5 Dividend Achievers Near Their 52-Week Lows

Includes: PPL, SJW, SYY, TGT, WABC
by: New Low Observer
Our watch list this week contains 28 companies that are within 11% of their 52-week low. The complete list can be found here.
Symbol Name Price % Yr Low P/E EPS (ttm) Dividend Yield Payout Ratio
SJW SJW Corp. 22.65 1.80% 17.42 1.30 0.69 3.05% 53%
SYY Sysco Corp. 27.86 2.69% 14.36 1.94 1.04 3.73% 54%
WABC Westamerica BanCorp. 50.13 2.94% 15.62 3.21 1.44 2.87% 45%
PPL PP&L Corporation 24.57 3.45% 11.38 2.16 1.40 5.70% 65%
TGT Target Corp. 49.95 3.57% 12.49 4.00 1.00 2.00% 25%

Watch List Summary

On the top of our list this week is San Jose, CA-based water utility SJW Corp. The stock has been under pressure this week. The current yield of 6% is attractive, but with nearly $30B of debt and only $650M of cash on hand, it may not be worth the risk/reward.

Target is another name with tremendous upside potential, gauging by the relative dividend yield established by IQTrends. Historically, shares are undervalued at 1% yield. With the stock trading nearly 2%, it has the potential to double, all else being equal.

Another name we'd like to highlight is Abbott Labs (NYSE:ABT). We went back to our 2009 analysis of the company and found some interesting qualitative changes. The stock was trading at 3.4% yield and roughly $47. Today, with a price of $48, ABT would yield 4%. We see that the stock offers more value at $48 than at $47.

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 March 26, 2010 and have checked their performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2010 Price 2011 Price % change
XOM Exxon Mobil Corp. 66.54 83.62 25.67%
FPL* FPL Group, Inc. 47.81 54.10 13.16%
MON Monsanto Co. 71.10 70.76 -0.48%
TMP Tompkins Financial Corp. 37.75 41.34 9.51%
BRO Brown & Brown, Inc. 17.81 25.09 40.88%

Average 17.75%

DIA Dow Jones Industrial 10,850.36 12,220.59 12.63%
SPY S&P 500 1,166.59 1,313.80 12.62%

*FPL is now NextEra (NYSE:NEE)

[Click to enlarge]

The performance of our top five stocks topped the overall market by 5%, thanks to two key performers, Exxon and Brown & Brown.
On our current list, we excluded companies that have no earnings. 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. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last two years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit 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. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.