Category Archives: Dividend Achiever Watch List

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from September 1, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The average gain from the top five company was mediocre rise of 0.5% compared to 17.2% gain from S&P 500 and 18.1% from Dow Jones Industrial. The largest gain came from Hormel Foods (HRL) which rose 26.6%. We had this to say about Hormel last year.

Another food producer that should be on the radar is Hormel Foods (HRL). The stock has fallen 11% since the year began. Our valuation model imply that additional downside of 25% should be expected but 34% upside is also possible. Similar to the prior company we mentioned, Hormel Coppock indicator dipped into negative territory in April. With that in mind, a change in direction would make Hormel an ideal company to go long. Our study of Coppock on this company is that when applying the strategy, the average return is 31% after one year. Although sample size is small (5 of 309 months), the indicator have not produced negative return. Additionally, Hormel return on equity average 16% which is exceptional.

The biggest decline came from SCANA Corp (SCG) which fell 36.2%. The utility company couldn't raise rate and stock price followed.

J.M. Smucker (SJM) was the other stock that lost value since last year falling 1.4%. Our team believed that valuation was ripe for accumulation. Although shares remain virtually flat, shares actually rose 30% from $100 to $130 in 6 months before giving back all those gain. our team has long position but didn't sell because of tax implication. Perhaps we can explore the use of Put option to lock in majority of the gain. Despite that, we believed shares provide good value at the current level.

U.S. Dividend Watch List: August 31, 2018

The market took out the all-time high and the bull market continued. If we wish to go long, our team would start with companies on the watch list below. Continue reading →

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from August 18, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The average gain from the top five companies were amazing with gain of 38.9%. One can thank W.W. Grainger (GWW) for such strong performance with price more than double (121.7%). We were upbeat about the company after the pull back last year and loaded up on shares. Below is what we said about W.W. Grainger.

We wrote a short commentary on W.W. Grainger (GWW) on April 21st. There, we specifically advised our readers to wait for a -15% decline before accumulating shares. Sure enough, shares have fallen -17% since and now would be the time for accumulation. An initial purchase should be coupled with additional purchases 10% below the current level if and when it occurs.

U.S. Dividend Watch List: August 17, 2018

The all-time high is just few ticks away. With that, it's hard to begin buying at this level and yet an all-time high would be mark a bullish pattern. If we wish to go long, our team would start with companies on the watch list below. Continue reading →

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from August 4, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Top five companies gained, on average, 3.9% which under performed the market that rose nearly 15%. The biggest drag came from Owens & Minor (OMI) which fell 35.6%. Our team were bullish on the company because of the valuation and learn a hard lesson. That lesson is, cheap company could get cheaper even if a model doesn't account for it.

On the opposite end, we thought that Bemis (BMS) was fairly valued and could experience 15% downside. However, shares closed this week nearing its all-time high driven by news of potential take over.

U.S. Dividend Watch List: August 3, 2018

The market is approaching an all-time high at the end of the week. If the trend continue, we'll see the bull market optimism renewed as the S&P break its record set back in January. Below are companies that are on watch list this week. Continue reading →

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from July 21, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Top five companies did extremely well, gaining 26%, as group despite lack of performance from IBM (IBM). The largest contributor was the retail sector companies Ross Stores (ROST) (+59.4%) and TJX Companies (TJX) (+40.8%). These gains far out strip the market of 13.3%. We thought that Ross Stores was trading at fair value thus wasn't worth the risk. Below is what we said about Ross Stores.

Next stop on the list is Ross Stores (ROST). This discount retail store traded as high as $69.80 late last year but shares have fallen 22%. It should be no secret to anyone that Amazon presence is hurting retailers be it discount or luxury. The brick and mortar model contain high overhead which makes it difficult to compete with online retailer. Our analysis suggest that Ross Store appears to be risky investment at this level. Dividend regression model shows that shares are right at fair value. Applying historical data and produce altimeter suggests shares are overvalued despite fallen 22% from the peak.

We also touched on IBM (IBM) which was virtually flat year-over-year. However, we believed shares would be a good trade at support level of $140 which did so recently (see chart below). The excerpt below was our commentary last year on IBM.

IBM (IBM) closed the week at yearly low. The company reported quarterly result that didn't excite the bull. Revenue continued to decline but revenue beat consensus estimates. Value investor will know by now that Warren Buffett sold majority of his holding in IBM. It wouldn't surprise us that he exit his entire position in the near future. Value Line estimated that IBM will produce cash flow per share of $17.50 in 2018 and believe shares are fairly traded at 9.5 times. This calculation put share price as $166, about 13% higher than current level. Since the peak in March ($182), stock price have fallen 19% and broke technical level at $150. Because of that technical breakdown, our prediction is for shares to find support at $140 range. Anyone looking to find value may want to wait a little longer and establish positions in $140 range.

One stock the market went against us big time was medical equipment supplier Owens & Minor (OMI). Despite hitting all-time low last year and reaching valuation level similar to 2008 low, shares continued to slide more than 50% and reached an extreme low of $15. Since then, shares hare rebounded to $17. The pain is felt to our portfolio as we do own shares of OMI. Blind sided by the issue at hand, we still believe shares are of good value but any hope of sizable profit is highly unlikely based on our purchase price. The important lesson to take away is to always anticipant sizable downside risk even if your assessment shows no sign of it. Then be prepared to either cut your loss if you're trading, realized short-term loss for tax purpose, or purchase more if you have full conviction.

U.S. Dividend Watch List: July 20, 2018

The market is displaying some bullish characteristic with late week rebound and closed above 2,800. The first time this occurred was in January of this year which technically looks like a parabolic move. A well defined pattern of higher-high is a more robust pattern with good support. As we move longer into this bull market, it would be natural to get defensive so we urge our readers to assess the asset allocation and the cash holding. Below is our dividend watch list for the week. Continue reading →

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from July 7, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The top five companies didn't do so well with average loss of 5.4%. Biggest drag on this list was General Electric (GE). The biggest gain of 11.9% came from Hormel (HRL). Our team said the following about Hormel.

One company our model offer good risk/reward profile is Hormel Foods (HRL). Dividend payment is the best proxy for share price direction and using our dividend regression model, there is a 21% upside potential in shares of Hormel Foods. Average yield for this company historically has been in range of 1.5% but current yield of 2.2% suggest an undervalue range. Even so, one should take caution and establish a multiple purchases plan.

Another company we mentioned was Genuine Parts (GPC) which we believed to be trading near fair value at the time. Our assessment is fairly close to reality as share rose 4.5% for the year. We said the following about Genuine Parts.

Four companies are trading within 1% of its yearly low. First on the list is auto supplier Genuine Parts (GPC). Shares broke below $90 after Goldman downgraded the stock to sell from neutral rating and reduced its target price to $89 from $104. Our valuation model isn't as bullish on shares of Genuine Parts at current level but would be if shares are trading at $70. Trading at 4x book value is a bit rich and multiple of 3x would be more reasonable.

U.S. Dividend Watch List: July 6, 2018

It was a good week for the bull as the S&P 500 gained 2.2%. The momentum is swinging upward and look to the 2,800 mark to be the key technical level. The sideway trading pattern that began at the beginning of the year could mean an accumulation before the next leg up or down. A break below 2,600 would be very bearish and above 2,900 to be bullish. Our team will explores investment opportunities from the watch list below. Continue reading →

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from June 23, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The average gain for the top five companies was subpar. The first company on our list was JM Smucker (SJM). We thought that JM Smucker at the time was trading at fair value and a decline of 10% would prompt an investor with a good starting point. Fast forward to today and shares are off 12% from last year. As such, it's probably a great time to do evaluation JM Smucker as potential long. Our valuation model has a possible downside of 10% as the worse case scenario with 35% potential upside at current valuation.

One company we got completely wrong is Owen & Minor (OMI) which we though had reached an extreme downside. To our surprise, shares fell 44% compared to our projection of 15% downside risk. It would be difficult to walk away from a company with strong fundamental and balance sheet after a big decline such as this one. As a long-term investor, accumulating shares of Owen & Minor at the current level would put the risk and reward profile in their favor.

U.S. Dividend Watch List: June 22, 2018

Below are companies on our watch list this week. Continue reading →

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from May 27, 2016 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The top five companies average gain was 6% for the year. The best performer was TJX Companies (TJX) whose shares rose 31.4%. On the opposite end of the spectrum was JM Smucker (SJM) which lost 15.2%.

Regarding TJX, we said Target (TGT) would be our preferred option in the retail space given the current dividend yield and our assessment was proven correct. While TJX gained 31.4%, Target rose 46.8%. Excerpt below is what we said last year.

Trading near the low and not far from Carlisle is a discount retailer, TJX Company (TJX). It's no secret that retail industry is in a big slump and have seen their market share shifted to Amazon. Our team have not extended our study to TJX because we own a substantial shares of Target. A recent swoon in Target shares pushed the dividend yield up to 4.6%. Compared that with 1.7% for TJX and it's a no brainer to us. Time will tell if our assessment is right.

As for JM Smucker (SJM), we believed that the valuation wasn't ripe and a drop to $100 would mark a good entry point. Sure enough, JM Smucker is currently trading at $105, a fall of 15% from last year.

U.S. Dividend Watch List: June 15, 2018

Below are companies on our watch list this week. Continue reading →

It was a good week for the market with the S&P 500 gaining more than 1.3%. However, the index is approaching the resistant level of 2,800 which can be trace back to March of this year. Looking at the chart, the trading range between 2,600 and 2,800 emerges. Below are companies on our dividend watch list for this week. Continue reading →

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from May 26, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The average gain for the top five companies were 14.5% which is higher than the S&P 500 (+12.6%) but lower than the Dow Jones Industrial (+17.4%). Largest decline of -46.7% came from General Electric (GE). Though we didn't elaborate much on GE, we placed it in a high quality category based on its history.

One company we elaborated on was Hormel (HRL) which rose 8.3%. Recent development over the weekend on recall will likey reduce that gain by a good margin. Our assessment was that using dividend as proxy for value, Hormel would be undervalue by 21%. Although that valuation hasn't come to fruition, our team still believe Hormel is undervalued and remain long a Call option on Hormel. Long-term investor could use this range trading as accumulation phase.

U.S. Dividend Watch List: May 25, 2018 Continue reading →

Prior Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from May 5, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The average loss for the top five companies was 7.3%. Weighting down the list was SCANA Corporation (SCG) and Tanger Factory Outlet Centers (SKT) who lost 44.6% and 27.5% respectively. We didn't foresee the extreme drop in price but did warned our reader on REIT. The excerpt below was our remark.

One should exercise extreme caution on Real Estate Investment Trust (REIT). These include companies such as Tanger Factory (SKT) and SCANA (SCG). We believed that income investors entered this sector aggressively which makes the risk/reward profile at current level unattractive to us.

The best performing company of the top five was W.W.Grainger (GWW) with 51.5% gain. Our team was bullish on W.W. Grainger last year and was fortunate enough to get the timing right. As part of an elite group call Dividend Aristocrat, we believed that risk/reward was appropriate at the level we saw last year. However, there were companies in Dividend Aristocrat that went the opposite direction. AT&T (T) and Procter & Gamble (PG) lost 17% and 16% respectively.

U.S. Dividend Watch List: May 4, 2018

The market started the week at 2,680, dropped to 2,600 and closed the week at 2,660. The volatility is setting in but we see consolidation occurring. Our team continue to be mindful of the March low as the level to watch. If and when that level is breached, we will reassess our asset allocation between cash and equity holding. Below are companies for this week dividend watch list. Continue reading →

Prior Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from April 21, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The average gain of the top five companies on the last year's list yielded 7.6% gain. The largest decline came from SCANA Corporation (SCG) which fell -45.80%. Though we didn't elaborate on SCANA in this writing, our readers will know that we have cautioned of the risk associated with utility companies. The best performer was W.W. Grainger (GWW) which gained +47.80%. We said the following about W.W. Grainger a year ago.

"First on our list is W.W. Grainger (GWW), an industrial servicing company. Grainger reported earnings that missed estimates and lowered its outlook that tanked the stock earlier this week. Shares are trading at the yearly low. Based on our dividend model, shares have the potential to reach $260 but we see current price as fair value. Based on the newly revised EPS estimate of $10, one should expect a 30% downside risk. As such, we would advise one to wait for the price to fall another 15% before accumulating shares."

The key take away is our assessment that one should wait for -15% pull back before accumulation. Shares of W.W. Grainger did fall to $155 or as much as -21%. If one happen to be lucky enough to purchase shares after a -15% decline to $165, the one year return would be at +75%.

Another company we touched on and were bullish on was Target (TGT). In one year, the share price rose +28.40%. We said the following of the stock:

"Next company we'd like to highlight with some potential for downside but greater potential for upside is Target (TGT). To be transparent, we are long Target. We see that the shares could rise 30% from the current level with either multiple expansion to 13x from 10x. However, if net income rises in addition to multiple expansion, shares could rise further than the 30% mark. In addition, the Coppock Curve analysis suggest that shares will rise over the long-term by 22% after the buy signal. Such a signal came in November 2016 but we do not expect the price would recover anytime soon. Target has a strong balance sheet and a dividend yield of 4.50% which should keep long-term investors happy until the sentiment changes."

Not often will our forecast come close to fruition but this one did. We projected a +30% upside and got +28.40%. The result of the upside would be due to multiple expansion pushing P/E to 13 and shares closed the week trading at 13.2x net income. Because the stock has done everything we'd hope for, profit taking, partial or full, should be highly considered.

U.S. Dividend Watch List: April 20, 2018

The market continued to gyrate wildly throughout the week. The S&P 500 broke above 2,700 mark but failed to hold that key support and closed the week at 2,670. A technical pattern is displaying a consolidation pattern or "line" formation between 2,600 and 2,800. If the market continue this trend, it gives investors great opportunity to conduct their research. Below are companies on our watch list this week. Continue reading →

Top Five Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from April 7, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Our analysis of Target (TGT) proved to be well timed. Share rose 35.8% from prior year. Below is the commentary on Target shares last year.

The top four companies from this list are the same as our previous list. Target (TGT) leads the pack and is trading less than 1% above the yearly low. The stock appears to be retesting the the low of $52.70. However, the technical set up appears to be bullish as the Relative Strength Index (RSI) is making a higher-high. Based on our observations, whenever we see this occur, there is good chance that the bottom is set, at least in the short-term. Additionally, our analysis of Target using the Coppock Curve suggests that now is an opportune time for accumulation.

Another company we were bullish on was Hormel Foods (HRL), the maker of SPAM. Shares dropped as low as $30 and peaked at $38. However, the performance since last year yield only 5% increase in share price. The following quote is an excerpt from last year post.

• Hormel's financial strength is A rated according to Value Line Investment Survey.
• The dividend yield of 2% does not seems like much but is higher than the historical average for this company.
• The P/E multiple of 20x may appears to be high when compared to the market. However, we believe that multiple could expand to 25 if this bull market persists. If this bull market is coming to an end, we could see that multiple collapse to 12.

We see a possible upside to $47 with a possibility of downside to $25. A multiple purchase plan is highly recommended.

U.S Dividend Watch List: April 6, 2018

The volatility in the market linger and our watch list has more than 100 companies ranging from small to large cap in different sectors. However, we would urge extreme caution as the bull trend appears to be in its last leg. If and when that occurs we will inform our reader of the approach we will take in our portfolio. Continue reading →

As a follow up to the watch list we published earlier this week, we will break down the watch list into several components using fundamental criterias. Continue reading →

Top Five Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from March 24, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The average loss of the top five companies was 2.5% compared to gain of 10.4% for the S&P 500. We didn't touch on these five companies but did highlight our bullish sentiment for Hormel (HRL). The stock lost 6% for the year with swing of +/- 10%. Our team continued to believe the valuation and feel that a bottoming process for the stock is in place. In early January, the company announced 10% dividend increase. We continue to hold our long-term call options on the stock which we view as highly speculative.

U.S Dividend Watch List: March 23, 2018

The market lost 6% for the week and propelled the number of companies on our watch list to more than 100 companies. Our team will list all companies below but will expand our coverage by providing top five companies by each fundamental categories such as P/E ratio, Payout Ratio, and our proprietary ratio we'll term NLO ratio. Continue reading →

Top Five Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from March 17, 2017 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The top five companies average return was -13.20% largely driven by SCANA (SCG) and Cato (CATO) which lost -40.80% and -39.50%, respectively. A gain of +30.80% from Target (TGT) wasn't enough to offset the loss incurred from the other four companies. The good news for us is that we were bullish about Target and acted on our intuition.

Other notable companies mentioned were Hormel Foods (HRL), Coca-Cola (KO), and Genuine Parts (GPC). The average change for the three companies are -2% compared to the S&P 500 gain of +15.70%. Although these companies are part of an elite group call Dividend Aristocrats, that doesn't mean they will outperform the market. Even when our valuation model point to potential upside, in the case of Hormel Foods and Coca-Cola, they didn't come to fruition.

U.S. Dividend Watch List: March 16, 2018

Below are 54 companies on our watch list for this week. Continue reading →