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Saturday, January 2, 2016

Recent Transfer: Reynolds American, Inc.

Reynolds American, Inc. (NYSE:RAI) is a holding company. Through its subsidiaries, RAI manufactures and sells cigarettes and other tobacco products in the United States. The company also provides electronic cigarettes. It distributes its products primarily through direct wholesale deliveries from a local distribution center and public warehouses. RAI was founded in 2004 and is headquartered in Winston-Salem, North Carolina.

RAI is a Dividend Contender with an 11-year streak of annual dividend increases. The company pays quarterly dividends of 36¢ per share in the months of January, April, July and October. At the current price of $46.17, the stock yields 3.12%.

RAI is the 12th stock that I'm transferring from my portfolio at Scottrade to DivGro.

Previously, I've transferred the following stocks:

Coca Cola (NYSE:KO)
Toronto-Dominion Bank (NYSE:TD)
Proctor & Gamble (NYSE:PG)
Pfizer (NYSE:PFE)
Kimberly-Clark (NYSE:KMB)
Texas Instruments (NASDAQ:TXN)
Union Pacific (NYSE:UNP)
Dominion Resources (NYSE:D)
Gilead Sciences (NASDAQ:GILD)
W.P. Carey (NYSE:WPC)

In doing so, I've added $1,336.40 in past dividends to DivGro's total dividend tally and $974.77 to DivGro's projected annual dividend income.

    2012-06-12 Bought: 60 shares of RAI at $21.78 per share:$1,307.10
2012-10-01 Dividend on 60 shares at 29.5¢ per share: $17.70
2013-01-02 Dividend on 60 shares at 29.5¢ per share: $17.70
2013-04-01 Dividend on 60 shares at 29.5¢ per share: $17.70
2013-07-01 Dividend on 60 shares at 31.5¢ per share: $18.90
2013-10-01 Dividend on 60 shares at 31.5¢ per share: $18.90
2014-01-02 Dividend on 60 shares at 31.5¢ per share: $18.90
2014-04-01 Dividend on 60 shares at 33.5¢ per share: $20.10
2014-07-01 Dividend on 60 shares at 33.5¢ per share: $20.10
2014-10-01 Dividend on 60 shares at 33.5¢ per share: $20.10
2015-01-02 Dividend on 60 shares at 33.5¢ per share:  $20.10
2015-04-01 Dividend on 60 shares at 33.5¢ per share: $20.10
2015-06-22 Cash in lieu of fractional shares: $6.64
2015-07-01 Dividend on 60 shares at 33.5¢ per share: $20.10
2015-10-01 Dividend on 60 shares at 36.0¢ per share: $21.60
2015-11-16 Bought: 25 shares of RAI at $45.80 per share: $1,145.00
 Total Capital Invested $2,452.10

Total Dividends Received:$258.64

With this transfer, DivGro's projected annual dividend income increases by $122.40.

The following chart shows a 4-year history of RAI's share price (split-adjusted) and indicates when I bought shares. So far, RAI has performed very well for me. My investment is up by 73%, or 38% annualized.

Source: Scottrade

Why RAI?

Here are some reasons I like RAI and why I decided to transfer the shares to DivGro:
  1. RAI is a solid dividend payer with a 3.12% yield. The company raised its dividend by 7.5% in 2015. 
  2. A payout ratio of 54% means there is room for future dividend increases.
  3. The company expects double digit earnings growth (12.82%) this year. Strong earnings growth supports dividend growth. 
  4. RAI has a strong history of delivering increased value via stock buybacks. In the past 3 years, the company has reduced its share count by about 9%.
  5. In June 2015, RAI completed its acquisition of Lorillard, adding the Newport brand to its top-selling Camel brand. Following the merger, RAI will have an estimated 35% of the US cigarette market. 
Thanks for reading! Please share your thoughts about RAI as a dividend growth stock below.

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