Dividend Aristocrats With Spectacular Dividend Payment Histories

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 |  Includes: MDU, PNY, UGI, VVC, WRE
by: Tactical Investor

The main requirement to make it to this list was to have consecutively increased dividend payments for at least 19 years in a row. Our favourite play on the list is Vectren Corp (NYSE:VVC), and we like it for the following reasons.

  1. ROE= 9.81%
  2. Five year dividend growth average= 2.41%
  3. Quarterly earnings growth rate= 115%
  4. Consecutive dividend increases= 36 years
  5. Paying dividends since= 1946
  6. Five year dividend average=5.1%
  7. Total three year return= 25.42%
  8. Net income has been increasing for the past 3 years

Traders should not base their investment decision on yield alone. Investors should examine key metrics when it comes to dividend investing. We have listed some of the more important ones below. It is okay to deploy some capital into riskier plays but betting the house is asking for trouble.

The payout ratio tells us what portion of the profit is being returned to investors. A pay out ratio over 100% indicates that the company is paying out more money to shareholders, then they are making; this situation cannot last forever. In general if the company has a high operating cash flow and access to capital markets, they can keep this going on for a while. As companies usually only pay the portion of the debt that is coming due and not the whole debt, this technique/trick can technically be employed to maintain the dividend for sometime. If the payout ratio continues to increase, the situation warrants close monitoring as this cannot last forever; if your tolerance for risk is a low, look for similar companies with the same or higher yields, but with lower payout ratios. Individuals searching for other ideas might find this article to be of interest 7 Investment Ideas With Yields As High As 13.7%

Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a modest amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa.

Operating cash flow is generally a better metric than earnings per share because a company can show positive net earnings and still not be able to properly service its debt; the cash flow is what pays the bills.

Price to tangible book is obtained by dividing share price by tangible book value per share. The ratio gives investors some idea of whether they are paying too much for what would be left over if the company were to declare bankruptcy immediately. In general stocks that trade at higher price to tangible book value could leave investors facing a great percentage per share loss than those that trade at lower ratios. The price to tangible book value is theoretically the lowest possible price the stock would trade to

Debt to Equity Ratio is found by dividing the company's total amount of long-term debt (debts with interest rates that have a maturity longer than one year) by the total amount of equity. A debt to equity ratio of 0.5 tells us that the company is using 50 cents of liabilities in addition to each $1 dollar of shareholders equity in the business. There is no fixed ideal number as it depends on the industry the company is in. However, in general a ratio under 1 is acceptable and ideally it should be in the 0.5-0.6 ranges.

Current Ratio is obtained by dividing the current assets by current liabilities. This ratio allows you to see if the company can pay its current debts without potentially jeopardising their future earnings. Ideally the company should have a ratio of 1 or higher.

Interest coverage is usually calculated by dividing the earnings before interest and taxes for a period of 1 year by the interest expenses for the same time period. This ratio informs you of a company's ability to make its interest payments on its outstanding debt. Lower interest coverage ratios indicate that there is a larger debt burden on the company and vice versa.

Quick ratio or acid -test is obtained by adding cash and cash equivalents plus marketable securities and accounts receivable dividing them by current liabilities. It is a measure of a company's ability to use its quick assets (assets that can be sold of immediately at close to book value) to pay off its current liabilities immediately. A company with a quick ratio of less than 1 cannot pay back its current liabilities. Additional key metrics are addressed in this article Dividend Champs With Tempting Yields As High As 8.3%.


Stock

Dividend Yield

Market Cap

Forward PE

EBITDA

Quarterly Revenue Growth

Beta

Revenue

Operating Cash flow

PNY

3.50%

2.40B

18.63

314.12M

-1.10%

0.32

1.43B

311.24M

VVC

4.80%

2.35B

15.34

589.60M

27.60%

0.40

2.26B

353.90M

WRE

5.80%

1.97B

15.23

189.39M

10.60%

1.08

317.67M

114.84M

MDU

3.00%

4.06B

16.67

724.03M

2.30%

1.11

4.03B

591.73M

UGI

3.80%

3.00B

10.37

775.97M

-4.30%

0.43

6.01B

N/A

Click to enlarge

Piedmont Natural Gas Co., Inc. (NYSE:PNY)

Industry : Gas Utilities

It has a levered free cash flow rate of $3.5 million and a current ratio of 0.54.

Net income for the past three years

  • 2009 = $122.83 million
  • 2010 = $141.96 million
  • 2011 = $113.57 million

Total cash flow from operating activities

  • 2009 = $344.27 million
  • 2010 = $360.52 million
  • 2011 = $311.25 million

Key Ratios

  • P/E Ratio = 21.1
  • P/E High - Last 5 Yrs = 23.7
  • P/E Low - Last 5 Yrs = 11.5
  • Price to Sales = 1.67
  • Price to Book = 2.41
  • Price to Tangible Book = 2.53
  • Price to Cash Flow = 10.9
  • Price to Free Cash Flow = -156.7
  • Quick Ratio = 0.2
  • Current Ratio = 0.5
  • LT Debt to Equity = 0.68
  • Total Debt to Equity = 1.01
  • Interest Coverage = 3.6
  • Inventory Turnover = 10.9
  • Asset Turnover = 0.5
  • ROE = 11.58%
  • Return on Assets = 4.11%
  • 200 day moving average = 31.02
  • Current Ratio = 0.54
  • Total debt = 1.01B
  • Book value = 13.79
  • Qtrly Earnings Growth = N/A

  • Dividend yield 5 year average = 3.9%
  • Dividend rate = $ 1.16
  • Payout ratio = 74%
  • Dividend growth rate 3 year avg = 3.71%
  • Dividend growth rate 5 year avg = 3.86%
  • Consecutive dividend increases = 32 years
  • Paying dividends since = 1956
  • Total return last 3 years = 41.53%
  • Total return last 5 years = 46.99%

Vectren Corp

Industry : Electric Utilities

It has a levered free cash flow rate of $-21 million and a current ratio of 0.89.

Net income for the past three years

  • 2008 = $129 million
  • 2009 = $133.1 million
  • 2010 = $133.7 million

Total cash flow from operating activities

  • 2008 = $423.2 million
  • 2009 = $449.6 million
  • 2010 = $384.8 million

Key Ratios

  • P/E Ratio = 16.8
  • P/E High - Last 5 Yrs = 20.5
  • P/E Low - Last 5 Yrs = 11
  • Price to Sales = 1.04
  • Price to Book = 1.62
  • Price to Tangible Book = 1.97
  • Price to Cash Flow = 6.2
  • Price to Free Cash Flow = -16.6
  • Quick Ratio = 0.4
  • Current Ratio = 0.9
  • LT Debt to Equity = 1.09
  • Total Debt to Equity = 1.33
  • Interest Coverage = 3.1
  • Inventory Turnover = 8.2
  • Asset Turnover = 0.5
  • ROE = 9.81%
  • Return on Assets = 4.63%
  • 200 day moving average = 27.86
  • Current Ratio = 0.89
  • Total debt = 1.94B
  • Book value = 17.75
  • Qtrly Earnings Growth = 115.2%

  • Dividend yield 5 year average = 5.1%
  • Dividend rate = $ 1.40
  • Payout ratio = 81%
  • Dividend growth rate 3 year avg = 1.87%
  • Dividend growth rate 5 year avg = 2.41%
  • Consecutive dividend increases = 36 years
  • Paying dividends since = 1946
  • Total return last 3 years = 25.42%
  • Total return last 5 years = 27.21%

Washington Real Estate Investm (NYSE:WRE)

Industry : REITs

It has a levered free cash flow rate of $125.6 million and a current ratio of 0.9.

Net income for the past three years

  • 2008 = $32.85 million
  • 2009 = $40.75 million
  • 2010 = $37.43 million

Total cash flow from operating activities

  • 2008 = $97.02 million
  • 2009 = $102.91 million
  • 2010 = $111.94 million

Key Ratios

  • P/E Ratio = 23.1
  • P/E High - Last 5 Yrs = 58.3
  • P/E Low - Last 5 Yrs = 20.6
  • Price to Sales = 6.83
  • Price to Book = 2.31
  • Price to Tangible Book = 2.31
  • Price to Cash Flow = 23.2
  • Price to Free Cash Flow = -22
  • Quick Ratio = N.A.
  • Current Ratio = N.A.
  • LT Debt to Equity = 1.5
  • Total Debt to Equity = 1.5
  • Interest Coverage = 1.2
  • Inventory Turnover = N.A.
  • Asset Turnover = 0.1
  • ROE = 1.71%
  • Return on Assets = 2.54%
  • 200 day moving average = 28.9
  • Current Ratio = 0.9
  • Total debt = 1.28B
  • Book value = 12.94
  • Qtrly Earnings Growth = 851.1%

  • Dividend yield 5 year average = 6.1%
  • Dividend rate = $ 1.74
  • Payout ratio = 1084%
  • Dividend growth rate 3 year avg = 0.29%
  • Dividend growth rate 5 year avg = 1.14%
  • Consecutive dividend increases = 42 years
  • Paying dividends since = 1962
  • Total return last 3 years = 44.34%
  • Total return last 5 years = -8.55%

MDU Resources Group Inc. (NYSE:MDU)

Industry : Mining

It has a levered free cash flow rate of $107.9 million and a current ratio of 1.48.

Net income for the past three years

  • 2008 = $293.68 million
  • 2009 = $-123.28 million
  • 2010 = $240.66 million

Total cash flow from operating activities

  • 2008 = $786.19 million
  • 2009 = $846.69 million
  • 2010 = $551.64 million

Key Ratios

  • P/E Ratio = 16.8
  • P/E High - Last 5 Yrs = N.A.
  • P/E Low - Last 5 Yrs = N.A.
  • Price to Sales = 1.01
  • Price to Book = 1.46
  • Price to Tangible Book = 1.92
  • Price to Cash Flow = 7
  • Price to Free Cash Flow = 44.4
  • Quick Ratio = 1
  • Current Ratio = 1.5
  • LT Debt to Equity = 0.49
  • Total Debt to Equity = 0.51
  • Interest Coverage = 5.3
  • Inventory Turnover = 21.5
  • Asset Turnover = 0.6
  • ROE = 8.96%
  • Return on Assets = 3.81%
  • 200 day moving average = 20.74
  • Current Ratio = 1.48
  • Total debt = 1.43B
  • Book value = 14.7
  • Qtrly Earnings Growth = 4.9%

  • Dividend yield 5 year average = 2.8%
  • Dividend rate = $ 0.67
  • Payout ratio = 0%
  • Dividend growth rate 3 year avg = 2.97%
  • Dividend growth rate 5 year avg = 4.61%
  • Consecutive dividend increases = 19 years
  • Paying dividends since = 1937
  • Total return last 3 years = 15.5%
  • Total return last 5 years = -2.84%

UGI Corp. (NYSE:UGI)

Industry : Gas Utilities

Net income for the past three years

  • 2009 = $258.5 million
  • 2010 = $261 million
  • 2011 = $232.9 million

Total cash flow from operating activities

  • 2009 = $665 million
  • 2010 = $598.8 million
  • 2011 = $554.7 million

Key Ratios

  • P/E Ratio = 14.7
  • P/E High - Last 5 Yrs = 16.3
  • P/E Low - Last 5 Yrs = 7.9
  • Price to Sales = 0.52
  • Price to Book = 1.57
  • Price to Tangible Book = 11.58
  • Price to Cash Flow = 6.7
  • Price to Free Cash Flow = -47
  • Quick Ratio = 0.7
  • Current Ratio = 1.2
  • LT Debt to Equity = 1.07
  • Total Debt to Equity = 1.16
  • Interest Coverage = 3.6
  • Inventory Turnover = 15.6
  • Asset Turnover = 0.9

  • ROE = N/A
  • Return on Assets = N/A
  • 200 day moving average = 28.58
  • Current Ratio = N/A
  • Total debt = 2.30B
  • Book value = 17.68
  • Qtrly Earnings Growth = -23.1%
  • Dividend yield 5 year average = 3.2%
  • Dividend rate = $ 1.04
  • Payout ratio = 50%
  • Dividend growth rate 3 year avg = 10.74%
  • Dividend growth rate 5 year avg = 8.27%
  • Consecutive dividend increases = 19 years
  • Paying dividends since = 1885
  • Total return last 3 years = 19.38%
  • Total return last 5 years = 13.72%

Conclusion

The targets we issued over 6 weeks were hit. The markets are now rather overbought on the short term time frames and the charts are projecting that a top is in place or should take hold anytime. This should be followed with a rather short and sharp correction. After that we are expecting the markets to mount a rather strong counter rally which should last at least until March.

On Dec. 16, we made the following comments:

On a short-term basis, the Dow has put in a bottom and is getting ready to challenge the 12,000 ranges again. However, there is a chance that the recent lows could be tested before the rally gathers steam. Going out a little further, the cycles suggest that the Dow should be able to rally until early next year and there is a fairly good chance that the Dow could trade to the 12,800 range and the and the SPX could trade to the 1305-1330 plus range with the possibility of mounting an intra-day spike to the 1340 range. The dollar is overbought and has generated a few sell signals on the hourly time frames, so a pullback here would help drive commodities and the general market higher.

This pullback is projected to be fast and furious; after that the markets are expected to mount a strong counter rally until March. March is a very important time frame, and we are preparing our subscribers for this key timing point; it marks the three year anniversary of this Bull Run. Long-term investors would be best served by waiting for a strong pull back before deploying new funds into this market.

All dividend charts were sourced from dividata.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is very important that you check the finer details, do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware.