We continue to look for dividend stocks that can be part of a long-term investment portfolio. With continued market turbulence and the euro crisis far from over, having stable companies with strong dividends is a useful backup for those who want income as well as growth. Danny Guttridge from Kapital.com sought out companies with good yields and that have seen insider purchases over the past six months. I want to evaluate what sort of stocks this leads to and whether they would be worth considering.
The list is sorted by market cap:
- Whirlpool (WHR): Engages in the manufacture and marketing of home appliances worldwide. Market cap at $4.96B. Dividend yield at 3.10%, payout ratio at 37.95%. Over the last six months, insiders were net buyers of 15,500 shares, which represents about 0.02% of the 75.94M shares.
- American National Insurance (ANAT): Provides insurance products and services. Market cap at $1.91B. Dividend yield at 4.33%, payout ratio at 42.97%. Over the last six months, insiders were net buyers of 3,250 shares, which represents about 0.03% of the 11.91M shares.
- National Penn Bancshares (NPBC): Provides commercial banking products and services to residents and businesses primarily in eastern and central Pennsylvania. Market cap at $1.37B. Dividend yield at 3.11%, payout ratio at 16.17%. Over the last six months, insiders were net buyers of 1,122,160 shares, which represents about 1.15% of the 97.48M shares.
- Oiltanking Partners (OILT): Provides integrated terminaling, storage, pipeline, and related services for third-party companies engaged in crude oil, refined petroleum products, and liquefied petroleum gas. Market cap at $1.22B. Dividend yield at 4.35%, payout ratio at 22.33%. Over the last six months, insiders were net buyers of 49,350 shares, which represents about 0.43% of the 11.44M shares.
- Community Bank System (CBU): The holding company for Community Bank, N. Market cap at $1.11B. Dividend yield at 3.68%, payout ratio at 49.65%. Over the last six months, insiders were net buyers of 14,630 shares, which represents about 0.04% of the 37.21M shares.
- Tesoro Logistics LP Common Unit (TLLP): Operates, develops, and acquires assets involving oil and petroleum products. Market cap at $1.08B. Dividend yield at 4.09%, payout ratio at 16.0%. Over the last six months, insiders were net buyers of 3,600 shares, which represents about 0.02% of the 15.01M shares.
- A. Schulman (SHLM): Supplies plastic compounds and resins for packaging, consumer products, industrial, and automotive applications. Market cap at $708.18M. Dividend yield at 3.17%, payout ratio at 41.49%. Over the last six months, insiders were net buyers of 21,666 shares, which represents about 0.08% of the 28.39M shares.
- NL Industries (NL): Operates in the component products industry in the United States, Canada, and Taiwan. Market cap at $656.91M. Dividend yield at 3.70%, payout ratio at 29.80%. Over the last six months, insiders were net buyers of 112,166 shares, which represents about 1.71% of the 6.55M shares.
- First Interstate Bancsystem (FIBK): Provides commercial and consumer banking services. Market cap at $587.11M. Dividend yield at 3.53%, payout ratio at 46.77%. Over the last six months, insiders were net buyers of 24,726 shares, which represents about 0.13% of the 18.50M shares.
- Community Trust Bancorp (CTBI): Operates as the holding company for Community Trust Bank, Inc. Market cap at $498.20M. Dividend yield at 3.87%, payout ratio at 48.82%. Over the last six months, insiders were net buyers of 43,738 shares, which represents about 0.34% of the 12.88M shares.
The first thing that's noticeable is that there are four banking stocks, which is too many. The next thing to remark on is that these are all relatively small companies -- certainly in the small-cap stocks, which gives me no little concern -- especially in the banking sector. I think, in the end, I might want to cherry pick some of the stocks. But if we put them in one portfolio, we will see how they operate together.
Despite this, it will be interesting to see what the historical simulations tell us -- especially when compared against our dividend-producing ETF portfolio:
|Asset||Fund in this portfolio|
|REAL ESTATE||(ICF) iShares Cohen & Steers Realty Majors|
|FIXED INCOME||(TIP) iShares Barclays TIPS Bond|
|Emerging Market||(VWO) Vanguard Emerging Markets Stock ETF|
|US EQUITY||(DVY) iShares Dow Jones Select Dividend Index|
|US EQUITY||(VIG) Vanguard Dividend Appreciation ETF|
|INTERNATIONAL EQUITY||(IDV) iShares Dow Jones Intl Select Div Idx|
|High Yield Bond||(HYG) iShares iBoxx $ High Yield Corporate Bd|
|INTERNATIONAL BONDS||(EMB) iShares JPMorgan USD Emerg Markets Bond|
- May 2012 10 High Yield Dividend Stocks With Insider Buying -- Total of $10K invested equally in each stock.
- The Safest and Best Dividends on the Dow -- Total of $10K invested equally in each stock.
- Five Stocks for the Timid Investor -- Total of $10K invested equally in each stock.
- 3 All Star Stocks -- Total of $10K invested equally in each stock.
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes).
Portfolio Performance Comparison:
|Portfolio/Fund Name||YTD |
|1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|Retirement Income ETFs Strategic Asset Allocation Moderate||5%||2%||18%||13%||102%||2%||8%|
|Retirement Income ETFs Tactical Asset Allocation Moderate||2%||7%||69%||14%||117%||7%||59%|
|10 High-Yield Dividend Stocks With Insider Buying||8%|
I probably should have checked the history of all of the stocks because we have just under a year of history of the combined stocks, and this table doesn't tell you very much.
If you break out the stocks, you get a different picture.
|Ticker||YTD Return||1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe||Watch|
There is definitely some cherry picking I would do here. I have indicated the ones that I might put on my watch list.
I don't think that this is an interesting filter of what to buy. With these being small-cap companies, I don't have confidence that something really bad won't happen, and I wouldn't feel comfortable with a "fire and forget" approach. I might come back and look at some of the newer stocks, but there is nothing really compelling here for me.
Disclaimer: We do not have any business relationship with the company or companies mentioned in this article. We do not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.