2. The company should have a history of paying dividends. Dividends should be reinvested as they are paid to buy more shares over time. Many of the companies we recommend have a history of increasing their dividend exponentially allowing the investor to buy more shares. This compounding effect can have a tremendous impact on the total return of the investment over time.

3. Buy companies that are attractively priced based upon the company’s fundamentals. We favor companies with low levels of debt, high levels of cash flow, and good growth relative to the multiple of earnings paid. These companies are better poised to withstand market downturns and have the financial flexibility to grow their business and their dividends.

CAIM’s Holiday List:
(prices as of 12/7/2023)

1. Oracle (ORCL, $112.96, 1.4% dividend yield). Oracle has had a nice move in 2023, but we think there are many more years of growth ahead. This software company increased its’ dividend this year by 25%. Its databases and related software are a key part of the support system for AI which is just getting started. ORCL is an inexpensive way to play the trend and get paid while you wait (dividend). It trades at a 30% discount to comparable companies.

2. Nextera Energy (NEE, $59.88, 3.1% dividend yield). Steady and superior growth (8-10%), and steady dividend increases (has averaged 10% per year). This is not your typical utility. NextEra has been thriving on the growing population of Florida and is the largest owner of renewable energy power generation assets in the US. They are the largest generator of wind and solar power. Despite superior growth, NEE sells at a discount to the S&P 500 and its’ 5-year average valuation.

3. International Business Machines (IBM, $160.14, 4.2% dividend yield). New management, restructuring (selling off low margin businesses, acquiring growth companies) and poised for growth. IBM is in the midst of transforming itself, and the results are starting to show in accelerating sales growth. There is lots of cash to continue to pay the dividend and grow the company at the same time.

Many of these companies offer dividend reinvestment plans (otherwise known as DRIPs) to buy the share directly through the company. Charles Schwab & Co. will open up a custodial account with as little as $100 and you can buy as little as 1 share. Please call with any questions about how to set up a plan or how to choose companies that are right for your child.

Enjoy the holiday season!

Catherine Avery is the founder of CAIM, an independent, 100% woman-owned investment management firm specializing in a low-volatility equity strategy that focuses on high-quality, dividend-paying stocks.  

Copyright 2023, CAIM LLC

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