If you’re keen on teaching your children how finances work and how it’s possible to use money to make money, there are few ways better than introducing them to some of the bigger, solid dividend stocks on the market.
Now, before you start laughing, keep in mind that billionaire investor Warren Buffett actually purchased his first stock at the tender age of 11 years old. I don’t think there’s anyone that could argue that Mr. Buffett has had fabulous success. He built his vast fortune by investing in some of the most famous dividend stocks and stock history. (And yes, we realize that his father was a stockbroker.)
The point is, if a child is taught about money, how it works and how to handle it at a young age, there is practically no limit to what they can accomplish, especially if they’re taught about one of the potentially best wealth building mediums that is available today. If this is something that interests you you’re in luck because today we’ve put together a short blog about three excellent dividend stocks that your kids will love (because of who issued the stocks) and you will also love (because they’re excellent stocks, d’uh). Enjoy.
1) Nike (NYSE: NKE). There are very few businesses that have a larger global presence and better brand visibility than shoemaker Nike. With a very healthy 9.2% net profit margin and dividends that are paying 1.4%, Nike brings $4 billion in cash and equivalents to the table with long-term debt of just $161 million.
In the last quarter Nike bought back nearly 5,000,000 of its own shares for an estimated $253 million. What that means is that only 7.4 billion remains on the four-year share repurpose authorization that it now has.
Nike trades at a higher premium than some companies in its class. In our opinion that’s quite fair when you consider that its earnings were boosted by 20% last quarter of 9% revenue growth, something that is practically unheard of for a company that had almost $25 billion in revenue in 2012. At the end of the day, your kids probably love Nike sneakers and you should definitely feel the love for their stock.
2) Disney (NYSE: DIS). Without question Disney is one of the most comprehensive entertainment companies in the world and has successfully grown their brand by leveraging their vast repertoire of character properties into first-run films, extremely popular video games, excellent theme parks and of course their merchandising. This has allows them to raise their dividend 7 times over the past decade and given their stock a very reasonable 1.2% yield.
One of the biggest coups that Disney has had in the last decade is their triple acquisition of Pixar, Marvel Entertainment group and the Star Wars franchise, three of the most successful entertainment brands on the planet. Without question Disney has more than enough characters, storylines and opportunities to keep their customers happily entertained for the next few decades.
Even more, with record attendance at their theme parks and recent admission price increases along with the buyback of over 38 million of their own shares during the first half of 2013, their stock value as well as their entertainment value should continue to perform well into the foreseeable future. If you have Disney stock both you and your children should be smiling from ear to ear.
3) Apple (NYSE: AAPL) when you consider that 37.4 million iPhones were sold in the last quarter alone, it’s not hard to imagine that any child would want to own a piece of the company that helps them send their hundreds of daily text messages. Add to that the fact that Apple literally created a new market segment when they invented the iPad (which sold nearly 20,000,000 units last quarter, thank you very much) and that millions of people download their games and music from iTunes and you have a brand that kids recognize nearly as easily as McDonald’s.
For mom and dad, all you need to do is simply keep in mind that Apple created $12.5 billion in cash flow last quarter alone and has a ridiculous cash balance of over $145 billion with a balance sheet that carries zero debt. (Yes, those numbers are correct.)
Want even more reasons to buy Apple stock? How about that their shares are currently trading for only 9.5 times that of last year’s earnings and, as far as next year’s estimates, at 9.1 times. The 3% dividend and Apple’s massive $100 billion share repurchase authorization may not, as far as excellent stocks are concerned, this one is about as good as it gets.
All three of these dividend stocks represent extremely strong, successful long-term businesses. All three of them also are probably brands that your children hold near and dear and, if you choose to, can easily be used to teach them about financial matters that may very well help them greatly as adults.