Weekly Newsletter   Challenge account   Weekly Newsletter   

ADM increased dividend by 4.48%

ADM increased the dividend by 4.48% making this dividend champion‘s 44th consecutive dividend increase.

The old dividend rate was 1.34 annual dividend payout (0.335 quarterly), the new rate is 1.40 (0.35 quarterly).

Our current fair value of the company is $28.22 a share so at the current price of $42.44 the stock is overvalued and we mark it a “hold”. The current yield is 3.16%.

The 10 year YOC would be 8.35% with no dividend reinvestment and 13.01% with DRIP. The company share price tracks the S&P 500 but is not able to outperform the index. If you invested 10,000 dollars in 1995 and held for 23 years, the stock average total return would be 7.63% vs 8.74% of the index.

This make this stock a good source of income but with under performing growth. If you are looking for both – dividend yield, dividend growth, and capital appreciation outperforming the index, then this stock is not for you.

Note, that during accumulation phase, I recommend seeking both – the dividend growth and capital appreciation. If you are a retiree and plan on living solely from your dividends then you do not need capital growth and this income stock is a safe investment.

Disclosure: Currently, I do not own ADM, but it is in our watch list and if it appears as “buy” we may buy shares of this stock.

Leave a Reply

Your email address will not be published. Required fields are marked *