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Summary

  • National Oilwell Varco recently performed a spin-off of its distribution business and is a great value stock.
  • Rayonier is poised to perform its split of the company at the end of June and is a value within its industry.
  • Emerson is an industrial play which pays a nice dividend and is a value within its industry.
  • Union Pacific just executed a 2:1 stock split earlier in the week and is a value within its industry.

What started off to be a mediocre week turned out to be not so hot. Oil began to increase in price as geopolitical tensions began to intensify in Iraq. Obviously with higher oil prices comes a higher price at the pump for the consumer. When there are higher prices at the pump, we as consumer economy begin to tighten the purse strings and not go out for dinner as much or buy those shoes we like, but instead begin to focus on the necessities in life. This past week was rather weak, with the Dow losing 0.88% for the week while the S&P 500 was down 0.68% and the Nasdaq lost 0.25%. In times like these, I love picking up some more shares of value dividend stocks.

Call me a pessimistic optimist, but for now I will continue the course and purchase value stocks for my dividend portfolio. Value investing is the bread and butter of Warren Buffett's money-making strategy. The essence of value investing is basically purchasing a stock at less than market value based on certain metrics. My philosophy on dividend investing is to utilize the forward price to earnings ratio and use a one-year PEG ratio, along with a dividend. I don't necessarily look for a stock with a high yield, because I like to see capital appreciation. Because the market may be correcting itself from all-time highs, I maintain that it is difficult to find good stocks these days. That's why I'm highlighting a select set of excellent value companies in my dividend portfolio, which have had ex-dividend dates or paid out a dividend during this past week or early next week that people should place on their radar.

National Oilwell Varco, Inc. (NYSE:NOV)

Varco provides equipment and components for oil and gas drilling and production; oilfield services; and supply chain integration services to the upstream oil and gas industry worldwide. On 28Apr14, Varco reported first quarter 2014 earnings of $1.40 per share. This result beat the consensus of the 28 analysts following the company by two cents and beat last year's first quarter results by 8.53%. Varco's PE ratio is among the lowest of any stock in the oil well services and equipment industry and signals that investors have not been willing to pay a premium for this company's business prospects, making it a value story. However, during the past year, earnings growth has lagged its historical five year growth rate.

The company went ex-dividend on 11Jun14 with a $0.46 per share dividend which will be paid on 27Jun14 for a yield of 2.37%. In terms of news pertaining to the company during the week, no alerts were issued.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is near overbought territory with a current value of 68.27, while the MACD chart below shows the black line above the red line with divergence bars flattening in height, meaning the bullish momentum may be getting tired. The trend for the stock has been upwards since the end of April, so I'm going to play this one cool and not buy a position here.

(click to enlarge)

Union Pacific Corp. (NYSE:UNP)

Union Pacific Corporation owns transportation companies, of which its principal operating company, Union Pacific Railroad Company, connects 23 states in the western 66% of the United States. On 17Apr14, Union Pacific reported first quarter 2014 earnings of $1.19 per share. This result was in-line with the consensus of the 24 analysts following the company and beat last year's first quarter results by 17.24%. Union Pacific's PE ratio is below the railroad's industry average and signals that investors are not willing to pay a premium for this stock, making it a value stock. However, during the past year, earnings growth has lagged its historical five-year growth rate.

The company went ex-dividend on 12Jun14 with a $0.455 per share dividend, which will be paid on 01Jul14 for a yield of 1.8%. In terms of news pertaining to the company, the stock started trading with an adjusted price for a 2:1 stock split on 09Jun14.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is dropping from overbought territory right after the split with a current value of 66.05, while the MACD chart below shows the black line above the red line with decreasing divergence bars, meaning there is bearish momentum on the stock price. I will not be putting any additional capital to work in the name right now.

(click to enlarge)

Emerson Electric Co. (NYSE:EMR)

Emerson is a diversified global technology company which is engaged in designing and supplying products and technology, and delivering engineering services and solutions in the industrial and commercial worlds. On 06May14, Emerson reported second quarter 2014 earnings of $0.80 per share. This result missed the consensus of the 25 analysts following the company by a penny and beat last year's second quarter results by 3.90%. Emerson's PE ratio is below the Scientific & Technical industry average and signals that investors are not willing to pay a premium for this stock, making it a value stock. Additionally, during the past year, earnings growth has outpaced its historical five year growth rate.

The company went ex-dividend on 14May14 with a $0.43 per share dividend which was paid on 10Jun14 for a yield of 2.58%. In terms of news pertaining to the company, no alerts were released this week.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle-ground territory with a current value of 45.54, while the MACD chart below shows the black line just crossing below the red line with decreasing divergence bars, meaning bearish momentum is starting to mount. I will not be putting any additional capital to work in the name right now.

(click to enlarge)

Rayonier, Inc. (NYSE:RYN)

Rayonier is compared to real estate investment trusts and is an international forest products company primarily engaged in activities associated with timberland management, the sale and entitlement of real estate, and the production and sale of specialty cellulose fibers and fluff pulp. On 29Apr14, Rayonier reported first quarter 2014 earnings of $0.36 per share. This result missed the $0.46 consensus of the six analysts covering the company. Rayonier's PE ratio is below the real estate operations industry average and signals that investors are not willing to pay a premium for this stock, making it a value story. Additionally, during the past year, earnings growth has outpaced its historical five year growth rate.

The company went ex-dividend on 12Jun14 with a $0.49 per share dividend which will be paid on 30Jun14 for a yield of 4.12%. In terms of news pertaining to the company this week, the company provided an update on the planned spin-off of Rayonier Advanced Materials during a live webcast on 11Jun14. The target separation date thus far is 27Jun14.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is dropping from overbought territory with a current value of 65.46, while the MACD chart below shows the black line is about to cross below the red line with decreasing divergence bars, meaning bearish momentum is starting to mount. I will not be putting any additional capital to work in the name right now.

(click to enlarge)

Conclusion

I've highlighted these names because they are poised to increase their dividends in coming years. It is important in this market to be able to hold onto companies which raise their dividend rates or initiated them, because it is a sign that the underlying company is doing well financially. The importance of these stocks I've highlighted is that they are value plays, while the broader market is choppy. I believe we are at a point in the market where we have to look for value.

Disclaimer: This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!

Source: 4 Value Dividend Stocks To Put On Your Radar