Dividend investors take note. This week, a number of high-yielding stocks go ex-dividend. Here are five I have highlighted:
Bebe Stores Inc. (BEBE) – This Brisbane, California-based women’s clothing designer and manufacturer goes ex-dividend on Monday, Sept. 19. Its forward annual dividend yield is 1.3 percent, or $0.10. The company, which was founded in 1976, has paid dividends since 2004. The last dividend, which was paid June 10, 2011, was $0.025.
BEBE closed last week at $7.53. Its 52-week range is $5.41 to $8.25. It is showing a loss per share of $0.02.
This Motley Fool article compares BEBE to a “perfect stock” standard, and it didn’t hold up well. We, too, believe value investors should proceed with caution.
BEBE’s quarterly revenue growth is 3.8 percent. Its gross margin is 38.89 percent, which is lower than the industry average of 45.2 percent. Return on equity is dismal at 1.12 percent. Its balance sheet shows no debt.
Its competitor Wet Seal Inc. (WTSLA) does not pay a dividend. It reports earnings per share of $0.17, and price-to-earnings ratio of 28.32. It closed Friday at $4.90 a share. Its 52-week trading range is $3.09 to $5.23. Its quarterly revenue growth is 13.10 percent. Gross margin looks good at 47.84 percent. Return on equity is 6.88 percent. WTSLA is not carrying debt on its balance sheet, either.
We feel BEBE is too risky for conservative dividend investors near or at retirement, particularly in light of current fears of an impending recession.
Eni SpA (E) – This large-cap oil and natural gas company, which is headquartered in Rome, Italy, also trades ex-dividend on Monday, Sept. 19. It closed Friday at $37.80. Over the past 52 weeks, E has ranged from $33.93 to $53.80. Its forward annual dividend yield is 5.7 percent, or $2.16. E began paying a dividend in 2009. The dividend paid on May 23, 2011 was $1.383. Earnings per share are $4.61, and price- to-earnings ratio is 8.20.
Its competitor Total SA (TOT), which is based in Paris, France, closed Friday at $45.28, which is very close to the lower end of its 52-week range of $43.18 to $64.44. Its forward annual dividend yield is 3 percent or $1.37. TOT has a longer dividend history, which dates back to 1992. It just paid a dividend of $0.819 on Sept. 14. TOT’s earnings per share are $7.07, and its price-to-earnings ratio is 6.41.
E’s market capitalization of $68.47 billion is considerably less than TOT’s $101.83 billion. E’s quarterly revenue growth of 7.8 percent is lower than TOT’s 11.4 percent. The industry average is 10.2 percent. E’s gross margin is 31.12 percent, which is very close to TOT’s 32.51 percent. Both are comparable to the industry average of 31.45 percent. E’s return on equity is 13.24 percent, and its debt to equity is 49.54. TOT’s return on equity is a little higher at 19.03 percent. Its debt to equity is also slightly higher at 52.48.
This Seeking Alpha article looks at how E’s and TOT’s share prices have been impacted by the European credit crisis. It compares a number of oil and gas companies and concludes that both E and TOT appear to be good buys. This Reuters article offers a discussion of Friday’s overall performance of American Depository Receipts, or foreign stocks that trade in American markets.
E and TOT both have a lot to offer already diversified investors, but they may not be the companies of choice for foundation stocks. Still, we see potential bargains in both these stocks, thanks to the current trading prices, dividend records, and price to earnings ratios.
HJ Heinz Co. (HNZ) – HNZ trades ex-dividend on Tuesday, Sept. 20. It is currently trading around $51.50 a share, which is in the middle of its 52-week range of $46.98 to $55. Its forward annual dividend yield is 3.7 percent or $1.92. HNZ is a company with an established dividend payment record. As of June 2010, it raised its payout to $0.45 from $0.42. Earnings per share is $3.01, and its price-to-earnings ratio is 17.12.
Campbell Soup Co. (CPB), a large-cap competitor, reports a forward annual dividend yield of 3.7 percent or $1.16. It also boasts an established dividend payment record, dating back to 1995. It raised its payout to $0.29 on Dec. 22, 2010, from $0.275 on Oct. 7. Earnings per share is $2.42, and its price-to-earnings ratio at 12.96 is a little lower than HNZ.
HNZ’s quarterly revenue growth of 14.9 percent compares with CPB’s 5.9 percent. Gross margins are similar. HNZ shows 36.67 percent, and CPB’s is slightly higher at 40.2 percent. Both exceed the industry average of 26.7 percent. HNZ’s return on equity is 36.69 percent, but CPB’s is much higher at 79.21 percent. Debt to equity is very high at 139.84, but CPB’s is double at 281.39.
This Seeking Alpha article looks at 11 large-cap companies that have recently increased their dividend payouts. HNZ is among them.
We feel HNZ is a good value. It has a great track record as well as an encouraging outlook. It can work well for dividend investors.
American Eagle Outfitters, Inc. (AEO) – This company is trading near its 52-week low. It closed Friday at $11.46, and its range over the past year is $10 to $17.46. It goes ex-dividend on Thursday, Sept. 22. Its forward annual dividend yield is 3.8 percent or $0.44. AEO has paid dividends since 2004. It paid a special $0.61 on Dec. 9, 2010, after paying $0.11 for the two prior quarters. So far this year, it has also paid $0.11. Earnings per share is $0.85, and its price to earnings ratio is 13.53.
Its competitor Abercrombie & Fitch Co. (ANF), with over twice the market capitalization, is trading near $68, which is on the high side of its 52-week range of $35.88 to $78.25. ANF has a forward annual dividend yield of only 1 percent or $0.70. It has paid quarterly dividends since 2004. For the past 25 consecutive quarters, it has paid $0.175. It had earnings per share of $2.20, and the price to earnings ratio is 30.92, which is too high to be a bargain.
AEO’s quarterly revenue growth of 3.7 percent compares with ANF’s 22.9 percent. Gross margin figures seem to favor ANF as well. AEO’s is 38.52 percent, whereas ANF’s is 63.93 percent. AEO reports return on equity of 12.26 percent and no debt to equity. ANF’s return on equity is 10.74 percent, and its debt to equity is negligible at 1.39.
When considering purchasing a stock such as AEO, keep in mind general market conditions that will impact its sector and industry. This Forbes article looks at economic indicators and trends in consumer sentiment that could impact AEO’s performance in the coming quarters. Also, the holiday shopping season is just around the corner, so expect seasonal fluctuations in earnings and other key metrics.
Lawson Products Inc. (LAWS) – This small-cap industrial maintenance products distributor trades ex-dividend on Friday, Sept. 23. The company has announced it will pay $0.12 a share, which is consistent with the past three quarters. It has been paying dividends since 1995. It reports a forward annual dividend yield of 3 percent or $0.48. It had earnings per share of $0.69, and a price-to-earnings ratio is 23.65. It is trading near $16, which is on the lower side of its 52-week range of $13.97 to $27.21.
Its competitor Barnes Group Inc. (B) reports a forward annual dividend yield of 1.4 percent, or $0.32. Its dividend history also dates to 1995. It has paid $0.08 a quarter for the past nine consecutive periods. B reports earnings per share of $1.22, and a price to earnings ratio of 18.21. It is trading near $22 with a 52-week range of $16.90 to $25.85.
LAWS’ quarterly revenue growth at 4.8 percent is considerably slower than B’s 16.3 percent. The industry average is 13.3 percent. LAWS' gross margin of 60.3 percent is almost twice B’s 36.16 percent. LAWS' return on equity is 6.34 percent, compared with B’s 9.13 percent.
This Motley Fool article compares the economic value added metric of LAWS and its competitors. Both LAWS and B appeared to show the desired economic value added momentum.
LAWS shows some indicators that it is appropriate for already well diversified dividend investors with some room for risk in their portfolios.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.