The problems in Europe continue to plague the markets globally. The S&P 500 rallied mid-week when it seemed that the bailout of Greece is coming. Seemingly good news couldn't hold the market up and thus the selling continued from Wednesday through Friday. The S&P closed down 0.44% for the week while the blue-chip, the Dow Industrial index, was actually up 1.3%. Upon initial review, it could have been a flight to "quality" within the realm of stocks. However, as a result of the sell off, our list swelled and we included only those companies within 5% of the 52-week low below.
Symbol |
Name |
Price |
% Yr Low |
P/E |
EPS |
Dividend |
Yield |
Payout |
FNFG |
First Niagara Financial Group Inc. |
9.15 |
0.00% |
13.66 |
0.67 |
0.64 |
6.99% |
96% |
EMR |
Emerson Electric Co. |
41.31 |
0.00% |
12.75 |
3.24 |
1.38 |
3.34% |
43% |
GTY |
Getty Realty Corp. |
14.42 |
0.00% |
8.69 |
1.66 |
1.00 |
6.93% |
60% |
NFG |
National Fuel Gas Co. |
48.68 |
0.02% |
15.65 |
3.11 |
1.42 |
2.92% |
46% |
MMM |
3M Co |
71.79 |
0.11% |
12.19 |
5.89 |
2.20 |
3.06% |
37% |
AOS |
AO Smith Corp. |
32.03 |
0.28% |
9.56 |
3.35 |
0.64 |
2.00% |
19% |
UMBF |
UMB Financial Corp. |
32.08 |
0.38% |
13.04 |
2.46 |
0.78 |
2.43% |
32% |
WFSL |
Washington Federal, Inc. |
12.74 |
0.39% |
14.81 |
0.86 |
0.24 |
1.88% |
28% |
AVP |
Avon Products, Inc. |
19.6 |
0.51% |
11.46 |
1.71 |
0.92 |
4.69% |
54% |
ATR |
AptarGroup Inc. |
44.67 |
0.61% |
16.98 |
2.63 |
0.88 |
1.97% |
33% |
XRAY |
DENTSPLY International Inc. |
30.69 |
0.92% |
16.07 |
1.91 |
0.20 |
0.65% |
10% |
BMI |
Badger Meter, Inc. |
28.93 |
0.94% |
16.44 |
1.76 |
0.64 |
2.21% |
36% |
AVY |
Avery Dennison Corp. |
25.08 |
0.97% |
9.02 |
2.78 |
1.00 |
3.99% |
36% |
DNB |
Dun & Bradstreet Corp. |
61.26 |
1.36% |
11.92 |
5.14 |
1.44 |
2.35% |
28% |
ADM |
Archer Daniels Midland Co. |
24.81 |
1.60% |
7.93 |
3.13 |
0.64 |
2.58% |
20% |
ALB |
Albemarle Corp. |
40.4 |
1.60% |
9.35 |
4.32 |
0.66 |
1.63% |
15% |
SYY |
Sysco Corp. |
25.9 |
1.65% |
13.21 |
1.96 |
1.04 |
4.02% |
53% |
CYN |
City National Corp. |
37.76 |
1.70% |
12.50 |
3.02 |
0.80 |
2.12% |
26% |
CAT |
Caterpillar Inc. |
73.84 |
1.71% |
12.20 |
6.05 |
1.84 |
2.49% |
30% |
JCI |
Johnson Controls Inc |
26.37 |
1.78% |
11.77 |
2.24 |
0.64 |
2.43% |
29% |
UGI |
UGI Corp. |
26.27 |
1.78% |
11.52 |
2.28 |
1.04 |
3.96% |
46% |
ITW |
Illinois Tool Works, Inc. |
41.6 |
1.91% |
10.98 |
3.79 |
1.44 |
3.46% |
38% |
BXS |
BanCorp.South Inc. |
8.78 |
1.97% |
18.68 |
0.47 |
0.04 |
0.46% |
9% |
EOG |
EOG Resources, Inc. |
71.01 |
2.10% |
44.66 |
1.59 |
0.64 |
0.90% |
40% |
BEN |
Franklin Resources, Inc. |
95.64 |
2.20% |
11.41 |
8.38 |
1.00 |
1.05% |
12% |
SON |
Sonoco Products Co. |
28.23 |
2.21% |
14.19 |
1.99 |
1.16 |
4.11% |
58% |
BDX |
Becton, Dickinson and Co. |
73.32 |
2.25% |
12.32 |
5.95 |
1.64 |
2.24% |
28% |
CATO |
Cato Corp. |
22.56 |
2.36% |
10.30 |
2.19 |
0.92 |
4.08% |
42% |
HP |
Helmerich & Payne, Inc. |
40.6 |
2.39% |
11.12 |
3.65 |
0.28 |
0.69% |
8% |
UVV |
Universal Corp. |
35.86 |
2.40% |
6.87 |
5.22 |
1.92 |
5.35% |
37% |
APD |
Air Products & Chemicals, Inc. |
76.37 |
2.40% |
14.22 |
5.37 |
2.32 |
3.04% |
43% |
VNO |
Vornado Realty Trust |
74.62 |
2.43% |
16.66 |
4.48 |
2.76 |
3.70% |
62% |
DOV |
Dover Corp. |
46.6 |
2.60% |
10.20 |
4.57 |
1.26 |
2.70% |
28% |
MUR |
Murphy Oil Corporation |
44.16 |
2.62% |
8.96 |
4.93 |
1.10 |
2.49% |
22% |
WAG |
Walgreen Co. |
32.89 |
2.78% |
11.19 |
2.94 |
0.90 |
2.74% |
31% |
FULT |
Fulton Financial Corp. |
7.65 |
2.82% |
11.42 |
0.67 |
0.20 |
2.61% |
30% |
CTBI |
Community Trust BanCorp., Inc. |
23.29 |
2.87% |
9.95 |
2.34 |
1.24 |
5.32% |
53% |
NUE |
Nucor Corp. |
31.64 |
2.99% |
21.38 |
1.48 |
1.45 |
4.58% |
98% |
SBSI |
Southside Bancshares, Inc. |
18.01 |
3.00% |
8.00 |
2.25 |
0.72 |
4.00% |
32% |
AROW |
Arrow Financial Corp. |
22.25 |
3.00% |
11.84 |
1.88 |
0.97 |
4.36% |
52% |
TRMK |
Trustmark Corp. |
18.15 |
3.01% |
10.93 |
1.66 |
0.92 |
5.07% |
55% |
BOH |
Bank of Hawaii Corp. |
36.4 |
3.12% |
10.80 |
3.37 |
1.80 |
4.95% |
53% |
BMS |
Bemis Co Inc |
29.31 |
3.17% |
14.58 |
2.01 |
0.96 |
3.28% |
48% |
MSEX |
Middlesex Water Company |
17.07 |
3.20% |
18.55 |
0.92 |
0.73 |
4.28% |
79% |
EXPD |
Expeditors International of Washington |
40.55 |
3.23% |
23.17 |
1.75 |
0.50 |
1.23% |
29% |
GE |
General Electric Co |
15.22 |
3.40% |
11.98 |
1.27 |
0.60 |
3.94% |
47% |
GS |
Goldman Sachs Group, Inc. |
94.55 |
3.45% |
9.27 |
10.20 |
1.40 |
1.48% |
14% |
ARE |
Alexandria Real Estate Equities, Inc. |
61.39 |
3.47% |
21.47 |
2.86 |
1.88 |
3.06% |
66% |
PPG |
PPG Industries, Inc. |
70.66 |
3.50% |
11.15 |
6.34 |
2.28 |
3.23% |
36% |
WBS |
Webster Financial Corp. |
15.3 |
3.52% |
12.24 |
1.25 |
0.20 |
1.31% |
16% |
BRO |
Brown & Brown, Inc. |
17.8 |
3.55% |
16.18 |
1.10 |
0.32 |
1.80% |
29% |
GBCI |
Glacier BanCorp., Inc. |
9.37 |
3.65% |
16.44 |
0.57 |
0.52 |
5.55% |
91% |
SWK |
Stanley Black & Decker, Inc. |
49.1 |
3.87% |
13.68 |
3.59 |
1.64 |
3.34% |
46% |
MLM |
Martin Marietta Materials, Inc. |
63.22 |
3.98% |
34.36 |
1.84 |
1.60 |
2.53% |
87% |
SUSQ |
Susquehanna Bancshares, Inc. |
5.46 |
4.00% |
21.00 |
0.26 |
0.08 |
1.47% |
31% |
BMO |
Bank of Montreal |
55.85 |
4.09% |
11.24 |
4.97 |
2.71 |
4.85% |
55% |
CFR |
Cullen/Frost Bankers, Inc. |
45.86 |
4.13% |
12.99 |
3.53 |
1.84 |
4.01% |
52% |
LNC |
Lincoln National Corp. |
15.63 |
4.20% |
4.56 |
3.43 |
0.20 |
1.28% |
6% |
HIG |
Hartford Financial Services Group Inc. |
16.14 |
4.26% |
4.62 |
3.49 |
0.40 |
2.48% |
11% |
SJW |
SJW Corp. |
21.77 |
4.31% |
16.37 |
1.33 |
0.69 |
3.17% |
52% |
NTRS |
Northern Trust Corp. |
34.98 |
4.39% |
13.88 |
2.52 |
1.12 |
3.20% |
44% |
TROW |
T. Rowe Price Group, Inc. |
47.77 |
4.42% |
16.76 |
2.85 |
1.24 |
2.60% |
44% |
WSFS |
WSFS Financial Corp. |
31.57 |
4.43% |
15.55 |
2.03 |
0.48 |
1.52% |
24% |
PBI |
Pitney Bowes Inc |
18.8 |
4.44% |
11.33 |
1.66 |
1.48 |
7.87% |
89% |
PEP |
PepsiCo Inc. |
61.9 |
4.47% |
15.75 |
3.93 |
2.06 |
3.33% |
52% |
TRV |
The Travelers Companies, Inc. |
48.73 |
4.53% |
9.21 |
5.29 |
1.64 |
3.37% |
31% |
CBSH |
Commerce Bancshares, Inc. |
34.75 |
4.57% |
12.32 |
2.82 |
0.92 |
2.65% |
33% |
PH |
Parker Hannifin Corp. |
63.13 |
4.59% |
9.91 |
6.37 |
1.48 |
2.34% |
23% |
TDS |
Telephone and Data Systems, Inc |
21.25 |
4.68% |
11.87 |
1.79 |
0.47 |
2.21% |
26% |
FRS |
Frisch's Restaurants, Inc |
19.4 |
4.70% |
10.37 |
1.87 |
0.64 |
3.30% |
34% |
CBU |
Community Bank System, Inc. |
22.69 |
4.71% |
11.64 |
1.95 |
1.04 |
4.58% |
53% |
UTX |
United Technologies Corp. |
70.36 |
4.83% |
13.64 |
5.16 |
1.92 |
2.73% |
37% |
T |
AT&T Inc |
28.52 |
4.85% |
8.29 |
3.44 |
1.72 |
6.03% |
50% |
PAYX |
Paychex, Inc. |
26.37 |
4.98% |
17.94 |
1.47 |
1.24 |
4.70% |
84% |
Watch List Summary
Topping our list this week is First Niagara Financial Group (FNFG). According to Value Line, this New York regional bank typically trades at 15 times earnings. The recent merger with NewAlliance Bancshares should fuel First Niagara's expansion and growth. It appears that growth is being priced into the company as seen in the forward P/E ratio of 7.5. If the company can grow 18% as predicted by the analysts, the dividend payout ratio should contract slightly.
Moving down the list, we have a well known bluechip company, 3M (MMM). IQTrends estimates that anytime 3M trades around a 3% dividend yield, it is undervalue. Currently, the yield sits slightly above its undervalued range at 3.06%. Another gauge we can look to is Value Line Investment Survey, which shows a fair value at 12x cash flow. Using the 2012 estimate of $9 cash flow and 3M is fairly valued at $108. At the current price of $71, with a 3% yield, there appears to be a reasonable margin of safety for long-term investors.
Another company to highlight this week is Avon Products (AVP). This cosmetics producer is extremely undervalued according to historical cash flow and dividend yield. At almost 5% dividend yield and a healthy payout ratio, we believe Avon is a stock one to pay attention to. The stock is undervalued at or around 3.7% dividend yield so the current 4.69% yield suggests that AVP has at least 25% upside. If based on AVP's cash flow we get a more bullish picture. Valueline shows Avon trades around 14x cash flow and with 2012 consensus at $2.80 per share, Avon's fair value appears to be at $39, a figure that is twice the current price.
After last appearing on our Dividend Watch List of September 16, 2011, Harleysville Group (HGIC) has increase by 119%. On Friday September 23rd, it was reported by Bloomberg (article here) that Harleysville Group was rumored to be acquired by Nationwide Insurance. On Thursday September 29th, it was officially announced that Nationwide Insurance would pay $60 a share for Harleysville Group. Nationwide Insurance is paying 2 times book value in the transaction. Harleysville Group was ranked 3rd on our list of top dividend stocks to consider on September 16th.
From the same list, three insurance related companies are worth considering. First on the list is American National Insurance Company (ANAT) which “…operates in five segments: Life, Annuity, Health, Property and Casualty, and Corporate…” ANAT is selling at a book value of $139 a share while trading at $69.25 and sporting a P/E ratio of 11.5. From 1992 to 2002, ANAT increased it’s dividend for each year. However, since late 2002, ANAT has intermittently increased the annual dividend from $2.96 to the current level of $3.08. The dividend yield is a healthy 4.40% with a reasonable payout ratio of 51%.
The next company was ranked 5th on our September 16th list and currently ranked 51st is Brown & Brown (BRO). Brown & Brown is “…a diversified insurance agency, markets and sells insurance products and services primarily in the United States.” BRO has a price/book ratio of 1.65 and an enterprise value of $2.51 billion. Trading within 4% of the 52-week low, Brown & Brown has fallen by 34% from the high and is within 13% of the 2009 low. BRO has increased the dividend every year since 1996.
Finally, Allstate (ALL) was ranked 9th on the list and has managed to fall off of our current list. Prior to 2008, Allstate had increased the dividend for 14 years in a row. However, the financial crisis took its toll on the company requiring a dividend cut of 51%. Allstate recently increased the dividend in March of this year.
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 September 10, 2010 and have checked their performance one year later. The top five companies on that list can be seen in the table below.
| Symbol | Name | 9/10/2010 | 9/9/2011 |
% change
|
| INTC | Intel Corp. | 17.97 | 19.7 | 9.63% |
| WST | West Pharmaceutical Services | 33.65 | 37.78 | 12.27% |
| TR | Tootsie Roll Industries Inc | 23.87 | 23.67 | -0.84% |
| OMI | Owens & Minor, Inc. | 26.44 | 27.72 | 4.84% |
| BEC | Beckman Coulter, Inc. | 45.71 | 83.47 | 82.61% |
|
Avg.
|
21.70% | |||
| Dow Industrials | 10,462.77 | 10,992.13 | 5.06% |
Excluding Beckman Coulter (BEC), the remaining four stocks, on average, managed to exceed the Dow Jones Industrials throughout the year with a gain +6.48%. The average performance of all five stocks was 21.70% compared to the Industrials 5.06% in the same one year period of time.