Goodbye VVC, Hello New Position?

Vectren (VVC) was one of my early buys. I picked it off the list of Dividend Champions. 59 years of dividend growth came to an end when Houston-based CenterPoint Energy (CNP) acquired Indiana-based Vectren. It was #9 on the list, and had continuously raised its dividend longer than JNJ, KO, and HRL.

I purchased VVC only about two years ago, but it served me well! My average cost basis was $54.74/share, and the buyout was for $72/share. I also collected $57 in dividends over that span.

I’m losing $34.56/year in dividend income with this sale. But, I can put it into something else. I have a few on my watch list:

  • American States Water (AWR)
  • Automatic Data Processing (ADP)
  • Avery Dennison (AVY)
  • American States Water (AWR). A utility, like VVC. Incredible annual share appreciation, and roughly 7.5% annual dividend increases. Bonus – its dividend increase streak is the longest at 64 years. Its payout ratio is 59%, which leaves a lot of room for a utility company. Its yield is very low for a utility. We will see if that goes up.
  • Automatic Data Processing (ADP). Providers of human resources management software, this is something every business over a certain size needs. Their payout ratio sticks out as being high, but that is forward-based. Trailing payout ratio is closer to 61% (thanks to the generous, and accelerated, recent dividend increases). This is a company I want to own, but I’m going to hold off for now.
  • Avery Dennison (AVY). When people are shopping more and more through the mail, who benefits? AVY makes a broad range of products, but one of their specialties is packaging and labeling. I think they’re in a great position, and they have been very generous to shareholders. I’ve been wanting to add AVY to my portfolio for a long time. I’m going to get in now before the next dividend increase announcement, which should be coming soon.

I had AVY on my watchlist for what seemed like forever. Going from VVC to AVY will cost me about $10/year in dividend income, but I’m excited for AVY’s potential.