Our Dividend Watch List has been reduced from 51 companies on September 10, 2010 to 31 companies as of September 23, 2010. This could be an indication that overall sentiment is improving. The complete list of companies can be found here.
As always, we revisit the previous list for the best and worst performing stocks from our Dividend Watch List. The best performing stock was National Fuel Gas (NYSE:NFG) which rose 12.9% in two weeks. The biggest decline was Carlisle (NYSE:CSL) which fell 5.2%.
Of the top five companies, we particularly like Northern Trust (NASDAQ:NTRS). Anyone interested can read our take of Northern Trust from September 1, 2010 article. Intel (NASDAQ:INTC) bounced off the 52-week low and rose 5% in two weeks. ConAgra (NYSE:CAG) got hit after lowering its guidance as investors overlooked the 15% hike in the dividend. ConAgra shares are approaching their historical undervalued range according to Investment Quality Trends.
September 23, 2010 Watch List
|CSL||Carlisle Co. Inc||28.25||1.00%||12.12||2.33||0.68||2.41%||29%|
|NTRS||North'n Trust Co.||46.97||3.69%||15.40||3.05||1.12||2.38%||37%|
|TR||Tootsie Roll Inc.||24.06||3.71%||26.44||0.91||0.32||1.33%||35%|
|FFIN||First Fin'l Bank||45.08||3.51%||17.27||2.61||1.36||3.02%||52%|
*Note: Price data as of market close on Thursday September 23, 2010*
For anyone who hasn't seen our performance review of the Dividend Watch List from last year, we urge you to take a look. Our assessment is a worst case look at how our list beat the S&P 500.
On our current list, 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 urge investors to filter for companies with a less than 50% payout ratio. This should minimized 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 worse case scenario prior to investing. The November 2008 to March 2009 time frame fits 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.
Disclosure: No positions