Category Archives: NLO Dividend Watch List

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 July 25, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Our top five gained an average of 14.1%. This far exceeded the market performance. The only company that failed to meet or exceed the market performance was Stepan (SCL) which fell -5.8%. The other four companies had gains ranging from +10.7% to +31.2%. Our commentary about Stepan and Tootsie Roll is worth reviewing. Regarding Stepan, we said the following:

When we look at the price level compared to various fundamental figures (cash flow, earning, and book value), you will see that price has risen far beyond the fundamental. From 2003 to 2013, the stock has risen around 17% on an annual basis. Compared that to 5.6% for cash flow, 13% for earning, 10% for bookvalue, and 5.5% for dividend. While stock purchased at the low will mark a better entrance than stock at the high, we think that this stock will have some catching up to do on the fundamental front.

As for Tootsie Roll (TR), we all know there isn't anything exciting to write about the company other than it managed to gain nearly +16% while the S&P 500 had risen only +4.5%. The stock of Tootsie Roll has always appears to be 'expensive' on P/E basis but time after time, the company manages to maintain a consistent level of appreciation. That may be due to the predictability of their revenue and profit. We stated that the stock was worth a look at the current price while making note that it wasn't a screaming buy.

U.S. Dividend Watch List: July 24,2015

It was a train wreck for the market this week as the S&P 500 fell -2.2% while Industrial average lost nearly -3%. For those with cash on the sidelines, this is music to their ears. A pullback in the market will allow long-term investors to accumulate assets and utilize our dividend watch list to position themselves for income investing. 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 July 11, 2014 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 combined for an average gain of +22.6%, far exceed the performance of the market. The biggest gainer was Ross Stores (ROST) which gained +54.6%, split adjusted. The worse performer was Stepan (SCL) which lost -4.4% over the year.

U.S. Dividend Watch List: July 10, 2015

This week, we highlight 27 companies that are on our dividend watch list. 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 June 27, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Out top five companies surpassed the market performance by a wide margin. The overall gain was +23.60% compared with +7.20% for the S&P 500.

Ross Stores (ROST) was the largest contributor with a +52.8% gain. ROST also did a 2-to-1 split on June 12th of this year. Our assessment of Ross was inaccurate when we said that the stock doesn't have enough margin of safety at the current level. However, we may have identified a key attribute for stocks that may outperform the market. One of the biggest takeaway is the fact that ROST raised its dividend by +17% while maintaining a low payout ratio of 19%. The fact that the dividend yield was only 1.12% confirms our theory that the dividend growth and sustainability is more important than absolute yield.

Of the top five, Stepan (SCL) was the worst performer. The street had an optimistic view of the stock and expected it to grow net income by +36%. This made Stepan's forward P/E of 9 very attractive. However, that all depended on one important fact, that the net income must rise by more than a third. Because the stock was trading at its 5-year high on P/E, any earnings miss would not be good. When Stepan reported earnings in October 2014, the street expected EPS to come in at $0.89 but the actual result was $0.68. The stock fell from $52 to $38. Next, the inevitable event occurred, analysts revised their estimate downward.  Stepan's EPS came in at $0.38 in the February quarter, above the street's estimate of $0.35. Three months later, EPS came in at $0.90 when the street's estimate was $0.68. Shares rose back from $38 to $55.

U.S. Dividend Watch List: June 26, 2015

There are 33 companies on our watch list. Continue reading →

It was a good week for the market as it gained +0.75% despite the indecision with Greece. It appears that the market may be looking beyond the Greece and has priced in the exit from the Euro monetary system.

Despite climbing a wall of worry, a key element needed for a rising market, several sectors remain relatively weak. The sectors include energy, utilities, and real estate investment trust. Two of these are driven by the interest rate outlook. We are not making a macro forecast but we know where interest rates will be eventually heading, the only real question is the timing. That being said, we want our readers to be caution of the macro factors that may suppressed or adversely affect some companies on the watch list below. 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 June 6, 2014 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 stocks outperformed the market and the blue chip index by a wide margin. The two best performing stocks were Target (TGT) and First Community Bancshares (FCBC). Below is an excerpt from last year's posting:

First Community Bancshares (FCBC) topped our list. Though this regional bank didn't appeared on or top five in the previous week, the company play into the same theme of what could be the undervalued bank sector. We have limited scope on the view of the company but one prominent fact worth nothing is that the bank was founded in 1874. That alone tell[s] us that the bank has stood the test of time and was able to withstand many business cycle including the great depression and the recent credit crisis during which the company reduced dividend payout by 64%. Even so, the stock now yield 3.3% with less than 50% payout ratio. On book value basis, shares are trading at 20% discount to tangible book.

Target (TGT) remain in the top five on our list. The stock appears to be forming a double-bottom pattern as long as the stock can hold above $55 level. Our fair value assessment place the stock at $75

We are lucky that the fair value assessment came quite close to what our research showed. First Community traded 20% below book value and the shares rose +21.80% over the year. Our fair value assessment of the stock was $75 and shares closed the week at $79.20.

U.S. Dividend Watch List: June 5, 2015

It was another turbulent week for the stock market. After dropping -1.1% in the prior week, the market declined another -0.7% this week. This minor correction provides a great opportunity to assess companies that are trading at or near the low. There are 82 companies in our full list but we have chosen to indicated only 33 companies which should be enough for everyone to start their research. 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 May 30, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Target (TGT) was the best performing with the shares gaining nearly +40% over the year. Coincidentally, our write up last year marked the low in Target's price. The excerpt below came from last year's post.

Target (TGT) doesn’t need any introduction. Also, readers may not need to be reminded of their credit card fraud problem that caused the stock to be down from the high of $73.50 to $56.75. While bad news will likely continue to linger, we believe that their best days are ahead and remain a shareholder in the company.

Our belief was that the credit card fraud issue was a one time problem that should not destroy the company's underlying fundamentals. At the end of the day, Target is a retailer and not credit card processor.

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 May 17, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Applied Industrial Technologies (AIT) topped our list last year. While the stock traded near the 52-week low, it doesn't imply that it should be bought but rather the beginning for research. We stated the following about the stock last year.

A quick glance at AIT and we find that the company is trading about 17% below its 5-year average, on P/E basis. On a cash flow basis, the company is trading about 20% above the 5-year average (figure from Morningstar). A secondary source of valuation we refer to is Value Line Investment Survey, which suggests a fair value of $38.50 which is 15% below the current price.

AIT traded down as low as $40 then rebounded back to the $42 range. With shares fallen by -7% year-over-year and is trading closer to the fair value estimate, now might be a better opportunity to start your research.

The best performing stocks from the top five was State Street (STT). We didn't highlight many things about the stock but only the fact that it was trading slightly above its 5-year average based on fundamental figures such as Price/Earning and Price/Book. The fact that State Street rose +23% despite trading at more than its historical average proves that historical figures are only part of the story. Continue reading →

By the end of the week, the market closed at its all-time high. While S&P 500 and Nasdaq reached the historical mile stone, the Dow Industrial and Dow Transport are lagging behind. The Dow Industrial will need to top 18,288 while the Transport needs to peak 9,217. At the end of the week, there are 58 companies on our dividend watch list. Continue reading →

The market took a turn on Friday and tumbled more than 1%. At the end of the week, S&P 500 was off by 1% and the Dow was off by 1.3%. The pull back is a small drop in the larger scheme of thing. The overall market remain in the upward trend with the Dow sitting well above the low of 16,117 in late 2014. However, the weakness in the market pushed the number companies on our watch list up slightly from the previous week. There are 64 companies on our watch list that one could consider. Continue reading →

Below are 57 companies with strong dividend record and is trading near its yearly low. It's important to consider the price which one begin to accumulate these dividend paying companies. Continue reading →

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 28, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Our top five did amazingly well and outperformed the market by +18%. The average gain for the top five stocks was +28%. Family Dollar (FDO) gained an amazing +37.6% in one year. This is after a fund manager, Andy Matthes of Teton Valley Fund, suggested shorting the stock (found here). The biggest pop came after Dollar General (DG) bid for Family Dollar but that bid was rejected.

The best performer was C.H. Robinson (CHRW) which nearly gained +50%. The logistic broker may have benefited from the drop in oil. Oil has fallen -52% while C.H. Robinson rose +43%.

U.S Dividend Watch List: March 27, 2015

The foundation of our investment strategy is to invest in companies that pay consistent stream of dividends with a history of payout increases. The book that help set the stage for this process was Dividends Don't Lie: Finding Value in Blue-Chip Stocks. With the stage set, our full list consists of 72 companies and 20 companies are trading at or near the low. Continue reading →

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 February 7, 2014 and have checked their performance one year later. The top five companies on that list can be seen in the table below.

McCormick (MKC) topped the list and we made a quick commentary about it. We said the following about the stock.

The stock currently yields 2.35% with a payout ratio of 51% and a P/E ratio of 21. Our initial assessment indicates that shares typically trade around a P/E of 17 and with a dividend yield of 2.35%. As such, we see MKC being at, or close to, undervalued level.

Our short assessment turned out to better than expected with the average of the stocks on our watch list outperforming the market.

We also thought that AT&T (T) would be well received for long-term investor with exceptional yield.  The share performance didn’t turn out well but inclusion of dividend of 5.7%, the total return was comparable to the Dow.

U.S. Dividend Watch List: February 6, 2015

Below are 56 companies on our U.S. Dividend Watch List that are currently of interest to us. 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 January 24, 2014 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Watch List Review

Our top five kept pace with the Dow but lagged the S&P 500 by 4%. The best performer was Target (TGT). The stock was under tremendous pressure a year ago after the data breach but our team believed that it was a one-time event and took a sizable position. Expectations for Target were so low at the time that we believed all the bad news was priced into the stock.

The worst performer was McDonald (MCD) seemingly due to a drop in earnings by -8% in 2014. However, analyst estimate that net income will rise by +10% going forward, from $4.82 to $5.32. That places a forward P/E at 17x 2015 earnings.

An insurance company, W.R. Berkley (WRB), did well with a gain of +24%. Net income rose +21.5% for the year but what may have propelled the stock higher was the special dividend paid out at the end of 2014.

U.S. Dividend Watch List: January 16,2015

Although a volatile week, it turned out to be a great one for the bulls. The market had a solid gain of +3%. Despite the move higher, there are virtually the same number of companies on our watch list as last week. Pockets of weakness can be seen in several sectors on our list. Below are 27 companies on our watch list. Continue reading →