Category Archives: Dividends & Income

This is One of the Biggest Safe Dividends You Can Get

Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) just increased its cash distribution by 5.1% to an annualized payout of US$2.06 per unit. That implies a yield of 7% at US$29.29 per unit. 

A Sustainable Dividend

In 2018, it increased its funds from operations (“FFO”) per unit by nearly 14%, resultingĀ in a payout ratio of <91% for the year, which was a meaningful improvement from 2017’s payout ratio of 98%. The lower payout ratio makes a safer dividend.

Management aims for cash distribution growth of 5-9% per year in the stock. It’s conservative to assume a cash distribution growth rate of 5% because, since 2011, its distribution has compounded at a growth rate of 5.4%.

Hydroelectric generation
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4 Stocks for Safe Dividend Income

Generally, dividend-growth stocks are a conservative way to invest in the stock market. Typically, they’re mature companies that generate sufficient earnings or cash flows to pay a generous dividend and maintain and grow the business.

double your money
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This Telecom offers a growing dividend

It’s been a long time sinceĀ TELUS (TSX:T)(NYSE:TU), the third-largest Canadian telecom has hit my minimum yield target of 4.7%.

The dividend is safe, and the stock is reasonably valued — not a bargain and not excessively expensive. At ~CAD$46 per share, TELUS trades at a P/E of ~16, while it’s estimated to increase its earnings per share (“EPS”) by 6.5-7.1% per year over the next 3-5 years.

Source: FAST Graphs

At current levels, TELUS can deliver 8-11% per year on average over 3-5 years.

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Will You Buy This Dividend Aristocrat Now Or Wait?

Johnson & Johnson (NYSE:JNJ) recently reported its Q4 and full year results. In 2018, it increased sales by 6.7% to $81.6 billion. Excluding divestitures/acquisitions, sales would have increased by 5.5%

A Business Overview

J&J is a globally diversified healthcare company that operates in three segments:

  1. Consumer, which includes popular brands such as Tylenol, Motrin, Neutrogena, and Aveeno;
  2. Pharmaceutical with Zitiga, Stelara, Tremfya, etc. that were key contributors to growth; and
  3. Medical Devices
Source: Author-generated pie chart with company sales data

The Pharmaceutical segment is the largest and experienced the highest sales growth of 12.4% (compared to 1.8% for Consumer and 1.5% for Medical Devices). The segment experienced market outperformance driven by double-digit growth in 10 key products.

In 2018, about 51% of its sales were in the U.S. and 49% were international (23% in Europe, 18% in Asia-Pacific and Africa, and 7% in the western hemisphere excluding the U.S.).

J&J’s blockbuster portfolio contributed nearly 47% of sales in 2018.

Source: J&J’s Q4 earnings call slides– Slide 22

The company doesn’t stop there, though. It continues to grow its portfolio via research and development (“R&D”), acquisitions and licensing, deals and partnerships, etc. In 2018, it spent about $11 billion in R&D, which was about 13% of sales and aligned with the percentage spent in 2017.

Source: J&J’s Q4 earnings call slides – Slide 23
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