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As a contributor to the New Low Observer (http://www.newlowobserver.com/about-this-site), we intend to give new insights on a low risk approach to trading in dividend paying stocks for tax deferred accounts. The New Low Observer (http://www.newlowobserver.com/about-this-site) is not intended for... More
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  • Top Ten From The Blue Chip Bargain Bin 0 comments
    Feb 6, 2013 3:35 PM | about stocks: AAPL, IBM

    Below are the approximate ex-dividend dates for the month of February 2013 for companies that appear on our U.S. Dividend, Nasdaq 100, Dow Jones Transportation/Industrial Index and International Dividend Watch Lists. All companies are ranked by ex-dividend dates.

    Companies that show up on our Watch Lists could be considered the equivalent of the bargain bin of high quality blue chip stocks. Because these companies have increased their dividends every year for at least 10 years in a row (or have had similar dividend policies in the past) or are part of major indexes and within 20% of their respective 52-week low, you know that you're not overpaying for a company that has demonstrated profitability and the ability to rebound from challenging times. The remaining list of February ex-dividend stocks can be found here.

     

     

    SymbolCompanyPrice% from yr lowQtrly Yieldpayout ratioEx-date
    IBMInternational Business Machines$203.1911.71%0.43%23.66%2/6/2013
    AAAlcoa Inc.$8.9312.17%0.33%66.67%2/6/2013
    FNFGFirst Niagara Financial Group Inc.$7.9812.41%1.00%80.00%2/6/2013
    BBTBB&T Corporation$30.9215.04%0.75%34.07%2/6/2013
    CWTCalifornia Water Service Group$19.3614.99%0.80%58.72%2/7/2013
    XOMExxon Mobil Corporation$89.7916.31%0.63%23.51%2/7/2013
    ALTRAltera Corp.$34.4916.46%0.30%23.26%2/7/2013
    SJWSJW Corp.$26.4517.24%0.65%59.84%2/7/2013
    WBSWebster Financial Corp.$22.4418.64%0.45%21.51%2/8/2013
    AAPLApple Inc.$455.494.44%0.58%24.03%2/11/2013

    Watch List Summary

    The first stock on our list is IBM (NYSE:IBM). After our April 19, 2012 titled "What Does Warren Buffett See In IBM?" (found here) the stock has been in a consolidation pattern. Despite the critics, IBM managed to fall within 5% of the 52-week low on November 14, 2012. With the stock currently trading within 12% of the 1-year low and a healthy payout ratio of 24%, the stock is well positioned for those interested in long-term positions. We're including an updated version of Edson Gould's Altimeter which suggests that IBM is significantly undervalued based on the on dividend relative to the stock price.

    (click to enlarge)

    According to Gould's Speed Resistance Lines, IBM has the downside targets of $137.45 and $72.

    Another notable stock on our list is Apple with an ex-dividend date of February 11, 2013. On April 17, 2012, we projected the conservative downside target for Apple (NASDAQ:AAPL) at $424.15 and the extreme downside target of $212.08 (found here). On an intraday basis, Apple fell within 3% of our April 2012 conservative downside target.

    Regardless of the market conditions, according to Dow Theory, Apple has upside targets of $528.28 and $616.68 before re-testing the previous highs, as shown below.

    (click to enlarge)

    If you happen to be researching these companies for potential investment, it would be advisable to consider the ex-dividend date prior to possible purchases. Owning the shares of the company that you're interested in before the ex-dividend date entitles you to the upcoming dividend payment.

    Owning the shares on or after the ex-dividend date means that you would have to wait at least three months before receipt of the next dividend payment. Please verify the ex-dividend date and payout ratio before committing funds to these stocks. Additionally, do not base your next long or short-term purchase on the dividend payment or yield. Instead, get as much research in as you possibly can before the ex-dividend date "just in case" you're actually interested in buying the stock. Payout ratios that exceed 100% should be considered speculative investments.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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