Below are the 40 companies on our U.S. Dividend Watch List that are within 11% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.
|Symbol||Name||Price||% Yr Low||P/E||EPS (ttm)||Dividend||Yield||Payout Ratio|
|SON||Sonoco Products Co.||29.65||3.64%||16.66||1.78||1.20||4.05%||67%|
|NJR||New Jersey Resources||39.97||3.79%||17.92||2.23||1.60||4.00%||72%|
|TEG||Integrys Energy Group||53.26||4.84%||16.80||3.17||2.72||5.11%||86%|
|ANAT||American Nat'l Insurance||67.00||5.21%||9.82||6.82||3.08||4.60%||45%|
|OMI||Owens & Minor||28.51||5.71%||16.67||1.71||0.88||3.09%||51%|
|PRK||Park National Corp.||64.29||5.74%||14.58||4.41||3.76||5.85%||85%|
|CBU||Community Bank System||27.38||7.88%||13.90||1.97||1.08||3.94%||55%|
|CWT||California Water Service||18.19||8.02%||16.69||1.09||0.63||3.46%||58%|
|BOH||Bank of Hawaii Corp.||44.87||8.36%||12.40||3.62||1.80||4.01%||50%|
|JW-A||John Wiley & Sons||38.77||8.84%||12.23||3.17||0.80||2.06%||25%|
|ETP||Energy Transfer Partners||43.82||9.03%||10.07||4.35||3.58||8.17%||82%|
|AJG||Arthur J Gallagher||35.07||9.56%||20.88||1.68||1.36||3.88%||81%|
|NWN||Northwest Natural Gas||45.25||10.34%||20.02||2.26||1.82||4.02%||81%|
|CTBI||Comm. Trust BanCorp||32.19||10.50%||11.29||2.85||1.26||3.91%||44%|
|AROW||Arrow Financial Corp.||24.99||10.59%||13.66||1.83||1.00||4.00%||55%|
|APD||Air Products & Chemicals||84.28||10.73%||15.49||5.44||2.56||3.04%||47%|
Watch List Review
The 100+ year industrial and consumer packaging product company, Sonoco (SON), topped our list for the first time. Sonoc lowered its 3rd quarter guidance by -19% citing weaker demand in consumer and industrial packaging. The firm is also struggling with inconsistent operations at their uncoated recycled paperboard mills. Despite slowing growth, the dividend remains their top priority. Analysts estimates earnings to rise in 2013 from $2.19 to $2.31. The current dividend yield of 4% and payout ratio of 67% is an attractive combination. Sonoco's acquisition of Tegrant could become an additional growth driver.
There are 2 utility companies in our top five, New Jersey Resources (NJR) and Consolidated Edison (ED). While the shares remain very close to the 52-week low, we feel that income oriented investors have moved into these names prematurely and are pushing the yields lower than they typically would be at the bottom of a utility cycle. While the 4% yield and forecasted low Fed fund rate makes these names attractive, we would opt for more growth from other sectors such as medical equipment and/or semiconductor.
FactSet Research (FDS) lands on the third spot this week. The company reported 1Q EPS that was above Wall Street expectations and yet the shares traded down. The 1Q EPS came in at $1.14 compared to the consensus estimate of $1.10. The top line grew 7.5% from the prior year, including contribution of StreetAccount. The U.S. revenue grew 7% year-over-year and non-U.S. revenue rose even higher at 8.3%. Despite the good news, Wall Street may not be happy with FDS' shrinking margins which came in at 33.7% versus 34.0%. The biggest contribution to the declining margins came from absorption of StreetAccount employees and rising headcount. Income investors may look past their 1.4% yield but the firm’s dividend yield rarely reach 1%. At the bottom of 2008/2009 market, the yield topped 1.6%.
Top Five Performance Review
In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from December 23, 2011 and have check their performance one year later. The top five companies on that list can be seen in the table below.
|Symbol||Name||2011 Price||2012 Price||% change|
|TR||Tootsie Roll Industries Inc||23.74||26.93||13.44%|
|BMO||Bank of Montreal||54.40||61.42||12.90%|
|JW-A||John Wiley & Sons Inc.||43.99||38.77||-11.87%|
|BCR||CR Bard, Inc.||85.12||98.18||15.34%|
|FRS||Frisch's Restaurants, Inc||19.50||18.11||-7.13%|
|DJI||Dow Jones Industrial||11,871.84||13,190.84||11.11%|
Our watch list performance didn’t keep up with the gains in the market due to major declines in John Wiley (JW-A) and Frisch’s Restaurant (FRS). However, all of the top 5 companies were able to achieve 15% gains in less than a year. Frisch even topped most companies with a rise above 60% after the company announced 2 special dividend payments.