 2013www.cabot.net

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