Saturday, June 3, 8:57 am EST. Stocks followed through and closed at another new high again Friday. This makes folks feel good, but it goes entirely counter to what we are trying to accomplish here. We want to buy shares of safe-dividend growing stocks… when they are On-Sale! I like to buy around Low-Risk Market Entry Opportunities. These come around once, twice… as many as four times a year. I noted the first one since the November election in April. I am of a firm belief there will be another before the year is over. When it comes, I will commit rather heavily, and very rapidly increase the rate of our portfolio dividend income.
It’s a sort of a perverse kind of a thing, but you want stock prices to go down. When prices are off, yield is up. And, since we are investing for the yield, we want prices to get hammered down as low as they will go, and technical measures of stock market risk are signaling that risk has been all but entirely wrung out.
The April low wasn’t as strong a signal as I would have liked to have seen, and I had hoped the market would have gone even lower, so as to put all my indicators in place. It didn’t, but, as I explained then, I would do some buying just in case that was all it was going to give me, and I miss the opportunity altogether. As it turned out, that was indeed all it was going to give, and so, I’m very glad that I bought what I did.
Running my search this weekend, I see that the very first issue to rise to the top is Rollins Inc., the largest name pest-control people, Orkin, and a whole plethora of other pest-control companies. The EPS line of the analysts’ consensus of forward-looking earnings estimates is a beauty, and about triples from $.31 to $.90 the past 10 years. The 10-year past history of dividend payout is that desirable stair-step pattern of growth, starting at $.09 a share, and is now $.46 a share, for better than 400% dividend growth. Price has performed as well, being $6.50 a share 10 years ago, and closing at $43.06 on Friday, for better than 500% appreciation!
The last dividend hike was from $.40 to $.46 a share, for a 15% “pay raise”. The safety factor for its dividend is high, with an EPS estimate of $.90, that $.46 dividend is just more than half of its earnings being paid out. But, ROL is a low-tech company, and little is necessary for R&D, so much of the rest can go to marketing.
I’m not recommending anyone buy any now, unless it is to get a toe in the door, to cause you to pay more attention to it in the future, but when the next opportunity should come along, Rollins Inc. is an excellent safe-dividend grower for the long haul. I have some, and I’ll likely add more, when the time is right!
I hope to publish an entire list of all the best of the safe-dividend growers very soon.