Are You Paying Attention to the Right Financial News?

It’s all about the Elephant’s Paycheck. The div­i­dend income you receive, and rein­vest until you need it.

How do you find good infor­ma­tion about div­i­dend stocks?

The thing is, sta­ble div­i­dend pay­ers some­times tell you what their plans are. Not always, but often enough that it’s impor­tant to lis­ten. They might tell you that the div­i­dend is in jeop­ardy in order to min­i­mize Wall Street’s sur­prise should a div­i­dend cut be nec­es­sary.

On the oth­er hand, they might tell you about their plans to increase the div­i­dend before they’re ready to actu­al­ly raise it. I’m not sure why they’d do that. Why not just raise the div­i­dend instead of telling us you’ll raise it? I mean, oth­er than the obvi­ous rea­son that they’re not ready to pay a high­er div­i­dend until some point in the future so they can’t announce it until they’re ready to pay it.

Take Spectra Energy for exam­ple.

1. In January, Spectra announced their plans to raise the div­i­dend at least ¢8/year for “the next sev­er­al years”. (Look at the para­graph right after the bul­lets for that juicy bit of news.)
2. In June, they announced their plans to increase that increase. The stock liked that news which was a good side-effect too!
3. In November, they announced that they’ll increase the div­i­dend in time for the 2014 pay­ments. They made the announce­ment with their 3^rd quar­ter results. That link opens a PDF, do a search on div­i­dend to see the fol­low­ing:

The drop-down also allows for a sig­nif­i­cant div­i­dend increase at Spectra Energy and sig­nif­i­cant increas­es in Spectra Energy Partners’ dis­tri­b­u­tions to unithold­ers. The cash to Spectra Energy from its lim­it­ed part­ner­ship and gen­er­al part­ner­ship dis­tri­b­u­tions will sup­port Spectra Energy’s abil­i­ty to raise its annu­al div­i­dend by 12 cents per year, effec­tive in the first quar­ter of 2014, an annu­al increase of about 10 per­cent from 2013. Spectra Energy expects to con­tin­ue annu­al div­i­dend increas­es at this lev­el through 2015.

It’s fas­ci­nat­ing that they come out ahead of the increase to share details this spe­cif­ic. Is this news priced into the price of the stock? Most like­ly. Unlike the June announce­ment, the raise won’t like­ly cause the stock to jump. However, at ~$35/share a ¢12 raise from $1.22 to $1.34 in January means that the true yield is 3.83% ($1.34/$35) not 3.49% ($1.22/$35). That makes a dif­fer­ence. It’s good to know that your Elephant’s Paycheck will be increas­ing nice­ly.

This is the sort of finan­cial news you should be read­ing, not the crap on TV that makes invest­ing more like a sport than a dis­ci­pline.

That said, last year Spectra increased their div­i­dend in late 2012, payable in December 2012. This year’s increase (in January or February 2014) payable in March, means the increase is com­ing a quar­ter lat­er than it did last year. That’s a lit­tle dis­ap­point­ing.