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This seminar is intended to introduce potential investors to the value of including dividend growth stocks in their mix of investments. It is a valuable introduction and highlights several stocks …

This seminar is intended to introduce potential investors to the value of including dividend growth stocks in their mix of investments. It is a valuable introduction and highlights several stocks with a 15 year (or better) record of increasing dividends. Also covers dividend reinvestment plans and mutual funds that focus on dividend stocks. Contact me if you would like a custom developed seminar. floyd.saunders@yahoo.com

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  • 1. How Dividend Growth Stocks Can Secure Your Financial Future What a history of dividend growth means to you Use Dividend Reinvestment Program or Mutual Funds to build a solid portfolio of investments.Saunders Learning Group, LLC May 2012
  • 2. All About Figuring Out Wall Street ... Everything has changed in the financial services industry and it effects your financial well-being. From bank failures, to record unemployment, home foreclosures and panic around the world, Figuring Out Wall Street, is the concise guide to help everyone from first time investors to veterans of banking understand what to do to persevere and restore our faith in our financial systems.This presentation is from Chapter Eight of Figuring Out Wall Street Saunders Learning Group, LLC, Andover, KS 2
  • 3. As Albert Einstein observed about, money compounding: “It is the most powerful force in the universe.” – Albert EinsteinSaunders Learning Group, LLC, Andover, KS
  • 4. Summary of Book Figuring Out Wall Street Consumer’s Guide To Financial Markets By Floyd Saunders Publisher: Saunders Learning Group ISBN: 978-0-9824019-0-3 available from Amazon, B&N, and http://www.figuringout wallstreet.com or www.floydsaunders.com Author Contact email: floyd@floydsaunders.com Blog: www/money/floydsaunders.com Twitter @floydsaunders LinkedIn: http://www.linkedin.com/profile/view?id=14740656&trk=tab_pro Facebook: Figuring Out Wall Street Sideshare: http://www.slideshare.net/FloydSaunders Book summary: From bank failures to home foreclosures and panic around the world, Figuring Out Wall Street, is the concise guide to help everyone understand how this latest crisis happened, who was responsible and what to do now to restore our financial systems. Written in an easy to understand manner, even the most complex financial concepts are easy to digest. This book provides help to monitor investments with a review of investment products, financial regulators and economic indicators. Learn how the stock market exchanges work and the world of investment banking, hedge funds, venture capital and private equity. Every chapter includes action plans for investing. Saunders Learning Group, LLC, Andover, KS
  • 5. Training from Saunders Learning Group Saunders Learning Group provides a variety of training programs, workshops and seminars targeted to the financial services industry. Programs are available in a wide range of topics, and we are specialists in developing custom programs that are targeted to your needs. Contact the founder, Floyd Saunders at 316-680-6482 or at floyd@floydsaunders.com for more information. Saunders Learning Group, LLC, Andover, KS5
  • 6. Which is better a 14% return or a 6% return?What happens if the 14% return is tax favored? Dividend payers have outperformed non-payers in both bull and bear markets. This trend is even more pronounced in firms that have grown or initiated their dividends. Stocks that decreased or eliminated their dividend have historically been punished by investors and declined. Dividends are typically taxed at the lower 15% rate. Saunders Learning Group, LLC, Andover, KS
  • 7. Why Dividends Matter Saunders Learning Group, LLC, Andover, KS
  • 8. Five Reasons Why You Want Dividend Stocks Dividend Provide a Steady Stream of Income Dividend Stock Prices Increase Over Time Dividend Reinvestment Allows Your Dollars to Grown at Compounded Rate Dividend Reinvestment, Using Dollar Cost Averaging Saves You Money Dividend Stocks Generally Have Lower Price Volatility Saunders Learning Group, LLC, Andover, KS
  • 9. A Few Terms You Need to be Familiar With Dividend To Free Cash Flow FCF = Operating Cash Flow Ratio - Capital Expenditures •One of the most reliable means of •The FCF is the cash that a assessing a companys financial company can generate after standing is its free cash flow accounting for the money required [FCF]. It is a measure of financial to maintain and run the business. performance, obtained by •The Payout Ratio (Dividend to subtracting capital expenditures Earnings Ratio) from operating cash flow: Saunders Learning Group, LLC, Andover, KS
  • 10. Selecting Stocks With Solid Record of Dividends Current dividend yield of 3% or higher Dividend to free cash flow ratio (five-year average) of less than 55% The lower this ratio the better, as that would indicate a higher denominator [FCF]. Dividend to free cash flow (trailing twelve months) of less than 60% Payout ratio of less than 65% Saunders Learning Group, LLC, Andover, KS
  • 11. LEADING STOCKS WITHA 15 YEARS OF INCREASING DIVIDENDSSaunders Learning Group, LLC, Andover, KS
  • 12. Genuine Parts (GPC)Founded in 1928, Genuine Parts Company (GPC) is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts,office products and electrical/electronic materials. Five year stock chart: Free Cash Flow (FCF) payout ratio: 50% 15-year avg. annual dividend increase: 5% Dividend yield (1/17/11): 2.84% Stock price data: 1-year change: 27% 52-week high: $64.55 52-week low: $46.10 Latest Earnings (April 2012): Reported sharp uptick in Q1 earnings, beating expectations. First quarter net income of $146.3 million, or 93 cents per share, compared with $126.5 million, or 80 cents per share, in the year-ago period. Saunders Learning Group, LLC, Andover, KS
  • 13. Becton Dickinson (BDX)BD is a leading global medical technology company that develops,manufactures and sells medical devices, instrument systems and reagents.BD is focused on improving drug delivery, enhancing the quality ofdiagnosing infectious diseases and cancers, and advancing research,discovery and production of new drugs. Five year chart: FCF payout ratio: 48% 15-year avg. annual dividend increase: 17% Dividend yield (1/17/11): 2.38% Stock price data: 1-year change: -7.95% 52-week high: $89.75 52-week low: $69.59 News: 5/1/12 Quarterly revenues of $1.991 billion for the second quarter an increase of 3.6% from prior-year period. Earnings per share of$2.59, compared with $2.72 in the prior-year period. A decrease of 4.8%. Saunders Learning Group, LLC, Andover, KS
  • 14. 3M (MMM)The 3 M company was formerly known as the Minnesota Mining andManufacturing Company, founded in 1902. They produce more than 55,000products. Now known as the global innovation company that never stopsinventing. In 2004, sales topped $20 billion for the first time, withinnovative new products contributing significantly to growth. FCF payout ratio: 46% 15-year avg. annual dividend increase: 6% Dividend yield (1/17/11): 2.60% Stock price data: 1-year change: -2.58% 52-week high: $98.19 52-week low: $68.63 Q1 2012 sales of $7.5 billion, up 2.4% Earnings Per Share of $1,59 up 7% 54th consecutive annual dividend increase. Saunders Learning Group, LLC, Andover, KS
  • 15. Cintas (CTAS) Cintas provides highly specialized services to businesses in North America. Cintas designs, and manufactures corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products, first aid, safety, fire protection products and services and document management services for 900,000 customers.FCF payout ratio: 45% 15-year avg. annual dividend increase:13% Dividend yield (1/17/11): 1.32%Stock price data: 1-year change: 33.45% 52-week high: $38.22 52-week low: $26.39News: 2/29/12 Q3 revenues $1.01billion, 7.9% increase, EPS of $0.58, 41.5% increase Saunders Learning Group, LLC, Andover, KS
  • 16. WW Grainger (GWW)W.W. Grainger, had sales of $8.1 billion in 2011 and is North America’s leadingbroad line supplier of maintenance, repair and operating products, with expandingglobal operations. In 2010, a healthy balance sheet and strong cash flow enabledGrainger to return $657 million to shareholders in share repurchases and dividends. FCF payout ratio: 43% 15-year avg. annual dividend increase: 13% Dividend yield (1/17/11): 1.32% 
Stock price data: 1-year change: 48.41% 52-week high: $197.05 52-week low: $124.33 News: Saunders Learning Group, LLC, Andover, KS
  • 17. Bemis (BMS)Bemis Company, Inc. is a major supplier of flexible packaging used by leading food,consumer products, medical and pharmaceutical companies worldwide. Bemis alsosupplies pressure sensitive adhesive coated materials globally to label, signage,medical and graphics companies. Five year chart:FCF payout ratio: 41% 15-year avg. annual dividend increase: 7% Dividend yield (1/17/11): 3.19%
Stock price data: 1-year change: -5.10% 52-week high: $34.40 52-week low: $27.21News: 5/3/12– Bemis declares a quarterly dividend of 25 cents per share. 4/26/12 - reportedquarterly earnings of $0.42 per share for quarter ended 3/31/12. Saunders Learning Group, LLC, Andover, KS
  • 18. Other examplesHormel Foods (HRL Walgreen (WAG) Abbott Laboratories• FCF payout ratio: 41% 15- • FCF payout ratio: 39% 15- (ABT) year avg. annual dividend year avg. annual dividend • FCF payout ratio: 33% 15- increase: 10% Dividend increase: 15% Dividend year avg. annual dividend yield (1/17/11): 2.05% yield (1/17/11): 2.71% increase: 10% Dividend• Stock price data: 1-year • Stock price data: 1-year yield (1/17/11): 3.42% change: 17.07% 52-week change: -19.98% 52-week • Stock price data: 1-year high: $30.50 52-week high: $45.34 52-week change: 21.33% 52-week low: $24.52 low: $30.34 high: $56.84 52-week low: $45.07 Saunders Learning Group, LLC, Andover, KS
  • 19. “So, I can’t really afford to buy a bunch ofstocks, you need to be rich to do that. What doI do to get started?”Saunders Learning Group, LLC, Andover, KS
  • 20. Good News, You can buy stock directly from the leading companies and evenbuy fractional shares, with limited monthly contributions.It’s called a Dividend Reinvestment Plan or DripSaunders Learning Group, LLC, Andover, KS
  • 21. Dividend Reinvestment Plan (DRiP) programsA conservative, low-cost approach to investing Result of Dividendsin dividend-paying stocks is with dividend & Capital Growth Barron’s Article, April 1999reinvestment plans (DRPs or DRIPs).With these plans, dividend immediately go to $100 invested in S&P 500work for you with little transaction costs. stocks in 1925 would be $9,600 by 1999 Dividends are not paid to shareholder With DRIP $235,000 Reinvested dividends buys additional shares Dividend growth These dividends create additional 4% annually shares Year DividendUS Companies Paying Dividends 1 $5.50  Over 1,600 companies with DRIPs 2 $5.72  40% have Dividend Share Plan (DSPs)  60%, one share registered in your name 5 $6.43Dollar Cost Averaging 10 $7.83  Fixed $$ amount each wk/mth/qtr 12 $8.47  Results in a lower overs cost to purchase over a longer period Saunders Learning Group, LLC, Andover, KS 21
  • 22. DRIP Advantages & Disadvantages Advantages Disadvantages Can invest small or large amount  Can be Cancelled by Company Compounding dividend increases  Inability to Time Market Stock price appreciation  Minimum OCP Amounts Dollar Cost Averaging (OCP)  Fees are Increasing (US) Basically Fee Free (50% of US co)  Dividends are Taxable Stable Shareholder Base  Tracking Adjusted Cost Base Inexpensive Source of Equity $$$  Odd Lots from mergers Saunders Learning Group, LLC, Andover, KS 22
  • 23. How to Start with Dividend Reinvestment Plan Direct Investing Buy One Share Stockbroker • 600+US cos and 280 • Most Plans, One Share to • Buy Shares Through Broker foreign cos Enroll • Pay Commission • www.netstockdirect.com • Buy from a Friend • Have Shares Registered to • Print Enrollment Form • Deregistered from their Your Name (Internet) name • Request Drip & SPP Enroll • Complete and Mail Check • Registered to your name Forms • “Drawn From US Bank” • Buy as Group of Five • Complete & Return • Transfer registration to individuals Saunders Learning Group, LLC, Andover, KS
  • 24. Ok, those ideas are great, but I don’t want totake the time to get all of those DividendReinvestment Plans set up, is there an easierway?Saunders Learning Group, LLC, Andover, KS
  • 25. More good news,There are a number of leading mutual funds that do all the work for you . . . Examples include . . . .Saunders Learning Group, LLC, Andover, KS
  • 26. Dividend Yield Mutual FundsThree of the best mutual funds for high dividend yields: Saunders Learning Group, LLC, Andover, KS
  • 27. QuestionsSaunders Learning Group, LLC, Andover, KS
  • 28. Post Workshop Action Plan  Complete the Post Workshop Action Plan Saunders Learning Group, LLC, Andover, KS28
  • 29. Reference Material Figuring Out Wall Street Consumer’s Guide To Financial Markets By Floyd Saunders Publisher: Saunders Learning Group ISBN: 978-0-9824019-0-3 available from Amazon, B&N, and http://www.figuringout wallstreet.com or www.floydsaunders.com Book summary: From bank failures to home foreclosures and panic around the world, Figuring Out Wall Street, is the concise guide to help everyone understand how this latest crisis happened, who was responsible and what to do now to restore our financial systems. Written in an easy to understand manner, even the most complex financial concepts are easy to digest. This book provides help to monitor investments with a review of investment products, financial regulators and economic indicators. Learn how the stock market exchanges work and the world of investment banking, hedge funds, venture capital and private equity. Every chapter includes action plans for investing.Saunders Learning Group, LLC, Andover, KS