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 January 17, 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 outperformed the market by a wide margin. The biggest contribution came from the utility sector. The search for yield has driven shares of Integrys Energy (TEG) and Consolidated Edison (ED) up by +50% and +28%, respectively. Interestingly, shares of Philip Morris (PM) and AT&T (T) which yielded above 4.5% didn't fair too well and were virtually flat for the year. Another exceptional performer was Target (TGT) which was hit with bad news about a data hack, at the time. As we mentioned one year ago, we believed the news provided long-term investors with great opportunity to buy shares at discount.

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

It was a tough week to navigate the market as volatility spiked with surge in Swiss Franc which took the market by surprise. The Swiss Franc jumped by nearly +30% against the euro and +18% against the dollar after the Swiss National Bank's decision to eliminate the cap it placed on the value of the Franc. We believe that a "black swan" type of event such as this creates volatility in favor long-term investor. At the end of the week, there are 89 companies to search through. However, we've filtered out some companies and have displayed 39 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 December 27, 2013 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 companies outperformed the market by a decent margin thanks to two utility companies, Consolidated Edison (ED) and SCANA Corp (SCG). We were completely wrong about the direction of these two companies. We said of utilities at the time that "...we remain bearish on the sector." In hindsight, we were completely wrong about the timing of the call.

We also highlighted Target (TGT) in our review. Although the stock wasn't among the top five, we were convinced that the stock had potential given the one-time event of hacking which brought the stock down. We said:

Events such as this one should not alter the underlying business of the company in the long run. At 16x earnings and a 2.77% dividend yield, we may be tempted to start building a position in the near future.

We took a position in Target on February 12th and the stock is up +31% since.

U.S. Dividend Watch List: December 26,2014

The holiday shortened week didn't stop the market from moving forward. The S&P 500 was up +1.3% while the Dow broke the 18k mark and was up +1.5% for the week. Below are 28 companies on our 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 December 20, 2013 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

The best performer was Martin Marietta Materials (MLM).  While the stock ended the year up +24%, it gained as much +43% within 6 months.  We were skeptical about the stock at such a high multiple a year ago (P/E of 42) but that was because the company was expected to grown their net income by 49% (from $2.60 in 2013 to $3.87 in 2014).  As of this writing, analysts expect the company to earn $3.48 in 2014 which is 10% less than projected.  Analysts now expect the company to earn $5.19 per share in 2015 which is a 49% increase from 2014 and brings the forward P/E to 22.  It would be interesting to see how this projection plays out in the face of a global slowdown.  We believe that one of the key elements that should help in 2015 is falling oil prices.  While oil isn’t a direct input into the company's material cost, we assume that the cost to transport their product should be reduced substantially.

The second best performer from our top five was Consolidated Edison (ED). Our expectation was that the stock would under-perform the market but that didn't pan out. It turns out that interest rates continued to fall as the deflationary environment persisted. The stock now yield 2.5% which is extremely low for a utility company. It is hard to say that the stock is of good value.

IBM (IBM) was the worst performing out of the top five. The most interesting thing is that, at the time, IBM had the lowest P/E ratio. This goes to show that while buying stock with low P/E ratio may appear to be a safe bet, one shouldn't rely on a single ratio as a determination of value.

U.S. Dividend Watch List: December 19,2014

This volatile market has taken investors on a roller coaster ride. The market rose +3.4% for the week. As such, our watch list contracted to contain 39 companies. Continue reading →

The market was down -3.5% for the week which pulled the year-to-date gains of +8.4%. Oil prices tanked and is currently trading under $60 a barrel. As a result, we are seeing more companies on our watch list than usual. The total number of companies increased from 40 to 75. 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 December 6, 2013 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

Cumulatively, our top five fail to keep up with the market.  Consolidated Edison (ED) was the best performer with a gain of 13%.  We were not too convinced that Consolidated Edison would do well in a rising rate environment.  While rate hasn’t risen, share have gained ground and drive dividend yield lower.

IBM (IBM) was the worse performing stock of these five companies.  We have mentioned before that fair value for the stock would be around $160 thus making the stock less attractive to our team.

U.S. Dividend Watch List: December 5,2014

Below are 40 companies that are worth considering on our 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 November 22, 2013 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 watch list was on par with the Dow but fail to keep pace with the S&P 500.  IBM (IBM) was the worse performer of the top five companies falling 11.2%.  One would recall that we didn’t believe that IBM was trading at great discount so it doesn’t surprise use to see the stock down slightly year over year.

We said that Consolidated Edison (ED) wasn’t a bargain trading at 16x its earnings.  It turned out that the company was able to exceed the expectation and grew net income above what the street had estimated.  As such, shares were up 11% and is now trading at 14x trailing earnings.

Lindsay (LNN) peaked our interest last year.  This farming equipment company was a recent addition to the Dividend Achiever list thus has potential for long-term growth.  The stock gained 13% excluding dividend year-over-year.

U.S. Dividend Watch List: November 21,2014

Below are 40 companies that are worth considering on our 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 November 15, 2013 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

Deere & Company (DE) topped the list last year but the shares failed to gain much traction with an increase of only +5.7%.  Value Line Investment Survey's projected fair value at $118.80 is based on a multiple of 11x cash flow.  Unfortunately for the bulls, DE shares have not traded close to that projection, yet.  Net income per share for DE is expected to fall from $9.09 in 2013 to $8.34 in 2014 (-8%).  The profit outlook is even more grim in 2015 with an expectation of a decline to $6.43 (-22%).  Our valuation model indicates that the current price range is a buy with downside risk as low as -30% below current level.

Caterpillar (CAT) was the best performer from the watch list.  Net income per share rose more than projected which help fuel the rise in share price.   When analysts are too pessimistic, it may be time to get bullish and take on the opposite view.

U.S. Dividend Watch List: November 14,2014

The market was virtually flat for the week.  Below are 36 companies that are worth considering on our watch list. Continue reading →

After a minor correction, the market came roaring back and gained +2.7% for the week. As a result of the market rebound, the number of companies on our watching declined dramatically from 101 to 36 companies. Below is the list of companies that are worth considering. 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 October 11, 2013 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

IBM (IBM) was at the top of our list last year but shares fell 8.4% since we published our watch list. One October 18, 2013 we said the following about IBM shares.

According to our valuation model, the stock is priced just below fair value of $180. Our model indicates that the stock should be undervalue at or around $150. We’d look for more weakness to come.

IBM shares are trading a $160 which is slightly above but given that the company lifted the EPS guidance, we wouldn't be surprised if our fair value estimate should be reduced.

We highlighted Exxon Mobile (XOM) and alerted our readers that we took position in the stock prior to the ex-dividend date. We booked a gain of 14% from the transactions while the market gained 5%. The stock however has given some ground in recent weeks due to weakness in the oil price. If the stock retraced back toward the 52-week low, you can be certain that we will look to accumulate shares again.

U.S. Dividend Watch List: October 24,2014

After what appeared to be a minor correction in a short period of time, the market roared back and regained some ground. The S&P 500 rose 4% for the week. Based on that information, we would assumed that less companies will show up on our list and that was the case. The total number of companies that fit our criteria rose dropped to 101. Such figure is still a large number thus we will highlight 24 companies that are trading within 6% of the 52-week low. 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 October 11, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Philip Morris (PM) was the worst performer with a loss of -0.9%. Last year, analysts' estimated that PM profits would rise by +10%. The actual result didn't pan out and the net income was virtually flat while shares remained at 16x earnings.  A change in the expectation of profits was the likely cause for sub-par performance.

On the opposite end of the performance spectrum was Macerich (MAC) which gained +17.4%. When our watch list was published, the company was expected to grow their bottom line by +4%.  Currently, analysts are expecting the profits to rise by only +1.4%.  Even if the profits weren't expected to grow, shares can still outperform the market. Even more interesting is the fact that Macerich is an independent real estate investment trust or REIT.  The key attribute for the increase in price can be point to multiple expansion for the stock.

We highlighted the low valuation of C.H. Robinson (CHRW) and price rose by +9.7% while earnings were expected to rise by +12%.

U.S. Dividend Watch List: September 26,2014

It was a volatile week for the market as the S&P 500 shed -3% and the volatility index (VIX) rose +46%. The Russell 2000 has broken a critical support level and is trading at the 52-week low. The Dow Jones Industrial Average has erased all the gains for 2014. The large number of companies on our watch list is an indicator of market weakness. With that said, we are starting to see good values as prices continue to fall. Our watch list expanded to 163 companies but we will display 37 companies that are of strongest 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 September 27, 2013 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 didn't perform as well as the market. However, we did highlight a company that we took position in on our watch list at the time. That company was Sysco (SYY), a major food distributor. We said the following one year ago:

"We’ve a taken position in Sysco (SYY). This major food distributor is no stranger to our team. We believe the stock offers great value at the current level but we cautious that downside risk remains. As such, we’ve allocate a two part purchase for the stock if the price should drop. The current purchase is timed right before the ex-dividend date thus we will be compensated with the dividend in the coming month."

The stock has risen by +17% excluding dividend. Incorporating dividend payment in and the total return is +20.50%.

U.S. Dividend Watch List: September 26,2014

The market closed the week down -1.40% as volatility has risen. The VIX Indicator (a measure of volatility) was up +22.6%. Consolidation around the 2,000 level for the S&P 500 and 17,000 for the Dow Industrials appears to be the direction the market is headed, on a short-term basis. However, stronger signals of market weakness can be seen with the Russell 2000 index which is still struggling and our expanding watch list of stocks. At the end of the week, the total number of companies that met our criteria to be on the list expanded to 111 companies and 51 of them are trading within 5% of their 52-week low. Continue reading →

Top Five Watch List Performance Review

Continue reading →

Watch List Review

Second on our list is Meridian Bioscience (VIVO). We have a long history with this stock. This dividend achiever has a long record of dividend payment. However, one has to wonder if the company can continue to raise the dividend with slowing of the bottom line. A payout ratio of 93% is extremely high and leaves little room for error on the company operational front. The company currently has a dividend payment of $0.80 per share and is projected to earn $0.85 - $0.90 in 2014. The outlook for EPS in 2015 doesn't look different than 2014 with the company expecting to earn $0.85-$0.91. If we lean on the conservative perspective, the dividend payout ratio will be at 94%. There is one thing we believe would be make us somewhat bullish on the stock and that would be a dividend cut. If the company announced a dividend cut, we can expect shares to tumble lower. At that point, it would a great start for a re-assessment.

Disclaimer 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. Our view is to embrace the worse case scenario prior to investing. 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.

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 26, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

We didn't elaborate much about the top five companies on the list but we did indicate our position in Coca-Cola (KO). Coca-Cola performance was sub par with a gain of +6.75%. However, when we include dividend into the picture, the total gain is+ 9%.

U.S. Dividend Watch List: July 25,2014

The Dow is approaching its all-time high while the S&P 500 closed above its all-time high this week. We highlighted our macro view in the Dow Theory update on August 14, 2014. As a result of the market upward surge, our watch list dwindled down to sub 100 for the first time in several weeks.

Because the market multiple is at 19, many companies are likely to be closer to fair value and over valued. We highly encourage extra caution and due diligence when filtering through the list. Continue reading →

There’s an old saying, "Markets climb a wall of worry".

This week's market performance proved just that. Despite an order for air strikes on Iraq, the market managed a gain of +0.3%. For the market to continue higher, we believe that the Dow Jones Industrial Average would need to rise above 17,138 in conjunction with the Dow Jones Transport exceeding 8,468.

We're at an interesting juncture in the market. The recent highs were achieved with relatively weak market breadth. When the market reached its high one year ago (summer of 2013), we saw less than 10 companies that appeared on our dividend watch list. Currently, our list has more than ten times as many companies.

There are 104 companies on our watch list this week. We highly recommend everyone to take a more bearish view of the market at the current time while keeping a keen eye on the companies below.

Continue reading →