Category Archives: NLO Dividend Watch List

U.S. Dividend Watch List: December 28, 2012

Posted on December 30, 2012 by | Comments Off on U.S. Dividend Watch List: December 28, 2012

We’ve reached the end of 2012 and here are the 60 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
ED Consolidated Edison, Inc.  54.93 0.04% 14.42 3.81 2.42 4.41% 64%
INTC Intel Corp.  20.23 0.10% 8.83 2.29 0.90 4.45% 39%
CFR Cullen/Frost Bankers, Inc. 54.08 1.01% 14.31 3.78 1.92 3.55% 51%
NJR New Jersey Resources Corp. 39.03 1.35% 17.50 2.23 1.60 4.10% 72%
TEG Integrys Energy Group Inc 51.61 1.59% 16.28 3.17 2.72 5.27% 86%
MCD McDonald's Corp.  87.58 1.93% 16.49 5.31 3.08 3.52% 58%
PRK Park National Corp. 63.08 2.29% 14.30 4.41 3.76 5.96% 85%
OMI Owens & Minor, Inc. 28.05 2.48% 16.40 1.71 0.88 3.14% 51%
FDS FactSet Research Systems 87.68 2.69% 20.68 4.24 1.24 1.41% 29%
SON Sonoco Products Co. 29.45 2.94% 16.54 1.78 1.20 4.07% 67%
SCG SCANA Corporation 45.10 4.11% 14.50 3.11 1.98 4.39% 64%
WABC Westamerica BanCorp.  42.17 4.12% 14.06 3.00 1.48 3.51% 49%
WEYS Weyco Group, Inc.  22.95 4.27% 14.90 1.54 0.68 2.96% 44%
ATR AptarGroup Inc. 47.34 4.76% 19.48 2.43 0.88 1.86% 36%
PPL PP&L Corporation 28.18 5.62% 10.14 2.78 1.44 5.11% 52%
NWN Northwest Natural Gas Co. 43.32 5.63% 19.17 2.26 1.82 4.20% 81%
VVC Vectren Corp. 29.02 5.68% 14.66 1.98 1.42 4.89% 72%
ETP Energy Transfer Partners 42.48 5.70% 9.77 4.35 3.58 8.43% 82%
CBU Community Bank System 26.91 6.03% 13.66 1.97 1.08 4.01% 55%
SJI South Jersey Industries 49.48 6.36% 14.60 3.39 1.77 3.58% 52%
DCI Donaldson Co. Inc. 32.46 6.39% 19.79 1.64 0.36 1.11% 22%
BOH Bank of Hawaii Corp. 44.08 6.45% 12.18 3.62 1.80 4.08% 50%
UBSI United Bankshares, Inc.  24.04 6.65% 14.84 1.62 1.24 5.16% 77%
ANAT American National Insurance 67.99 6.77% 9.97 6.82 3.08 4.53% 45%
RBCAA Republic BanCorp., Inc.  20.90 6.85% 3.69 5.66 0.66 3.16% 12%
IBM IBM 189.83 7.04% 13.65 13.91 3.40 1.79% 24%
TRMK Trustmark Corp.  22.23 7.08% 12.70 1.75 0.92 4.14% 53%
WGL WGL Holdings, Inc. 38.65 7.48% 14.26 2.71 1.60 4.14% 59%
AJG Arthur J Gallagher & Co. 34.47 7.69% 20.52 1.68 1.36 3.95% 81%
PNY Piedmont Natural Gas Co. 30.72 7.75% 18.51 1.66 1.20 3.91% 72%
PX Praxair, Inc. 107.90 7.90% 19.23 5.61 2.20 2.04% 39%
KO Coca-Cola Co 35.97 8.07% 18.83 1.91 1.02 2.84% 53%
BDX Becton, Dickinson and Co. 77.34 8.08% 13.84 5.59 1.98 2.56% 35%
WBS Webster Financial Corp. 20.41 8.10% 11.47 1.78 0.40 1.96% 22%
CWT California Water Service 18.21 8.14% 16.71 1.09 0.63 3.46% 58%
SYBT S.Y. BanCorp., Inc.  21.90 8.20% 11.90 1.84 0.80 3.65% 43%
JW-A John Wiley & Sons Inc. 38.56 8.25% 12.32 3.13 0.80 2.07% 26%
DBD Diebold, Inc. 30.03 8.57% 11.38 2.64 1.14 3.80% 43%
APD Air Products & Chemicals 82.93 8.96% 15.24 5.44 2.56 3.09% 47%
CTBI Community Trust BanCorp. 31.75 8.99% 11.14 2.85 1.26 3.97% 44%
AROW Arrow Financial Corp.  24.64 9.04% 13.46 1.83 1.00 4.06% 55%
TMP Tompkins Financial Corp. 39.11 9.18% 15.96 2.45 1.52 3.89% 62%
EGN Energen Corp. 43.90 9.39% 15.46 2.84 0.56 1.28% 20%
PEP PepsiCo Inc. 68.02 9.44% 18.09 3.76 2.15 3.16% 57%
CLX Clorox Co. 72.66 9.48% 17.64 4.12 2.56 3.52% 62%
ABM ABM Industries, Inc. 19.58 9.69% 17.18 1.14 0.60 3.06% 53%
MSEX Middlesex Water Company  19.18 9.73% 22.30 0.86 0.75 3.91% 87%
THFF First Financial Corp. 29.71 9.75% 11.43 2.60 0.96 3.23% 37%
LKFN Lakeland Financial Corp.  25.78 9.84% 12.05 2.14 0.68 2.64% 32%
IBKC IBERIABANK Corp.  48.71 10.00% 20.30 2.40 1.36 2.79% 57%
MRK Merck & Co., Inc 40.64 10.11% 18.47 2.20 1.72 4.23% 78%
SYK Stryker Corp. 54.45 10.16% 14.64 3.72 1.06 1.95% 28%
CLC Clarcor Inc. 47.15 10.29% 19.40 2.43 0.54 1.15% 22%
CAH Cardinal Health, Inc.  40.72 10.32% 12.89 3.16 1.10 2.70% 35%
XOM Exxon Mobil Corp.  85.10 10.33% 9.00 9.46 2.28 2.68% 24%
ADP Automatic Data Processing 56.33 10.69% 19.90 2.83 1.74 3.09% 61%
MCY Mercury General Corp. 39.87 10.72% 10.22 3.90 2.45 6.14% 63%
YUM Yum! Brands, Inc. 64.72 10.82% 19.04 3.40 1.34 2.07% 39%
CAT Caterpillar Inc. 86.81 10.94% 8.89 9.76 2.08 2.40% 21%
ADM Archer Daniels Midland Co. 27.06 10.99% 18.92 1.43 0.70 2.59% 49%
60 Companies

Watch List Review

This week, we will refer you to our comments made last week on top company, Consolidated Edison (ED).  That commentary also apply to the fourth company on our list, New Jersey Resources (NJR).

Second on our list is Intel (INTC), the largest chip maker and a Dow component.  In addition to that, Intel made our Dog of the NLO list and Dog of the Dow.  More on that in our post Dog of the Dow – A Look Back at 2012 & Forward to 2013.

In addition to Intel, we’d like to highlight several blue chip companies on this list. McDonald’s (MCD), IBM (IBM), and Caterpillar (CAT).  These companies made the list and are mentioned in our article above.  With the Dow underperforming the S&P500 (+5.9% vs 11.5%), our guess is that these companies are poised to out perform in the year to come.

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U.S. Dividend Watch List: December 21, 2012

Posted on December 23, 2012 by | Comments Off on U.S. Dividend Watch List: December 21, 2012

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%
FDS FactSet Research 88.63 3.81% 20.90 4.24 1.24 1.40% 29%
CFR Cullen/Frost Bankers 54.76 4.32% 14.49 3.78 1.92 3.51% 51%
ED Consolidated Edison 56.05 4.51% 14.71 3.81 2.42 4.32% 64%
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%
WABC Westamerica BanCorp.  42.79 5.65% 14.26 3.00 1.48 3.46% 49%
ATR AptarGroup Inc. 47.76 5.69% 19.65 2.43 0.88 1.84% 36%
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%
SCG SCANA Corporation 46.22 6.69% 14.86 3.11 1.98 4.28% 64%
WEYS Weyco Group 23.49 6.72% 15.25 1.54 0.68 2.89% 44%
UBSI United Bankshares 24.10 6.92% 14.88 1.62 1.24 5.15% 77%
DCI Donaldson 32.85 7.67% 20.03 1.64 0.36 1.10% 22%
CBU Community Bank System 27.38 7.88% 13.90 1.97 1.08 3.94% 55%
INTC Intel Corp.  20.77 7.98% 9.07 2.29 0.90 4.33% 39%
CWT California Water Service 18.19 8.02% 16.69 1.09 0.63 3.46% 58%
MCD McDonald's Corp.  90.18 8.25% 16.98 5.31 3.08 3.42% 58%
VVC Vectren Corp. 29.74 8.30% 15.02 1.98 1.42 4.77% 72%
BOH Bank of Hawaii Corp. 44.87 8.36% 12.40 3.62 1.80 4.01% 50%
PPL PP&L Corporation 28.92 8.40% 10.40 2.78 1.44 4.98% 52%
TRMK Trustmark Corp.  22.53 8.53% 12.87 1.75 0.92 4.08% 53%
PX Praxair, Inc. 108.66 8.66% 19.37 5.61 2.20 2.02% 39%
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%
IBM IBM 193.42 9.06% 13.91 13.91 3.40 1.76% 24%
YUM Yum! Brands 63.88 9.38% 18.79 3.40 1.34 2.10% 39%
AJG Arthur J Gallagher 35.07 9.56% 20.88 1.68 1.36 3.88% 81%
SYBT S.Y. BanCorp.  22.26 9.98% 12.10 1.84 0.80 3.59% 43%
MSEX Middlesex Water  19.26 10.18% 22.40 0.86 0.75 3.89% 87%
BDX Becton, Dickinson 78.86 10.20% 14.11 5.59 1.98 2.51% 35%
RBCAA Republic BanCorp. 21.56 10.22% 3.81 5.66 0.66 3.06% 12%
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%
CLC Clarcor Inc. 47.29 10.62% 19.46 2.43 0.54 1.14% 22%
WGL WGL Holdings 39.79 10.65% 14.68 2.71 1.60 4.02% 59%
APD Air Products & Chemicals 84.28 10.73% 15.49 5.44 2.56 3.04% 47%
KO Coca-Cola Co 36.89 10.83% 19.31 1.91 1.02 2.76% 53%
40 Companies

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%
Average 4.54%
DJI Dow Jones Industrial 11,871.84 13,190.84 11.11%
SPX S&P 500 1,283.35 1,430.15 11.44%

image

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.

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U.S. Dividend Watch List: December 7, 2012

Posted on December 9, 2012 by | Comments Off on U.S. Dividend Watch List: December 7, 2012

Below are the 55 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
OMI Owens & Minor, Inc. 27.57 2.22% 16.12 1.71 0.88 3.19% 51%
RBCAA Republic BanCorp., Inc.  20.03 2.40% 3.54 5.66 0.66 3.30% 12%
WABC Westamerica BanCorp.  42.00 3.70% 14.00 3.00 1.48 3.52% 49%
SON Sonoco Products Co. 29.76 4.02% 16.72 1.78 1.20 4.03% 67%
ED Consolidated Edison, Inc.  56.03 4.48% 14.71 3.81 2.42 4.32% 64%
LKFN Lakeland Financial Corp.  24.54 4.56% 11.47 2.14 0.68 2.77% 32%
INTC Intel Corp.  20.16 4.81% 8.80 2.29 0.90 4.47% 39%
BOH Bank of Hawaii Corp. 43.48 5.00% 12.01 3.62 1.80 4.14% 50%
JW-A John Wiley & Sons Inc. 42.72 5.17% 13.14 3.25 0.80 1.87% 25%
ATR AptarGroup Inc. 47.70 5.55% 19.63 2.43 0.88 1.84% 36%
SJW SJW Corp. 23.89 5.90% 19.58 1.22 0.71 2.97% 58%
NWN Northwest Natural Gas 43.44 5.93% 19.22 2.26 1.82 4.19% 81%
MCD McDonald's Corp.  88.48 6.21% 16.66 5.31 3.08 3.48% 58%
MSEX Middlesex Water Co.  18.58 6.29% 21.60 0.86 0.75 4.04% 87%
IBKC IBERIABANK Corp.  47.07 6.30% 19.61 2.40 1.36 2.89% 57%
TEG Integrys Energy Group Inc 53.37 6.61% 16.84 3.17 2.72 5.10% 86%
WEYS Weyco Group, Inc.  23.48 6.68% 15.25 1.54 0.68 2.90% 44%
CWT California Water Service 17.97 6.71% 16.49 1.09 0.63 3.51% 58%
ANAT American Nat'l Insurance 68.05 6.86% 9.98 6.82 3.08 4.53% 45%
NJR New Jersey Resources 41.20 6.99% 18.48 2.23 1.60 3.88% 72%
CBU Community Bank System 27.18 7.09% 13.80 1.97 1.08 3.97% 55%
CLC Clarcor Inc. 45.87 7.30% 18.88 2.43 0.54 1.18% 22%
PX Praxair, Inc. 107.31 7.31% 19.13 5.61 2.20 2.05% 39%
CFR Cullen/Frost Bankers, Inc. 54.00 7.38% 14.29 3.78 1.92 3.56% 51%
VVC Vectren Corp. 29.49 7.39% 14.89 1.98 1.42 4.82% 72%
TMP Tompkins Financial Corp. 38.55 7.62% 15.73 2.45 1.52 3.94% 62%
TRMK Trustmark Corp.  22.35 7.66% 12.77 1.75 0.92 4.12% 53%
WGL WGL Holdings, Inc. 38.74 7.73% 14.30 2.71 1.60 4.13% 59%
ETP Energy Transfer Partners 43.31 7.76% 9.96 4.35 3.58 8.27% 82%
PRK Park National Corp. 64.31 7.78% 14.58 4.41 3.76 5.85% 85%
CASY Caseys General Stores 49.82 7.95% 16.50 3.02 0.66 1.32% 22%
IBM IBM 191.95 8.23% 13.80 13.91 3.40 1.77% 24%
WBS Webster Financial Corp. 19.82 8.31% 11.13 1.78 0.40 2.02% 22%
FNB F.N.B. Corp. 10.72 8.39% 13.92 0.77 0.48 4.48% 62%
ONB Old National BanCorp. 11.79 8.46% 12.41 0.95 0.36 3.05% 38%
SFNC Simmons First National 24.26 8.50% 15.96 1.52 0.80 3.30% 53%
SCG SCANA Corporation 45.90 8.56% 14.76 3.11 1.98 4.31% 64%
PPL PP&L Corporation 28.98 8.62% 10.42 2.78 1.44 4.97% 52%
SJI South Jersey Industries 49.89 8.91% 14.72 3.39 1.77 3.55% 52%
APD Air Products & Chemicals 83.06 9.13% 15.27 5.44 2.56 3.08% 47%
EXPD Expeditors International 37.34 9.18% 23.34 1.60 0.56 1.50% 35%
FDS FactSet Research Systems 93.25 9.22% 22.63 4.12 1.24 1.33% 30%
ABM ABM Industries, Inc. 19.56 9.58% 20.16 0.97 0.58 2.97% 60%
FULT Fulton Financial Corp.  9.62 9.94% 12.33 0.78 0.32 3.33% 41%
GD General Dynamics Corp. 67.19 9.99% 10.00 6.72 2.04 3.04% 30%
PNY Piedmont Natural Gas Co. 31.37 10.03% 20.11 1.56 1.20 3.83% 77%
DCI Donaldson Co. Inc. 33.58 10.06% 20.48 1.64 0.36 1.07% 22%
GRC Gorman-Rupp Company 28.10 10.15% 19.93 1.41 0.40 1.42% 28%
THFF First Financial Corp. 29.86 10.31% 11.48 2.60 0.96 3.22% 37%
SRCE 1st Source Corp.  21.76 10.46% 11.10 1.96 0.68 3.13% 35%
UBSI United Bankshares, Inc.  24.93 10.60% 15.39 1.62 1.24 4.97% 77%
GWW W.W. Grainger Inc. 191.09 10.78% 20.35 9.39 3.20 1.67% 34%
CAH Cardinal Health, Inc.  40.90 10.81% 12.94 3.16 1.10 2.69% 35%
BDX Becton, Dickinson and Co. 77.63 10.82% 13.89 5.59 1.98 2.55% 35%
AROW Arrow Financial Corp.  24.42 10.90% 13.34 1.83 1.00 4.10% 55%
55 Companies

Watch List Review

Owens & Minor (OMI) topped our list again this week.  The stock was virtually unchanged from a week ago and nothing material developed so we’ll refer you to our previous post commentary here.

Republic BanCorp (RBCAA) is second on our list and has become a big topic of discussion within our team.  The company fundamentals appear to be simply stunning.  RBCAA has exhibited a dividend growth rate of 13% annually in the past five years.  Earnings have exceeded that rate at 16.5% annually and book value trailing at 11.5% over the past 5 years.  So while the company trades at a 25% discount to its book value and at 3x earnings, we are afraid of its balance sheet.  The company’s long-term debt is $764M, nearly double the size of its market cap of $420M.  Cash on hand is $96M with 12% of debt.  Debt is a major thing we are worry about.  Besides that, the 12% payout ratio suggests that the company has a large margin of safety on the earnings side.  The bank weathered the financial crisis without having to cut the dividend and that’s a big positive on the stock.

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 9, 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
AVP Avon Products, Inc. 16.58 14.62 -11.82%
BDX Becton, Dickinson and Co. 72.92 77.63 6.46%
WST West Pharmaceutical 37.38 54.71 46.36%
BCR CR Bard, Inc. 85.70 97.46 13.72%
FNFG First Niagara Financial Group Inc.  8.73 7.59 -13.06%
Average 8.33%
DJI Dow Jones Industrial 12,184.26 13,155.13 7.97%
SPX S&P 500 1,255.19 1,418.07 12.98%

image

Our watch list managed to gain slightly more than the Dow Industrial Index but failed to outperform the S&P500 Index.  The biggest decline came from First Niagara Financial (FNFG) because the company cut their dividend by half.  The 97% payout ratio gave us a first sign of what was to come with the dividend payment.

Avon's (AVP) decline of -12% came after the company couldn’t managed to capitalized on the buyout rumor which boost the stock up as high as 40% within 4 months.  Our sale of AVP on March 30, 2012 (found here) seemed like a huge mistake after only a +10% gain.  However, since our sale of the stock, AVP has  declined -24.48%.

In all case, however, all five companies managed to gain 10% within the first three months.

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U.S. Dividend Watch List: November 30, 2012

Posted on December 1, 2012 by | Comments Off on U.S. Dividend Watch List: November 30, 2012

Below are the 56 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
OMI Owens & Minor, Inc. 27.38 0.37% 16.01 1.71 0.88 3.21% 51%
INTC Intel Corp.  19.57 1.74% 8.55 2.29 0.90 4.60% 39%
ED Consolidated Edison, Inc.  55.79 4.03% 14.64 3.81 2.42 4.34% 64%
MCD McDonald's Corp.  87.04 4.48% 16.39 5.31 3.08 3.54% 58%
RBCAA Republic BanCorp., Inc.  20.47 4.65% 3.62 5.66 0.66 3.22% 12%
WABC Westamerica BanCorp.  42.56 5.09% 14.19 3.00 1.48 3.48% 49%
BOH Bank of Hawaii Corp. 43.47 5.10% 12.01 3.62 1.80 4.14% 50%
SON Sonoco Products Co. 30.07 5.10% 16.89 1.78 1.20 3.99% 67%
JW-A John Wiley & Sons Inc. 42.70 5.12% 13.14 3.25 0.80 1.87% 25%
NJR New Jersey Resources 40.58 5.38% 17.96 2.26 1.60 3.94% 71%
LKFN Lakeland Financial Corp.  24.74 5.41% 11.56 2.14 0.68 2.75% 32%
ATR AptarGroup Inc. 47.67 5.49% 19.62 2.43 0.88 1.85% 36%
CBU Community Bank System 26.88 5.91% 13.64 1.97 1.08 4.02% 55%
TEG Integrys Energy Group 53.17 6.21% 16.77 3.17 2.72 5.12% 86%
SFNC Simmons First National 23.81 6.48% 15.66 1.52 0.80 3.36% 53%
VVC Vectren Corp. 29.25 6.52% 14.77 1.98 1.42 4.85% 72%
CWT California Water Service 18.00 6.89% 16.51 1.09 0.63 3.50% 58%
ABM ABM Industries, Inc. 19.08 6.89% 19.67 0.97 0.58 3.04% 60%
WEYS Weyco Group, Inc.  23.53 6.91% 15.28 1.54 0.68 2.89% 44%
NWN Northwest Natural Gas Co. 43.86 6.95% 19.41 2.26 1.82 4.15% 81%
TRMK Trustmark Corp.  22.22 7.03% 12.70 1.75 0.92 4.14% 53%
CASY Caseys General Stores 49.40 7.04% 16.36 3.02 0.66 1.34% 22%
IBM IBM 190.07 7.17% 13.66 13.91 3.40 1.79% 24%
PRK Park National Corp. 63.09 7.19% 14.31 4.41 3.76 5.96% 85%
PX Praxair, Inc. 107.21 7.21% 19.11 5.61 2.20 2.05% 39%
SRCE 1st Source Corp.  21.15 7.36% 10.79 1.96 0.68 3.22% 35%
ONB Old National BanCorp. 11.74 8.00% 12.36 0.95 0.36 3.07% 38%
DBD Diebold, Inc. 29.91 8.13% 11.33 2.64 1.14 3.81% 43%
FDS FactSet Research Systems 92.39 8.21% 22.42 4.12 1.24 1.34% 30%
STBA S&T BanCorp., Inc.  16.97 8.23% 14.38 1.18 0.60 3.54% 51%
PNY Piedmont Natural Gas 30.86 8.24% 19.78 1.56 1.20 3.89% 77%
ANAT American Nat'l Insurance 68.99 8.34% 10.12 6.82 3.08 4.46% 45%
SJW SJW Corp. 24.46 8.42% 20.05 1.22 0.71 2.90% 58%
CLC Clarcor Inc. 46.38 8.49% 19.09 2.43 0.54 1.16% 22%
WGL WGL Holdings, Inc. 39.06 8.62% 14.41 2.71 1.60 4.10% 59%
TMP Tompkins Financial Corp. 38.99 8.85% 15.91 2.45 1.52 3.90% 62%
GD General Dynamics Corp. 66.50 8.86% 9.90 6.72 2.04 3.07% 30%
CAT Caterpillar Inc. 85.24 8.93% 8.73 9.76 2.08 2.44% 21%
APD Air Products & Chemicals 82.94 8.97% 15.25 5.44 2.56 3.09% 47%
SJI South Jersey Industries 49.97 9.08% 14.74 3.39 1.77 3.54% 52%
GRC Gorman-Rupp Company 27.83 9.09% 19.74 1.41 0.40 1.44% 28%
CFR Cullen/Frost Bankers 54.61 9.11% 14.45 3.78 1.92 3.52% 51%
FNB F.N.B. Corp. 10.80 9.20% 14.03 0.77 0.48 4.44% 62%
ETP Energy Transfer Partners 43.89 9.21% 10.09 4.35 3.58 8.16% 82%
EXPD Expeditors International 37.42 9.42% 23.39 1.60 0.56 1.50% 35%
BDX Becton, Dickinson 76.67 9.45% 13.72 5.59 1.98 2.58% 35%
ADM Archer Daniels Midland 26.70 9.52% 18.67 1.43 0.70 2.62% 49%
UBSI United Bankshares, Inc.  24.70 9.58% 15.25 1.62 1.24 5.02% 77%
CAH Cardinal Health, Inc.  40.45 9.59% 12.80 3.16 1.10 2.72% 35%
SCG SCANA Corporation 46.34 9.60% 14.90 3.11 1.98 4.27% 64%
TNC Tennant Co. 38.14 9.63% 18.70 2.04 0.72 1.89% 35%
PPL PP&L Corporation 29.35 10.01% 10.56 2.78 1.44 4.91% 52%
DCI Donaldson Co. Inc. 33.58 10.06% 20.48 1.64 0.36 1.07% 22%
IBKC IBERIABANK Corp.  48.75 10.09% 20.31 2.40 1.36 2.79% 57%
MATW Matthews International 30.25 10.32% 15.28 1.98 0.40 1.32% 20%
CVX Chevron Corp. 105.69 10.40% 8.67 12.19 3.60 3.41% 30%
56 Companies

Watch List Review

Medical equipment company, Owens & Minor (OMI) topped our list this week after shares fell -7% when the company issued 2013 guidance that was below the street's expectations.   The comment below comes from Associated Press.

The company said it expects to earn $1.90 to $2 per share for 2013, not counting some expenses from its $158 million purchase of Movianto Group, which allowed it to enter the European health care market.   Analysts surveyed by FactSet, on average, were expecting profit of $2.07 per share.

Owens & Minor also said it expects revenue growth of 2 percent to 4 percent. Wall Street is expecting sales of $9.2 billion.

The low growth of revenue is concerning but that is somewhat expected given the industry the company competes in.  The dividend of 3.2% and 51% payout ratio coupled with strong history of dividend increases (13% annual growth rate for 23 years) makes this company a top prospect for research.

The next company, Intel (INTC), has appeared on our list for many weeks.  The stock continues to be under pressure by the macro view of PC growth.  Goldman Sachs and Citigroup issued a ‘sell’ rating on the stock.  The thesis of ‘the death of PC’ is one that investors are basing their selling of this stock on, but this isn’t the first time analysts cut ratings based on PC weakness.  They did that in October 2008 (read here).  Since that article was published, shares dropped as low as $12.40 (-28%) from $17.30 but had risen to $29.27 (+69%).  Intel earnings per share (EPS) for 2013 is now expected to be $1.96 versus $2.11 in 2012, a 7% decline.

Something worth noting this week is that 5 out of 56 companies are Dow Jones Industrial components.  Those companies are Caterpillar (CAT), Chevron (CVX), IBM (IBM), Intel (INTC), and McDonald’s (MCD).  That’s 16% of the Dow!  Any conservative investors may look deeper into each one of these companies as a starting point for a constructing a well diversified portfolio with blue-chip stocks.

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U.S. Dividend Watch List: November 23, 2012

Posted on November 25, 2012 by | Leave a comment

Below are the 50 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
ED Consolidated Edison, Inc.  54.10 0.49% 14.20 3.81 2.42 4.47% 64%
NJR New Jersey Resources 39.19 0.77% 17.34 2.26 1.60 4.08% 71%
INTC Intel Corp.  19.72 0.80% 8.61 2.29 0.90 4.56% 39%
JW-A John Wiley & Sons Inc. 41.72 0.97% 12.84 3.25 0.80 1.92% 25%
ANAT American Nat'll Insurance 65.41 1.44% 9.59 6.82 3.08 4.71% 45%
NWN Northwest Natural Gas 42.17 1.47% 18.66 2.26 1.82 4.32% 81%
SJW SJW Corp. 23.29 1.61% 19.09 1.22 0.71 3.05% 58%
VVC Vectren Corp. 28.33 1.98% 14.31 1.98 1.42 5.01% 72%
WGL WGL Holdings, Inc. 37.30 2.01% 13.76 2.71 1.60 4.29% 59%
CASY Caseys General Stores 47.89 2.12% 15.86 3.02 0.66 1.38% 22%
CWT California Water Service 17.50 2.13% 16.06 1.09 0.63 3.60% 58%
PNY Piedmont Natural Gas 29.67 2.20% 19.02 1.56 1.20 4.04% 77%
MSEX Middlesex Water Co.  18.21 2.21% 21.17 0.86 0.75 4.12% 87%
MCD McDonald's Corp.  87.05 2.25% 16.39 5.31 3.08 3.54% 58%
SFNC Simmons First National  23.37 2.29% 15.38 1.52 0.80 3.42% 53%
AMAT Applied Materials Inc. 10.40 2.35% 115.56 0.09 0.36 3.46% 400%
SJI South Jersey Industries 48.05 2.38% 14.17 3.39 1.77 3.68% 52%
PPL PP&L Corporation 28.08 2.40% 10.10 2.78 1.44 5.13% 52%
ATR AptarGroup Inc. 47.62 2.46% 19.60 2.43 0.88 1.85% 36%
CLC Clarcor Inc. 45.12 2.52% 18.57 2.43 0.54 1.20% 22%
RAVN Raven Industries, Inc.  24.29 2.55% 17.11 1.42 0.42 1.73% 30%
OMI Owens & Minor, Inc. 28.90 2.57% 16.90 1.71 0.88 3.04% 51%
SON Sonoco Products Co. 30.25 2.60% 16.99 1.78 1.20 3.97% 67%
WABC Westamerica BanCorp.  42.92 2.60% 14.31 3.00 1.48 3.45% 49%
THFF First Financial Corp. 28.73 2.91% 11.05 2.60 0.94 3.27% 36%
ABM ABM Industries, Inc. 18.97 2.98% 19.56 0.97 0.58 3.06% 60%
MATW Matthews Int'l  29.20 3.63% 14.75 1.98 0.40 1.37% 20%
SRCE 1st Source Corp.  21.00 3.67% 10.71 1.96 0.68 3.24% 35%
FDS FactSet Research Systems 91.39 4.56% 22.18 4.12 1.24 1.36% 30%
GD General Dynamics Corp. 65.41 4.66% 9.73 6.72 2.04 3.12% 30%
DBD Diebold, Inc. 29.65 4.70% 11.23 2.64 1.14 3.84% 43%
RBCAA Republic BanCorp., Inc.  20.97 4.75% 3.70 5.66 0.66 3.15% 12%
ETP Energy Transfer Partners 43.15 4.89% 9.92 4.35 3.58 8.30% 82%
WEYS Weyco Group, Inc.  23.65 5.11% 15.36 1.54 0.68 2.88% 44%
TMP Tompkins Financial Corp. 38.51 5.13% 15.72 2.45 1.52 3.95% 62%
CAT Caterpillar Inc. 84.16 5.13% 8.62 9.76 2.08 2.47% 21%
STBA S&T BanCorp., Inc.  16.93 5.23% 14.35 1.18 0.60 3.54% 51%
TEG Integrys Energy Group 52.60 5.39% 16.59 3.17 2.72 5.17% 86%
CAH Cardinal Health, Inc.  39.99 5.40% 12.66 3.16 1.10 2.75% 35%
TNC Tennant Co. 37.74 5.58% 18.50 2.04 0.72 1.91% 35%
EXPD Expeditors Int'l 37.18 5.63% 23.24 1.60 0.56 1.51% 35%
IBM IBM 193.49 5.86% 13.91 13.91 3.40 1.76% 24%
APD Air Products & Chemicals 83.04 6.10% 15.26 5.44 2.56 3.08% 47%
SCG SCANA Corp. 45.13 6.20% 14.51 3.11 1.98 4.39% 64%
ADM ADM Co. 26.74 6.56% 18.70 1.43 0.70 2.62% 49%
DCI Donaldson Co. Inc. 33.56 6.66% 20.46 1.64 0.36 1.07% 22%
IBKC IberiaBank Corp.  48.83 6.87% 20.35 2.40 1.36 2.79% 57%
UNM Unum Group 20.23 6.97% 23.80 0.85 0.52 2.57% 61%
EGN Energen Corp. 44.44 7.14% 15.65 2.84 0.56 1.26% 20%
UBSI United Bankshares, Inc.  24.97 7.36% 15.41 1.62 1.24 4.97% 77%
50 Companies

Watch List Review

Two major utilities companies topped our list this week. Consolidated Edison (ED) and New Jersey Resources (NJR) both yield more than 4%.  Despite being the first and second companies on our list, we feel there are better alternatives based on the fundamental numbers such as P/E and dividend yield.

Right after those two utilities is Intel (INTC) which yields 4.56%, higher than both companies.  The payout ratio of 39% is also lower than that of the utility companies.  In addition, the P/E ratio of 8.6 is about half of those two companies as well.  If we are to enter into a recession, I expect a major earnings decline so the P/E will no be sustained but we truly believe the dividend is here to stay.  As full disclosure, we are long this company and will aim to purchase more if it falls to $16 or below.

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 November 25, 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
AVP Avon Products, Inc. 16.09 14.26 -11.37%
CCBG Capital City Bank Group  9.65 10.94 13.37%
FNFG First Niagara Financial Group Inc.  8.24 7.41 -10.07%
TR Tootsie Roll Industries Inc  22.88 26.76 16.96%
WST West Pharmaceutical 35.60 53.68 50.79%
Average 11.93%
DJI Dow Jones Industrial 11,231.65 13,009.68 15.83%
SPX S&P 500 1,158.67 1,409.15 21.62%

Our top five failed  to meet the market’s performance. The best performer is West Pharmaceutical (WST) which nearly doubled its value.  Avon (AVP) was the worst performer.  However, despite not exceeding the indexes, four of the five stocks exceeded +10% gains within the first 2 months.  Additionally, four of five stocks achieved gains of +20% before declining.

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U.S. Dividend Watch List: November 9, 2012

Posted on November 11, 2012 by | Leave a comment

Below are the 66 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
INTC Intel Corp.  20.80 0.00% 9.08 2.29 0.90 4.33% 39%
NWN Northwest Natural Gas Co. 42.77 0.19% 18.92 2.26 1.82 4.26% 81%
ED Consolidated Edison, Inc.  55.74 0.38% 14.63 3.81 2.42 4.34% 64%
NJR New Jersey Resources Corp. 41.21 0.68% 18.23 2.26 1.60 3.88% 71%
JW-A John Wiley & Sons Inc. CL 'A' 42.34 0.76% 13.03 3.25 0.80 1.89% 25%
MCD McDonald's Corp.  84.74 0.82% 15.96 5.31 3.08 3.63% 58%
WABC Westamerica BanCorp.  41.34 1.08% 13.78 3.00 1.48 3.58% 49%
BUSE First Busey Corp.  4.41 1.38% 20.05 0.22 0.16 3.63% 73%
WGL WGL Holdings, Inc. 38.19 1.43% 19.39 1.97 1.60 4.19% 81%
ADM Archer Daniels Midland Co. 25.39 1.48% 17.76 1.43 0.70 2.76% 49%
SRCE 1st Source Corp.  20.83 1.61% 10.63 1.96 0.68 3.26% 35%
CLC Clarcor Inc. 44.51 2.51% 18.32 2.43 0.54 1.21% 22%
SJW SJW Corp. 23.40 3.17% 19.18 1.22 0.71 3.03% 58%
PNY Piedmont Natural Gas Co., Inc. 29.84 3.25% 19.13 1.56 1.20 4.02% 77%
ATR AptarGroup Inc. 48.02 3.31% 19.76 2.43 0.88 1.83% 36%
CWT California Water Service 17.61 3.35% 16.16 1.09 0.63 3.58% 58%
MATW Matthews International Corp.  28.83 3.41% 12.99 2.22 0.36 1.25% 16%
SJI South Jersey Industries, Inc. 48.31 3.85% 14.25 3.39 1.61 3.33% 47%
SFNC Simmons First National Corp.  23.51 4.26% 15.47 1.52 0.80 3.40% 53%
ETP Energy Transfer Partners L P 42.08 4.70% 9.48 4.44 3.58 8.51% 81%
UBSI United Bankshares, Inc.  23.61 4.75% 14.57 1.62 1.24 5.25% 77%
APD Air Products & Chemicals, Inc. 79.73 4.76% 14.66 5.44 2.56 3.21% 47%
CASY Caseys General Stores, Inc. 49.27 4.90% 16.31 3.02 0.66 1.34% 22%
FDS FactSet Research Systems 89.83 5.21% 21.80 4.12 1.24 1.38% 30%
DBD Diebold, Inc. 29.54 5.27% 11.19 2.64 1.14 3.86% 43%
STBA S&T BanCorp., Inc.  16.51 5.29% 13.99 1.18 0.60 3.63% 51%
WEYS Weyco Group, Inc.  22.90 5.53% 14.87 1.54 0.68 2.97% 44%
THFF First Financial Corp. 28.64 5.80% 11.02 2.60 0.94 3.28% 36%
OMI Owens & Minor, Inc. 29.02 6.03% 16.97 1.71 0.88 3.03% 51%
VVC Vectren Corp. 28.64 6.03% 14.46 1.98 1.42 4.96% 72%
RBCAA Republic BanCorp., Inc.  20.43 6.19% 3.61 5.66 0.66 3.23% 12%
TNC Tennant Co. 36.96 6.24% 18.12 2.04 0.72 1.95% 35%
FRS Frisch's Restaurants, Inc 17.75 6.29% 16.90 1.05 0.64 3.61% 61%
GD General Dynamics Corp. 64.45 6.35% 9.59 6.72 2.04 3.17% 30%
SON Sonoco Products Co. 30.45 6.43% 17.11 1.78 1.20 3.94% 67%
ABM ABM Industries, Inc. 19.02 6.55% 19.61 0.97 0.58 3.05% 60%
DCI Donaldson Co. Inc. 32.58 6.78% 18.83 1.73 0.36 1.10% 21%
AMAT Applied Materials Inc. 10.67 7.02% 12.86 0.83 0.36 3.37% 43%
IBM International Business Machines 189.64 7.10% 13.63 13.91 3.40 1.79% 24%
ANAT American National Insurance 71.35 7.16% 10.46 6.82 3.08 4.32% 45%
TEG Integrys Energy Group Inc 52.00 7.33% 16.40 3.17 2.72 5.23% 86%
MSEX Middlesex Water Company  18.65 7.37% 21.69 0.86 0.75 4.02% 87%
BDX Becton, Dickinson and Co. 75.23 7.39% 13.46 5.59 1.80 2.39% 32%
EXPD Expeditors International 36.73 7.40% 22.96 1.60 0.56 1.52% 35%
PPL PP&L Corporation 28.68 7.50% 11.03 2.60 1.44 5.02% 55%
UNM Unum Group 19.66 7.55% 23.13 0.85 0.52 2.64% 61%
GRC Gorman-Rupp Company 26.50 7.68% 18.79 1.41 0.40 1.51% 28%
UTX United Technologies Corp. 75.84 7.71% 15.60 4.86 2.14 2.82% 44%
TMP Tompkins Financial Corp. 38.65 7.90% 15.84 2.44 1.52 3.93% 62%
IBKC IBERIABANK Corp.  47.90 8.18% 19.01 2.52 1.36 2.84% 54%
EGN Energen Corp. 43.43 8.22% 15.29 2.84 0.56 1.29% 20%
CAH Cardinal Health, Inc.  40.00 8.37% 12.66 3.16 1.10 2.75% 35%
RLI RLI Corp. 67.05 8.39% 12.89 5.20 1.28 1.91% 25%
HRL Hormel Foods Corp. 29.61 8.54% 16.45 1.80 0.60 2.03% 33%
CAT Caterpillar Inc. 84.95 8.56% 8.70 9.76 2.08 2.45% 21%
ERIE Erie Indemnity Company  66.43 8.67% 22.91 2.90 2.21 3.33% 76%
FNB F.N.B. Corp. 10.65 8.78% 13.83 0.77 0.48 4.51% 62%
SBSI Southside Bancshares, Inc.  20.80 9.15% 10.00 2.08 0.80 3.85% 38%
JCI Johnson Controls Inc  25.52 9.20% 14.34 1.78 0.72 2.82% 40%
RAVN Raven Industries, Inc.  27.40 9.21% 18.77 1.46 0.42 1.53% 29%
COP ConocoPhillips 55.67 9.98% 6.84 8.14 2.64 4.74% 32%
CBU Community Bank System, Inc. 26.31 10.18% 13.36 1.97 1.08 4.10% 55%
TRMK Trustmark Corp.  22.18 10.24% 12.67 1.75 0.92 4.15% 53%
HRC Hill-Rom Holdings, Inc. 27.31 10.61% 14.08 1.94 0.50 1.83% 26%
CTWS Connecticut Water Service, Inc.  28.93 10.63% 18.43 1.57 0.97 3.35% 62%
PEP PepsiCo Inc. 68.85 10.78% 18.31 3.76 2.15 3.12% 57%
66 Companies

Watch List Review

Market weakness continued to take stocks down.  Intel broke $21 support level and is right at the 52-week low of $20.80, yielding 4.3% and a P/E below 10.  There were rumors of Apple moving away from Intel based chips for their Mac products.  That may be another catalyst that takes the stock lower but Mac is now a minor part of Apple’s business.  Though the day will eventually come that Apple will not run on Intel chips, they will need a company to manufacture or fabricate their chips and we believe Intel will be the forerunner for that.

The top two through four spots are utility companies, Northwest Natural Gas (NWN), Consolidated Edison (ED), and New Jersey Resources (NJR).  All of them yield more than 3.5% and two (NWN & ED) have yields north of 4%.  While that yield is attractive, utilities typically will reach much higher yield at the bottom of utility cycle.

Fifth on our list is John-Wiley & Son (JW-A), the publishing company.  We here at the New Low Observer are intrigued by this company because of the recent merger between Pearson's Penguin Books with Bertelsmann's Random House (found here).  We believed there are value here and a possible buy point near the low would not be unusual.  The dividend payout ratio is very conservative at 25% but the yield remains quite low compared to other companies on our list.

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 November 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
AVP Avon Products, Inc. 18.23 14.28 -21.67%
WAG Walgreen Co. 32.85 32.66 -0.58%
BDX Becton, Dickinson and Co. 74.12 75.23 1.50%
FRS Frisch's Restaurants, Inc 19.54 17.75 -9.16%
CCBG Capital City Bank Group  10.35 9.44 -8.79%
Average -7.74%
DJI Dow Jones Industrial 12,153.68 12,815.39 5.44%
SPX S&P 500 1,263.85 1,379.85 9.18%

image

Our top five failed miserably to perform in the 1-year time frame, underperforming the market by a wide margin.  Although Avon (AVP) fell 21% year-over-year, the stock spiked in April giving investors a chance to lock in some gains.

We did manage to buy AVP on November 15, 2011 and sell the stock on March 30, 2012 for a +10% gain in over 4 months.  Conceptually, we hope that it is clear that we're targeting 10% gains in short periods of time for the purpose of avoiding the -21% losses in "longer" duration periods that can be incurred as a result of the "buy-and-hold" philosophy being inappropriately applied.

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U.S. Dividend Watch List: October 26, 2012

Posted on October 27, 2012 by | Leave a comment

Below are the 48 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
MCD McDonald's Corp.  86.71 0.92% 16.33 5.31 3.08 3.55% 58%
JW-A John Wiley & Sons Inc. 43.20 1.74% 13.29 3.25 0.80 1.85% 25%
APD Air Products & Chemicals 77.92 2.38% 14.32 5.44 2.56 3.29% 47%
ERIE Erie Indemnity Company  62.59 2.39% 22.27 2.81 2.21 3.53% 79%
MATW Matthews International Corp.  28.67 2.83% 12.91 2.22 0.36 1.26% 16%
CLC Clarcor Inc. 44.75 3.06% 18.42 2.43 0.54 1.21% 22%
INTC Intel Corp.  21.95 3.44% 9.59 2.29 0.90 4.10% 39%
ETP Energy Transfer Partners 42.95 4.68% 9.12 4.71 3.58 8.34% 76%
WGL WGL Holdings, Inc. 39.50 4.91% 20.05 1.97 1.60 4.05% 81%
OMI Owens & Minor, Inc. 28.76 5.08% 15.63 1.84 0.88 3.06% 48%
DBD Diebold, Inc. 29.51 5.17% 11.18 2.64 1.14 3.86% 43%
UBSI United Bankshares, Inc.  23.65 5.58% 14.42 1.64 1.24 5.24% 76%
DCI Donaldson Co. Inc. 32.21 5.69% 18.62 1.73 0.36 1.12% 21%
ABM ABM Industries, Inc. 18.87 5.71% 19.45 0.97 0.58 3.07% 60%
FDS FactSet Research Systems 90.85 6.41% 22.05 4.12 1.24 1.36% 30%
SJW SJW Corp. 24.05 6.51% 19.71 1.22 0.71 2.95% 58%
EXPD Expeditors International 36.43 6.52% 21.68 1.68 0.56 1.54% 33%
AMAT Applied Materials Inc. 10.65 6.82% 12.83 0.83 0.36 3.38% 43%
ED Consolidated Edison, Inc.  59.97 6.96% 16.57 3.62 2.42 4.04% 67%
SRCE 1st Source Corp.  21.97 7.12% 11.50 1.91 0.68 3.10% 36%
TNC Tennant Co. 37.35 7.36% 18.31 2.04 0.68 1.82% 33%
GRC Gorman-Rupp Company 26.43 7.40% 18.10 1.46 0.40 1.51% 27%
CWT California Water Service 18.43 7.53% 20.94 0.88 0.63 3.42% 72%
HRL Hormel Foods Corp. 29.34 7.55% 16.30 1.80 0.60 2.04% 33%
BDX Becton, Dickinson and Co. 75.34 7.55% 13.65 5.52 1.80 2.39% 33%
CAT Caterpillar Inc. 84.25 7.67% 8.63 9.76 2.08 2.47% 21%
SFNC Simmons First National Corp.  24.30 7.76% 15.78 1.54 0.80 3.29% 52%
ADM Archer Daniels Midland Co. 27.05 8.11% 14.70 1.84 0.70 2.59% 38%
VVC Vectren Corp. 29.28 8.40% 15.09 1.94 1.40 4.78% 72%
NJR New Jersey Resources Corp. 44.60 8.49% 19.73 2.26 1.60 3.59% 71%
SON Sonoco Products Co. 31.06 8.56% 17.45 1.78 1.20 3.86% 67%
RAVN Raven Industries, Inc.  27.27 8.69% 18.68 1.46 0.42 1.54% 29%
WABC Westamerica BanCorp.  44.47 8.73% 14.82 3.00 1.48 3.33% 49%
CBSH Commerce Bancshares, Inc.  38.10 8.73% 12.83 2.97 0.92 2.41% 31%
NWN Northwest Natural Gas Co. 47.78 8.84% 20.42 2.34 1.82 3.81% 78%
IBM International Business Machines 193.27 9.16% 13.89 13.91 3.40 1.76% 24%
PNY Piedmont Natural Gas Co. 31.57 9.24% 20.24 1.56 1.20 3.80% 77%
MDU MDU Resources Group 21.48 9.31% 19.01 1.13 0.67 3.12% 59%
SBSI Southside Bancshares  20.45 9.50% 9.83 2.08 0.80 3.91% 38%
CAH Cardinal Health, Inc.  40.43 9.54% 13.21 3.06 0.95 2.35% 31%
SJI South Jersey Industries, Inc. 50.98 9.59% 16.03 3.18 1.61 3.16% 51%
ANAT American National Insurance 73.02 9.67% 10.80 6.76 3.08 4.22% 46%
EMR Emerson Electric Co. 47.84 9.75% 14.50 3.30 1.60 3.34% 48%
WEYS Weyco Group, Inc.  23.89 10.09% 16.36 1.46 0.68 2.85% 47%
PH Parker Hannifin Corp. 77.58 10.17% 10.91 7.11 1.64 2.11% 23%
JCI Johnson Controls Inc  25.81 10.44% 10.28 2.51 0.72 2.79% 29%
CASY Caseys General Stores, Inc. 51.91 10.52% 17.19 3.02 0.66 1.27% 22%
PPL PP&L Corporation 29.49 10.53% 10.03 2.94 1.44 4.88% 49%
48 Companies

Watch List Review

Topping out list this week is a another Dow component, McDonald (MCD).  The stock retraced from the $94 level in mid-October and is now trading very close to the $85 level.  One could put on a trade at the current price with a tight stop at $85.  An interesting technical pattern appears with the 50-day moving average looking to cross the 150-day moving average to the upside (see chart below).  Fundamentally, dividend yield of 3.55% is close to the undervalued range of 3.6% (IQTrends at www.iqtrends.com).  Although this sound very attractive, our valuation model suggests a possible downside of $60, if the market cave.  Look for the company to trade down as far as 10x earning and 7x cash flow.

(updated 10/31: the company raised its divided by 10% on 9/20/2012)

image

John Wiley & Son (JW-A) is trading practically at the low.  A conservative payout ratio of 25% implies that the dividend can be sustained even if earnings drop by half.  We all know that the publishing business is a difficult one to be in and would suggest an alternative sector for the time being.

Air Products & Chemicals (APD) was under pressured after the company reported earnings that missed consensus estimates by couple of cents.  Consolidated income plunged -57% to $138.7 million from $324.8 million.  While revenue rose slightly, the company posted a "one-time" impairment charge of $240 million ($127 million of that is associated with the photovoltaic market which is extremely weak).  A dividend yield of 3.3% is where the company is considered undervalued by IQTrends (www.iqtrends.com).  We don’t have a valuation model for this company but will begin to building one soon as the risk/reward profile appears to be very attractive.

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U.S. Dividend Watch List: October 19, 2012

Posted on October 21, 2012 by | Leave a comment

We saw 50 companies on our watch list last week.  This week, we have 46 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
INTC Intel Corp.  21.26 0.21% 9.28 2.29 0.90 4.23% 39%
IBKC IBERIABANK Corp.  44.95 1.10% 20.25 2.22 1.36 3.03% 61%
JW-A John Wiley & Sons Inc. 44.00 1.76% 13.54 3.25 0.80 1.82% 25%
CRR Carbo Ceramics, Inc. 63.03 2.76% 11.04 5.71 1.08 1.71% 19%
CLC Clarcor Inc. 44.62 2.76% 18.36 2.43 0.54 1.21% 22%
ETP Energy Transfer Partners 42.25 2.97% 8.97 4.71 3.58 8.47% 76%
ERIE Erie Indemnity Company  63.09 3.21% 22.45 2.81 2.21 3.50% 79%
MCD McDonald's Corp.  88.72 3.26% 16.68 5.32 3.08 3.47% 58%
EXPD Expeditors International 35.32 3.27% 21.02 1.68 0.56 1.59% 33%
ABM ABM Industries, Inc. 18.47 3.47% 19.04 0.97 0.58 3.14% 60%
MATW Matthews International Corp.  29.08 4.30% 13.10 2.22 0.36 1.24% 16%
OMI Owens & Minor, Inc. 28.60 4.49% 15.54 1.84 0.88 3.08% 48%
SRCE 1st Source Corp.  21.44 4.53% 11.23 1.91 0.68 3.17% 36%
WGL WGL Holdings, Inc. 39.55 5.05% 20.08 1.97 1.60 4.05% 81%
APD Air Products & Chemicals, Inc. 79.99 5.10% 12.68 6.31 2.56 3.20% 41%
SFNC Simmons First National Corp.  23.70 5.10% 15.39 1.54 0.80 3.38% 52%
SJW SJW Corp. 23.80 5.40% 21.06 1.13 0.71 2.98% 63%
HRL Hormel Foods Corp. 28.90 5.94% 16.06 1.80 0.60 2.08% 33%
UBSI United Bankshares, Inc.  23.80 6.25% 14.51 1.64 1.24 5.21% 76%
FDS FactSet Research Systems Inc. 91.07 6.66% 22.10 4.12 1.24 1.36% 30%
CAT Caterpillar Inc. 83.86 7.17% 9.38 8.94 2.08 2.48% 23%
GRC Gorman-Rupp Company 26.45 7.48% 18.12 1.46 0.40 1.51% 27%
CASY Caseys General Stores, Inc. 49.27 7.58% 16.31 3.02 0.66 1.34% 22%
ED Consolidated Edison, Inc.  60.47 7.85% 16.70 3.62 2.42 4.00% 67%
CWT California Water Service 18.51 7.99% 21.03 0.88 0.63 3.40% 72%
BDX Becton, Dickinson and Co. 75.65 7.99% 13.70 5.52 1.80 2.38% 33%
VVC Vectren Corp. 29.31 8.52% 15.11 1.94 1.40 4.78% 72%
DBD Diebold, Inc. 30.46 8.55% 10.05 3.03 1.14 3.74% 38%
MSEX Middlesex Water Company  18.86 8.58% 23.58 0.80 0.74 3.92% 93%
RAVN Raven Industries, Inc.  27.25 8.61% 18.66 1.46 0.42 1.54% 29%
AMAT Applied Materials Inc. 10.84 8.73% 13.06 0.83 0.36 3.32% 43%
ANAT American National Insurance 72.40 8.74% 10.71 6.76 3.08 4.25% 46%
CBSH Commerce Bancshares, Inc.  37.68 7.53% 12.64 2.98 0.92 2.44% 31%
WEYS Weyco Group, Inc.  23.79 9.63% 16.29 1.46 0.68 2.86% 47%
IBM International Business Machines 193.36 9.21% 13.90 13.91 3.40 1.76% 24%
WABC Westamerica BanCorp.  44.73 9.36% 14.91 3.00 1.48 3.31% 49%
THFF First Financial Corp. 29.73 9.83% 10.85 2.74 0.94 3.16% 34%
RBCAA Republic BanCorp., Inc.  20.53 10.08% 4.07 5.05 0.66 3.21% 13%
LLTC Linear Technology Corp.  31.20 10.33% 18.57 1.68 1.00 3.21% 60%
SON Sonoco Products Co. 31.65 10.63% 16.07 1.97 1.20 3.79% 61%
SJI South Jersey Industries, Inc. 51.49 10.68% 16.19 3.18 1.61 3.13% 51%
EMR Emerson Electric Co. 48.25 10.69% 14.62 3.30 1.60 3.32% 48%
UTX United Technologies Corp. 77.99 10.77% 16.35 4.77 2.14 2.74% 45%
TMP Tompkins Financial Corp. 39.69 10.80% 13.36 2.97 1.44 3.63% 48%
SBSI Southside Bancshares, Inc.  20.70 10.84% 9.95 2.08 0.80 3.86% 38%
GD General Dynamics Corp. 67.17 10.84% 9.85 6.82 2.04 3.04% 30%
46 Companies

Watch List Review

The weakness in the markets continued to suppress many blue-chip companies.  First on our list is Intel (INTC) which is trading well below $22 and yields 4.23%.  Earnings estimates continue to come down for the next year.  Analysts now expect INTC to earn $2.13 this year and next.  That places their current and forward P/E at 10.  With such low valuations and room to grow the dividend, we believe the risk-reward profile for this stock is compelling and will wait to purchase more shares should it trade down to $16. YTD, the INTC is down -12% compared to the S&P 500 gain of +14%.

Another blue-chip name and Dow component that popped up on our list this week is IBM (IBM).  We all know about the big purchases by Warren Buffett in this name last year.  Anyone who was interest in piggybacking on the Buffett trade may have their chance as the stock is approaching the 52-week low.  We suspect that Buffett would be buying more on its way down as well.  One should go back to review Buffett's 2011 letter which stated the following about IBM:

I won’t keep you in suspense. We should wish for IBM’s stock price to languish throughout the five years.

Let’s do the math. If IBM’s stock price averages, say, $200 during the period, the company will acquire
250 million shares for its $50 billion. There would consequently be 910 million shares outstanding, and we would own about 7% of the company. If the stock conversely sells for an average of $300 during the five-year period, IBM will acquire only 167 million shares. That would leave about 990 million shares outstanding after five years, of which we would own 6.5%.

If IBM were to earn, say, $20 billion in the fifth year, our share of those earnings would be a full $100
million greater under the “disappointing” scenario of a lower stock price than they would have been at the higher price. At some later point our shares would be worth perhaps $1 1⁄2 billion more than if the “high-price” repurchase scenario had taken place.

The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day’s supply.

Fundamentally, the stock is trading very close to its ‘undervalued’ range (1.80% yield) according to IQTrends (www.iqtrends.com).  The weak guidance from the current quarterly earnings report pressured the stock and pushed it below the $200 level.

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U.S. Dividend Watch List: October 5, 2012

Posted on October 6, 2012 by | Leave a comment

Below are the 27 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
INTC Intel Corp.  22.68 1.84% 9.61 2.36 0.90 3.97% 38%
CLC Clarcor Inc. 44.24 1.89% 18.21 2.43 0.54 1.22% 22%
EXPD Expeditors International 35.55 2.07% 21.16 1.68 0.56 1.58% 33%
IBKC IBERIABANK Corp.  45.73 2.86% 20.60 2.22 1.36 2.97% 61%
CRR Carbo Ceramics, Inc. 63.17 2.98% 11.06 5.71 1.08 1.71% 19%
ABM ABM Industries, Inc. 18.49 3.59% 19.06 0.97 0.58 3.14% 60%
FRS Frisch's Restaurants, Inc 19.39 5.15% 45.09 0.43 0.64 3.30% 149%
WGL WGL Holdings, Inc. 39.70 5.44% 20.15 1.97 1.60 4.03% 81%
MATW Matthews International Corp.  29.47 5.70% 13.27 2.22 0.36 1.22% 16%
MCD McDonald's Corp.  91.00 5.91% 17.11 5.32 3.08 3.38% 58%
ERIE Erie Indemnity Company  64.77 5.95% 23.05 2.81 2.21 3.41% 79%
JW-A John Wiley & Sons Inc. 45.89 6.13% 14.12 3.25 0.80 1.74% 25%
ETP Energy Transfer Partners 43.59 6.97% 9.25 4.71 3.58 8.21% 76%
ED Consolidated Edison, Inc.  60.22 7.40% 16.64 3.62 2.42 4.02% 67%
VVC Vectren Corp. 29.10 7.74% 15.00 1.94 1.40 4.81% 72%
HRL Hormel Foods Corp. 29.45 7.95% 16.36 1.8 0.60 2.04% 33%
CWT California Water Service 18.59 8.46% 21.13 0.88 0.63 3.39% 72%
BUSE First Busey Corp.  4.80 8.60% 19.20 0.25 0.16 3.33% 64%
ANAT American National Insurance 72.39 8.73% 10.71 6.76 3.08 4.25% 46%
LM Legg Mason, Inc.  24.35 8.90% 22.55 1.08 0.44 1.81% 41%
PPL PP&L Corporation 29.12 9.15% 9.90 2.94 1.44 4.95% 49%
PBI Pitney Bowes Inc  13.81 9.26% 4.04 3.42 1.50 10.86% 44%
UNM Unum Group 19.98 9.30% 27.00 0.74 0.52 2.60% 70%
CAH Cardinal Health, Inc.  40.52 9.78% 12.99 3.12 0.95 2.34% 30%
OMI Owens & Minor, Inc. 30.17 10.23% 16.40 1.84 0.88 2.92% 48%
APD Air Products & Chemicals 83.90 10.24% 13.30 6.31 2.56 3.05% 41%
MCY Mercury General Corp. 39.91 10.83% 15.23 2.62 2.44 6.11% 93%
27 Companies

Watch List Review

Topping out list this week is Intel (INTC).  We’ve been watching and waiting for the number one chip maker to appear on our list and it did so at the top.  Pressure from the slowing PC market and little presence in the tablet market pushed the stock down below $23.  Earning estimates has been coming down and analysts now expect the company to earn $2.19 next year, a forward P/E of 9.6.  Current dividend yield is 4% and payout ratio of 38%.  We were excited to see this stock trade down to the current level that added Intel to our holdings (refer to our transaction alert here).

Clarcor (CLC), maker of filtration products, came into our top five for the first time.  The company raised its dividend by 12.5% at the end of September.  Although dividend yield is only 1.22%, it is higher than its 5-yr average yield of 0.9%.  The stock has been under pressure because profit in the third-quarter fell 5% and missed analysts’ consensus by $0.09.  We don’t know much about this company but should have more information on it soon.

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U.S. Dividend Watch List: September 28, 2012

Posted on September 29, 2012 by | Leave a comment

Below are the 20 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
CRR Carbo Ceramics, Inc. 62.92 1.80% 11.02 5.71 1.08 1.72% 19%
IBKC IBERIABANK Corp.  45.80 3.01% 20.63 2.22 1.36 2.97% 61%
EXPD Expeditors International  36.35 4.36% 21.64 1.68 0.56 1.54% 33%
ERIE Erie Indemnity Company  64.27 5.14% 22.55 2.85 2.21 3.44% 78%
UNM Unum Group 19.22 5.14% 25.97 0.74 0.52 2.71% 70%
CAH Cardinal Health, Inc.  38.97 5.58% 12.49 3.12 0.95 2.44% 30%
MATW Matthews International Corp.  29.82 6.96% 13.43 2.22 0.36 1.21% 16%
MCY Mercury General Corp. 38.65 7.33% 14.75 2.62 2.44 6.31% 93%
FRS Frisch's Restaurants, Inc 19.85 7.65% 46.16 0.43 0.64 3.22% 149%
ABM ABM Industries, Inc. 18.93 8.11% 19.52 0.97 0.58 3.06% 60%
ANAT American National Insurance 71.83 8.65% 10.63 6.76 3.08 4.29% 46%
PPL PP&L Corporation 29.05 8.88% 9.88 2.94 1.44 4.96% 49%
WGL WGL Holdings, Inc. 40.25 9.26% 20.43 1.97 1.60 3.98% 81%
RLI RLI Corp. 66.66 9.28% 12.97 5.14 1.28 1.92% 25%
ED Consolidated Edison, Inc.  59.89 9.45% 16.54 3.62 2.42 4.04% 67%
MCD McDonald's Corp.  91.75 9.57% 17.25 5.32 3.08 3.36% 58%
JW-A John Wiley & Sons Inc. 45.95 9.69% 14.14 3.25 0.80 1.74% 25%
VLY Valley National BanCorp.  10.02 10.11% 14.74 0.68 0.65 6.49% 96%
LM Legg Mason, Inc.  24.68 10.38% 22.85 1.08 0.44 1.78% 41%
CWT California Water Service 18.65 10.95% 21.19 0.88 0.63 3.38% 72%
20 Companies              

Watch List Review

Carbo Ceramics (CRR) came back to top our watch list this week.  August 3 was the last time the company topped our list, traded at $64.69.  After falling 2.7%, the stock has a yield of 1.8%, the second highest yield this company has seen.  We saw the stock traded at the highest yield at 2.32% at the market low in 2008.  Our valuation model suggests a fair value of $88 but with possible downside to $45.  While risk/reward of 28/40 is somewhat attractive, we are not comfortable taking position while the Transport is weakening.

IberiaBank (IBKC) reached the top five for the first time on our list.  We know little about this Southeast Regional bank thus we won’t elaborate much about its fundamental.  Technical level shows that $45 is the next support level while a break below that will lead a stock to see $42 support level.  Over the past three years, the stock has been compressing and a break above or below its trend line will determine the major move of the stock.

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 September 30,  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
FNFG First Niagara Financial Group 9.15 8.07 -11.80%
EMR Emerson Electric Co. 41.31 48.27 16.85%
GTY Getty Realty Corp. 14.42 17.95 24.48%
NFG National Fuel Gas Co. 48.68 54.04 11.01%
MMM 3M Co 71.79 92.42 28.74%
      Average 13.85%
         
DJI Dow Jones Industrial 10,913.38 13,437.13 23.13%
SPX S&P 500 1,131.42 1,440.67 27.33%

NLO_20120928

Our top five  under underperformed the market by nearly 10% partly due to the loss from First Niagara (FNFG).  Despite that, other four stocks managed to reach 10% mark within one year time frame.

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U.S. Dividend Watch List: September 14, 2012

Posted on September 14, 2012 by | Leave a comment

Below are the 11 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
CAH Cardinal Health, Inc.  38.23 2.47% 12.25 3.12 0.95 2.48% 30%
ERIE Erie Indemnity Company  64.05 4.87% 22.47 2.85 2.21 3.45% 78%
ABM ABM Industries, Inc. 18.84 7.77% 19.42 0.97 0.58 3.08% 60%
WGL WGL Holdings, Inc. 39.96 8.50% 20.28 1.97 1.60 4.00% 81%
PPL PP&L Corporation 29.06 8.96% 9.88 2.94 1.44 4.96% 49%
ED Consolidated Edison, Inc.  59.76 9.14% 16.51 3.62 2.42 4.05% 67%
MCD McDonald's Corp.  91.62 9.47% 17.22 5.32 2.80 3.06% 53%
WEYS Weyco Group, Inc.  22.82 9.61% 15.63 1.46 0.68 2.98% 47%
CWT California Water Service 18.44 9.82% 20.95 0.88 0.63 3.42% 72%
ANAT American National Insurance 72.40 10.07% 10.71 6.76 3.08 4.25% 46%
MCY Mercury General Corp. 39.77 10.52% 15.18 2.62 2.44 6.14% 93%
11 Companies

Watch List Review

Cardinal Health (CAH) has retained the top spot for several weeks now.  Despite that, the stock is holding well above the $37 support level.  Fundamentally, our model indicates that Cardinal Health has a downside risk of $33-34 if the market declines and an upside fair value of $57.  The 2.5% yield could provide a good cushion if you are willing to take on such an attractive risk/reward, given the flat yield curve.  In addition, we find the  payout ratio at 30% very compelling.  As Charles Dow said in his January 28, 1902 writing, “Nothing strengthens a stock more than margin of safety in dividend earnings, and nothing weakens a stock more than doubt in regard to stability in of dividends.”

We continue to go back to a classic blue-chip name of McDonald’s (MCD).  Fundamentally, the company would be undervalue around a dividend yield of 3.6%.  Given the low interest rate environment we’re in, 3% yield with 50% payout ratio appears to be sound.  Although the global weakness may have taken the stock down, the technical level shows very promising signs.  The stock made a low in June 2012 at $85 then rallied to $92 in mid July 2012.  MCD then retested the low in August at $86.  A break above the $92 would be a very bullish signal for any technical trader.

Yield seekers may turn their attention to Mercury (MCY) and American National (ANAT) with dividend yields of 6% and 4.25%, respectively.  These two insurance companies are trading at a deep discount to their historical book value.  American National trades at half of its tangible book while Mercury trades just slightly (10%) above its book value.  The concern may be from the heavy exposure in the bond or fixed income market.  We believe that has already been baked into the price and we should see the price stablize at their current level, however, one can never be too sure so we suggest 2-3 stage purchases into these insurance companies.

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 September 16,  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
ANAT American National Insurance 70.88 72.3276 2.04%
TMP Tompkins Financial Corp. 36.51 40.42 10.71%
HGIC Harleysville Group Inc.  26.76 59.9 123.84%
SYY Sysco Corp. 27.40 30.34 10.73%
BRO Brown & Brown, Inc. 19.01 26.71 40.50%
Average 37.57%

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U.S. Dividend Watch List: August 31, 2012

Posted on September 1, 2012 by | Leave a comment

Below are the 22 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
CAH Cardinal Health, Inc.  39.55 2.57% 12.92 3.06 0.95 2.40% 31%
ERIE Erie Indemnity Company  63.77 4.32% 22.38 2.85 2.21 3.47% 78%
EXPD Expeditors International 36.61 5.11% 21.79 1.68 0.56 1.53% 33%
WGL WGL Holdings, Inc. 39.04 5.97% 19.82 1.97 1.60 4.10% 81%
MCY Mercury General Corp. 38.29 6.33% 14.61 2.62 2.44 6.37% 93%
UNM Unum Group 19.51 6.73% 26.36 0.74 0.52 2.67% 70%
MCD McDonald's Corp.  89.49 6.98% 16.82 5.32 2.80 3.13% 53%
RLI RLI Corp. 63.36 7.15% 12.33 5.14 1.28 2.02% 25%
MATW Matthews International Corp.  29.93 7.35% 13.48 2.22 0.36 1.20% 16%
ANAT American National Insurance 70.69 7.58% 10.46 6.76 3.08 4.36% 46%
OMI Owens & Minor, Inc. 27.99 8.19% 15.21 1.84 0.88 3.14% 48%
CWT California Water Service 18.29 8.80% 20.78 0.88 0.63 3.44% 72%
SJI South Jersey Industries, Inc. 50.62 8.81% 15.92 3.18 1.61 3.18% 51%
BDX Becton, Dickinson and Co. 75.98 9.18% 13.76 5.52 1.80 2.37% 33%
LM Legg Mason, Inc.  24.58 9.93% 22.76 1.08 0.44 1.79% 41%
PPL PP&L Corporation 29.33 9.93% 9.98 2.94 1.44 4.91% 49%
WEYS Weyco Group, Inc.  22.94 10.18% 15.71 1.46 0.68 2.96% 47%
HRL Hormel Foods Corp. 28.72 10.33% 15.96 1.8 0.60 2.09% 33%
IBKC IBERIABANK Corp.  46.91 10.35% 21.13 2.22 1.36 2.90% 61%
VVC Vectren Corp. 28.21 10.67% 14.54 1.94 1.40 4.96% 72%
JNJ Johnson & Johnson  67.43 10.85% 21.41 3.15 2.44 3.62% 77%
ED Consolidated Edison, Inc.  60.62 10.96% 16.75 3.62 2.42 3.99% 67%
22 Companies

Watch List Review

Cardinal Health (CAH) remained at the top spot again this week.  With the 13-F filing released, we found that Loews Corp. doubled its holding of the stock from 50k shares to 100k shares.  In addition to that, the board approved a $750m share repurchase.

Technically speaking, CAH has been trading between a $39 and $43 range for a year.  Any break above the $43 level would be a bullish sign and a break below $39 would mark a bearish signal.  Any trader would take positions now with a stop slightly below $39.  However, we feel that a long-term investor could buy the shares knowing the stock has traded in-line or as expected.  Our model indicates that shares of CAH should be bought anywhere below $40 and would be a bargain around $26.

Erie Indemnity (ERIE) is an insurance broker and is a new addition to our list.  One of the biggest things we noticed is the amount of cash the company has on its books.  ERIE holds $2.76B in cash and the market cap is $3.39B.  That cash holding contributes to 81% of the company value.  Although we don’t know for sure the implication of that, we believe it may be because of the cash reserve they are required to hold.  But when we compared ERIE's cash reserve's to their competitors, it is much higher than most.  Value Line Investment Survey indicates that ERIE is considered at fair value at 15x earnings, thus 22x trailing 12-month earnings and 19x forward earnings doesn’t scream out buy just yet.

McDonald (MCD) is trading just 7% above its 52-week low.  Weakness in Asia and Europe continue to hold the stock back.  The cost of commodities may also contribute to the margin squeeze.  At $87/share, MCD is approaching our ‘buy’ price according to our model.  If the bear market takes its toll, our model indicates that we could possibly see the stock trade at $50/share.  IQTrends (www.iqtrends.com) indicates that this name is approaching its undervalued range at 3.6% dividend yield.

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U.S. Dividend Watch List: August 17, 2012

Posted on August 18, 2012 by | Leave a comment

Below are the 17 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
CAH Cardinal Health, Inc.  39.70 2.96% 12.97 3.06 0.95 2.39% 31%
ERIE Erie Indemnity Company  63.54 3.94% 22.29 2.85 2.21 3.48% 78%
MCD McDonald's Corp.  87.36 4.44% 16.42 5.32 2.80 3.21% 53%
MCY Mercury General Corp. 37.79 4.94% 14.42 2.62 2.44 6.46% 93%
UNM Unum Group 19.40 6.13% 26.22 0.74 0.52 2.68% 70%
ANAT American National Insurance 70.17 6.79% 10.38 6.76 3.08 4.39% 46%
OMI Owens & Minor, Inc. 28.33 9.51% 15.40 1.84 0.88 3.11% 48%
HRC Hill-Rom Holdings, Inc. 27.05 9.56% 11.66 2.32 0.50 1.85% 22%
MATW Matthews International Corp.  30.64 9.90% 13.80 2.22 0.36 1.17% 16%
EXPD Expeditors International 38.29 9.93% 22.79 1.68 0.56 1.46% 33%
BDX Becton, Dickinson and Co. 76.55 10.00% 13.87 5.52 1.80 2.35% 33%
PPL PP&L Corporation 29.41 10.23% 10.00 2.94 1.44 4.90% 49%
CAG ConAgra Foods, Inc. 24.73 10.45% 22.08 1.12 0.96 3.88% 86%
ADM Archer Daniels Midland Co. 26.17 10.47% 14.22 1.84 0.70 2.67% 38%
WGL WGL Holdings, Inc. 40.73 10.56% 20.68 1.97 1.60 3.93% 81%
RLI RLI Corp. 64.40 10.65% 12.53 5.14 1.28 1.99% 25%
HRL Hormel Foods Corp. 28.64 10.71% 16.46 1.74 0.60 2.09% 34%
17 Companies

Watch List Review

Cardinal Health (CAH) moved from the 3rd spot to the top of our list this week.  With the 13-F filing released, we found that Loews Corp. doubled its holding of the stock from 50k shares to 100k shares.  In addition to that, the board approved a $750m share repurchase.

Technically speaking, CAH has been trading between a $39 and $43 range for a year.  Any break above the $43 level would be a bullish sign and a break below $39 would mark a bearish signal.  Any trader would take positions now with a stop slightly below $39.  However, we feel that a long-term investor could buy the shares knowing the stock has traded in-line or as expected.  Our model indicates that shares of CAH should be bought anywhere below $40 and would be a bargain around $26.

Erie Indemnity (ERIE) is an insurance broker and is a new addition to our list.  One of the biggest things we noticed is the amount of cash the company has on its book.  The ERIE holds $2.76B in cash and the market cap is $3.39B.  That cash holding contributes to 81% of the company value.  Although we don’t know for sure the implication of that, we believe it may be because of the cash reserve they are required to hold.  But when we compared that to their competitors, that cash reserve is much higher than most.  Valueline indicates that Erie is considered at fair value at 15x earnings, thus 22x trailing 12-month earnings and 19x forward earnings doesn’t scream out buy just yet.

McDonald (MCD) is trading just 4% above its 52-week low.  Weakness in Asia and Europe continue to hold the stock back.  Commodity costs may also contribute to the margin squeeze.  At $87/share, MCD is approaching our ‘buy’ price according to our model.  If the bear market take its toll, our model indicates that we could possibly see the stock trade at $50/share.  IQTrends indicate that this name is approach its undervalue range at 3.6% dividend yield.

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 August 19,  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
BOH Bank of Hawaii Corp. 37.44 47.13 25.88%
LNC Lincoln National Corp. 19.46 23.89 22.76%
SEIC SEI Investments Company  15.71 21.89 39.34%
STT State Street Corp. 31.91 41.91 31.34%
BBT BB&T Corp. 19.27 31.96 65.85%
Average 37.04%
DJI Dow Jones Industrial 10,817.65 13,275.20 22.72%
SPX S&P 500 1,123.53 1,418.16 26.22%

NLO_2012.8.17

Our top five outperformed the market by a wide margin.  Four of the five companies are in the financial sector.  When many companies from the same sector appear in our watch list as the top five, it is a good sign that they are undervalued.

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U.S. Dividend Watch List: August 3, 2012

Posted on August 4, 2012 by | Leave a comment

Below are the 24 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
CRR Carbo Ceramics, Inc. 64.69 2.68% 11.33 5.71 1.08 1.67% 19%
EXPD Expeditors International 36.10 3.65% 20.87 1.73 0.56 1.55% 32%
CAH Cardinal Health, Inc.  39.24 4.56% 13.30 2.95 0.95 2.42% 32%
MATW Matthews International  29.16 4.59% 13.32 2.19 0.36 1.23% 16%
HRC Hill-Rom Holdings, Inc. 25.90 4.90% 11.16 2.32 0.50 1.93% 22%
UNM Unum Group 19.18 4.92% 25.92 0.74 0.52 2.71% 70%
JCI Johnson Controls Inc  24.59 5.22% 9.80 2.51 0.72 2.93% 29%
ERIE Erie Indemnity Company  65.93 5.29% 22.27 2.96 2.21 3.35% 75%
CHRW C.H. Robinson Worldwide  53.60 5.49% 19.71 2.72 1.32 2.46% 49%
HHS Harte-Hanks, Inc. 6.52 5.84% 9.59 0.68 0.34 5.21% 50%
IBKC IBERIABANK Corp.  45.37 6.73% 20.53 2.21 1.36 3.00% 62%
BDX Becton, Dickinson 74.35 6.84% 13.54 5.49 1.80 2.42% 33%
ADM Archer Daniels Midland 25.54 7.81% 13.88 1.84 0.70 2.74% 38%
ANAT American National Insurance 70.94 7.96% 9.98 7.11 3.08 4.34% 43%
HRL Hormel Foods Corp. 28.00 8.23% 16.09 1.74 0.60 2.14% 34%
OMI Owens & Minor, Inc. 28.04 8.39% 15.24 1.84 0.88 3.14% 48%
MCY Mercury General Corp. 36.65 8.40% 13.99 2.62 2.44 6.66% 93%
MCD McDonald's Corp.  89.59 9.24% 16.84 5.32 2.80 3.13% 53%
ABM ABM Industries, Inc. 18.90 9.31% 15.12 1.25 0.58 3.07% 46%
MGRC McGrath RentCorp.  23.68 9.58% 12.08 1.96 0.94 3.97% 48%
PBI Pitney Bowes Inc  13.86 9.65% 4.05 3.42 1.50 10.82% 44%
COP ConocoPhillips 55.71 10.06% 6.51 8.56 2.64 4.74% 31%
STBA S&T BanCorp., Inc.  16.81 10.52% 14.25 1.18 0.60 3.57% 51%
CAG ConAgra Foods, Inc. 24.57 10.68% 21.94 1.12 0.96 3.91% 86%
24 Companies

Watch List Review

Carbo Ceramics (CRR) continues to trade down and has broken the $70 mark.  On the technical level, shares remain in bearish territory.  After the company reported the Q2 earnings, share took a dive.  Despite not meeting analysts’ expectation, the company revenue and earnings rose 19% and 7% respectively.  In addition, the board approved a 13% increase in the dividend.  Here’s the summary of some of the price targets and analyst ratings on Carbo Ceramics.

  • Dahlman Rose – maintain Buy rating, lower price target from $99 to $84.
  • BMO Capital – maintain Outperform, lower price target from $130 to $100.
  • Howard Weil – cut target price from $108 to $83.
  • Tudor Pickering – lower rating from buy to accumulate.
  • Morgan Stanley – lower rating to Underweight, lower price target to $55.

Expeditors (EXPD) shares are trading in tandem with the Dow Jones Transportation Index.  Goldman Sachs initiates coverage on Expeditors with a Sell rating on the stock with price target of $35.  Goldman said, “In our view, Expeditors is a well run business in a highly fragmented and competitive industry, but trade growth is slowing cyclically and we expect this to negatively impact the company’s top line growth resulting in earnings to disappointment.  We do not believe this is discounted at current valuations.”  Here’s the summary of some of the research firm coverage.

Cardinal Health (CAH), the maker of medical equipment and supplies, is under pressure after Q4 revenue and earnings came in below analyst expectations. EPS was $0.68 vs $0.72 estimate; revenue was $26.76B vs the $27.27B estimate.  Credit Suisse maintains an outperform rating but lowered their target price slightly from $53 to $50.  JP Morgan also maintained their overweight rating but lowered the price target from $48 to $47.  We will dive more into the stock later in the week.

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 August 6,  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
GBCI Glacier BanCorp., Inc.  12.41 15.21 22.56%
SYBT S.Y. BanCorp., Inc.  21.47 22.96 6.94%
BOH Bank of Hawaii Corp. 43.04 47.25 9.78%
O Realty Income Corp. 30.01 41.41 37.99%
SFNC Simmons First National Corp.  23.47 23.30 -0.72%
Average 15.31%
DJI Dow Jones Industrial 11,444.61 13,096.17 14.43%
SPX S&P 500 1,199.38 1,391.00 15.98%

NLO_2012.8.3

Our top five performance was in-line with the market.  All five companies managed to reach the 10% mark within one year.

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U.S. Dividend Watch List: July 20, 2012

Posted on July 22, 2012 by | Leave a comment

Below are the 13 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
MATW Matthews International Corp.  28.96 2.15% 12.12 2.39 0.36 1.24% 15%
EXPD Expeditors International  37.05 2.43% 21.42 1.73 0.56 1.51% 32%
CHRW C.H. Robinson Worldwide  56.96 2.91% 21.25 2.68 1.32 2.32% 49%
UNM Unum Group 18.95 3.16% 24.93 0.76 0.52 2.74% 68%
FNFG First Niagara Financial Group  7.555 3.35% 12.59 0.6 0.32 4.24% 53%
JCI Johnson Controls Inc  25.28 4.08% 10.45 2.42 0.72 2.85% 30%
BDX Becton, Dickinson and Co. 74.79 7.47% 13.62 5.49 1.80 2.41% 33%
ANAT American National Insurance 71.09 8.19% 10.00 7.11 3.08 4.33% 43%
AMAT Applied Materials Inc. 10.51 8.35% 10.41 1.01 0.37 3.52% 37%
CAG ConAgra Foods, Inc. 24.13 8.69% 21.54 1.12 0.96 3.98% 86%
HRL Hormel Foods Corp. 28.3 9.39% 16.26 1.74 0.60 2.12% 34%
ABM ABM Industries, Inc. 18.99 9.83% 15.19 1.25 0.58 3.05% 46%
COP ConocoPhillips 55.99 10.61% 6.11 9.16 2.64 4.72% 29%
13 Companies              

Matthews International (MATW) reported earning that fell short of analysts’ expectation by $0.08 or roughly 10%.  In addition to the weak earning, they company guided next year’s earning in the range of $2.34 to $2.40, shy of the consensus expectation of $2.54.  As a result, the stock fell 8.4% on Friday and closed just 2.15% above the 52-week low.  Technical level of $28.50 will be an important level for the stock to hold.  Valueline estimated that the stock typically trades around 13x cash flow.  Currently, it is trading at 8.5x cash flow which tells us the stock is heavily undervalued.  Although dividend yield of 1.24% isn’t anything to brag about, it is extremely safe when the company pays out 15% of their earning.

Johnson Controls (JCI) took a hit this week as the company also reported earning that wasn’t at par with the street.  Analysts got to work right away and revised their price target for the stock. Deutsche Bank downgraded its rating on Johnson Controls from buy to hold, and lowered its price target from $35 (from April) to $32 (26% above current price).  Jefferies & Company reiterated its hold rating but lowered its price target from $28 to $26 (below current price).  UBS kept their rating at neutral and lowered the price target from $28 to $27.  Overall, the street appears to have mixed bag of opinion which range from $26 to $35.  Our proprietary model suggests a fair value of $31, a buy at $24, and a possible downside to $17 being the ultimate bargain bin.

We wanted to highlight the amazing performance of Walgreen (WAG) which rose 13% for the week after coming to term with Express Script.  Anyone lucky enough to scoop up the stock below $30 would have locked in a dividend yield of 3.6%!

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 July 22,  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
MDP Meredith Corp. 29.36 32.92 12.13%
ANAT American National Insurance 76.58 71.09 -7.17%
WABC Westamerica BanCorp.  48.57 45.97 -5.35%
MCY Mercury General Corp. 38.70 41.35 6.85%
GBCI Glacier BanCorp., Inc.  13.12 15.71 19.74%
      Average 5.24%
         
DJI Dow Jones Industrial 12,681.16 12,822.57 1.12%
SPX S&P 500 1,345.02 1,362.66 1.31%

NLO_2012.7.20

Our top five stocks outperformed the market by 4%.  Three out of five companies had a +10% gains within one year.

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