Category Archives: Dividend Achiever Watch List

U.S. Dividend Watch List: April 22, 2016

Posted on April 24, 2016 by | Leave a comment

Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from April 24, 2015 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
GRC Gorman-Rupp Company 27.99 28.95 3.4%
SAFM Sanderson Farms, Inc. 76.06 87.76 15.4%
TCO Taubman Centers 73.65 69.33 -5.9%
SJI South Jersey Industries 26.85 27.51 2.5%
DCI Donaldson 37.37 33.03 -11.6%
      Average 0.8%
         
DJI Dow Jones Industrial 18,080.14 18,003.75 -0.4%
SPX S&P 500 2,117.69 2,091.58 -1.2%

Watch List Review

The biggest gain came from a company unfamiliar to us, Sanderson Farms (SAFM). A year ago we said that this is a new company which we had no exposure to prior to the watch list. This small cap producer of poultry products had net earnings fall by -42% and yet the stock gained +15%! While one may view this as a disconnect in the fundamentals, another could argue that such expectations were baked into the price. When we published the list last year, shares were trading at $76 with projected net income of $7.05 which brings forward P/E to just 10x. Such low multiple imply that any miscalculation in the analysts' estimate (to the downside) would result in a strong recovery in share price. We believe this was the case with Sanderson Farms.

We wrote a quick note on Gorman-Rupp (GRC), which etched out a modest gain of +3%. However, that gain wasn't without some volatility. When we published the list, the stock was trading at $28. The shares traded below $20 in August (hit the low of $18.14 on August 22 but closed above $22). The reversal came the same day and shares traded as high as $32. We stated that shares were worth considering at such level but didn't have complete conviction over the name. However, if one was able to pick up shares on a two part trade, one would have done quite well within one year.

U.S Dividend Watch List: April 8, 2016

It was another strong week for the market as the S&P 500 rose +0.53% pushing the YTD gain at +2.3%. Because of that, there are only 9 companies on our watch list this week. We are not inclined to put new money to work at this point. However, the financial sector is appealing at the moment and any new money needs to be able to generate relatively safe income. Continue reading →

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U.S. Dividend Watch List: April 8, 2016

Posted on April 10, 2016 by | Leave a comment

Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from April 10, 2015 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
FAST Fastenal Company 40.01 47.13 17.8%
LNN Lindsay Corporation 75.19 67.78 -9.9%
MSM MSC Industrial Direct Co Inc 70.24 75.39 7.3%
DOV Dover Corp. 69.40 62.91 -9.4%
SJI South Jersey Industries 26.91 27.67 2.8%
      Average 1.7%
         
DJI Dow Jones Industrial 18,057.65 17,576.96 -2.7%
SPX S&P 500 2,102.06 2,047.60 -2.6%

Watch List Review

The average gain from our top five companies was reasonable given the overall environment. A gain of +1.70% was superior to a loss of -2.60% for the general market. The gain and loss ranged from +17.80% to -9.90%. The best performer with gain of +17.8% was Fasternal (FAST). The exceptional gain can be attributed to two factors, earnings growth and multiple expansion. Net income rose by +7%, from $1.66 to $1.77 over the past year. Earning multiples rose to 26 from 24. As icing on the cake, the dividend was increased by +7%, from $0.28 to $0.30. One outstanding statistic which highlighted the strong economic mode is Return on Equity (ROE). Below is what we said about Fasternal one year ago:

"Fasternal (FAST) currently yield 2.8% with P/E of 24. The stock is trading just 1.4% above its yearly low. For the last twelve months the company earn $1.66 per share and the consensus expects the net income to rise to $2.07 in 2016. The one fundamental number that attracts us is the return on equity. If the company earning $2.07 next year on $6.00 of book value, that equate to 34.5% ROE."

The worst performer was Lindsay (LNN). We all know that the agricultural sector was dragged down by deflationary forces and it clearly shown in the stock price. One year ago, LNN was trading at $75 and Value Line Investment Survey placed a fair value estimate at $77. However, the latest Value Line report has a price of $68, slightly below fair value of $69. Our valuation model suggests an extreme downside of $45 but long-term investors should start paying attention to Lindsay at the current price. Below is a highlight of our commentary on Lindsay.

Lindsay (LNN) provides agricultural equipment. While income investor may not be excited over 1.4% dividend yield, payout ratio of 30% ensure that income is relatively safe. Profit is expected to fall in 2015 from the last 12 months by 24% but is expected to recover in 2016. Value Line projects that the company trades at 16x cash flow with estimated fair value at $77.

U.S Dividend Watch List: April 8, 2016

The market gave ground this week and fell -1.2%. However, the correction wasn't big enough to make a substantial change in the watch list. Continue reading →

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U.S. Dividend Watch List: March 25, 2016

Posted on March 27, 2016 by | Leave a comment

Prior Year 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 March 27, 2015 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
PM Philip Morris International 76.79 97.57 27.1%
XOM Exxon Mobil Corp. 83.58 83.98 0.5%
CAT Caterpillar 79.67 75.29 -5.5%
MSM MSC Industrial Direct Co Inc 71.21 74.57 4.7%
PX Praxair 120.16 111.74 -7.0%
      Average 4.0%
         
DJI Dow Jones Industrial 17,712.66 17,515.73 -1.1%
SPX S&P 500 2,061.02 2,035.94 -1.2%

Watch List Review

The average gain for the top five companies was +4% which was better than the market. The best performer may be of a surprise to many, Philip Morris (PM) gained +27% in the year. Of the five companies, the largest decline of -7% came from Praxair (PX). We highlighted three companies and would like to bring to light what we said about Exxon Mobile (XOM). Below is an excerpt from that post.

As one look beyond the short term and see what the market has offered us, the investment opportunity looks even more compelling even in the mist of the bad news. Valueline placed a fair value at $75 for 2016 which is roughly 10% below the current level. Although Valueline estimated earning and cash flow per share to fall, dividend is projected to rise 5% and 4% from 2015 and 2016 respectively (head to Valueline for complimentary research report on Exxon). IQTrend estimated that the company is undervalued at 3.2% yield and current yield of 3.3% suggests that we are much closer to the bottom than the top. Don't expect the stock to pop in the short term and may have more downside to go. Multiple purchases is likely the best approach for long-term investor.

U.S Dividend Watch List: March 25, 2016

Below are 26 companies appearing on our dividend watch list for the week. Continue reading →

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U.S. Dividend Watch List: March 4, 2016

Posted on March 6, 2016 by | Leave a comment

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 5, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2014 Price 2015 Price % change
XOM Exxon Mobil Corp. 85.63 82.29 -3.9%
MSM MSC Industrial Direct Co Inc 72.16 70.34 -2.5%
GAS AGL Resources Inc. 47.11 64.80 37.6%
GTY Getty Realty Corp. 17.09 18.36 7.4%
SJI South Jersey Industries 26.18 26.44 1.0%
      Average 7.9%
         
DJI Dow Jones Industrial 17,856.78 17,006.77 -4.8%
SPX S&P 500 2,071.26 1,999.99 -3.4%

Watch List Review

Average gain for the top five companies were 7.9% which far exceed the S&P 500 and Dow Jones Industrial. The best performer was AGL Resources (GAS) which gained 37.6% driven by an aquisition by Southern Co. (SO).

Two companies with negative return were Exxon Mobil (XOM) and MSC Industrial (MSM). Our commentary on both companies were bullish and we took positions in Exxon about one year ago. Below are excerpt from last year.

Exxon Mobil (XOM) is the larger oil explorer and producer who need no introduction. The stock not only hit its 1 year low but also trading near its 2 years low. Back in October 2013, the stock marked the low at $84.79. Long-term investor without a position in the stock with focus on income and capital appreciation may want to start their due diligence. The drop in oil price may be one reason the stock has fallen but if you refer back to our post from February 20, we've highlighted that such correlation has little merit than one might believe. However, our view may be bias as we've acquired more Exxon in February.

MSC Industrial Direct (MSM) was founded in 1941 and manufactures and markets various industrial products such as abrasives and fasteners which are part of a larger category known as maintenance, repair, and operations (MRO). While the company isn't a dividend achiever, it has great dividend record which started in 2003. Since 2004, the dividend has grown at an annual rate of 16% excluding two special dividend that was paid out within that time frame. The company earned $3.74 on $20.26 of book value which is equivalent to 18% ROE. Such high ROE is favorable in the economic such as the one we are in because it imply wide economic moat. Charlie Munger once said that owning a great business at a fair price is better than owning a mediocre at a discount price thus we are beginning to look at company that can maintain exceptionally high ROE over a period of time.

Overall, we are content about our assessment of both companies even when they did not outperform the market. Despite oil falling -28%, Exxon was able to weather the storm and managed to loss only -4%. MSM Industrial was virtually flat on price as well as net income. The stock dipped as low as $54.19 and rebounded +30%. The street is expecting net income to grow by 10% over the next year.

U.S. Dividend Watch List: March 4, 2016

The recent rally in the market has taken many companies trading at or near their yearly low upward. Below are 13 companies that made the cut this week. Continue reading →

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U.S. Dividend Watch List: February 12, 2016

Posted on February 14, 2016 by | Leave a comment

It was another wild week for the market with extreme volatility setting in. The market ended the week down -0.80% and is off by -8.70% year-to-date. USO which is a proxy for oil fell -19% for the year while IAU which is a proxy for gold rose +16.70%. While weakness in the market may bring anxiety to investors, those with a longer-term perspective should embrace the recent trend and move towards a net buyer stance. At the end of the week, there are 30 companies on our watch list. Continue reading →

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U.S. Dividend Watch List: January 22, 2016

Posted on January 24, 2016 by | Leave a comment

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 January 23, 2015 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
NUE Nucor Corp. 43.80 35.36 -19.3%
EMR Emerson Electric 58.12 43.17 -25.7%
ITT ITT Corp 36.08 31.00 -14.1%
MCD McDonald's Corp. 89.56 118.40 32.2%
HY Hyster-Yale Materials Handling, Inc. 64.75 48.95 -24.4%
      Average -10.3%
         
DJI Dow Jones Industrial 17,672.60 16,093.51 -8.9%
SPX S&P 500 2,051.82 1,906.90 -7.1%

Watch List Review

Our top five lost an average of -10.3%. The best performer was McDonald (MCD) which gained an astonishing +32.2%. The driver for their success may be from menu changes (see here). We had some comments on Nucor (NUE) and Hyster-Yale (HY) which lost -19.3% and -24.4% respectively. Excerpts below were taken from our post from last year.

"Nucor (NUE) has lost -6.6% YTD and is trading right at the 52-week low. The company manufactures and sells steel and steel related products. The company recently raised their dividend by +0.05%. The small increase was a wise move because it kept the company on Dividend Achiever list while maintaining their cash position for the rocking time ahead. Interestingly, analysts at Goldman Sachs upgraded the stock to Buy from Neutral but lowered the price target to $52 from $55. The stock is trading at a slight discount to its 5-year average on all matrix (according to Morningstar). The stock is definitely worth considering at this level."

"One company that peaked our interest is Hyster-Yale (HY). The company was a spin-off from another Dividend Achiever, NACCO Industries, in 2012. Hyster-Yale manufactures forklifts. In less than one year, the stock has fallen from the high of $108 to settle at $65 by the end of the week, a -40% decline. Because Hyster-Yale is relatively young as a standalone company, we have little history on its financial. The stock currently trades at just 10x earnings with dividend yield of 1.6%. The company's balance sheet is strong with $39M in total debt while holding $97.9M in cash. Debt to equity ratio sits at 8.25. Hyster-Yale brings in $2.8B in revenue with net income of $109M or 3.9% profit margin. A razor thin margin is a cause for concern given that the company operates in a highly cyclical industry. However, current valuation is worth your consideration. The market cap is at $1B which is just 0.38x of sales."

Even though our speculation that these two would rise didn't come to fruition, this review provided us with an opportunity to reassess these two companies at a lower price. Although Nucor now yield 4.3%, it's payout ratio is high at 77%. Analysts are expecting the company net profits to be at $1.55 for the current year. With current earnings at $1.50, dividend increase will be put to question. Hyster-Yale currently sports a 2.37% dividend yield. Additionally, the payout ratio is 22% which is a large margin for safety for investors. While analysts expect their profits to fall, HY should be able to sustain the dividend if not increase it slightly.

U.S. Dividend Watch List: January 22, 2016

The S&P 500 continued to fluctuate between 1,820 and 1,900. Oil still hasn't hit bottom and commodities continued to slide lower. We see additional bearish sentiment as an opportunity to accumulate shares. Below are 41 companies on our watch list. Continue reading →

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U.S. Dividend Watch List: March 20, 2014

Posted on March 22, 2015 by | Leave a comment

The market roared back this week and pushed the S&P 500 above the 2,100 mark once again. The Nasdaq also closed the week above 5,000. However, the energy market continued to be in turmoil. Light sweet crude closed the week at $46.45 thus you will likely see many energy and industrial companies on our watch list. All-in-all, there are 54 companies that are on our watch list this week. Continue reading →

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NLO Dividend Watch List: March 9, 2012

Posted on March 10, 2012 by | Leave a comment

It was a volatile week but the market finished unchanged.  There are some bargains to be had in our Dividend Watch List this week which contains 11 companies that are within 11% of the 52-week low. A reminder to our readers, these are companies with long historical track records of dividend payments and increases.

Symbol Name Price % Yr Low P/E EPS (ttm) Dividend Yield Payout Ratio
TR Tootsie Roll Industries 22.63 2.31% 30.58 0.74 0.32 1.41% 43%
CHRW C.H. Robinson Worldwide 66.35 6.50% 25.32 2.62 1.32 1.99% 50%
CLX Clorox Co. 67.91 7.69% 16.56 4.1 2.40 3.53% 59%
PEP PepsiCo Inc. 63.15 7.95% 15.67 4.03 2.06 3.26% 51%
ANAT American National Insurance 71.49 8.80% 11.10 6.44 3.08 4.31% 48%
ATO Atmos Energy Corp. 31.09 9.05% 14.07 2.21 1.38 4.44% 62%
HNZ HJ Heinz Co. 53.06 10.27% 17.69 3 1.92 3.62% 64%
WAG Walgreen Co. 33.48 10.35% 11.31 2.96 0.90 2.69% 30%
BDX Becton, Dickinson 76.82 10.39% 14.02 5.48 1.80 2.34% 33%
CWT California Water Service 18.43 10.69% 20.48 0.9 0.63 3.42% 70%
MATW Matthews International  31.65 10.78% 13.08 2.42 0.36 1.14% 15%
11 Companies

Watch List Summary

Topping our list this week is Tootsie Roll (TR) which took a hit in the last month, down 2.6%. Our suspicion is that the recent rise in input costs (commodities such as sugar and cocoa) has hampered the growth of TR.  In the short-term, companies are not able to adjust their prices faster than their input costs, thus pressuring their margins in the short term. Value Line's estimated fair value for TR is around 19x cash flow which places the 2012 stock price at $20.90. After reviewing the historical range for TR, we see the worst case scenario at 15x cash flow. Therefore, our downside target is $16.50.

There are several companies on this list that have hit what IQTrends (www.iqtrends.com) considers “undervalued”. These are Clorox (CLX), Pepsi (PEP), Walgreen (WAG), and Becton (BDX). Based on their dividend yield thesis, the estimated upside are 26%, 48%, 92%, and 17% for these respective companies.

We are convinced that Walgreen (WAG) can emerge out of the Express Script deal better than expected. There’s no doubt that Walgreen's earnings will be hurt but we believed that many of these factors are priced into the stock. As such, our model places Walgreen fair value at $51. Value Line estimated that Walgreen trades at or around 11.5x cash flow which would put the intrinsic value at $50. We believed that the downside risk for the stock is around $30 level.  The technicals also support our claim as the shares have a 1-year low of $30.74.  In addition, we are anticipating a crossing over of the moving averages which should act as a buying case for the bulls. In any event, the dividend yield is at its highest point in history with a very low payout ratio. We feel comfortable holding a large amount of WAG in our portfolio.

WAG

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 March 11, 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
HCBK Hudson City Bancorp, Inc. 9.92 6.79 -31.55%
SYY Sysco Corp. 27.83 29.93 7.55%
SHEN Shenandoah Telecom. 16.01 10.35 -35.35%
BMI Badger Meter, Inc. 37.68 32.01 -15.05%
WABC Westamerica BanCorp.  50.25 47.32 -5.83%
Average -16.05%
DJI Dow Jones Industrial 12,044.40 12,922.02 7.29%
SPX S&P 500 1,304.28 1,370.87 5.11%

Companies on our watch list got hammered. Especially Hudson City (HCBK) and Shenandoah (SHEN). We said the following about Hudson City:

"On the top of our list this week is Hudson City Bancorp (HCBK). The stock has been under pressure this week. Current yield of 6% is attractive but with nearly $30B of debt and only $650M of cash on hand, it many not be worth risk/reward..."

We're glad that our intuition was right about the company and didn’t take any positions in the stock. Shenandoah paid an annual dividend which we were not fond of. As such, the name never attracted us. We highlighted Sysco (SYY) and Target (TGT) which rose 7.5% and 12.7% respectively.

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NLO Dividend Watch List

Posted on October 8, 2010 by | Leave a comment
Watch List Summary
Revisiting the previous list has provided great insight into those stocks that have either underperformed or overperformed.  The best performing stock from our September 24th list was Flushing Financial (FFIC).  After being listed as the top 10 bank stocks on TheStreet, the shares of FFIC are finally getting some recognition.

 

Although we don't have much insight into FFIC, we suggest readers look into our recent commentary on Northern Trust (NTRS).  Northern Trust was listed #3 on TheStreet's 10 Banks That Defy The Great Recession.  The #1 bank on that list was Bank of Hawaii (BOH). We wrote about this name back on January 12, 2009 and more recently in our article titled "The Anatomy of a Bear Market Trade." Another bank that made TheStreet.com's list and our list as well is US Bank (USB).  Although we're typically averse to investing in banking institutions, we find the current environment favorable to regional and multinational banks.

 

The worst performing stock from our September 24th list was Colgate (CL).  After falling 4% in two weeks, this name is becoming interesting at the current dividend yield.  Colgate is in the undervalued range, according to Investment Quality Trends (http://www.iqtrends.com/).

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 October 9, 2009 and have check their performance one year later.  The top five companies on that list were Wal-Mart (WMT), Cardinal Health (CAH), Weyco Group (WEYS), Bard Corp. (BCR), and Piedmont Natural Gas (PNY).

As a group, the top five companies on our Dividend List averaged a gain of 14.47% in the last year.  This compares with the Dow Jones Industrial Average gain of 11.57% in the same one year time frame.  The top performing stock of the group was Piedmont Natural Gas (PNY) which closes out the year with a gain of 23.81%.  The worst performing stock was Bard Corp. (BCR) with a paltry gain of 6.47% in the one year time period.  The graph below demonstrates that all stocks achieved 10% gains within six months of reaching a new low.

Chart courtesy of Yahoo!Finance and Commodity Systems Inc (CSI)

 

October 8, 2010 Watch List
Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
CL Colgate-Palmolive Co. 74.90 2.43% 17.88 4.19 2.12 2.83% 51%
CAG ConAgra Foods, Inc. 21.87 6.42% 13.84 1.58 0.92 4.21% 58%
NTRS Northern Trust Corp.  48.35 6.73% 15.85 3.05 1.12 2.32% 37%
WST West Pharmaceutical 35.11 7.24% 15.33 2.29 0.64 1.82% 28%
BBT BB&T Corp. 23.58 8.56% 22.25 1.06 0.60 2.54% 57%
MDT Medtronic 33.45 8.60% 10.59 3.16 0.90 2.69% 28%
BEC Beckman Coulter 47.95 9.10% 22.83 2.10 0.72 1.50% 34%
SBSI Southside Bancshares 18.98 9.14% 7.19 2.64 0.68 3.58% 26%
USB U.S. BanCorp. 22.31 9.15% 16.05 1.39 0.20 0.90% 14%
WFSL Washington Federal 15.27 9.31% 14.54 1.05 0.20 1.31% 19%
FUL HB Fuller Company 20.31 9.96% 13.72 1.48 0.28 1.38% 19%
HCC HCC Insurance Holdings 26.24 10.02% 9.02 2.91 0.58 2.21% 20%
TR Tootsie Roll Industries 25.53 10.04% 28.05 0.91 0.32 1.25% 35%
HGIC Harleysville Group Inc.  33.08 10.08% 12.48 2.65 1.44 4.35% 54%
FFIN First Financial Bankshares 47.99 10.20% 18.39 2.61 1.36 2.83% 52%
MLM Martin Marietta Materials 78.96 10.43% 43.87 1.80 1.60 2.03% 89%
OMI Owens & Minor 28.21 10.54% 14.32 1.97 0.71 2.52% 36%
CBSH Commerce Bancshares 38.13 10.63% 15.50 2.46 0.94 2.47% 38%
BOH Bank of Hawaii Corp. 45.30 10.87% 12.41 3.65 1.80 3.97% 49%
INTC Intel 19.52 10.91% 11.69 1.67 0.63 3.23% 38%
20 Companies






On our current list, we excluded companies that have no earnings and payout ratios in excess of 100%. 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 extensive due diligence.
Because our list has many great companies, we urged investors to filter for companies with less than 50% payout ratio. This should minimized the risk of dividend reductions if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, then payout ratios in excess of 50% may be considered. We suggest readers use the March 2009 low (or companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. The November 2008 to March 2009 time frame fits that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.
Email our team here.

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Dividend Watch List

Posted on September 24, 2010 by | 1 comment

Watch List Summary

As always, we revisit the previous list for the best and worse performing stocks from our Dividend Watch List.  The best performing stock was National Fuel Gas (NFG) which rose 12.9% in two weeks. The biggest decline was Carlisle (CSL) which fell 5.2%.

Of the top five companies, we particularly like Northern Trust (NTRS). Anyone interested can read our take of Northern Trust from September 1, 2010 article.  Intel (INTC) bounced off the 52-week low and rose 5% in two weeks.  ConAgra (CAG) got hit after lowering its guidance as investors overlooked the 15% hike in the dividend. ConAgra shares are approaching their historical undervalued range according to Investment Quality Trends (http://www.iqtrends.com/).

*Note: Price data as of market close on Thursday September 23, 2010*

September 24, 2010 Watch List

Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
WST West Pharmaceutical Services 33.04 0.89% 14.43 2.29 0.64 1.94% 28%
CSL Carlisle Companies Inc. 28.25 1.00% 12.12 2.33 0.68 2.41% 29%
NTRS Northern Trust Corp.  46.97 3.69% 15.40 3.05 1.12 2.38% 37%
TR Tootsie Roll Industries Inc  24.06 3.71% 26.44 0.91 0.32 1.33% 35%
FFIN First Financial Bankshares, Inc.  45.08 3.51% 17.27 2.61 1.36 3.02% 52%
MLM Martin Marietta Materials, Inc. 74.34 3.97% 41.30 1.80 1.60 2.15% 89%
CAG ConAgra Foods, Inc. 21.56 4.91% 13.31 1.62 0.80 3.71% 49%
LANC Lancaster Colony Corp.  45.47 5.06% 11.17 4.07 1.20 2.64% 29%
HGIC Harleysville Group Inc.  31.66 5.36% 11.95 2.65 1.44 4.55% 54%
FUL HB Fuller Company 19.49 5.52% 10.71 1.82 0.28 1.44% 15%
CWT California Water Service Group 35.78 5.83% 19.34 1.85 1.19 3.33% 64%
WFSL Washington Federal, Inc.  14.81 6.01% 14.10 1.05 0.20 1.35% 19%
SBSI Southside Bancshares, Inc.  18.44 6.03% 6.98 2.64 0.68 3.69% 26%
HRB H&R Block, Inc. 12.74 6.34% 8.73 1.46 0.60 4.71% 41%
BCR CR Bard, Inc. 78.75 6.43% 16.04 4.91 0.72 0.91% 15%
PAYX Paychex, Inc.  26.25 6.49% 19.89 1.32 1.24 4.72% 94%
USB U.S. BanCorp. 21.82 6.75% 15.70 1.39 0.20 0.92% 14%
CL Colgate-Palmolive Co. 78.06 6.76% 18.63 4.19 2.12 2.72% 51%
FFIC Flushing Financial Corp.  10.92 7.37% 11.26 0.97 0.52 4.76% 54%
OMI Owens & Minor, Inc. 27.48 7.68% 13.95 1.97 0.71 2.58% 36%
BEC Beckman Coulter, Inc. 47.33 7.69% 22.54 2.10 0.72 1.52% 34%
UMBF UMB Financial Corp.  34.24 7.77% 14.27 2.40 0.74 2.16% 31%
HCC HCC Insurance Holdings, Inc. 25.71 7.80% 8.84 2.91 0.58 2.26% 20%
INTC Intel Corp.  18.98 7.84% 11.37 1.67 0.63 3.32% 38%
MDT Medtronic, Inc. 33.25 7.95% 10.52 3.16 0.90 2.71% 28%
AWR American States Water Co. 33.74 8.14% 20.70 1.63 1.04 3.08% 64%
UFPI Universal Forest Products, Inc.  27.95 8.50% 22.72 1.23 0.40 1.43% 33%
JNJ Johnson & Johnson   61.81 8.71% 12.77 4.84 2.16 3.49% 45%
WFC Wells Fargo & Co. 25.04 8.77% 15.08 1.66 0.20 0.80% 12%
DNB Dun & Bradstreet Corp. 71.08 8.78% 15.29 4.65 1.40 1.97% 30%
XOM Exxon Mobil Corp.   61.15 9.31% 11.81 5.18 1.76 2.88% 34%
FRS Frisch's Restaurants, Inc 19.85 9.73% 10.28 1.93 0.60 3.02% 31%
32 Companies






For anyone who hasn't seen our performance review of the Dividend Watch List from last year, we urged you to take a look.  Our assessment is a worst case look at how our list beat the S&P 500. 
On our current list, we excluded companies that have no earnings and payout ratios in excess of 100%. 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 extensive due diligence.

Because our list has many great companies, we urged investors to filter for companies with less than 50% payout ratio. This should minimized the risk of dividend reductions if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, then payout ratios in excess of 50% may be considered. We suggest readers use the March 2009 low (or companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. The November 2008 to March 2009 time frame fits that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.

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Performance Review: Dividend Achiever Watch List of September 25, 2009

Posted on September 21, 2010 by | Leave a comment
We’ve decided to revisit our watch list from one year ago to see if we can extract any valuable lessons from our "research of quality stocks at a new low" approach. The table below shows our watch list from 9/25/09 against 9/21/10.
September 25, 2009
September 21, 2010


Symbol Name Price Div/Shr Yield Price Div/Shr Yield % Gain w/o Dividend % Gain w/ Dividend
WMT WAL MART STORES 49.47 1.09 2.20%
53.57 1.18 2.20%
8.3% 10.5%
CAH CARDINAL HEALTH 27.32 0.70 2.56%
33.11 0.72 2.17%
21.2% 23.8%
WEYS Weyco Group, Inc. 22.51 0.60 2.67%
23.97 0.62 2.59%
6.5% 9.2%
BCR BARD C R INC 78.06 0.68 0.87%
80.48 0.69 0.86%
3.1% 4.0%
NWN NORTHWEST NAT 41.91 1.58 3.77%
46.44 1.66 3.57%
10.8% 14.6%
ABT ABBOTT LAB 47.33 1.60 3.38%
52.15 1.68 3.22%
10.2% 13.6%
PNY PIEDMONT NAT GAS 23.84 1.08 4.53%
28.20 1.38 4.89%
18.3% 22.8%
BDX BECTON DICKINSON 68.50 1.32 1.93%
73.71 1.48 2.01%
7.6% 9.5%
LLY ELI LILLY 32.68 1.96 6.00%
36.33 1.96 5.39%
11.2% 17.2%

Watch List Avg.







10.8% 13.9%













S&P 500 1,044.38 21.58 2.07%
1,139.78 21.84 1.92%
9.1% 11.2%

Dow 30 9,665.19 281.71 2.91%
10,761.03 282.03 2.62%
11.3% 14.3%

As you can see, none of the companies on this list experienced any loss. However, not all high quality dividend-paying stocks are created equal. The gains ranged from 4% to 23.8% with dividend included. Overall, the average gain was 10.8% without dividends and 13.9% with dividends, which is a little better than the S&P 500 but lagged the Dow Jones Industrial average.
There are several interesting things we found. The first thing is that some companies on the list have virtually gone nowhere based on valuation. Wal-mart was and is yielding 2.2% and Bard still yields 0.86%. On one extreme of the spectrum, two companies are now cheaper than they were a year ago, on valuation basis. For example, Piedmont Natural Gas (PNY) is now yielding 4.89% compared to 4.53% a year ago. Yet, the shares of PNY have risen 22.8%. Also in the category is Becton Dickinson (BDX) which is yielding more today than it did last year.
The second finding is that, on average, these companies raised dividend by 7%. This should come as no surprise to those who know the Dividend Achiever list.
Another observation that can be made is the sectors that were at a new lows at the time. From this list, we can assume that the medical/pharmaceutical sectors were out of favor. Of the companies on the list, 5 of 9 belonged to that sector.
The next thing we noticed is that high dividend yields didn't necessarily mean higher returns. Although Eli Lilly (LLY) sported the highest dividend yield, which pushed LLY’s total return from 11% to 17%, it didn't out perform Cardinal Health’s (CAH) total return of 23.8% and Piedmont Natural Gas’ (PNY) total return of 22.8%. As we’ve indicated in our articles and commentary, among high quality dividend paying stocks, the yield isn’t as important quality of the company. Furthermore, what you lack in yield is often made up for in capital appreciation.
The final point is that, although BCR returned just 4% over one year, the shares had risen as high as $90, or 15.30%, in late April 2010. Conservative investors would do well to consider such performance exceptional since the historical return of the market over an extended period of time seldom exceeds 12% especially in less than a year. Similar intra-period performance can be demonstrated in many of the stocks on our list. This is the reason the New Low team is so focused on "seeking fair profits" as described by Charles H. Dow.
In summary, our watch list from one year ago beat the S&P by 270-basis points but fell short against the Dow Industrials by 40-basis points. Naturally, the spread widened without the dividend.
Going forward, as our watch list expands, we expect to show example of only the top five or ten on our list to simplify the examination process. It is our expectation that only 1/3 of the companies that are part of our list will outperform the market over a one year period. However, when the market of 5,000 investment options is winnowed down to what we believe are the best starting points, we think that selecting three out of ten high quality dividend stocks at a new low is reasonable approach.

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Dividend Watch List

Posted on September 10, 2010 by | Leave a comment

Watch List Summary

On this week's list, the best performing stock from the previous list was a steel and iron supplier, Harsco (HSC) which rose 13.6%. The worst performing stock was H&R Block (HRB) which fell 5%.

Johnson & Johnson (JNJ) is slowly moving away from the top of the list.  Taking JNJ's place is Intel (INTC) which fell 2% since our last update. Intel is trading at just 10x trailing earnings, 9x next year's estimated earnings. The reduction in price was triggered when INTC lowered its guidance and UBS downgraded the stock due to weak PC demand.  This might be a good time to start looking at Intel which currently yields 3.5%. With a target return of 10% annually, Intel only needs to increase 6.5% for investors to obtain the historical average market return. Intel's current valuation is also very close to the 2008-2009 market bottom. Read more about Intel's low valuation here.

Several notable companies on the list are Toosie Roll (TR), Colgate-Palmolive (CL), Beckman Coulter (BEC), Paychex (PAYX), and Norther Trust (NTRS).

September 10, 2010 Watch List

Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
INTC Intel Corp.  17.97 2.10% 10.76 1.67 0.63 3.51% 38%
WST West Pharmaceutical Services 33.65 2.75% 14.69 2.29 0.64 1.90% 28%
TR Tootsie Roll Industries Inc  23.87 2.89% 26.23 0.91 0.32 1.34% 35%
OMI Owens & Minor, Inc. 26.44 3.61% 13.42 1.97 0.71 2.69% 36%
BEC Beckman Coulter, Inc. 45.71 4.00% 21.77 2.10 0.72 1.58% 34%
BCR CR Bard, Inc. 77.31 4.49% 15.75 4.91 0.72 0.93% 15%
CL Colgate-Palmolive Co. 75.18 4.50% 17.94 4.19 2.12 2.82% 51%
DNB Dun & Bradstreet Corp. 68.45 4.76% 14.72 4.65 1.40 2.05% 30%
PAYX Paychex, Inc.  25.85 4.87% 19.58 1.32 1.24 4.80% 94%
NTRS Northern Trust Corp.  47.70 5.30% 15.64 3.05 1.12 2.35% 37%
PBI Pitney Bowes Inc   20.10 5.46% 12.18 1.65 1.46 7.26% 88%
JNJ Johnson & Johnson   59.98 5.49% 12.39 4.84 2.16 3.60% 45%
NFG National Fuel Gas Co. 45.21 5.56% 17.32 2.61 1.38 3.05% 53%
FFIN First Financial Bankshares, Inc.  45.97 5.56% 17.61 2.61 1.36 2.96% 52%
CWT California Water Service Group 35.80 5.89% 19.35 1.85 1.19 3.32% 64%
LANC Lancaster Colony Corp.  45.86 5.96% 11.27 4.07 1.20 2.62% 29%
MSA Mine Safety Appliances Co 23.74 5.98% 21.20 1.12 1.00 4.21% 89%
RNST Renasant Corp.  13.58 6.01% 18.35 0.74 0.68 5.01% 92%
UVV Universal Corp. 37.57 6.25% 7.40 5.08 1.88 5.00% 37%
SBSI Southside Bancshares, Inc.  18.53 6.55% 7.02 2.64 0.68 3.67% 26%
CSL Carlisle Companies Inc. 29.81 6.58% 12.79 2.33 0.68 2.28% 29%
CAG ConAgra Foods, Inc. 21.95 6.81% 13.55 1.62 0.80 3.64% 49%
AWR American States Water Co. 33.35 6.89% 20.46 1.63 1.04 3.12% 64%
UMBF UMB Financial Corp.  33.97 6.92% 14.15 2.40 0.74 2.18% 31%
WFSL Washington Federal, Inc.  15.01 7.44% 14.30 1.05 0.20 1.33% 19%
XRAY DENTSPLY International Inc.  29.87 7.60% 16.15 1.85 0.20 0.67% 11%
HGIC Harleysville Group Inc.  32.34 7.62% 12.20 2.65 1.44 4.45% 54%
BDX Becton, Dickinson and Co. 71.27 7.66% 13.95 5.11 1.48 2.08% 29%
UFPI Universal Forest Products, Inc.  27.78 7.84% 22.59 1.23 0.40 1.44% 33%
HRB H&R Block, Inc. 12.93 7.93% 8.86 1.46 0.60 4.64% 41%
MLM Martin Marietta Materials, Inc. 77.35 8.18% 42.97 1.80 1.60 2.07% 89%
MDT Medtronic, Inc. 33.34 8.25% 10.55 3.16 0.90 2.70% 28%
FRS Frisch's Restaurants, Inc 19.65 8.62% 10.18 1.93 0.52 2.65% 27%
BANF BancFirst Corp.  37.89 8.66% 14.98 2.53 1.00 2.64% 40%
FFIC Flushing Financial Corp.  11.06 8.75% 11.40 0.97 0.52 4.70% 54%
WMT Wal-Mart Stores, Inc. 51.97 8.79% 13.36 3.89 1.21 2.33% 31%
AROW Arrow Financial Corp.  23.86 8.80% 12.30 1.94 1.00 4.19% 52%
HCC HCC Insurance Holdings, Inc. 25.95 8.81% 8.92 2.91 0.58 2.24% 20%
BBT BB&T Corp. 23.65 8.89% 22.31 1.06 0.60 2.54% 57%
SYK Stryker Corp. 46.67 9.20% 15.87 2.94 0.60 1.29% 20%
MSEX Middlesex Water Company  16.12 9.36% 19.19 0.84 0.72 4.47% 86%
XOM Exxon Mobil Corp.   61.20 9.40% 11.81 5.18 1.76 2.88% 34%
CBSH Commerce Bancshares, Inc.  37.52 9.74% 15.25 2.46 0.94 2.51% 38%
SVU SUPERVALU INC 10.63 9.93% 6.52 1.63 0.35 3.29% 21%
VFC VF Corp. 75.51 10.07% 15.07 5.01 2.40 3.18% 48%
GD General Dynamics Corp. 61.13 10.22% 9.78 6.25 1.68 2.75% 27%
BRC Brady Corp. 26.70 10.24% 17.68 1.51 0.70 2.62% 46%
WAG Walgreen Co. 28.96 10.28% 13.92 2.08 0.70 2.42% 34%
TRH Transatlantic Holdings, Inc. 48.62 10.30% 7.74 6.28 0.84 1.73% 13%
IBM International Business Machines 127.99 10.34% 12.10 10.58 2.60 2.03% 25%
RLI RLI Corp. 54.47 10.42% 9.69 5.62 1.16 2.13% 21%
51 Companies






We excluded companies that have no earnings and payout ratios in excess of 100%. 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 extensive due diligence.

Because our list has many great companies, we urged investors to filter for companies with less than 50% payout ratio. This should minimized the risk of dividend reductions if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, then payout ratios in excess of 50% may be considered. We suggest readers use the March 2009 low (or companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. The November 2008 to March 2009 time frame fits that description. It is important to place these companies in your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.

Related Article
10-for-the-Money... Really?

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Dividend Watch List

Posted on August 28, 2010 by | Leave a comment
Watch List Summary
The best performing stock from the previous list was Harleysville (HGIC) which rose 4% The worst performing stock was Medtronic (MDT) which fell 14%.

Topping the list this week is Johnson & Johnson (JNJ). Based on IQTrends (http://www.iqtrends.com/), JNJ is undervalued at or near 3.5% yield. The current yield is 3.7%. Trailing P/E of 12 is 25% below its average 5 years P/E of 16. We suggest readers adding JNJ to your investment watch list.

Second on the list is Intel (INTC). After cutting their sales and margin forecast down on Friday, stock rose 1%. Could the negative news be priced in? Only time will tell. Intel is trading at 11x trailing earnings. Compared that to its 5 years average of 21x, it could be a bargain. Analyst will have a weekend full of downward revision so we expect little more pressure next week. But given the stock is yielding 3.4% compared to the 5 years average yield of 2.3%, the risk/reward is more attractive now. Both JNJ and INTC have payout ratio below 50%.

Our Investment Observation of Wesco Financial (WSC) on Tuesday August 24th was quickly verifed as being undervalued by Warren Buffett's offer to buy the remaining portion that he didn't already own on Thursday August 26th. We were able to provide a new Investment Observation of Transatlantic Holdings (TRH). With Transatlantic Holdings selling below book value, median price-to-earnings and dividend increases every year since going public, we believe TRH is a great alternative to Wesco Financial. In addition to TRH, we are working on a company which we believe will be able to retain its value far into the future.

August 27, 2010 Watch List

Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
JNJ Johnson & Johnson   57.60 1.30% 11.90 4.84 2.16 3.75% 45%
INTC Intel Corp.  18.37 1.38% 11.00 1.67 0.63 3.43% 38%
GD General Dynamics Corp. 57.37 1.95% 9.18 6.25 1.68 2.93% 27%
PBI Pitney Bowes Inc   19.61 2.14% 11.88 1.65 1.46 7.45% 88%
SVU SUPERVALU INC 10.19 2.31% 6.25 1.63 0.35 3.43% 21%
HRB H&R Block, Inc. 13.59 2.64% 9.50 1.43 0.60 4.42% 42%
CSL Carlisle Companies Inc. 29.50 2.68% 12.66 2.33 0.68 2.31% 29%
UVV Universal Corp. 36.47 2.70% 7.18 5.08 1.88 5.15% 37%
XRAY DENTSPLY International Inc.  28.86 2.70% 15.60 1.85 0.20 0.69% 11%
WFSL Washington Federal, Inc.  14.43 2.78% 13.74 1.05 0.20 1.39% 19%
DNB Dun & Bradstreet Corp. 67.37 2.85% 14.49 4.65 1.40 2.08% 30%
UMBF UMB Financial Corp.  33.48 2.86% 13.95 2.40 0.74 2.21% 31%
PAYX Paychex, Inc.  25.37 2.92% 19.22 1.32 1.24 4.89% 94%
BEC Beckman Coulter, Inc. 45.84 3.24% 21.83 2.10 0.72 1.57% 34%
HSC Harsco Corp. 20.74 3.49% 17.14 1.21 0.82 3.95% 68%
ALL Allstate Corp.   27.99 3.51% 15.13 1.85 0.80 2.86% 43%
NTRS Northern Trust Corp.  47.05 3.52% 15.43 3.05 1.12 2.38% 37%
EV Eaton Vance Corp. 26.93 3.74% 19.24 1.40 0.64 2.38% 46%
ITW Illinois Tool Works, Inc. 41.85 3.77% 13.86 3.02 1.36 3.25% 45%
NFG National Fuel Gas Co. 44.46 3.81% 17.03 2.61 1.38 3.10% 53%
WAG Walgreen Co. 27.32 4.04% 13.13 2.08 0.70 2.56% 34%
WFC Wells Fargo & Co. 24.00 4.26% 14.46 1.66 0.20 0.83% 12%
BBT BB&T Corp. 22.72 4.51% 21.43 1.06 0.60 2.64% 57%
OMI Owens & Minor, Inc. 26.68 4.55% 13.54 1.97 0.71 2.66% 36%
FRS Frisch's Restaurants, Inc 18.92 4.59% 9.80 1.93 0.52 2.75% 27%
CWT California Water Service Group 35.42 4.76% 19.15 1.85 1.19 3.36% 64%
WST West Pharmaceutical Services, Inc. 34.33 4.82% 14.99 2.29 0.64 1.86% 28%
MLM Martin Marietta Materials, Inc. 75.16 5.12% 41.76 1.80 1.60 2.13% 89%
USB U.S. BanCorp. 21.66 5.15% 15.58 1.39 0.20 0.92% 14%
MSA Mine Safety Appliances Co 23.57 5.22% 21.04 1.12 1.00 4.24% 89%
BANF BancFirst Corp.  36.49 5.28% 14.42 2.53 0.92 2.52% 36%
FFIN First Financial Bankshares, Inc.  45.85 5.28% 17.57 2.61 1.36 2.97% 52%
BDX Becton, Dickinson and Co. 69.72 5.32% 13.64 5.11 1.48 2.12% 29%
BCR CR Bard, Inc. 77.98 5.39% 15.88 4.91 0.72 0.92% 15%
CL Colgate-Palmolive Co. 74.25 5.39% 17.72 4.19 2.12 2.86% 51%
MDT Medtronic, Inc. 32.52 5.58% 11.66 2.79 0.90 2.77% 32%
FII Federated Investors Inc 21.13 5.60% 11.06 1.91 0.96 4.54% 50%
FUL HB Fuller Company 19.61 6.17% 10.77 1.82 0.28 1.43% 15%
TROW T. Rowe Price Group, Inc.  45.24 6.37% 20.20 2.24 1.08 2.39% 48%
TR Tootsie Roll Industries Inc  23.97 3.45% 26.34 0.91 0.32 1.34% 35%
WMT Wal-Mart Stores, Inc. 51.00 6.76% 13.11 3.89 1.21 2.37% 31%
LLY Eli Lilly & Co. 34.20 6.81% 8.47 4.04 1.96 5.73% 49%
XOM Exxon Mobil Corp.   59.80 6.90% 11.54 5.18 1.76 2.94% 34%
HGIC Harleysville Group Inc.  32.13 6.92% 12.12 2.65 1.44 4.48% 54%
UFPI Universal Forest Products, Inc.  28.18 7.15% 22.91 1.23 0.40 1.42% 33%
SBSI Southside Bancshares, Inc.  18.65 7.24% 7.06 2.64 0.68 3.65% 26%
HCC HCC Insurance Holdings, Inc. 25.59 7.30% 8.79 2.91 0.54 2.11% 19%
SEIC SEI Investments Company  18.02 7.52% 16.38 1.10 0.20 1.11% 18%
LM Legg Mason, Inc.  25.84 7.67% 20.35 1.27 0.16 0.62% 13%
HIG Hartford Financial Services Group  20.32 7.74% 70.07 0.29 0.20 0.98% 69%
RLI RLI Corp. 53.21 7.87% 9.47 5.62 1.16 2.18% 21%
SYK Stryker Corp. 44.00 7.90% 14.97 2.94 0.60 1.36% 20%
GS Goldman Sachs Group, Inc.   139.75 7.92% 7.05 19.82 1.40 1.00% 7%
AROW Arrow Financial Corp.  23.70 8.07% 12.22 1.94 1.00 4.22% 52%
CBSH Commerce Bancshares, Inc.  36.56 8.20% 14.86 2.46 0.94 2.57% 38%
IBM International Business Machines 124.73 8.32% 11.79 10.58 2.60 2.08% 25%
SFNC Simmons First National Corp.  26.29 8.73% 15.37 1.71 0.76 2.89% 44%
BRC Brady Corp. 26.34 8.75% 17.44 1.51 0.70 2.66% 46%
AWR American States Water Co. 33.94 8.78% 20.82 1.63 1.04 3.06% 64%
LEG Leggett & Platt, Inc. 19.48 8.89% 16.23 1.20 1.08 5.54% 90%
VFC VF Corp. 73.88 9.02% 14.75 5.01 2.40 3.25% 48%
TRMK Trustmark Corp.  19.74 9.24% 14.10 1.40 0.92 4.66% 66%
EGN Energen Corp. 43.97 9.24% 11.39 3.86 0.52 1.18% 13%
LANC Lancaster Colony Corp.  47.35 9.40% 11.61 4.08 1.20 2.53% 29%
TMP Tompkins Financial Corp. 37.94 9.51% 12.01 3.16 1.36 3.58% 43%
RNST Renasant Corp.  14.07 9.84% 19.01 0.74 0.68 4.83% 92%
TRH Transatlantic Holdings, Inc. 48.52 10.07% 7.73 6.28 0.84 1.73% 13%
CAG ConAgra Foods, Inc. 21.74 10.13% 13.42 1.62 0.80 3.68% 49%
MDU MDU Resources Group Inc. 18.85 10.17% 13.86 1.36 0.63 3.34% 46%
LOW Lowe's Companies Inc 21.10 10.18% 16.48 1.28 0.44 2.09% 34%
FFIC Flushing Financial Corp.  11.21 10.23% 11.56 0.97 0.52 4.64% 54%
RPM RPM International Inc. 17.25 10.15% 12.41 1.39 0.82 4.75% 59%
72 Companies






We excluded companies that has no earning and payout ratio in excess of 100%. 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 extensive due diligence.

Because our list has many great companies, we urged investors to filter for companies with less than 50% payout ratio. This should minimized the risk of dividend reductions if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, then payout ratios in excess of 50% may be considered.  We suggest readers to use the March 2009 low (or companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. The November 2008 to March 2009 time frame fits that description. It is important to place these companies in your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.

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Dividend Achiever Watch List

Posted on August 6, 2010 by | Leave a comment

At the end of the week, our watch list contracted to 30 companies. Here is the watch list which ranks current and former Dividend Achievers that are within 10% of their respective 52-week low for August 6, 2010. We filtered out companies that has no earning and payout ratio in excess of 100%. 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 extensive due diligence.

Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
PBI Pitney Bowes Inc   20.71 1.02% 10.79 1.92 1.46 7.05% 76%
WST West Pharmaceutical Services, Inc. 35.26 2.23% 15.81 2.23 0.64 1.82% 29%
PAYX Paychex, Inc.  25.56 2.69% 19.36 1.32 1.24 4.85% 94%
HGIC Harleysville Group Inc.  30.90 2.83% 11.24 2.75 1.30 4.21% 47%
CWT California Water Service Group 34.97 3.43% 18.90 1.85 1.19 3.40% 64%
BEC Beckman Coulter, Inc. 46.12 3.87% 21.96 2.10 0.72 1.56% 34%
FFIN First Financial Bankshares, Inc.  47.88 4.82% 18.34 2.61 1.36 2.84% 52%
DNB Dun & Bradstreet Corp. 68.96 5.28% 14.86 4.64 1.40 2.03% 30%
FII Federated Investors Inc 21.35 5.38% 11.18 1.91 0.96 4.50% 50%
JNJ Johnson & Johnson   59.96 5.45% 12.39 4.84 2.16 3.60% 45%
LOW Lowe's Companies Inc 20.28 5.90% 16.62 1.22 0.44 2.17% 36%
TR Tootsie Roll Industries Inc  24.58 6.09% 26.15 0.94 0.32 1.30% 34%
BBT BB&T Corp. 25.20 6.11% 23.77 1.06 0.60 2.38% 57%
UMBF UMB Financial Corp.  36.69 6.13% 15.29 2.40 0.74 2.02% 31%
AWR American States Water Co. 33.24 6.54% 18.57 1.79 1.04 3.13% 58%
WAG Walgreen Co. 28.00 6.63% 13.46 2.08 0.70 2.50% 34%
NTRS Northern Trust Corp.  48.57 6.86% 15.92 3.05 1.12 2.31% 37%
SFNC Simmons First National Corp.  26.25 7.14% 15.35 1.71 0.76 2.90% 44%
CSL Carlisle Companies Inc. 32.75 7.17% 14.06 2.33 0.64 1.95% 27%
MDT Medtronic, Inc. 37.81 7.63% 13.55 2.79 0.90 2.38% 32%
UVV Universal Corp. 37.78 7.70% 6.65 5.68 1.88 4.98% 33%
UFPI Universal Forest Products, Inc.  30.92 8.15% 25.14 1.23 0.40 1.29% 33%
TRH Transatlantic Holdings, Inc. 47.38 8.40% 7.54 6.28 0.84 1.77% 13%
WMT Wal-Mart Stores, Inc. 51.79 8.42% 13.59 3.81 1.21 2.34% 32%
CL Colgate-Palmolive Co. 76.50 8.59% 18.26 4.19 2.12 2.77% 51%
ALL Allstate Corp.   28.98 8.70% 12.60 2.30 0.80 2.76% 35%
HCC HCC Insurance Holdings, Inc. 25.98 8.93% 8.66 3.00 0.54 2.08% 18%
MSA Mine Safety Appliances Co 24.55 9.60% 21.92 1.12 1.00 4.07% 89%
SBSI Southside Bancshares, Inc.  19.08 9.72% 7.23 2.64 0.68 3.56% 26%
HSC Harsco Corp. 23.15 9.92% 19.13 1.21 0.82 3.54% 68%
OMI Owens & Minor, Inc. 28.08 10.03% 14.25 1.97 0.71 2.53% 36%
30 Companies






Watch List Summary
The best performing stock from the previous list was Pfizer (PFE) which rose 11.4%  The worst performing stock was State Auto Financial (STFC) which fell 6.3%.  Because our list has more than a handful of great companies, We urged investors to filter for companies with less than 50% payout ratio. This should minimized the risk of dividend reductions if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, then payout ratios in excess of 50% may be considered.

Pitney Bowes (PBI) fell like a rock on Thursday after missing analyst estimates on their earnings along with a a credit rating downgrade from S&P. Strangely, PBI's price action this week replicated last year's price action after they reported their earnings. The New Low team highlighted that price action on July 31, 2009. As a result, we are beginning to dig deeper into the details of this company in light of recent event.

After a heart-stopping drop of 15%, we took a position in Beckman Coulter (BEC). Because we're confident that BEC will fall further, we implemented the first of 3 purchases that we're expecting to make.  We're ready and excited to make the next two purchases if they happened to be triggered at much lower levels.

Johnson & Johnson (JNJ) is still interesting at this level.  Based on IQTrends (http://www.iqtrends.com/), JNJ is undervalued at or near 3.5% yield. With current yield of 3.60%, we suggest readers adding JNJ to your investment watch list.

Once again, we suggest readers use the March 2009 low (or companies' most distressed level in the last 2 years) as the downside projection for investing.  Our view is to embrace the worse case scenario prior to investing.  The November 2008 or March 2009 low fits that description.  Although we use the one year (52-week low) time frame, the past year was nothing but a major bull run and anyone who bought at or near the low could, and should, be taking profits.  It is important to place these companies in your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.

Next Week:

  • Nasdaq 100 Watch List
  • International Dividend Achievers

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Dividend Achiever Watch List

Posted on July 23, 2010 by | Leave a comment
At the end of the week, our watch list contracted to 30 companies. Here is the watch list which ranks current and former Dividend Achievers that are within 10% of the 52-week low for July 23, 2010. We filtered out companies that has no earning and payout ratio in excess of 100%.  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 extensive due diligence.

Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
BEC Beckman Coulter, Inc. 47.26 0.00% 19.77 2.39 0.72 1.52% 30%
JNJ Johnson & Johnson   57.63 1.35% 11.91 4.84 2.16 3.75% 45%
FRS Frisch's Restaurants, Inc 19.99 2.46% 10.10 1.98 0.52 2.60% 26%
XRAY DENTSPLY International Inc.  29.26 3.39% 15.99 1.83 0.20 0.68% 11%
WST West Pharmaceutical Services, Inc. 35.41 3.48% 15.88 2.23 0.64 1.81% 29%
FII Federated Investors Inc 20.98 3.55% 10.70 1.96 0.96 4.58% 49%
PFE Pfizer Inc 14.58 4.14% 13.50 1.08 0.72 4.94% 67%
NTRS Northern Trust Corp.  47.51 4.53% 14.94 3.18 1.12 2.36% 35%
BDX Becton, Dickinson and Co. 66.89 5.49% 12.84 5.21 1.48 2.21% 28%
FFIN First Financial Bankshares, Inc.  48.49 6.15% 18.79 2.58 1.36 2.80% 53%
XOM Exxon Mobil Corp.   59.72 6.76% 13.60 4.39 1.76 2.95% 40%
UMBF UMB Financial Corp.  36.92 6.80% 16.05 2.30 0.74 2.00% 32%
PAYX Paychex, Inc.  26.64 7.03% 20.18 1.32 1.24 4.65% 94%
MDT Medtronic, Inc. 36.58 7.24% 13.11 2.79 0.90 2.46% 32%
HCC HCC Insurance Holdings, Inc. 25.59 7.30% 8.53 3.00 0.54 2.11% 18%
DNB Dun & Bradstreet Corp. 70.34 7.39% 14.10 4.99 1.40 1.99% 28%
T AT&T Inc 25.54 7.40% 12.71 2.01 1.68 6.58% 84%
STFC State Auto Financial Corp.  16.00 7.96% 17.20 0.93 0.60 3.75% 65%
WMT Wal-Mart Stores, Inc. 51.67 8.16% 13.56 3.81 1.21 2.34% 32%
MSA Mine Safety Appliances Co 24.24 8.21% 21.26 1.14 1.00 4.13% 88%
OMI Owens & Minor, Inc. 27.67 8.42% 14.72 1.88 0.71 2.57% 38%
AROW Arrow Financial Corp.  23.78 8.44% 12.26 1.94 1.00 4.21% 52%
SVU SUPERVALU INC 11.28 8.46% 6.10 1.85 0.35 3.10% 19%
CWT California Water Service Group 36.75 8.70% 19.04 1.93 1.19 3.24% 62%
ITW Illinois Tool Works, Inc. 43.31 9.65% 14.34 3.02 1.24 2.86% 41%
LLY Eli Lilly & Co. 35.17 9.84% 9.06 3.88 1.96 5.57% 51%
LOW Lowe's Companies Inc 21.11 10.23% 17.30 1.22 0.44 2.08% 36%
TRH Transatlantic Holdings, Inc. 48.22 10.32% 7.70 6.26 0.84 1.74% 13%
CTWS Connecticut Water Service, Inc.  22.15 10.75% 18.77 1.18 0.91 4.11% 77%
UFPI Universal Forest Products, Inc.  31.72 10.95% 25.79 1.23 0.40 1.26% 33%
30 Companies






Watch List Summary
The best performing stock from the previous list was Matthews International (MATW) which rose 17%!  The worst performing stock was Johnson & Johnson (JNJ) which fell 4.8%.  Because our list has more than a handful of great companies, I urged investors to filter for companies with less than 50% payout ratio. This should minimized the risk of dividend reduction if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, payout ratios in excess of 50% may be considered.
Beckman Coulter (BEC) fell 21% on Friday and broke below its 52-week low. They are now withing 20% of their December 2008 low of $37. The company reported earnings that were 21% less than the analyst estimated. In addition, they took down their full year profit guidance by 10%. Our view is that the price action was not justified and we took a position in the name. We'll detail more about this company in the coming days.
Johnson & Johnson (JNJ) is another name that is getting interesting at this level.  Based on IQTrends (http://www.iqtrends.com/), JNJ is undervalued at or around 3.5% yield. With current yield of 3.75%, we suggest readers add JNJ to your investment opportunities list.
Once again, I suggest readers to use the March 2009 low (or companies' most distressed time) as the downside projection for investing.  Our conservative view is to embrace the worse case scenario prior to investing.  The March 2009 low fits that description.  Although we use the one year (52-week low) time frame, the past year was nothing but a major bull run and anyone who bought at or near the low could, and should, be taking profits.  It is important to place these companies in your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.

Email our team here.

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