Friday May 18, 2012
by Kelley Wright, editor IQ Trends
The dividends of the vast majority of blue chip stocks remained steadfast throughout the meltdown and waterfall. For example, Chevron Corp. (CVX) recently increased its dividend another 11% to $3.60 per share.
We pound the table ad nauseum on limiting buying considerations to only the highest quality stocks with long-term track records of dividend payments and dividend increases.
Share prices fluctuate daily with the ebb and flow of investor emotions but the underlying value of a stock is its return to the shareholder and nothing is more fundamental to return on investment than the cash dividend.
Chevron's dividend boost came despite the fact that crude oil prices have been all over the map as investors jockey back and forth on what the ramifications, if any, there will be for oil prices if the global economy is slowing or will slow in the future.
Do you think they have any economists working at Chevron? Do you think they might have an idea of what the market for their primary product will be going forward?
I believe Chevron, like other blue chips that have a long-term track record for increasing dividends, constantly assesses the myriad factors that could potentially affect their earnings and therefore their ability to maintain and increase their dividend.
After all, declaring and paying a dividend is not a one off event; it is an ongoing policy.
Accordingly, it is a prudent, long-term investment policy to focus buying considerations on top blue chips such as Chevron, wohch offer long-term track records for increasing dividends.
In sum, the markets are nervous and volatile. During times of market distress it is not uncommon for a select blue chips to become undervalue. These events are opportunities to acquire long-term values; take advantage.
Indeed, Chevron, with a yield of 3.5, a payout ratio of 26% and an S&P quality ranking of A+, is the top rated stock on our list of timely blue chip values.
Learn more about this financial newsletter at Kelley Wright's IQ Trends.