U.S. Dividend Watch List: December 19, 2014

Top Five Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from December 20, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2013 Price 2014 Price % change
ED Consolidated Edison 54.77 65.69 19.9%
MLM Martin Marietta Materials 96.17 119.26 24.0%
PM Philip Morris International 85.52 83.05 -2.9%
IBM IBM 180.02 158.51 -11.9%
T AT&T Inc 34.30 33.54 -2.2%
      Average 5.4%
         
DJI Dow Jones Industrial 16,221.14 17,804.80 9.8%
SPX S&P 500 1,818.32 2,070.65 13.9%

Watch List Review

The best performer was Martin Marietta Materials (MLM).  While the stock ended the year up 24%, it gained as much 43% within 6 months.  We were skeptical about the stock at such high multiple a year ago (P/E of 42) but that was because the company was expected to grown their net income by 49% (from $2.60 in 2013 to $3.87 in 2014).  As of this writing, analysts expect the company to earn $3.48 in 2014 which is 10% less than projected.  Analysts now expect the company to earn $5.19 per share in 2015 which is a 49% increase from 2014 and brings Forward P/E to 22.  It would be interesting to see how this projection play out in the face of a global slowdown.  We believe that one of the key element that should help the in 2015 is the falling oil price.  While oil isn’t a direct input into the company material cost, we assumed that the cost to transport their product should reduced substantially.

The second best performer from our top five was Consolidated Edison (ED). Our expectation was that the stock would under-perform the market but that didn’t pan out. It turns out that yield coninued to fall as deflationary environment continue to take hold. The stock now yield 2.5% which is extremely low for a utility company. It is hard to say that the stock is of good value.

IBM (IBM) was the worse peformer out of the top five. The most interesting aspect of that, IBM had the lowest P/E ratio. This goes to show that while buying stock with low P/E ratio may appeared to be a safe bet, one shouldn’t rely on a single ratio as a determination of value.

U.S. Dividend Watch List: December 19,2014

This volatile market has taken the market on a roller coaster ride. The market rose 3.4% for the week. As such, our watch list contracted to contain 39 companies. Continue reading

Gold Stock Indicator: December 19, 2014

Gold stocks were up while gold was down for the past week.  However, this isn’t a complete picture of what it took for gold stocks end the week up.  The chart below shows the dramatic loss of –7% by late Tuesday and the subsequent gain of +10% by early Friday.

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Nasdaq 100: 2014 Re-Rank Review

On December 12, 2014, the Nasdaq OMX Group announced the names of the companies that would be added and dropped from the Nasdaq 100 Index.  The following  are the companies that have been added and dropped from the index:

Symbol Name Price P/E EPS Yield Price/Book Action
EA Electronic Arts Inc. 47.24 38.31 1.23 - 5.38 added
AAL American Airlines 50.14 97.93 0.51 0.8 7.04 added
LRCX Lam Research 80.82 20.68 3.91 0.9 2.55 added
FFIV F5 Networks, Inc. 132.84 32.48 4.09 - 6.96 dropped
EXPE Expedia Inc. 87.79 27.59 3.18 0.8 5.83 dropped
MXIM Maxim Integrated 31.2 25.57 1.22 3.7 3.61 dropped

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U.S. Dividend Watch List: December 12, 2014

The market was down -3.5% for the week which pulled the year-to-date gains of +8.4%. Oil prices tanked and is currently trading under $60 a barrel. As a result, we are seeing more companies on our watch list than usual. The total number of companies increased from 40 to 75. Continue reading

Gold Stock Indicator: December 12, 2014

In the past two weeks, the price of gold has meandered in a tepid range.  Alternatively, gold stocks as represented by the Philadelphia Gold and Silver Stock Index decline –6.07%.

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