At the end of the week, our watch list contracted to 30 companies. Below is the top ten companies from our list which ranks current and former Dividend Achievers that are within 10% of their respective 52-week low for August 6, 2010. Because the list contains 30 companies you can find the full list here.
We filtered out companies that has no earning and payout ratio in excess of 100%. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence.
|Symbol||Name||Price||% Yr Low||P/E||EPS||Div/Shr||Yield||Payout Ratio|
|PBI||Pitney Bowes Inc||20.71||1.02%||10.79||1.92||1.46||7.05%||76%|
|HGIC||Harleysville Group Inc.||30.90||2.83%||11.24||2.75||1.30||4.21%||47%|
|CWT||California Water Service||34.97||3.43%||18.90||1.85||1.19||3.40%||64%|
|BEC||Beckman Coulter, Inc.||46.12||3.87%||21.96||2.10||0.72||1.56%||34%|
|FFIN||First Financial Bankshares||47.88||4.82%||18.34||2.61||1.36||2.84%||52%|
|DNB||Dun & Bradstreet Corp.||68.96||5.28%||14.86||4.64||1.40||2.03%||30%|
|FII||Federated Investors Inc||21.35||5.38%||11.18||1.91||0.96||4.50%||50%|
|JNJ||Johnson & Johnson||59.96||5.45%||12.39||4.84||2.16||3.60%||45%|
Watch List Summary
The best performing stock from the previous list was Pfizer (PFE) which rose 11.4% The worst performing stock was State Auto Financial (STFC) which fell 6.3%. Because our list has more than a handful of great companies, We urged investors to filter for companies with less than 50% payout ratio. This should minimized the risk of dividend reductions if earnings are to fall by half. If you understand the companies' history and their ability to pay the dividend, then payout ratios in excess of 50% may be considered.
Pitney Bowes (PBI) fell like a rock on Thursday after missing analyst estimates on their earnings along with a a credit rating downgrade from S&P. Strangely, PBI's price action this week replicated last year's price action after they reported their earnings. The New Low team highlighted that price action on July 31, 2009. As a result, we are beginning to dig deeper into the details of this company in light of recent event.
After a heart-stopping drop of 15%, we took a position in Beckman Coulter (BEC). Because we're confident that BEC will fall further, we implemented the first of 3 purchases that we're expecting to make. We're ready and excited to make the next two purchases if they happened to be triggered at much lower levels.
Johnson & Johnson (JNJ) is still interesting at this level. Based on IQTrends , JNJ is undervalued at or near 3.5% yield. With current yield of 3.60%, we suggest readers adding JNJ to your investment watch list.
Once again, we suggest readers use the March 2009 low (or companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. The November 2008 or March 2009 low fits that description. Although we use the one year (52-week low) time frame, the past year was nothing but a major bull run and anyone who bought at or near the low could, and should, be taking profits. It is important to place these companies in your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.
Disclosure: Disclosure: Long BEC