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
