Watch List Summary
Johnson & Johnson (JNJ) is slowly moving away from the top of the list. Taking JNJ's place is Intel (INTC) which fell 2% since our last update. Intel is trading at just 10x trailing earnings, 9x next year's estimated earnings. The reduction in price was triggered when INTC lowered its guidance and UBS downgraded the stock due to weak PC demand. This might be a good time to start looking at Intel which currently yields 3.5%. With a target return of 10% annually, Intel only needs to increase 6.5% for investors to obtain the historical average market return. Intel's current valuation is also very close to the 2008-2009 market bottom.
Several notable companies on the list are Tootsie Roll (TR), Colgate-Palmolive (CL), Beckman Coulter (BEC), Paychex (PAYX), and Northern Trust (NTRS). Below are the top 10 current and former Dividend Achievers. The complete list of Dividend Achievers within 11% of their 52-week low can be found here.
|Symbol||Name||Price||% Yr Low||P/E||EPS (ttm)||Div/Shr||Yield||Payout Ratio|
|WST||West Pharmaceutical Services||33.65||2.75%||14.69||2.29||0.64||1.90%||28%|
|TR||Tootsie Roll Industries Inc||23.87||2.89%||26.23||0.91||0.32||1.34%||35%|
|OMI||Owens & Minor, Inc.||26.44||3.61%||13.42||1.97||0.71||2.69%||36%|
|BEC||Beckman Coulter, Inc.||45.71||4.00%||21.77||2.10||0.72||1.58%||34%|
|BCR||CR Bard, Inc.||77.31||4.49%||15.75||4.91||0.72||0.93%||15%|
|DNB||Dun & Bradstreet Corp.||68.45||4.76%||14.72||4.65||1.40||2.05%||30%|
|NTRS||Northern Trust Corp.||47.70||5.30%||15.64||3.05||1.12||2.35%||37%|
We excluded companies that have no earnings and payout ratios in excess of 100%. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence.
Because our list has many great companies, we urged investors to filter for companies with less than 50% payout ratio. This should minimize the risk of dividend reductions if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, then payout ratios in excess of 50% may be considered. We suggest readers use the March 2009 low (or companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worst case scenario prior to investing. The November 2008 to March 2009 time frame fits that description. It is important to place these companies in your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.
Disclosure: Author is long BEC