Traditional models of how to evaluate the true underlying value of an equity vary. Discounting dividends is one of the ways many long term investors attempt to value the equity of an established, mature business.
Understanding the multiple of how many years' worth of earnings one will need to pay to acquire a stake in a given company is a meaningful exercise for those investors who are keenly focused on the size and frequency of dividend distributions over time.
As far as large cap U.S. equities go, Boeing Co. (NYSE:BA) is perhaps one of the greatest cash flow distributors of our era, delivering massive amounts of liquidity to investors each year.
Late last year, Boeing's management team announced a 20% increase to the company's dividend distribution in addition to a share buyback program which was authorized at $20 billion, a move which significantly boosted the company's share price.
Since the announcement of the combined dividend and buyback increase, shares of Boeing have increased more than 30%, as long term investors have bought into the value creation of Boeing's management team.
For investors nearing retirement, or those looking for a stable place to invest over the long run, Boeing has proven itself to be a company with a penchant for creating value for shareholders, making this one of my top dividend plays for investors seeking yield.
The company currently yields approximately 2% (down significantly since the company's most recent 52-week bottom around the time of the aforementioned dividend announcement), a modest yield, but one which investors can count on growing over time.
Invest wisely, my friends.
