Today’s purchase: an income-generating container company
Dividend growth, after all – the name of the freakin’ investment strategy – isn’t its strong suit. TUP hasn’t increased its dividends for the past couple of years – regularly making quarterly payments of $0.68 since it announced a $0.06 raise back in early 2014 – but don’t sleep on the packaging and container company … I think there’s a lot to like.
Like what? Glad you asked. TUP might not have a recent history of increasing its dividends, but already has a robust yield of 4.51%. When the yield is that high, I’m more than happy to settle with a consistent payment instead of the ever-increasing one most dividend-growth investors foam at the mouth for. I equate it to the college athlete who leaves early to pursue a career in his or her sport of choice. They don’t have to go through the grind most people do … they, at least according to draft projections, have already made it.
TUP, meanwhile, has already made it to the top of the heap when it comes to sustainable dividend payments. Most companies can’t go much past 4.50% on a consistent basis. Tupperware isn’t an exception to the rule, but that’s fine … the dividend is already really, really good.
The college basketball player who bolts for the NBA after his freshman year is an easy target for criticism. Would it be great for him to stay a few more years and get what amounts to a free degree while sharpening his on-court skill set? Sure … hard to find a problem with any of that. But, if his dream is to play in the NBA, shouldn’t he just go for it as soon as he gets a chance? People go to college to prepare themselves for their profession of choice. It takes most people at least four years to get what is pretty much just a pre-qualification for their dream job … or just a job in general. If a doctor, lawyer or teacher could leave school after a year and get a job in their desired field, though, my guess is most would do it.
The point, as it relates to TUP, is this: if a company already has a dividend scraping the high end of the sustainability spectrum, and growth doesn’t look like much of an option, that doesn’t make it a bad stock to invest in. Tupperware already has a really high yield and, well, for my purposes, it really doesn’t have to be much higher. I’m, probably above all else, an income investor. Instead of taking the income from dividends and using it to live off of, though, I just reinvest it. I have a lot of stocks in my 100-company portfolio that are poised for dividend growth, one example being MasterCard (annual dividend of $0.88 per share and a yield of .79%), which has a small dividend, but plenty of room to grow. You need companies like MasterCard in your portfolio, but, if you can skip the four-year undergrad period and go straight to the 4.50% yield of a Tupperware, why not?
Just like you need dividend growers over the long term, you need high yielders to help get your dividend stream off the ground.
Other stats I like:
- TUP is trading nearly 10% below its 52-week high.
- Has a solid EPS (earnings per share) of 4.51 and low P/E ratio of 13.68.
- Has a profit margin of 13.15% and has exceeded earnings estimates each of the past four quarters.
- Grown its EPS 34.78% over the course of last quarter and the same quarter the prior year.
That’s why I doubled my TUP position when I bought a share for $60.59 Monday morning. I now have two shares worth roughly $120 at an average cost of $60.58 (I bought my other share back on Feb. 10 for $60.57). I couldn’t help myself; the $74 auto deposit that hits my Robinhood account each week was burning a hole in my account for the 20 or so minutes it was in there. I like to put my money to work as fast as possible and, coupled with my tendency to have little to no patience (I know, not a great attribute when it comes to investing), I usually use a good chunk of the deposit as soon as the market opens at the start of the week.
Anyway, I have a pair of TUP shares … and I’m pretty excited about it. The ex-dividend date is Thursday, which means, thanks to my small position, a payment of $1.36 will be hitting my account early next month. Big picture: the $2.72 annualized dividend from the share I just bought increased my projected annual dividend income to $248.97.
Disclaimer: I’m the furthest thing from a pro investor you’ll ever find, so don’t confuse my blog posts with sound investment advice. I love to invest and am a big fan of blogging … so that’s what I do. I share my success and failures because I enjoy documenting the journey.