By Aubrey Tabuga
Oak Ridge Investments, LLC is a Chicago-based investment advisor. The investment company has over $2.76 billion under its management as of the end of September 2012. Its investment strategies cover large cap, mid-cap, small/mid-cap, all cap, and dividend growth. In the third quarter, the company initiated positions in 12 stocks and sold 8 out. Its portfolio is heavy on technology (24.62%), services (17.47%), healthcare (17.34%), capital goods (11.02%), financial (8.07%), and energy (6.2%).
Here, I review the top dividend stocks favored by the asset manager. These stocks are Watsco Inc. (NYSE:WSO); International Business Machines Corp. (NYSE:IBM); Texas Roadhouse Inc. (NASDAQ:TXRH); Questor Pharmaceuticals, Inc. (QCOR); and True Religion Apparel Inc. (NASDAQ:TRLG).
% of Portfolio
International Business Machines
True Religion Apparel
Source: whalewisdom.com & finviz.com; as of Nov. 9, 2012
Watsco Inc. is a Miami-based distributor of air conditioning, heating, and refrigeration equipment, among others, in the United States. It also exports its products to Latin America and the Caribbean. This quarter, the company has moved up in market cap rank. It has also exhibited record revenue and profits but missed the Zacks Consensus estimates.
Oak Ridge slightly increased its holdings in Watsco in the third quarter. It initiated its position in the company just in the previous quarter. The company now comprises 1.46% of Oak Ridge's total portfolio. Watsco's dividend yield is a high 3.56%. It has a great track record in paying dividends. The payment has been increasing over a decade already. The earnings prospects are impressive with its long-term annual growth estimate of 16.77% for the next 5 years. The stock has gained 17.38% from the previous year.
International Business Machines
IBM is a leading provider of information technology products and services worldwide. Just recently, the company unveiled its new offering - the new IBM Engineering Lifecycle Manager, which aims to help organizations bring intelligence to the products and applications that people use every day. The new software simplifies process thereby reducing costs. Software engineers are now able to review projects and better understand the complexities.
The asset manager further decreased its holdings in IBM by 8% in the third quarter. It has been cutting its shares for at least the 9th consecutive quarter. The position of Oak Ridge has declined by 86% from the previous two years. At a share of 1.34%, the company remains a top holding of the fund manager. IBM has a relatively lower yield at 1.79%. However, the company continuously pays stable and rising dividends to its investors in many years. The company is expected to enjoy high earnings with its long-term annual growth estimate of 9.92% for the next 5 years.
Texas Roadhouse Inc., the operator of full-service dining restaurant chain, is based in Louisville, Kentucky. As of November 2012, the company is operating about 385 restaurants. The company has reportedly met and beaten revenue and EPS expectations, respectively, in the latest quarter. The company's revenue climbed 15% from the same period last year and posted an EPS of 25 cents per share, which is higher than the consensus estimate at 23 cents.
Oak Ridge bought additional shares of the restaurant chain operator in the latest quarter. The asset manager initiated its position only in the previous quarter. Currently, the company forms 1.11% of Oak Ridge's portfolio. The company enjoys a high dividend yield of 2.15%. The company is paying dividends for 7 straight quarters already. Future earnings are robust with an annual growth estimate of 14.12% within the next 5 years. Compared with a year ago, its performance has improved remarkably by 13.97%.
Questor Pharmaceuticals, Inc. is the Anaheim-based biopharmaceutical company that provides treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms diseases, among others. Among its offerings are the H.P. Acthar Gel for collagen diseases and rheumatic disorders; and Doral for insomnia. The company's consistent profitability in many quarters comes from the price increase of its Acthar Gel. The drug being used for multiple sclerosis is a huge source of the company's recent growth.
The asset manager slightly increased its holdings in Questor in the latest quarter. It has initiated its position in the last quarter of 2010 and has since increased its holding five more times. The shares currently comprise 0.96% of Oak Ridge's total portfolio. The pharmaceutical company has a high yield of 3.19%. The company is new at paying dividends. However, future earnings are expected to grow annually at a remarkable rate of 33.50%. The stock's profitability is at a very high 39.45%.
True Religion Apparel
True Religion Apparel Inc. is a designer, manufacturer, seller, and distributor of apparel in North America and many countries worldwide. It is based in Vernon, California. As of March 2012, the company operated 127 retail stores. The company has just surpassed expectations on revenue and earnings in the third quarter.
Oak Ridge increased its shares in the company for the third straight quarter. The company currently forms 0.89% of the asset manager's total holdings. TRLG has been in Oak Ridge's 13F Filing in at least the 9 quarters shown by the whalewisdom.com database. The dividend yield at the apparel company is 3.09%. Its future earnings are expected to grow at an outstanding rate of 25% per year for the next 5 years. Its profit margin is encouraging at 10.81%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: EfsInvestment is a team of analysts. This article was written by Aubrey Tabuga, one of our equity researchers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.