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Category Archives: PEP
PepsiCo Inc. 10-Year Targets
Below are the valuation targets for PepsiCo Inc. (PEP) for the next 10 years. Continue reading
U.S. Dividend Watch List: October 12, 2012
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 |
| INTC | Intel Corp. | 21.48 | 0.38% | 9.10 | 2.36 | 0.90 | 4.19% | 38% |
| ABM | ABM Industries, Inc. | 18.12 | 1.51% | 18.68 | 0.97 | 0.58 | 3.20% | 60% |
| EXPD | Expeditors International | 34.78 | 1.70% | 20.70 | 1.68 | 0.56 | 1.61% | 33% |
| IBKC | IBERIABANK Corp. | 45.25 | 1.78% | 20.38 | 2.22 | 1.36 | 3.01% | 61% |
| CLC | Clarcor Inc. | 44.69 | 2.92% | 18.39 | 2.43 | 0.54 | 1.21% | 22% |
| ERIE | Erie Indemnity Company | 63.20 | 3.39% | 22.49 | 2.81 | 2.21 | 3.50% | 79% |
| WGL | WGL Holdings, Inc. | 39.09 | 3.82% | 19.84 | 1.97 | 1.60 | 4.09% | 81% |
| JW-A | John Wiley & Sons Inc. CL 'A' | 45.06 | 4.21% | 13.86 | 3.25 | 0.80 | 1.78% | 25% |
| MATW | Matthews International Corp. | 29.13 | 4.48% | 13.12 | 2.22 | 0.36 | 1.24% | 16% |
| ETP | Energy Transfer Partners L P | 42.61 | 3.85% | 9.05 | 4.71 | 3.58 | 8.40% | 76% |
| CRR | Carbo Ceramics, Inc. | 64.49 | 5.14% | 11.29 | 5.71 | 1.08 | 1.67% | 19% |
| HRL | Hormel Foods Corp. | 28.83 | 5.68% | 16.02 | 1.80 | 0.60 | 2.08% | 33% |
| PBI | Pitney Bowes Inc | 13.36 | 5.70% | 3.91 | 3.42 | 1.50 | 11.23% | 44% |
| CAT | Caterpillar Inc. | 82.82 | 5.84% | 9.26 | 8.94 | 2.08 | 2.51% | 23% |
| OMI | Owens & Minor, Inc. | 29.06 | 6.17% | 15.79 | 1.84 | 0.88 | 3.03% | 48% |
| VVC | Vectren Corp. | 28.78 | 6.55% | 14.84 | 1.94 | 1.40 | 4.86% | 72% |
| ED | Consolidated Edison, Inc. | 59.83 | 6.71% | 16.53 | 3.62 | 2.42 | 4.04% | 67% |
| SON | Sonoco Products Co. | 30.59 | 6.92% | 15.53 | 1.97 | 1.20 | 3.92% | 61% |
| STBA | S&T BanCorp., Inc. | 16.85 | 7.46% | 14.28 | 1.18 | 0.60 | 3.56% | 51% |
| SRCE | 1st Source Corp. | 22.06 | 7.56% | 11.55 | 1.91 | 0.68 | 3.08% | 36% |
| MCD | McDonald's Corp. | 92.51 | 7.67% | 17.39 | 5.32 | 3.08 | 3.33% | 58% |
| BUSE | First Busey Corp. | 4.76 | 7.69% | 19.04 | 0.25 | 0.16 | 3.36% | 64% |
| APD | Air Products & Chemicals, Inc. | 82.00 | 7.74% | 13.00 | 6.31 | 2.56 | 3.12% | 41% |
| UTX | United Technologies Corp. | 75.96 | 7.88% | 15.92 | 4.77 | 2.14 | 2.82% | 45% |
| UNM | Unum Group | 19.75 | 8.04% | 26.69 | 0.74 | 0.52 | 2.63% | 70% |
| ANAT | American National Insurance | 72.01 | 8.16% | 10.65 | 6.76 | 3.08 | 4.28% | 46% |
| PNY | Piedmont Natural Gas Co., Inc. | 31.28 | 8.24% | 20.05 | 1.56 | 1.20 | 3.84% | 77% |
| VLY | Valley National BanCorp. | 9.85 | 8.24% | 14.49 | 0.68 | 0.65 | 6.60% | 96% |
| CWT | California Water Service | 18.58 | 8.40% | 21.11 | 0.88 | 0.63 | 3.39% | 72% |
| SJW | SJW Corp. | 24.59 | 8.90% | 21.76 | 1.13 | 0.71 | 2.89% | 63% |
| LM | Legg Mason, Inc. | 24.39 | 9.08% | 22.58 | 1.08 | 0.44 | 1.80% | 41% |
| FDS | FactSet Research Systems Inc. | 93.28 | 9.25% | 22.64 | 4.12 | 1.24 | 1.33% | 30% |
| MDU | MDU Resources Group Inc. | 21.48 | 9.31% | 19.01 | 1.13 | 0.67 | 3.12% | 59% |
| AMAT | Applied Materials Inc. | 10.90 | 9.33% | 13.13 | 0.83 | 0.36 | 3.30% | 43% |
| BDX | Becton, Dickinson and Co. | 76.62 | 9.38% | 13.88 | 5.52 | 1.80 | 2.35% | 33% |
| GD | General Dynamics Corp. | 66.10 | 9.53% | 9.69 | 6.82 | 2.04 | 3.09% | 30% |
| RBCAA | Republic BanCorp., Inc. | 20.49 | 9.87% | 4.06 | 5.05 | 0.66 | 3.22% | 13% |
| RLI | RLI Corp. | 68.06 | 10.02% | 13.24 | 5.14 | 1.28 | 1.88% | 25% |
| SFNC | Simmons First National Corp. | 24.83 | 10.11% | 16.12 | 1.54 | 0.80 | 3.22% | 52% |
| NJR | New Jersey Resources Corp. | 45.27 | 10.12% | 20.03 | 2.26 | 1.60 | 3.53% | 71% |
| RAVN | Raven Industries, Inc. | 27.68 | 10.32% | 18.96 | 1.46 | 0.42 | 1.52% | 29% |
| PPL | PP&L Corporation | 29.44 | 10.34% | 10.01 | 2.94 | 1.44 | 4.89% | 49% |
| DOV | Dover Corp. | 55.33 | 10.35% | 12.03 | 4.60 | 1.40 | 2.53% | 30% |
| SJI | South Jersey Industries, Inc. | 51.49 | 10.68% | 16.19 | 3.18 | 1.61 | 3.13% | 51% |
| JCI | Johnson Controls Inc | 25.87 | 10.70% | 10.31 | 2.51 | 0.72 | 2.78% | 29% |
| MSEX | Middlesex Water Company | 19.23 | 10.71% | 24.04 | 0.80 | 0.74 | 3.85% | 93% |
| CAH | Cardinal Health, Inc. | 40.89 | 10.78% | 13.11 | 3.12 | 0.95 | 2.32% | 30% |
| STR | Questar Corp. | 20.20 | 10.81% | 17.12 | 1.18 | 0.68 | 3.37% | 58% |
| EMR | Emerson Electric Co. | 48.35 | 10.92% | 14.65 | 3.30 | 1.60 | 3.31% | 48% |
| COP | ConocoPhillips | 56.17 | 10.96% | 6.56 | 8.56 | 2.64 | 4.70% | 31% |
| 50 Companies | ||||||||
Watch List Review
Topping out list this week is Intel (INTC). The stock continues to be under pressure especially after Advance Micro Devices (AMD) issued a profit warning. Speculation about job cuts, as much as 2,340 jobs (20% of the work force), is also circulating. AMD shares were down -14% on Friday. Despite that, Intel share were down just less than -1%. At the current price, INTC is yielding 4.19% with a conservative payout ratio of 38%. While the short-term picture seems grim, with the PC market slowing to a halt, we still believe the that there is significant value built into INTC and it shouldn’t be ignored. Again, we took a position in Intel about a week ago and would be very excited to see it trade down to $16.
ABM Industries (ABM) has been trading in a "line" formation (between $18-$20) for nearly three months. The stock appears to be retesting the $18 level we saw in mid-July. The company announced a definitive agreement to purchase Air Serv which provides facility management services to airlines and airports. ABM expects to add $650 million to their top line through this acquisition. Based on that, we assume a Price-to-Sales ratio of 0.24 which is a decent figure. Our valuation model shows a possible downside to $15 and upside to $24, a –19%/+34% risk/reward.
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 14, 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 |
| WAG | Walgreen Co. | 32.90 | 35.94 | 9.24% |
| PEP | PepsiCo Inc. | 62.09 | 70.05 | 12.82% |
| BDX | Becton, Dickinson and Co. | 73.85 | 76.62 | 3.75% |
| AROW | Arrow Financial Corp. | 22.73 | 24.74 | 8.84% |
| FRS | Frisch's Restaurants, Inc | 19.52 | 17.13 | -12.24% |
| Average | 4.48% | |||
| DJI | Dow Jones Industrial | 11,644.49 | 13,328.85 | 14.46% |
| SPX | S&P 500 | 1,224.58 | 1,428.59 | 16.66% |
Our top five underperformed the market by nearly 10% partly due to the loss from Frisch (FRS). All of the stocks on our watch list achieved a +10% gain within a year. In fact, 4 of 5 stocks achieved 15% gains within the year.
Despite the year end losses in FRS, it should be noted that in the process to FRS having a losing year, it also had the largest increase in the year. FRS gained as much as +67% before collapsing within the last two months. The performance of FRS is among the primary reasons why we choose to consider selling if the gain exceeds the historical average.
NLO Dividend Watch List: October 14, 2011
The market rebounded nicely this week and pushed many companies out of their 52-week low range. Despite that, there are some great bargains to be had. There are 26 companies on this week's list.
| Symbol | Name | Price | % Yr Low | P/E | EPS | Dividend | Yield | Payout Ratio |
| WAG | Walgreen Co. | 32.9 | 2.81% | 11.19 | 2.94 | 0.90 | 2.74% | 31% |
| PEP | PepsiCo Inc. | 62.09 | 4.79% | 15.80 | 3.93 | 2.06 | 3.32% | 52% |
| BDX | Becton, Dickinson | 73.85 | 4.83% | 12.41 | 5.95 | 1.64 | 2.22% | 28% |
| AROW | Arrow Financial Corp. | 22.73 | 5.28% | 12.09 | 1.88 | 0.97 | 4.27% | 52% |
| FRS | Frisch's Restaurants | 19.52 | 5.34% | 10.44 | 1.87 | 0.64 | 3.28% | 34% |
| SYY | Sysco Corp. | 26.52 | 5.70% | 13.53 | 1.96 | 1.04 | 3.92% | 53% |
| CFR | Cullen/Frost Bankers | 46.94 | 6.58% | 13.30 | 3.53 | 1.84 | 3.92% | 52% |
| T | AT&T Inc | 29.15 | 7.16% | 8.47 | 3.44 | 1.72 | 5.90% | 50% |
| BCR | CR Bard, Inc. | 86.81 | 7.41% | 22.91 | 3.79 | 0.76 | 0.88% | 20% |
| BOH | Bank of Hawaii Corp. | 37.79 | 7.88% | 11.21 | 3.37 | 1.80 | 4.76% | 53% |
| VNO | Vornado Realty Trust | 76.1 | 7.93% | 16.99 | 4.48 | 2.76 | 3.63% | 62% |
| TR | Tootsie Roll Industries | 24.79 | 7.97% | 28.83 | 0.86 | 0.32 | 1.29% | 37% |
| WST | West Pharmaceutical | 38.23 | 8.12% | 20.78 | 1.84 | 0.72 | 1.88% | 39% |
| ANAT | American Nat'l Insur. | 71.27 | 8.46% | 11.80 | 6.04 | 3.08 | 4.32% | 51% |
| TRV | Travelers | 50.65 | 8.64% | 9.57 | 5.29 | 1.64 | 3.24% | 31% |
| BRO | Brown & Brown, Inc. | 18.38 | 9.02% | 16.71 | 1.10 | 0.32 | 1.74% | 29% |
| CWT | California Water Service | 18.17 | 9.10% | 18.73 | 0.97 | 0.62 | 3.41% | 64% |
| MSEX | Middlesex Water | 18.06 | 9.18% | 19.63 | 0.92 | 0.73 | 4.04% | 79% |
| MDT | Medtronic, Inc. | 33 | 9.34% | 11.50 | 2.87 | 0.97 | 2.94% | 34% |
| CBSH | Commerce Bancshares | 36.39 | 9.51% | 12.90 | 2.82 | 0.92 | 2.53% | 33% |
| NTRS | Northern Trust Corp. | 36.75 | 9.67% | 14.58 | 2.52 | 1.12 | 3.05% | 44% |
| WFSL | Washington Federal | 13.37 | 10.04% | 15.55 | 0.86 | 0.24 | 1.80% | 28% |
| PRK | Park National Corp. | 53.93 | 10.06% | 12.15 | 4.44 | 3.76 | 6.97% | 85% |
| ALL | Allstate Corp. | 24.58 | 10.37% | 23.41 | 1.05 | 0.84 | 3.42% | 80% |
| UTX | United Technologies Corp. | 74.2 | 10.55% | 14.38 | 5.16 | 1.92 | 2.59% | 37% |
| NU | Northeast Utilities | 33.08 | 11.42% | 13.96 | 2.37 | 1.10 | 3.33% | 46% |
Watch List Summary
Topping our list this week is Walgreen Co. (WAG). Walgreen Co. is currently yielding 2.74% with a conservative P/E ratio of 11. Earnings is expected to grow 11% through 2012. With the stock being so close to the one year low, it appears that the risk-reward may have turned in favor of the investor. We have bought a 10% position of WAG as of Friday October 14th with the expectation to purchase the exact same dollar amount when the price falls by 20% or more. Like moths to a flame, we're drawn to the compounding consistency of Walgreen as demonstrated in the performance of the stock against Apple (AAPL) since Apple's IPO in 1980. In the chart below, only recently has AAPL been able to exceed the total return of Walgreen but by a relatively narrow margin.
Right behind Walgreen Co. is the well known consumer name, Pepsi Co. (PEP). Pepsi Co. has been on our list for some time now so we'll have to see how much longer it would stay. Analysts expect Pepsi to grow its bottom line by 7% next year. Although times may be different, but we can't help but remind investors of Jeremy Siegel's seminal piece "The Nifty Fifty Revisited" (found here). In that piece, Siegel reviews the performance of the "Nifty Fifty" at their peak price in 1972 before their crash. Pepsi Co. (PEP), from the peak in 1972, produced an annualized return of 16.03% in the period from 1972 to 1995.
Becton, Dickinson (BDX) is now on our watch list after our first recommendation of the stock on May 4, 2009. According to Edson Gould’s altimeter (chart below), BDX is now selling below the price paid by Warren Buffett relative to the dividend and subsequent dividend increases. BDX has a dividend payout ratio of 28% which indicates that earnings could fall by 50% without imperiling the company’s ability to make good on their dividend.
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 October 8, 2010 and have checked their performance one year later. The top five companies on that list can be seen in the table below.
| Symbol | Name | 2010 Price | 2011 Price | % change |
| CL | Colgate-Palmolive Co. | 74.90 | 91.99 | 22.82% |
| CAG | ConAgra Foods, Inc. | 21.87 | 25.47 | 16.46% |
| NTRS | Northern Trust Corp. | 48.35 | 36.63 | -24.24% |
| WST | West Pharmaceutical | 35.11 | 38.3 | 9.09% |
| BBT | BB&T Corp. | 23.58 | 22.36 | -5.17% |
| Average | 3.79% | |||
| DJI | Dow Jones Industrial | 11,062.78 | 11,573.34 | 4.62% |
| SPX | S&P 500 | 1,176.19 | 1,215.65 | 3.35% |
The performance of the top five from last year, at 3.79%, was between the Dow's 4.62% and the S&P 500's 3.35%.
Three of the top five stocks from last year performed above the level of the S&P 500 and Dow Jones Industrial Average. Colgate-Palmolive (CL) cranked out a return of over 22% despite sporting a subpar dividend yield of 2.83%. ConAgra managed to generate a return of 16% with a dividend yield of 4.21% at the time the list was generated. Northern Trust (NTRS) got hammered with a decline of -24.24%.
Disclaimer:
On our current list, we excluded companies that have no earnings. 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. We suggest that readers use the March 2009 low (or the 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. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit 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. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.
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