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Many investors try to time the market by buying on stock price drops. These price declines are sometimes called "pull backs" or "dips." This strategy is being co-opted by income investors who are frustrated by the low yields offered by bonds and dividend-paying stocks.

I do not advocate any bottom fishing or other technical strategies based on simple price movements, and analysis reveals how stocks that have dropped in price are not attractive. Each of the following stocks recently traded 10% below its 20 day simple moving average, while having a dividend yield in excess of 2%. Data relevant to valuation and past performance are provided below:

Suburban Propane Partners LP (NYSE:SPH) recently traded at $45.13 per share. At this price level, the stock has a 7.6% dividend yield. For 10 out of the past 10 fiscal years, a share of SPH paid a total of $27.76 in dividends. Of these dividend payments, a total of $15.87 were paid in the last five years.

SPH shareholders have endured a -5.2% change in share price over the past year. At present, shares of this small cap stock trade at a price-to-book ratio of 4.5, a price-to-earnings multiple of 14.1, and a price-to-sales multiple of 1.3 (trailing twelve months). Over the past decade shareholders savored a 61.3% average annual return on equity.

Quad/Graphics, Inc. (NYSE:QUAD) recently traded at $11.8 per share. At this price level, the stock has a 6.8% dividend yield. QUAD has only recently issued dividends to shareholders.

QUAD shareholders have suffered a -17.7% change in share price over the past year. At present, shares of this small cap stock trade at a price-to-book ratio of 0.4, a price-to-earnings multiple of 62.1, and a price-to-sales multiple of 0.1 (trailing twelve months).

Inergy, L.P. (NRGY) recently traded at $17.33 per share. At this price level, the stock has a 16.3% dividend yield. For 10 out of the past 10 fiscal years, a share of NRGY paid a total of $21.18 in dividends. Of these dividend payments, a total of $12.90 were paid in the last five years.

NRGY shareholders have suffered a -29.0% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 2.0, a price-to-earnings multiple of 61.9, and a price-to-sales multiple of 1.1 (trailing twelve months). Over the past decade shareholders enjoyed a 5.7% average annual return on equity.

Frontier Communications Corporation (NASDAQ:FTR) recently traded at $4.3099 per share. At this price level, the stock has a 17.4% dividend yield. For 7 years from 2000 through 2010, a share of FTR paid a total of $6.38 in dividends. Of these dividend payments, a total of $4.88 were paid in the last five years.

FTR shareholders have suffered a -16.3% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 0.9, a price-to-earnings multiple of 28.7, and a price-to-sales multiple of 0.8 (trailing twelve months). Over the past decade shareholders enjoyed a 8.2% average annual return on equity.

CenterPoint Energy, Inc. (NYSE:CNP) recently traded at $18.23 per share. At this price level, the stock has a 4.4% dividend yield. For 10 out of the past 10 fiscal years, a share of CNP paid a total of $7.22 in dividends. Of these dividend payments, a total of $3.55 were paid in the last five years.

CNP shareholders have endured a -9.3% change in share price over the past year. At present, shares of this mid cap stock trade at a price-to-book ratio of 1.9, a price-to-earnings multiple of 10.1, and a price-to-sales multiple of 0.9 (trailing twelve months). Over the past decade shareholders suffered a -21.0% average annual return on equity.

Amcol International Corp. (NYSE:ACO) recently traded at $28.99 per share. At this price level, the stock has a 2.5% dividend yield. For 10 out of the past 10 fiscal years, a share of ACO paid a total of $4.23 in dividends. Of these dividend payments, a total of $3.21 were paid in the last five years.

ACO shareholders have seen a 8.0% change in share price over the past year. At present, shares of this small cap stock trade at a price-to-book ratio of 2.3, a price-to-earnings multiple of 25.7, and a price-to-sales multiple of 1.0 (trailing twelve months). Over the past decade shareholders savored a 12.9% average annual return on equity.

Of these stocks, only FTR appears attractive. It is cheaply priced because it trades below book value and below sales. Its high PE ratio is based on one year of earnings, whereas its positive return on equity over the past ten reported fiscal years is less fleeting. In the same way that its long-term positive ROE demonstrates a commitment to growing shareholder wealth, its history of dividend payments demonstrates a commitment to dividend income.

The other stocks are either overpriced or lack a track-record of positive ROE and dividend payments. Screens based on fundamentals generate better investment candidates than screens based on technical analysis.

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

Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing. Moreover, this research does NOT constitute a guarantee.

Source: 6 Dividend Stocks To Buy On January's Dips