How many of us carry dead meat in our portfolios? I bet we all do to some extent right? I mean it’s always tempting to go after stocks that already offer a high dividend yield. So I did some more screening and came up with the worst of the worst:
- Weyerhaeuser Co (WY)
- Altria Group Inc (MO)
- Masco Corp (MAS)
- Nicor Inc (GAS)
- Sempra Energy (SRE)
- Northeast Utilities (NU)
- CenterPoint Energy Inc (CNP)
- H&R Block Inc (HRB)
- NiSource Inc (NI)
- Constellation Energy Group Inc (CEG)
- Molson Coors Brewing Co (TAP)
Why are these companies hard to sell and how did I come up with them?
First off, I simply took all companies in the S&P500 that pay a dividend of 2% or more. From there, it was quite simple. Do any of these companies have sales declining by 5% (or more) on average over five years? I mean you have to do very badly to regress by so much over 5 years don’t you think? Sales are the number one way for me to find this dead meat because a company that has declining sales will usually have declining profits and eventually declining dividends. There’s always a possibility that declining sales would be caused by the sale of a unit or part of a company and further analysis will be required for that.
Here are the complete numbers for these companies:
Ticker Name Price Dividend Yield Payout Ratio Sales change 5 year average WY Weyerhaeuser Co 21.98 2.73 664.68 -19.37 MO Altria Group Inc 26.55 5.73 77.98 -18.98 MAS Masco Corp 13.22 2.27 N/A -10.75 GAS Nicor Inc 52.8 3.52 61.42 -9.08 SRE Sempra Energy 53.19 3.61 51.56 -9.03 NU Northeast Utilities 33.48 3.29 46.84 -7.83 CNP CenterPoint Energy Inc 17.82 4.43 72.35 -7.39 HRB H&R Block Inc 17.67 3.4 41.09 -6.73 NI NiSource Inc 18.91 4.87 86.8 -6.68 CEG Constellation Energy Group Inc 32.88 2.92 N/A -6.1 TAP Molson Coors Brewing Co 47.76 2.34 30.05 -5.18
Do you agree? What are your thoughts and would you own a company that has such negative momentum in its underlying business? If so, under what circumstances?