These Beat Up Dividend Achievers Are Worth a Look

According to the National Bureau of Economic Research, and backed up by the Federal Reserve's Industrial Production Index, the economy officially went into recession starting in December 2007. Since then, we have seen the economy and the stock market decline in unprecedented amounts never before seen. As the chart below demonstrates, not even the "Great" Depression has seen such a year-over-year decline on a percentage basis.

click to enlarge

When it comes to investing in the current economic environment, we have to consider the worst case scenario. Below I have included a spreadsheet that considers Dividend Achievers that are close to or within 10% of their one-year lows. These stocks are ideal for consideration as your next research and potential purchase candidates.

What I have done is assume the period which these stocks have accrued the lowest quarterly earnings since the recession began, then projected those low earnings to determine if the company can sustain the dividend payment over the coming months and years. Stocks that have a negative number in the column titled "cash remaining" are the least likely to be able to increase their dividend in the coming year. While this does not condemn the stock, it does warns us of the danger that might exist.

Also, stocks that are highlighted in red are those whose lowest quarterly earnings since 2006, if projected into the future, could not sustain the current dividend payout. These stocks (DBD, PII, KO, PPG, TRH, UVV) are still good companies, however, if the recession continues or gets worse, then we could see the dividend increase put on hold as well.

My recommendation is that stocks with the lowest payout ratio and the highest cash remaining (based on the lowest quarterly earnings since the recession began) are the best companies to start your research. Don't forget to verify the dividend history before buying these stocks.

Comments

[TulipsAllOv...:]

Shouldn't you be looking at cash flow from operations (less cap ex), not GAAP earnings?

Feb 08 09:00 PM

[User 413534:]

Even though these are a bit out of date as I'm reading them, it's still nice to look back and see what was hot a little while back. You're one of the only people on the Internet I'd trust for financial advice.

May 13 07:05 PM