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

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 Einstein
Saunders 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, KS
5

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 company's 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 WITH
A 15 YEARS OF INCREASING
DIVIDENDS
Saunders 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 of
diagnosing 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 and
Manufacturing Company, founded in 1902. They produce more than 55,000
products. Now known as the global innovation company that never stops
inventing. In 2004, sales topped $20 billion for the first time, with
innovative 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: $26.39
News: 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 leading
broad line supplier of maintenance, repair and operating products, with expanding
global operations. In 2010, a healthy balance sheet and strong cash flow enabled
Grainger 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 also
supplies 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: $27.21
News: 5/3/12– Bemis declares a quarterly dividend of 25 cents per share. 4/26/12 - reported
quarterly earnings of $0.42 per share for quarter ended 3/31/12.
Saunders Learning Group, LLC, Andover, KS

18. Other examples
Hormel 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 of
stocks, you need to be rich to do that. What do
I do to get started?”
Saunders Learning Group, LLC, Andover, KS

20. Good News,
You can buy stock directly from
the leading companies and even
buy fractional shares, with limited
monthly contributions.
It’s called a Dividend Reinvestment
Plan or Drip
Saunders Learning Group, LLC, Andover, KS

21. Dividend Reinvestment Plan (DRiP) programs
A conservative, low-cost approach to investing Result of Dividends
in dividend-paying stocks is with dividend & Capital Growth
Barron’s Article, April 1999
reinvestment plans (DRPs or DRIPs).
With these plans, dividend immediately go to $100 invested in S&P 500
work 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 Dividend
US 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 $6.43
Dollar 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 to
take the time to get all of those Dividend
Reinvestment Plans set up, is there an easier
way?
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 Funds
Three of the best mutual funds for high dividend yields:
Saunders Learning Group, LLC, Andover, KS

27. Questions
Saunders Learning Group, LLC, Andover, KS

28. Post Workshop Action Plan
 Complete the Post Workshop Action Plan
Saunders Learning Group, LLC, Andover, KS
28

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