Watch List Summary
This week's list contains 21 companies that are among some of the biggest blue-chip institutions out there. The complete list can be found here.
Topping our list is the giant food supplier, ConAgra (NYSE:CAG). A quick glance at the one year performance review of the top five companies (see below) and you may want to consider ConAgra as a potential investment.
In addition, there are great household names such as Kimberly-Clark (NYSE:KMB), Colgate-Palmolive (NYSE:CL), Pepsi (NYSE:PEP), and Clorox (NYSE:CLX) that we are all familiar with. Inflation themed investors can look to another major food supplier to restaurants, Sysco (NYSE:SYY). In the following article we wrote on December 17, 2008, we compared Sysco to Newmont Mining (NYSE:NEM) and Couer D'Alene (NYSE:CDE) from 1970 to 1983. On a total return basis, according to Morningstar.com, Sysco gave far superior returns (4 times greater) than the leading gold and silver stocks did during a commodity boom.
The New Low team is very interested in re-purchasing Bank of Hawaii (NYSE:BOH) as the banking sector is seen as out of favor. If interested, investors can refer to our original writing on Bank of Hawaii from initiation to sell recommendation with a detailed follow-up titled "The Anatomy of a Bear Market Trade."
November 19, 2010 Watch List
Symbol Name Price % Yr Low P/E EPS Div/Shr Yield Payout CAG ConAgra 21.48 2.19% 13.68 1.57 0.92 4.28% 59% WABC Westamerica 50.50 2.98% 15.83 3.19 1.44 2.85% 45% IBKC IBERIABANK 50.52 4.57% 8.43 5.99 1.36 2.69% 23% GBCI Glacier BanCorp. 13.32 5.05% 21.14 0.63 0.52 3.90% 83% VLY Valley National 13.01 6.14% 17.12 0.76 0.72 5.53% 95%
Top Five Performance Review
In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from November 20, 2009 and have check their performance one year later. The top five companies on that list were Aqua America (NYSE:WTR), First Financial (NASDAQ:THFF), California Water(NYSE:CWT), WGL Holding (NYSE:WGL), and UGI (NYSE:UGI).
Name Symbol 2009 Price 2010 Price % change AQUA AMERICA INC WTR 15.88 21.05 32.56% First Financial Corporation Ind THFF 27.96 31.1 11.23% CALIFORNIA WATER SVC CWT 35.78 36.44 1.84% WGL HOLDINGS INC WGL 31.33 37.12 18.48% U G I CP UGI 23.36 30.16 29.11%
Dow Jones Industrial DJI 10,318.16 11,203.55 8.58% S&P 500 SPX 1,091.38 1,199.73 9.93%
As a group, the top five companies on our Dividend List averaged a gain of 18.64% in the last year. This compares with the Dow Jones Industrial Average gain of 8.58% and the S&P500 gain of 9.93% in the same one year time frame. Again, the graph below demonstrates that all stocks achieved 10% gains within six months of being on the watch list from November of 2009.
On our current list, we excluded companies that have no earnings and payout ratios 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. Because our list has many 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. We suggest readers use the March 2009 low (or companies' most distressed level in the last 3 years) as the downside projection for long term investing. Our view is to embrace the worse case scenario prior to investing. The November 2008 to March 2009 time frame fits that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety.
Disclosure: No positions