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Norman Tweed
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Retiree interested in stocks and financial instruments, especially dividend producing stocks. In the 20th century, I was an electrical engineer with Dominion Resources. I use a dividend growth investment style. Quick rules of thumb for complex questions, like fair value p/e using the Gordon... More
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  • Does J M Smucker's Pet Food Purchase Make It A Buy?

    J. M. Smucker (NYSE:SJM) has recently purchased Big Heart Pet brands company to diversify it's product line. In my opinion, this maintains the growth aspect of Smucker just as it was becoming a dividend growth stock. This is positive news and should allow Smucker to maintain the high P/E ratio of 20/1 that shareholders have come to expect from this consumer staples stock. This stock has appreciated 18.7% per year since 2009.

    (click to enlarge)

    The Tweed Factor is -4.2, however the five year dividend growth rate is 12.2% and with the upcoming dividend growth, the current 2% yield should be increased. I especially like the product diversification:

    This is a long term growth holding in the consumer staples sector, and is a core holding of mine.

    The consistent cash flow from this sector makes SJM a good stock for dripping, which I have done for years and the stock has grown into a core holding for me. I rate this stock as relatively safe for dividend growth and asset appreciation.

    One should know what they are buying and their risk tolerance before making any purchase of an equity security.

    Feb 04 3:19 PM | Link | Comment!
  • Comcast And The Merger War Of 2015

    The last time I reviewed Comcast (NASDAQ:CMCSA) was August 14, 2013. At that time the proposed merger with Time Warner had just started to hit the media. The stock was growing like gangbusters and it appeared to be a good long-term investment for my granddaughter.

    (click to enlarge)

    Since that time, the growth rate has fallen to 12.92%. I believe the battle to prevent the merger has had a slowing effect on price appreciation of the stock. Dana Blankenhorn has summed up rather well the FCC battle and "restart of the clock" on the merger. Comcast is no stranger to merger battles, having purchased NBC/Universal from GE in the last several years.

    I believe that 2015 will be a pivotal year for mergers and I need a consumer cyclical stock to balance my portfolio in that sector. My small 1/3 position has done rather well since 2009, but I haven't started dollar cost averaging into it because of other opportunities in high yield stocks, such as Prospect Capital (NASDAQ:PSEC), American Capital Agency (NASDAQ:AGNC), American Capital Mortgage (NASDAQ:MTGE) and my oil stock Linn Company (NASDAQ:LNCO). With the Federal Reserve talking about raising short term Federal Funds rates, this year may be unsettled for high yield stocks. Although all of these high yield stocks have cut their dividends over the last 2 years, I am holding all of them and dollar cost averaging into PSEC in my IRA. BDCs usually rise with increased interest rates, while the others do not. With RMDs staring me in the face, I need to add to my regular account and CMCSA pays a low dividend yield (1.57%) to keep taxes down. The P/E is 18.03 with a forward P/E of 14.02. My TweedFactor (yield + 5yr dividend growth rate -P/E) is 14.35. With these facts in mind I decided to update my dividend growth study for CMCSA to 7 years (Data from Finviz). I start with an initial investment of $10,000 on March 31, 2008 and reinvest the dividends through January 2015.

    Date of reinvestDiv Rate# SharesDividendDrip price# Shares purTotal ValueCurrent Yield
      586.76$2,075.37 69.70  
            
    01/05/15$0.23584.46$131.50$57.352.29$33,650.501.57%
    09/29/14$0.23582.05$130.96$54.162.42$31,654.561.66%
    06/30/14$0.23579.62$130.41$53.682.43$31,244.211.68%
    03/31/14$0.23577.02$129.83$50.042.59$29,004.001.80%
    12/30/13$0.20574.86$112.10$51.872.16$29,930.121.50%
    09/30/13$0.20572.39$111.62$45.122.47$25,937.711.73%
    07/01/13$0.20569.65$111.08$40.662.73$23,273.251.92%
    04/01/13$0.20566.98$110.56$41.382.67$23,572.321.88%
    12/28/12$0.16564.47$92.01$36.542.52$20,717.561.78%
    10/01/12$0.16561.88$91.59$35.382.59$19,970.771.84%
    06/29/12$0.16559.03$91.12$31.972.85$17,963.192.04%
    04/02/12$0.16556.01$90.6330.053.02$16,798.742.17%
    12/30/11$0.11553.37$62.53$23.712.64$13,183.001.91%
    10/03/11$0.11550.32$62.19$20.363.05$11,266.672.22%
    07/01/11$0.11547.91$61.91$25.732.41$14,159.701.76%
    04/04/11$0.11545.47$61.64$25.262.44$13,840.261.79%
    01/03/11$0.10543.17$51.60$22.372.31$12,202.211.70%
    10/04/10$0.10540.26$51.32$17.662.91$9,592.302.15%
    07/02/10$0.10537.34$51.05$17.462.92$9,432.922.18%
    04/05/10$0.10534.64$50.79$18.822.70$10,112.652.02%
    01/04/10$0.10531.66$50.51$16.972.98$9,072.792.24%
    10/05/09$0.07529.31$35.99$15.342.35$8,155.671.77%
    07/06/09$0.07526.74$35.82$13.902.58$7,357.471.96%
    04/06/09$0.07524.25$35.65$14.362.48$7,563.951.89%
    01/05/09$0.06522.32$32.91$17.031.93$8,928.061.48%
    10/06/08$0.06520.51$32.79$18.141.81$9,474.931.39%
    07/07/08$0.06518.74$32.68$18.461.77$9,608.701.37%
    03/31/08$0.06517.06$32.57$19.341.68$10,032.521.30%

    In addition, I have graphed these results:

    (click to enlarge)

    This study shows that the total value of the investment increased to $33,650 over the 7 years for 18.9% per year growth. By inspection it can be seen that there was a downdraft during 2008-2009 (Great Recession), and again in the second quarter of 2014. Earnings per share are projected to rise 17.33% over the next 5 years.

    Conclusion: In my opinion, now is the time to begin dollar cost averaging in my regular account in order to build this stock to a full position. There should be plenty of up and down action during 2015 as the merger battle is fought out, with the stock continuing to rise just as it has for the last 7 years. An investment in CMCSA appears less risky than one in high yield stocks at the present time, but it is an equity investment and the price can drop just as any other equity. The buyer should perform their own due diligence.

    Jan 03 10:34 AM | Link | 2 Comments
  • Church & Dwight: Is The Price Too High?

    The new year of 2015 is being born and the time has come to build up the college funds of my grandchildren. Although some of them have consumer staples stocks, like Kimberly Clark (NYSE:KMB) I believe most of the large cap consumer staples are over priced in the current environment. Instead, I feel a mid-cap company, similar to Church & Dwight (NYSE:CHD) (market cap $10.73B) would be an appropriate addition to their portfolios this year. The past year 2014 saw slow growth of the S&P 500 index and several sectors, like energy and basic materials fall precipitously. However, recently CHD has begun a rather steep price appreciation: (Data from Finviz)

    (click to enlarge)

    Price wise alone, it has appreciated from $59.89 to $80.18 or 34% in the past 52 weeks. Is it overpriced? The forward P/E ratio is 24.3 with a PEG ratio of 2.83. Earnings per share have grown 13.9% this year and are projected to grow 9.84% average over the next 5 years. The price/book value is 5.14 and even the price to sales ratio is 3.3. It has an acceptable debt/equity ratio of .5 and a dividend of 1.55% yield. My Tweed Factor (yield + 5yr dividend growth rate-P/E) is 22.06. With a fast growing stock, the dividend growth rate must be high to maintain the yield and Church and Dwight has done that.

    With the above in mind, I extended last year's dividend growth study:

    Date of reinvestDiv Rate# SharesDividendDrip price# Shares purTotal ValueCurrent Yield
      384.62$1,530.70 206.62  
    11/06/14$0.31383.00$118.73$73.041.63$28,093.001.70%
    08/08/14$0.31381.22$118.18$66.371.78$25,419.671.87%
    05/08/14$0.31379.48$117.64$67.731.74$25,819.951.83%
    02/13/14$0.31377.66$117.08$64.381.82$24,431.041.93%
    11/06/13$0.28376.04$105.29$64.661.63$24,419.711.73%
    08/08/13$0.28374.33$104.81$61.451.71$23,107.351.82%
    05/09/13$0.28372.67$104.35$63.031.66$23,593.981.78%
    02/13/130.28370.93$103.8659.621.74$22,218.811.88%
    11/07/120.24369.18$88.6050.561.75$18,754.311.90%
    08/09/120.24367.48$88.2052.041.69$19,212.091.84%
    05/10/120.24365.83$87.8053.191.65$19,546.501.80%
    02/16/120.24364.00$87.3647.511.84$17,380.772.02%
    11/09/110.17362.56$61.6442.951.44$15,633.591.58%
    08/11/110.17361.08$61.3841.411.48$15,013.611.64%
    06/02/112/1 split180.54$0.0040.75180.54$14,713.921.67%
    05/12/110.17180.17$30.6383.050.37$14,993.660.82%
    02/16/110.17179.75$30.5673.050.42$13,161.340.93%
    11/10/100.085179.52$15.2665.890.23$11,843.770.52%
    08/12/100.085179.27$15.2462.060.25$11,140.950.55%
    05/13/100.07179.09$12.5466.60.19$11,939.620.42%
    02/08/100.07178.88$12.5260.570.21$10,847.200.46%
    11/05/090.07178.66$12.5157.40.22$10,267.630.49%
    08/11/090.07178.44$12.4957.270.22$10,231.900.49%
    05/07/090.045178.30$8.0254.480.15$9,721.550.33%
    02/05/090.045178.14$8.0252.50.15$9,360.500.34%
    11/06/080.045178.00$8.0156.170.14$10,006.270.32%

    I have graphed the results below:

    (click to enlarge)

    With an investment of $10,000 in quarter 4 of 2008, the current value would be $28,093 with dividends reinvested. This would be a total return of 2.8x for the 6 year period or 18.7% per year.

    I have also included a CHD update from Sure Dividend NASDAQ Dividend Achievers: Church & Dwight .

    Conclusion: I believe the global economy is starting to pick up and Church & Dwight has already started to climb in price. My studies show that it is still a good buy, even at the present price.

    Investors should know what they are buying and be careful, especially at times like these of global turmoil and market contraction in the energy sector.

    Dec 28 2:42 PM | Link | 3 Comments
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    May 5, 2015
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    Feb 15, 2015
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    Feb 7, 2015
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