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This list is meant to serve as a starting point for investors. A lot of data has been provided so it should be relatively easy for an investor to scroll down the list and decide if the stock warrants further attention. If you find the stock interesting, you can dig deeper and see if meets with your investment criteria. Investors should not base their decision on yield alone. There are many stocks that offer extremely high yields, but their performance over the years has been dismal. In fact, in some cases even with the yield the total rate of return has been negative for the past 3-5 years. One should look at the robustness of the company, the dividend growth rate, the sustainability of the dividend and finally one should take a look at the company's dividend history. Companies with stellar records will do everything possible to avoid cutting the dividend in order to maintain this record. Novice Investors can use "this guide "as a starting to point to help you determine which stocks you should get into and which ones to avoid. These are not absolute rules. They are just suggestions to help get you started and please note there are always exceptions to the rule. The goal is to try to satisfy as many of them as possible

Company: Pengrowth Egy (PGH)

Levered Free Cash Flow = -22.56M

Brief Overview

  1. Short Ratio = 2.3%
  2. Relative Strength 52 weeks = 19
  3. Cash Flow 5-year Average = 2.56
  4. Profit Margin = 6.97%
  5. Operating Margin = 18.44%
  6. Quarterly Revenue Growth = -10.7%
  7. Quarterly Earnings Growth = -86.7%
  8. Operating Cash Flow = 679M
  9. Beta = 1.4

Growth

  1. Net Income ($mil) 12/2011 = 86
  2. Net Income ($mil) 12/2010 = 224
  3. Net Income ($mil) 12/2009 = 75
  4. Net Income Reported Quarterly ($mil) = 1
  5. EBITDA ($mil) 12/2011 = 644
  6. EBITDA ($mil) 12/2010 = 799
  7. EBITDA ($mil) 12/2009 = 582
  8. Cash Flow ($/share) 12/2011 = 1.59
  9. Cash Flow ($/share) 12/2010 = 2.45
  10. Cash Flow ($/share) 12/2009 = 2.23
  11. Sales ($mil) 12/2011 = 1460
  12. Sales ($mil) 12/2010 = 1392
  13. Sales ($mil) 12/2009 = 1305
  14. Annual EPS before NRI 12/2007 = -0.3
  15. Annual EPS before NRI 12/2008 = 1.29
  16. Annual EPS before NRI 12/2009 = 0.31
  17. Annual EPS before NRI 12/2010 = 0.78
  18. Annual EPS before NRI 12/2011 = 0.34

Dividend history

  1. Dividend Yield = 7.50
  2. Dividend Yield 5 Year Average 03/2012 = 12.00
  3. Dividend Yield 5 Year Average 12/2011 = 11.56
  4. Annual Dividend 12/2011 = 0.86
  5. Dividend 5 year Growth 03/2012 = -24.81

Dividend sustainability

  1. Payout Ratio = 3.39
  2. Payout Ratio 5 Year Average 03/2012 = 1.58
  3. Payout Ratio 5 Year Average 12/2011 = 1.63

Performance

  1. ROE 5 Year Average 03/2012 = 9.55
  2. ROE 5 Year Average 12/2011 = 9.54
  3. Debt/Total Cap 5 Year Average 03/2012 = 30.09
  4. Current Ratio = 0.43
  5. Current Ratio 5 Year Average = 0.66
  6. Quick Ratio = 0.62
  7. Cash Ratio = 0.1
  8. Interest Coverage Quarterly = 0.89

Notes

It recently announced that it would lower its monthly dividend from 7 cents (Canadian) to 4 cents. When investing in commodities based stocks one has to be prepared for such moments. These companies typically raise dividends during good times and cut them when their margins start to get squeezed during rough times.

Another factor to consider is that Western Canadian select is selling for about $25 below WTI. This wide price differential could also be squeezing margins and pushing many Canadian oil and gas based securities to cut their dividends and or consider reducing future dividend payments. For now if you want something more stable consider ConocoPhillips (COP).

Company: Breitburn Energy Partners L.P. (BBEP)

Levered Free Cash Flow = -222.03M

Brief Overview

  1. Percentage Held by Insiders = 3.11
  2. 5 year sales growth = 19.34%
  3. Short Ratio = 2.10
  4. Relative Strength 52 weeks = 49
  5. Cash Flow 5-year Average = 2.91
  6. Profit Margin = 38.85%
  7. Operating Margin = 53.15%
  8. Quarterly Revenue Growth = 1.8%
  9. Operating Cash Flow = 145.44M
  10. Beta = 0.41
  11. Percentage Held by Institutions = 27.7%
  12. Short Percentage of Float = 1.00%

Growth

  1. Net Income ($mil) 12/2011 = 110
  2. Net Income ($mil) 12/2010 = 35
  3. Net Income ($mil) 12/2009 = -107
  4. Net Income Reported Quarterly ($mil) = -50
  5. EBITDA ($mil) 12/2011 = 259
  6. EBITDA ($mil) 12/2010 = 163
  7. EBITDA ($mil) 12/2009 = 20
  8. Cash Flow ($/share) 12/2011 = 2.31
  9. Cash Flow ($/share) 12/2010 = 2.87
  10. Cash Flow ($/share) 12/2009 = 2.86
  11. Sales ($mil) 12/2011 = 480
  12. Sales ($mil) 12/2010 = 318
  13. Sales ($mil) 12/2009 = 205
  14. Annual EPS before NRI 12/2007 = 1.36
  15. Annual EPS before NRI 12/2008 = 1.65
  16. Annual EPS before NRI 12/2009 = 0.78
  17. Annual EPS before NRI 12/2010 = 0.87
  18. Annual EPS before NRI 12/2011 = 0.46

Dividend history

  1. Dividend Yield = 9.8
  2. Dividend Yield 5 Year Average 03/2012 = 11.12
  3. Dividend Yield 5 Year Average 12/2011 = 10.83
  4. Annual Dividend 12/2011 = 1.71
  5. Dividend 5 year Growth 03/2012 = -1.88

Dividend sustainability

  1. Payout Ratio = 0.68
  2. Payout Ratio 5 Year Average 03/2012 = 2.11
  3. Payout Ratio 5 Year Average 12/2011 = 2.11

Performance

  1. ROE 5 Year Average 03/2012 = 4.94
  2. ROE 5 Year Average 12/2011 = 5.68
  3. Debt/Total Cap 5 Year Average 03/2012 = 30
  4. Current Ratio = 1.38
  5. Current Ratio 5 Year Average = 1.46
  6. Quick Ratio = 1.87
  7. Cash Ratio = 1.01
  8. Interest Coverage = 4.40
  9. Long term debt to equity ratio = 0.45

Important facts investors should be aware in regards to investing in MLP's

Payout ratios are not that important when it comes to MLPS generally pay a majority of their cash flow as distributions. Payout ratios are calculated by dividing the dividend/distribution rate by the net income per share, and this is why the payout ratio for MLPs is often higher than 100%. The more important ratio to focus on is the cash flow per unit. If one focuses on the cash flow per unit, one will see that in most cases, it exceeds the distribution declared per unit.

MLPs are not taxed like regular corporations because they pay out a large portion of their income to partners (as an investor you are basically a partner and are allocated units instead of shares) usually through quarterly distributions. The burden is thus shifted to the partners who are taxed at their ordinary income rates. As ordinary income tax rates of investors are typically lower than the income tax assessed on corporations, this arrangement is advantageous to the MLPs and generally most investors.

MLPs issue a Schedule K-1 to their investors. Unrelated business income (UBI) above $1,000 is taxable in an IRA. This information will appear Box 20 in the schedule K-1. UBI is typically a very small number usually well below $1000 and in some cases negative. If the MLP pays out distributions in excess of the income it generates, the distribution is classified as a "return of capital" and tax deferred until you sell your units. For more information, on this topic investors can visit the National Association of Publicly Traded Partnerships.

Company: Silver Wheaton (SLW)

Brief Overview

  1. Short Ratio = 1.3
  2. Cash Flow 5-year Average = 0.62
  3. Profit Margin = 74%
  4. Quarterly Revenue Growth = 26.20%
  5. Quarterly Earnings Growth = 20.5%
  6. Operating Cash Flow = $ 663 million
  7. Beta = 1.36
  8. Levered Free Cash Flow = 353.38M
  9. 5 year EPS growth rate 39.8%
  10. 5 year sales growth rate 39%
  11. Sales vs 1 year ago = 72.4%
  12. Long term debt to equity = 0.02

Growth

  1. Net Income ($mil) 12/2011 = 550
  2. Net Income ($mil) 12/2010 = 290
  3. Net Income ($mil) 12/2009 = 118
  4. Net Income ($mil) 12/2008 = 18
  5. Net Income Reported Quarterly ($mil) = 147
  6. EBITDA ($mil) 12/2011 = 616
  7. EBITDA ($mil) 12/2010 = 334
  8. EBITDA ($mil) 12/2009 = 159
  9. Cash Flow ($/share) 12/2011 = 1.72
  10. Cash Flow ($/share) 12/2010 = 1
  11. Cash Flow ($/share) 12/2009 = 0.47
  12. Sales ($mil) 12/2011 = 730
  13. Sales ($mil) 12/2010 = 423
  14. Sales ($mil) 12/2009 = 239
  15. Annual EPS before NRI 12/2007 = 0.37
  16. Annual EPS before NRI 12/2002 = 0.33
  17. Annual EPS before NRI 12/2009 = 0.38
  18. Annual EPS before NRI 12/2010 = 0.83
  19. Annual EPS before NRI 12/2011 = 1.55

Dividend history

  1. Dividend Yield = 1.3
  2. Dividend Yield 5 Year Average = 0.12

Dividend sustainability

  1. Payout Ratio = 0.09
  2. 3. Payout Ratio 5 Year Average = 0.03

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 22.99
  2. ROE 5 Year Average = 13.09
  3. Current Ratio = 5.03
  4. Current Ratio 5 Year Average = 2.99
  5. Quick Ratio = 5.03
  6. Cash Ratio = 5.01
  7. Retention rate = 91%

Company: Nuance Communication Inc (NUAN)

Brief Overview

  1. Percentage Held by Insiders = 25.17
  2. Levered Free Cash Flow = 326.40M
  3. Number of Institutional Sellers 12 Weeks = 8
  4. Short Ratio = 6.7
  5. Relative Strength 52 weeks = 66
  6. Cash Flow 5-year Average = 1.02
  7. Profit Margin = 3.23%
  8. Operating Margin = 10.1%
  9. Quarterly Revenue Growth = 22.4%
  10. Quarterly Earnings Growth = -48.7%
  11. Operating Cash Flow = 388.02M
  12. Beta = 1.41
  13. Percentage Held by Institutions = 92.3%
  14. Short Percentage of Float = 12.6%

Growth

  1. Net Income ($mil) 12/2011 = 38
  2. Net Income ($mil) 12/2010 = -19
  3. Net Income ($mil) 12/2009 = -19
  4. Net Income Reported Quarterly ($mil) = 1
  5. EBITDA ($mil) 12/2011 = 238
  6. EBITDA ($mil) 12/2010 = 197
  7. EBITDA ($mil) 12/2009 = 202
  8. Cash Flow ($/share) 12/2011 = 1.74
  9. Cash Flow ($/share) 12/2010 = 1.41
  10. Cash Flow ($/share) 12/2009 = 1.31
  11. Sales ($mil) 12/2011 = 1319
  12. Sales ($mil) 12/2010 = 1119
  13. Sales ($mil) 12/2009 = 950
  14. Annual EPS before NRI 12/2007 = 0.57
  15. Annual EPS before NRI 12/2008 = 0.7
  16. Annual EPS before NRI 12/2009 = 0.86
  17. Annual EPS before NRI 12/2010 = 0.89
  18. Annual EPS before NRI 12/2011 = 1.14

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 13.08
  2. ROE 5 Year Average = 11.66
  3. Debt/Total Cap 5 Year Average = 33.07
  4. Current Ratio = 1.57
  5. Current Ratio 5 Year Average = 1.82
  6. Quick Ratio = 1.8
  7. Cash Ratio = 1.21
  8. Interest Coverage Quarterly = 1.62

Company: Walgreen Co (WAG)

Brief Overview

  1. Percentage Held by Insiders = 0.05
  2. Short Ratio = 4.9
  3. Levered Free Cash Flow = 2.38B
  4. Relative Strength 52 weeks = 33
  5. Cash Flow 5-year Average = 2.97
  6. Profit Margin = 3.54%
  7. Operating Margin = 5.28%
  8. Quarterly Revenue Growth = -3.4%
  9. Quarterly Earnings Growth = -10.9%
  10. Operating Cash Flow = 4.02B
  11. Beta = 1.2
  12. Percentage Held by Institutions = 66.8%
  13. Short Percentage of Float = 3.4%

Growth

  1. Net Income ($mil) 12/2011 = 2714
  2. Net Income ($mil) 12/2010 = 2091
  3. Net Income ($mil) 12/2009 = 2006
  4. Net Income Reported Quarterly ($mil) = 537
  5. EBITDA ($mil) 12/2011 = 5451
  6. EBITDA ($mil) 12/2010 = 4488
  7. EBITDA ($mil) 12/2009 = 4222
  8. Cash Flow ($/share) 12/2011 = 3.9
  9. Cash Flow ($/share) 12/2010 = 3.21
  10. Cash Flow ($/share) 12/2009 = 3
  11. Sales ($mil) 12/2011 = 72184
  12. Sales ($mil) 12/2010 = 67420
  13. Sales ($mil) 12/2009 = 63335
  14. Annual EPS before NRI 12/2007 = 2.02
  15. Annual EPS before NRI 12/2008 = 2.17
  16. Annual EPS before NRI 12/2009 = 2.02
  17. Annual EPS before NRI 12/2010 = 2.12
  18. Annual EPS before NRI 12/2011 = 2.64

Dividend history

  1. Dividend Yield = 3.00
  2. Dividend Yield 5 Year Average 03/2012 = 1.73
  3. Dividend 5 year Growth 03/2012 = 23.18

Dividend sustainability

  1. Payout Ratio 03/2012 = 0.35
  2. Payout Ratio 5 Year Average 03/2012 = 0.26

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 11.53
  2. 5 Year History EPS Growth 03/2012 = 5.8
  3. ROE 5 Year Average 03/2012 = 16.09
  4. Return on Investment 03/2012 = 13.31
  5. Debt/Total Cap 5 Year Average 03/2012 = 10.71
  6. Current Ratio 03/2012 = 1.54
  7. Current Ratio 5 Year Average = 1.58
  8. Quick Ratio = 0.53
  9. Cash Ratio = 0.22
  10. Interest Coverage Quarterly = 51.35

Conclusion

In general, a great way to get into a stock at a price of your choosing is to sell puts at strikes you would not mind owning the stock at. Consider taking some money off the table once the summer is behind us as the markets are likely to put in a multi month top that should lead to a much stronger correction. Investors looking for other ideas might find this article to be of interest United Technologies: Get In At $68 Or Earn 6.2% in 6 months.

Disclaimer

It is imperative that you do your due diligence and then determine if the above plays meets with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware

Source: 1 Growth And 4 Dividend Plays To Consider

Additional disclosure: EPS and EPS surprise charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Earnings and growth estimates obtained from dailyfinance.com