About the Editor
Equities strategist Josh Peters is the editor of Morningstar DividendInvestor, a monthly newsletter that provides quality recommendations for current income and income growth from stocks.

Josh manages DividendInvestor's model dividend portfolio, the Dividend Select Portfolio. Josh joined Morningstar in 2000 as an automotive and industrial stock analyst. After leaving in 2003 to join UBS Investment Bank as an equity research associate, he returned to Morningstar in 2004 to develop DividendInvestor.

Peters holds a BA in economics and history from the University of Minnesota Duluth and is a CFA charterholder. He is also the author of a book, The Ultimate Dividend Playbook, which was released by John Wiley & Sons in January 2008.

 
Investment Strategy

Dividends are for everyone regardless of age. The outcome of owning dividend-yielding stocks is the key variable-higher-yielding stocks with safe payouts being less risky while affording investors who don't need current income the ability to reinvest/reallocate the capital.

The goal of the Dividend Select Portfolio is to earn annual returns of 9% - 11% over any three-to-five year rolling time horizon. We further seek to minimize risk, as defined by the probability of a permanent loss of capital. For our portfolio as a whole, this goal is composed of:

3% - 5% current yield
5% - 7% annual income growth

 
 
May 30, 2016
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Josh Peters, CFA
Equities Strategist and Editor
Equities strategist Josh Peters is the editor of Morningstar DividendInvestor, a monthly newsletter that provides quality recommendations for current income and income growth from stocks.Josh manages DividendInvestor's model dividend portfolio, the Dividend Select Portfolio.
Featured Posts
Happy Memorial Day -- The Week in Dividends, 2016-05-26

It's been another very quiet week in terms of company-specific news, which is often the case before Memorial Day weekend. Like many Americans, I'll be traveling (an 1,100 mile round trip drive with four small kids in tow--wish me luck!), so this week's news update comes a day early. The sole event of note is the reaffirmation of our $82 fair value estimate for Duke Energy DUK described below; yielding 4.2% at Thursday's closing price, Duke remains my top pick in the utility sector.

With thanks to our veterans, and best wishes for the weekend,

Josh Peters, CFA
Director of Equity-Income Strategy
Editor, Morningstar DividendInvestor

Disclosure: I own all of the holdings of the Dividend Select portfolio in my personal accounts.


News and Research for Dividend Select Portfolio Holdings

Duke Energy DUK
Valuation 05/24/2016 | Andrew Bischof, CFA

Our fair value estimate is $82 per share, which includes $2 per share of value dilution related to Duke's $60 per share cash offer for Piedmont Natural Gas. We assume a 75% probability that the deal closes and incorporate $0.50 per share of value from estimated synergies.

On a consolidated basis, we expect 5.5% long-term normalized earnings growth, as regulated earnings driven by rate base growth are partially offset by weakness at the company's international unit. Our 2016 earnings per share estimate is $4.54, in line with management's guidance.

We estimate Duke will invest about $42 billion through 2020 on a stand-alone basis primarily at its regulated utilities and continue to receive constructive regulatory recovery of those expenditures. This excludes incremental investment opportunities in 2017 and beyond if Duke closes its Piedmont acquisition in 2016. Based on this investment budget, we anticipate consolidated rate base could grow as much as 6% annually. We don't expect a material change in the companywide average allowed returns.

Our forecast 1% average power demand growth for Duke's Carolina, Indiana, and Ohio subsidiaries and 1.5% for Florida from 2016 through 2020 should alleviate the need for near-term rate relief even with Duke's huge investment plan.

We discount our cash flows using a 5.9% weighted average cost of capital, which is based on a 7.5% cost of equity, 2.25% inflation, and a 4.5% normalized risk-free rate.

 

 
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