MaxDividends CEO Letter: Building Safer, Faster-Growing Income

A Behind-the-Scenes Business Insight for Premium Partners

These are brief private update emails about what’s happening at MaxDividends, exclusively for premium subscribers. Updates, ideas, insights, and discussions on investments, dividends, business, and life.

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Intro

Friends, I want to share a few thoughts on two companies sitting on my watchlist right now. I think walking through them openly can be just as useful for you as it is for me.

As many of you already know, I keep a running list of companies I track closely. My goals with every pick are simple and consistent:

1. Get paid from day one. Dividends at the moment of purchase matter to me. The bigger the check, the better.

2. Dividend growth. I want those payouts climbing year after year. The faster the growth, the more powerful the compounding.

3. Capital protection. My money needs to be safe.

4. Capital growth. Over time, I want the value of my shares to rise too.

That’s how I pick companies—both for my family’s core portfolio and for my public “experiment portfolio,” the one I started from scratch a year ago with the goal of building $12,000 per month in dividends within 10 years. That’s the public target.

To reach it, I stick with financially strong businesses, undervalued at the moment, paying me well today while also offering clear paths for dividend and capital growth. The MaxDividends app helps me a lot with that analysis.

I’m conservative when it comes to managing money. But I also believe stocks are one of the best ways to lock in a rising stream of passive income—and, with time, the freedom to live life on your own terms.

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First Company — Why It Caught My Eye

On paper, this one looks solid. Here’s where it shines:

• Dividend growth has been clockwork ever since the company started paying.

• Current dividend yield sits at about 3%, higher than its 10-year average.

• Payout ratio is under 30%, which gives me confidence in future raises.

• EPS is strong and running well ahead of its 10-year average.

• The company buys back shares regularly—8 out of the last 10 years.

• Right now, the stock trades below book value.

What’s the catch? It’s still a young dividend payer. No 15-year streak yet. That’s my first screen. But the intent is there, and management clearly wants to build that history. For me, that makes it worth watching.

Second Company — Strong but With Caveats

This one’s a bit more established, but not without questions:

• Dividend history: Paid for 12 years straight, with increases in 10 of them. But one year, they paused. Not a cut—just no raise. For a conservative dividend investor like me, that’s a red flag.

• Payout ratio: About 65% right now. That’s fine, but ideally I want it below 60%, even better if it’s under 50%. Gives more cushion in tough times.

• The good stuff:

  • Current yield near 5%.

  • Dividend growth of about 15% per year over the past decade.

  • Another raise likely coming soon.

  • Stock looks undervalued versus the market and its own 10-year history.

  • Solid fundamentals: revenue, operating profit, balance sheet—all better than peers in its space.

  • Consistent share buybacks (again, 8 of the last 10 years).

The upside? Analysts see potential for about 50% capital appreciation from here. If payout drops below 50% on a trailing basis, and the price stays where it is (or even better, goes lower), I’d likely buy. But right now, I’m staying patient.

So Where Am I Putting My Money?

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