Here are the last six stocks of the dividend raisers for the last 15 years, along with my opinions about them. The O-Metrix Grading System is applied where possible, as well.
(Data obtained from Finviz/Morningstar, and current as of February 1. You can download the O-Metrix calculator here.)
Walgreen Co. (WAG)
Walgreen has just appointed Robyn L. Peters as the group vice president of managed market sales. The stock is trading at a P/E ratio of 11.3, and a forward P/E ratio of 11.1. Analysts estimate a 10.0% annual EPS growth for the next five years. It pays a 2.70% dividend, and the profit margin is 3.7%.
Walgreen is buying the prescription files and inventory of the pharmacies from Kmart stores to be transferred to nearby Walgreens locations. Overall, the company is performing significantly admirable. Earnings-per share [ttm] is climbing straight up since February 2002, going from 0.92 to 2.95. Average 15-year annual dividend increase is 15%. While the company is doing OK, there's great competition in its industry. The failure of the Express Scripts (NASDAQ:ESRX) contract is showing its effects for sure, but it will outperform in the long run with this cash flow and revenue. Hold if you want, but I recommend buying. Walgreen has an O-Metrix score of 5.66.
Medtronic has completed patient enrollment in a study in its CoreValve U.S. Pivotal Trial. It is selling 12 times earnings, and 10 times forward earnings. Five-year annualized EPS growth forecast is 7.4%, which is fair when its 6.5% EPS growth of past five years is considered. Profit margin (20.6%) is way higher than the industry average of 13.1%, while it pays a 2.51% dividend.
Medtronic is an unrivaled company in its industry, doubling its closest competitor Stryker (NYSE:SYK) in terms of market cap. Moreover, Medtronic's balance sheet is much more trustworthy. Since July 2009, earnings per share has come from 1.60 to 3.17. Debt-to equity ratio (0.5) is also convincing, which doubles the industry average of 1.0. It has been boosting its dividend around 23% every year, while the O-Metrix score is 4.38. Dividends are safe, and there's a huge upside potential. What's there in Medtronic not to like? Read a full analysis of Medtronic here.
Abbott Labs (NYSE:ABT)
Thomas C. Freyman of Abbott will make a presentation at the Leering Swann 2012 Global Healthcare Conference on February 15. The drug manufacturer is trading at a P/E ratio of 18.6, and a lower forward P/E ratio of 10.2. Analysts expect the company to have an 8.4% annualized EPS growth in the next five years. It sports a 3.55% dividend, and the profit margin is 11.8%.
Abbott will have a spin-off, which will add value to both Abbott and the spun-off branch. With a Beta value of 0.29, Abbott is the third-least volatile stock in its industry. With a 33% FCF payout ratio, Abbott has kept increasing its annual dividend by around 10% for the last 15 years. Revenue and assets seem appetizing, but the stock is trading next to its 52-week high. A spin-off or a new product release is a must for Abbott to feed its cash flow at the moment. I rate this stock a hold. Based on these numbers, Abbott has a C Grade O-Metrix score of 4.14.
The Chubb Corp. (NYSE:CB)
Chubb recently unveiled its Q4 2011 results. The New Jersey-based insurance company shows a trailing P/E ratio of 10.9, and a forward P/E ratio of 11.2. Estimated annual EPS growth for the next five years is 9.1%. Dividend yield is 2.31%, and profit margin is 13.5%, crushing the industry average of 5.2%.
Chubb's board approved a $1.2 billion share buyback program without an expiration date. The company's Q4 2011 net income fell by 27% due to tornadoes, hurricanes and wind storms in the U.S. However, if we look in a broader period of time, it is doing very good since the Lehman disaster. Chubb is one of the least volatile stocks among its peers with a Beta value of 0.51. Revenue and cash flow are quite strong. Debt-to- equity (0.3) is also good, below the industry average of 0.5. The company increased its annual dividend around 8% in the last 15 years. As Morningstar states, "the company has a strong business model and benefits from competitive advantages in many of its key lines." Wait for the stock to go down a bit. Based on these numbers, Chubb has an O-Metrix score of 5.16.
International Business Machines (NYSE:IBM)
IBM is planning to cut as many as 8,000 jobs in Germany to reduce costs, which will also raise earnings. The stock is trading at a P/E ratio of 15.2, and a forward P/E ratio of 11.7. Five-year annualized EPS growth forecast is 10.8%. It offers a 1.56% dividend, while the profit margin is 14.7%.
IBM will do better as it sold its PC division to Lenovo (OTCPK:LNVGF). IBM survived the distressed Q3 of the last year, even increasing its revenue up to significant prices in the crisis. It has been pushing its dividends up by around 16% every year. With this strong balance sheet and field performance, I see no reason for IBM to reach new 52-week highs. Everyone will want to buy shares of such a successful name. IBM has a C Grade O-Metrix score of 4.59.
The McGraw-Hill (MHP)
McGraw has just announced its latest quarterly results. The New York-based company is selling 16 times earnings, and 14 times forward earnings. Analysts expect the company to have an 11.0% annual EPS growth in the next five years. With a profit margin of 13.5%, it sports a 2.22% dividend.
It is very uncommon to see a stock's insider transactions for the last six months up by 362.78%, even in the services sector. McGraw-Hill reported a nice earnings result this quarter, having a 39% profit in the Q4 and increasing its revenue to $1.52 billion. With a 23% FCF payout ratio, McGraw-Hill has been increasing its annual dividend around 8% every year. Cash flow is intensely strong. Debt-to equity ratio of 0.5 crushes the industry average of 6.2. The company is trading close to its 52-week high, so wait for a pullback before jumping into this one. McGraw-Hill has a C Grade O-Metrix score of 4.27.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.