dividend growthTarget Corporation (TGT) is a general merchandise retailer in the United States and Canada.  Currently, the company has just under 2,000 stores.

Target has a very long dividend growth streak going 46 years strong.  Not only has Target been growing their dividend rate for nearly 5 decades, but they recently have been able to maintain a near 20% growth rate of that dividend.

In fact, Target has a 5 year dividend growth rate of 18.13% and an even more impressive 10 year dividend growth rate of 18.17%.

Since Target has such a long dividend growth streak and because they have been growing dividends more recently at such a high rate, I wanted to do a review to see how an investor would have fared owning shares of Target Corporation over the past 10 and 20 years.

A 10 Year Investment in Target Corporation

Let’s take a look and see how you would have fared if you invested $5,000 in Target Corporation stock exactly 10 years ago.  On April 23, 2004 you would have been able to purchase roughly 111 shares of Target Corporation for $4,966.14 at a closing price of $44.74.  The most recent closing price of TGT was April 24, 2014 when Target stock closed at $61.45.  Today your 111 shares would be worth roughly $6,820.95 for a return of 37% or a compound annual growth rate of 3.22%.

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Questions?With the holiday this past weekend, I was busy with different family meals and gatherings of extended family.  Within my family, it is common knowledge that I wrote a couple books about stock investing.

For this reason, many family members often like to ask my opinions on different things finance related.

What’s a good stock to buy?  What’s your best stock tip right now?  What was the last stock you bought?

Just to be clear, no question is a stupid question and I’m extremely happy to have questions so that I can try and help people become better investors.

However, sometimes it’s difficult to answer because it would take a long discussion where I want to fully detail out my investment strategy and how everything works.

Well, this past holiday weekend I had another question.

“What do you think will happen to the stock market when they stop quantitative easing?”

I Don’t Even Care

This question is hard for me.  Because honestly, I don’t care.

And that is not the type of answer people expect to hear from me.  I’m supposed to be the expert!

But to be honest, I have no idea how stocks and the stock market will react.  Nor do I really give crap.

I’m an investor.  I’m not a stock trader.  I don’t buy and sell stocks on a whim or based on some short term news.

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Should I sell my stock?In my last article, I discussed my thoughts on possibly selling part of my Walgreen’s (WAG) position.

I discussed my reasons for thinking about selling some of my Walgreen’s stock.  I also worked through an exercise to figure out the costs I would incur by selling my shares.

In that exercise, I calculated that it will cost me around $170 to sell half of my position.  These costs would come from long term capital gains taxes as well as brokerage commissions to sell the shares and to buy another company in Walgreen’s place.

In total, the costs would eat up roughly 8.5% of my gains from the Walgreen’s stock.  In order to make it worth selling and moving the money into another company, I have to find another company that I believe will recoup these costs and have a higher future potential compared to Walgreen’s.

Today, I want to take a look at 3 companies I would consider buying right now.

I want to calculate whether I believe it would be worth it to sell half of my Walgreen’s position in order to move the money into one of these 3 companies.

At the end of the article, you’ll find out what I ultimately decided to do in regards to my Walgreen’s position.

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Buy Sell HoldThe other day when looking over my dividend growth portfolio, I noticed a couple things.

First, I noticed that Walgreen’s is only paying around a 1.95% current dividend yield. 

Second, I noticed it has a pretty heavy weighting within my portfolio.  In fact, Walgreen’s accounts for 14% of my total holdings.

This got me thinking about the idea of possibility of selling some of my position in the company.

My History With Walgreen’s

I purchased my Walgreen’s shares in two separate buys around two years ago.  At the time, the company was in contract negotiations with Express Scripts and the two companies were at a standoff.  The market was concerned and thus gave Walgreen’s a very low valuation.

The company caught my eye because they had a very long (over 35 years) dividend growth streak and they were trading at such a low valuation.  I did a review of the financials of the company and believed Walgreen’s to be an absolutely stellar company.

I looked at this as a perfect opportunity to purchase a great company at a low valuation.  The opportunity arose because investors were scared that Walgreen’s and Express Scripts wouldn’t be able to work out their differences and thus Walgreen’s would suffer in the future.  I was pretty certain that one of the largest pharmacy retailers in the U.S. would be able to come to mutually agreeable terms with Express Scripts.  It benefited neither company to fight against each other.

So I bought in.  I made my first purchase of Walgreen’s in April of 2012 and followed up with another purchase in June of 2012.  I would have loved to buy more because I really believed this was going to be a big win for me.  However, my portfolio at the time wasn’t large enough to take on too large of a position in the company without too much risk.

It turns out that my thinking was correct.  Walgreen’s and Express Scripts worked out their differences.

The stock has done very very well for me.  In fact, it has been my best purchase so far.

While owning Walgreen’s, I have doubled my money.  The stock is up over 100% from my purchase dates.

I’ve been a very happy Walgreen’s owner.

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AdviceWhen learning about investing, sometimes it can be a bit overwhelming. There are tons of books and investment sites available ready to teach you.

There are many different investment strategies available, tons of tips from the pros and lots of advice. All to try and help you be a better investor.

I’ve reached out to some of the best dividend bloggers on the web and have asked them for their #1 investment advice for beginners.  This is an epic post with over 2,000 words of advice.  In the end, you’ll see that investing doesn’t have to be that difficult.

And be sure you are signed up for my free dividend growth investing newsletter where I will be sharing my own #1 advice for new investors in my next monthly newsletter released next Saturday April 12th!

Top Advice from Dividend Bloggers

Brick by Brick Investing – “Read, read, then read some more. Educate yourself because at the end of the day nobody cares about your money more than you do. I’m not saying you have to take control of all your investments but at the very least you should understand what your financial advisor is saying. More importantly you need to understand the strategy he/she is trying to implement for you.”

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stock researchFamily Dollar Stores (FDO) operates a chain of discount retail stores in the U.S.  The discount retailer currently includes around 8,100 stores located throughout the country.

Family Dollar Stores is one of those dividend growth companies you don’t hear about too often.  However, they have a very long dividend growth streak that stretches almost four decades!

Dividend Growth and Current Yield

Family Dollar Stores has been growing their dividend rate for 38 years.  The company currently pays a dividend of $0.31 per quarter for a $1.24 annual dividend.  At the close of market on Friday April 4th 2014, FDO’s price per share was $58.04.  This gives the stock a current dividend yield of 2.14% (1.24/58.04).

In 2003, Family Dollar Stores payed an annualized dividend amount of $0.29 per share.  The dividend trend has been up each year as it now pays $1.24 annually per share.  This gives FDO a 10 year annual compound dividend growth rate of 12.48%.  More recently the annual dividend growth rate was 20.51% for 2012 to 2013 and 19.23% recent dividend increase announcement.  This is a pretty good dividend growth rate for a company that has been able to grow their dividend annually for almost 4 decades.

Earnings Per Share Growth

Family Dollar Stores had a 2003 earnings per share (EPS) of $1.43 and a 2013 EPS of $3.83.  Over the 10 years their earnings per share have been consistently climbing upward.  Family Dollar has had a 10 year EPS growth rate of 10.35% which is a pretty good growth rate.

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Announcing Dividend IncreasesThere were a few decent dividend increases this past month in March 2014.  Unfortunately for me, I didn’t own any of them.  However, there are a couple that I wouldn’t mind owning.

Let’s check them out!

Family Dollar Stores (FDO) - Family Dollar Stores owns and operates a chain of discount retail stores in the United States.  They currently have around 8,000 stores.  Family Dollar Stores has grown their dividend rate for 38 years in a row.  Recently, Family Dollar announced a dividend increase of 20%.  This grows the dividend rate by $0.05 from $0.26 to $0.31.

General Dynamics (GD) - General Dynamics is an aerospace and defense company.  They have grown their dividend rate for 22 consecutive years.  In March, General Dynamics announced an 11% dividend increase.  GD grew their dividend rate from $0.56 to $0.62 per share.

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MoneyEarlier this month, Family Dollar Stores (FDO) announced a very nice 20% dividend increase.  This extends the Family Dollar dividend growth streak to 38 years in a row.  Family Dollar operates a change of discount retail stores in the United States.  Founded in 1959, the company has grown to now include around 8,000 retail stores.

With the recent dividend increase announcement, I wanted to do a review to see how an investor would have fared owning shares of Family Dollar Stores over the past 10 and 20 years.  Next week I’ll follow up with a thorough analysis of Family Dollar to evaluate whether I believe the company is currently a good buy for investors.

A 10 Year Investment in Family Dollar

Let’s take a look and see how you would have fared if you invested $5,000 in Family Dollar stock exactly 10 years ago.  On March 29, 2004 you would have been able to purchase roughly 140 shares of Family Dollar for $4,999.40 at a closing price of $35.71.  The most recent closing price of FDO was March 28, 2014 when FDO stock closed at $57.76.  Today your 140 shares would be worth roughly $8,086.40 for a return of 62% or a compound annual growth rate of 4.93%.

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20I love dividend growth stocks.  I love reading about dividend growth investing.

So I decided to combine the two by reaching out to some of my favorite dividend growth bloggers and asking them about their favorite dividend growth stocks.  And be sure to stick around because at the end I will discuss both my current and my all-time favorites!

Hopefully you will enjoy the answers as much as I did!

What is Your Favorite Dividend Growth Stock (currently or all-time) and why?

  • The Conservative Income Investor – “I think there are five realistic candidates you can choose from–Coca-Cola, Johnson & Johnson, Procter & Gamble, Nestle, or Colgate-Palmolive.  From there, it’s more a debate about style than substance.  My guess is that everyone reading this will be six feet under while these companies are still pumping out profits on six different continents.  If I could only own one of them for the rest of my life, I’d choose Coca-Cola. The diversification of 500 brands is huge, the distribution network that is unparalleled, and a brand name that actually means something significant is the kind of asset you want to spend your life acquiring.  They spend a couple cents coloring water, and are able to sell it for a dollar.  That’s a heck of a business model.  It’s probably the safest way to get 8-11% annual returns over the coming fifteen to twenty years.”
  • Dividend Growth Investor – “The dividend stock I like best is Philip Morris International (PM), which sells tobacco products outside of the US.  I like several things about the company, such as its current valuation, strong cash flow and the prospects for future growth,  all of which could result in massive compounding of wealth. The stock is cheap at 15 times earnings and yields 4.70%.  The company expects to grow earnings and dividends in the high single digits or low double digits in the foreseeable future, fueled by acquisitions and organic growth.  Phillip Morris International has a high exposure to emerging markets, where number of smokers and their income is increasing. The company also sells popular brands of cigarettes, which have a loyal customer base that buy even if prices increase. Plus, PM generates a lot of cash flow that has allowed it to repurchase massive amounts of stock and double dividends per share since 2008. I actually reviewed the stock in early 2014: http://www.dividendgrowthinvestor.com/2014/01/the-security-i-like-best-philip-morris.html

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Investing SuccessWhen getting started with investing, it can be difficult at first finding a strategy that brings success.

There are so many different investing strategies you can try.  There are so many decisions made in investing.  It is easy at first to go down the wrong path or to make decisions that ultimately hurt us rather than help.

When I first started investing, I had dreams of getting rich quick.  Because of those dreams, I got caught up in many different stock trading strategies that I believed were going to make me rich in just a short time.  I had visions of trading stocks and making 100% returns within a few months.  I thought it was going to be easy.

The truth is it wasn’t easy.  Looking back, I can see that I was doing everything wrong.  I was going about my investing in completely the wrong way.

Chasing hot stock tips, frequent buying and selling, no real investment plan mapped out.  These are all mistakes I was making that ended up costing me money in the long run.  My initial history of investing saw little success.

It wasn’t until I became familiar with the dividend growth investing strategy where I finally saw the light and changed my ways.  I made a few changes in my investing strategy that eventually led me down the path of finally seeing success.

The 4 Things That Made Me Successful

Here are the 4 things that I did/focused on which I fully believe helped change me from someone chasing dreams of riches to someone who has much more successfully built up an investment portfolio that actually makes me money.

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