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IP: Paper Profits
05/20/2014 7:00 am EST
While much of the attention in the stock market revolves around speculation and volatility, true wealth has always been a matter of persistence and discipline, suggests Vita Nelson. Here, the editor of MoneyPaper highlights her latest dividend reinvestment special.
These qualities explain the long-term success of dividend reinvestment and dollar-cost averaging, especially when combined with high-quality companies that produce growing revenues, earnings, and dividends consistently over time.
The discipline required to follow those principles helps to keep us from panicking when trading prompts others to make rash decisions or lose focus, and allows us to sleep well at night, confident that the best values will rise to the top, given enough time.
One stock that fits this long-term strategy is International Paper (IP). Founded in 1898 and based in Memphis, Tennessee, International Paper is a paper and packaging firm that operates in North America, Europe, Latin America, Russia, Asia, and the Middle East.
Its Industrial Packaging segment manufactures original and recycled containerboards, linerboard, and saturating kraft.
Its Printing Papers segment produces papers for use in copiers and laser printers, pulp used in the manufacture of printing, writing, and specialty papers, towel and tissue products, and filtration products.
The Consumer Packaging segment offers coated paperboard for various packaging and commercial end uses, such as food, cosmetics, pharmaceuticals, computer software, tobacco products, greeting cards, direct mail, and advertising. Its Distribution segment serves commercial printers, building services, and suppliers.
Consensus estimates call for IP to earn about $3.62 per share this year and $4.40 in 2015, compared with $3.16 in 2013. The dividend, which has been increased for four straight years, provides a yield of 3.1%.
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