Dividends Value » SVU

List of 195 Dividend Stocks Every Income Investor Should Know About *

D4L — Wed, 09 Mar 2011 07:30:16 +0000

In 2009, I introduced the Stock Ideas list and it has proven to be immensely popular. The list consists of Dividend Aristocrats, US Broad Dividend Achievers and U.S. Dividend Champions. Duplications in the above lists are eliminated and stocks are crossed out when I learn that they have either cut their dividend or fail to raise it. Here is some information on each of the constituent lists and some highlights on this year’s changes:

Dividend Aristocrats: Companies in the S&P 500 that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. As the name denotes, these are the best of the best – the blue blood stocks, including names like:

US Broad Dividend Achievers: Is comprised of companies incorporated in the United States or its territories, trade on the NYSE, NASDAQ or AMEX, and have increased their annual regular dividend payments for the last ten or more consecutive years. Notable names on this list include:

The U.S. Dividend Champions: Is maintained by Dave Fish of MoneyPaper. The list is updated monthly and located at the The Drip Investing Resource Center. Like the Dividend Aristocrats above the Dividend Champions list looks for companies that have increased their dividend for at least 25 consecutive years. However, since S&P 500 membership is not a requirement, the list is larger than the Dividend Aristocrats list and also includes small-cap companies.

- Bowl America (BWL.A) | Yield: 5.0%
- Conn. Water Service (CTWS) | Yield: 3.8%
- Weyco Group Inc. (WEYS) | Yield: 2.6%

Membership in the Stock Ideas list declined in this edition, but it was significantly less than what was experience in the prior year. Overall the number of constituents fell to 198 in the 2011 Stock Ideas list from 218 stocks in the 2010 list. There were 319 stocks in 2009. There were 28 companies that fell off the list, including these prominent stocks:

- Eli Lilly & Co. (LLY)
- Paychex Inc. (PAYX)
- Progress Energy Inc. (PGN)
- SUPERVALU Inc. (SVU)
- Integrys Energy Group, Inc. (TEG)

The news wasn’t all bad. Partially offsetting the 28 companies that fell off the list were 5 new companies joining the Dividend Stock Ideas List. Some of these aren’t household names, not yet at least, but here are some names we will likely be seeing in the future:

You can see the entire Dividend Stock Idea List here. Remember, not every stock listed here is a great dividend investment, but virtually all great dividend investments are on this list.

Full Disclosure: Long ABT, KO, JNJ, MCD, MMM, PG, WMT, CVX, NUE, LLY, TEG. See a list of all my income holdings here.

(Photo Credit)

The 2011 Dividend Aristocrats *

D4L — Wed, 15 Dec 2010 07:30:21 +0000

The S&P 500 Dividend Aristocrats is the most prestigious list of dividend stocks. The Dividend Aristocrats index is designed to measure the performance of S&P 500 constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. This index is a member of the S&P Dividend Aristocrats index series.

Dividend Aristocrats constituents exhibit the following characteristics:

- Underlying Indices – S&P 500
- Weighting – Equally weighted; Constituents re-weighted quarterly
- Reconstitution – Reviewed annually in December

Among others, Dividend Aristocrats include these highly recognizable names, with years of consecutive dividend increases shown:

- 3M Co. (MMM) – 52 years
- Abbott Laboratories (ABT) – 38 years
- Clorox Co (CLX) – 35 years
- Coca-Cola Co (KO) – 48 years
- Exxon (XOM) – 28 years
- Johnson & Johnson (JNJ) – 48 years
- McDonald’s Corp (MCD) – 34 years
- Procter & Gamble (PG) – 54 years
- Wal-Mart Stores (WMT) – 36 years

Members may be deleted during the December rebalance if calendar-year dividends did not increase from the previous year, or intra-year if the stock is removed from the underlying S&P 500.

On December 2nd, S&P announced changes to the Dividend Aristocrats Index. Standard & Poor’s will perform the annual reconstitution of the S&P 500 Dividend Aristocrats Index after the close of trading on Friday, December 17, 2010.

The following stocks will be added to the Dividend Aristocrats:

- McCormick & Company (MKC)
- Hormel Foods Corp. (HRL)
- Ecolab Inc. (ECL)

The following stocks will be dropped from the Dividend Aristocrats:

- Eli Lilly And Company (LLY)
- SUPERVALU Inc. (SVU)
- Integrys Energy Group, Inc. (TEG)

After last year’s significant decline, it is good see the membership number level off. The previous two years were difficult for dividend stocks, but that is not necessarily a bad thing. During good times it is easy for companies to increase dividends, and many companies were added to the index. It is during times of adversity that we learn who the real aristocrats are.

Full Disclosure: Long MMM, ABT, CLX, KO, JNJ, LLY, MCD, PG, TEG, WMT. See a list of all my income holdings here.

(Photo Credit)

Five Dividend Stocks With Different Reasons Not To Buy *

D4L — Wed, 05 Aug 2009 10:30:06 +0000

Sometimes good companies aren’t good buys, and this is not always a bad thing. Often it is a result of the market over reacting in a positive direction. The stocks simply become overvalued, but their underlying fundamentals remain excellent. Below are a couple of companies that fall into this group:

Illinois Tool Works Inc. (ITW) – Yield: 3.06% – 2 Stars – Analysis
Illinois ToolWorks Inc. is a diversified manufacturer operates a portfolio of about 750 industrial and consumer businesses located throughout the world. As you can see for the information below, price is all that is keeping ITW from being a 4 Star stock:

Recent Price: $40.00
3 Star Price: $38.99
4 Star Price: $36.20

3M Co (MMM) – Yield: 2.89% – 2 Stars – Analysis
3M Co. is a diversified technology company with a presence in various businesses, including industrial & transportation, healthcare, display & graphics, consumer & office, safety, security & protection services, and electro and communications. Like ITW above, price is all that is keeping MMM from being a 4 Star stock:

Recent Price: $72.00
3 Star Price: $57.44
4 Star Price: $44.43

I was fortunate to purchase both of the stocks above when their prices were much lower, so I can’t complain that they are no longer 4 Star buys. However, for other companies the road to fewer stars is not as appealing. Instead of a significant run up in their share price, the run up may have occurred in their debt or dividend payout percentage, or both. Here are some dividend companies and the challenges they are facing:

BP Plc (BP) – Yield: 6.50% – 1 Star
This supermajor integrated oil company (formerly BP Amoco p.l.c.) is based in London and is the world’s second largest publicly owned oil company and the fourth largest U.S. refiner. With Debt to Total Capital at an acceptable level and Free Cash Flow Payout at an undesirable level, a 3 Star rating is the best BP could earn at any price.

Debt to Total Capital: 27%
Free Cash Flow Payout: 69%
Recent Price: $50.00
3 Star Price: $1.00

SUPERVALU Inc. (SVU) – Yield: 4.67% – 0 Stars
SUPERVALU INC. is one of the largest U.S. food wholesalers, this company is also one of the biggest supermarket retailers in the U.S. With Debt to Total Capital at an undesirable level and Free Cash Flow Payout at an acceptable level (but with some years negative), a 3 Star rating is the best SVU could earn at any price.

Debt to Total Capital: 73%
Free Cash Flow Payout: 42%
Recent Price: $15.00
2 Star Price: $14.75
3 Star Price: $1.00

The Hershey Company (HSY) – Yield: 2.89% – 0 Stars
The Hershey Company engages in the manufacture, marketing, distribution, and sale of various types of chocolate and confectionery, refreshment and snack products, and food and beverage enhancers in the United States and internationally. With both Debt to Total Capital and Free Cash Flow Payout at undesirable levels, a 2 Star rating is the best HSY could muster at any price.

Debt to Total Capital: 83%
Free Cash Flow Payout: 88%
Recent Price: $40.00
2 Star Price: $1.00

Of the three, I believe BP stands the best chance of recovery. Though BP recently froze its dividend at $0.84/share (ADR), higher oil prices should lead to higher FCF and a dividend increase, it could easily add a fourth Star and once again enter the buy zone. I don’t have a lot of confidence in the other two.

Before buying a stock with hopes things will soon improve, it is a good idea to run some sensitivities to see where, or if, the stock can make a recovery. Modeling is cheap, selling an undesirable stock usually isn’t.

Full Disclosure: Long ITW, MMM, BP. See a list of all my income holdings here.

Dividend Stocks Are ‘Slow Good’*

D4L — Fri, 29 May 2009 10:30:51 +0000

For years Heinz Ketchup ran commercials describing their product as ‘slow good’. It was an obvious inference to ‘so good’ and that it was worth waiting on. Investing in dividend stocks in very similar. You certainly won’t find sudden wealth on any given day, but over time those compounding dividends will handsomely reward you.

Speaking of the H. J. Heinz Company (HNZ) and dividends, yesterday the company reported results in-line with the analyst consensus estimate and raised its quarterly common stock dividend from $0.415 to $0.42. The current dividend yield based on the new rate is 4.63%.

Below are other companies being ‘slow good’ to their shareholders by increasing the cash dividends paid:

Unum Group (UNM) raised its quarterly dividend by 10% to $0.0825/share, yielding 1.96%
PPD, Inc. (PPDI) increased its quarterly dividend by 20% to $0.15/share, yielding 3.05%
Monro Muffler (MNRO) boosts its quarterly dividend by 16.7% to $0.07/share, yielding 1.08%
Fred’s (FRED) quarterly dividend soared by 50% to $0.03/share, yielding 0.90%
SUPERVALU (SVU) raised its quarterly dividend by 1.45% to $0.175/share, yielding 4.36% (Analysis)

Rising dividends are good, but to be great you have to do year after year. For companies with a long string of consecutive dividend increases, see this list.

Full Disclosure: No position in the aforementioned companies. See a list of all my income holdings here.

(Photo Credit)

Stock Analysis: SUPERVALU INC (SVU) *

D4L — Wed, 10 Dec 2008 11:30:00 +0000

Linked here is a PDF copy of my detailed analysis of SUPERVALU INC (SVU). Below are some highlights from the above linked analysis:

Company Description: SUPERVALU INC. is one of the largest U.S. food wholesalers, this company is also one of the biggest supermarket retailers in the U.S.

Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:

Avg. High Yield Price
20-Year DCF Price
Avg. P/E Price
Graham Number

SVU is trading at a discount to 1.) and 3.) above. Since SVU’s tangible book value is not meaningful, a Graham number can not be calculated. If I exclude the high and low valuations and average the remaining two, SVU is trading at a 38.7% discount. SVU earned a Star in this section since it is trading at a fair value.

Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:

Rolling 4-yr Div. > 15%
Dividend Growth Rate
Years of Div. Growth
1-Yr. > 5-Yr Growth
Payout 15% of avg.

SVU earned one Star in this section for 3.) above. SVU has paid a cash dividend to shareholders every year since 1936 and has increased its dividend payments for 35 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

NPV MMA Diff.
Years to >MMA

SVU earned both of the available Stars in this section. The NPV MMA Diff. of the $6,799 is in excess of the $2,500 minimum I look for in a stock that has increased dividends as long as SVU has. SVU’s current yield of 6.11% exceeds the 4.61% estimated 20-year average MMA rate.

Other: SVU is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. SVU is the largest U.S. food distributor to supermarkets, and the second largest conventional food retailer. It is the company’s strategy to leverage its retail food and supply chain services by benefiting from economies of scale and its low-cost supply chain network.

SVU has strong market share positions and is well positioned within its regional markets. However, the company operates in a highly competitive environment with constant threats of new entrants into its markets. Risks include acquisition integration issues, further deterioration in the economy and increased competition.

Conclusion: SVU earned one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and earned two Stars in the Dividend Income vs. MMA section for a net total of four Stars. This quantitatively ranks SVU as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price could increase to $13.97 before SVU‘s NPV MMA Differential dropped below the $3,000 that I like to see. At that price the stock would yield 4.93%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the $3,000 NPV MMA Differential I’m looking for, the calculated rate is -0.3%. This dividend growth rate is below the 2.9% used in this analysis.

SVU has a RQ Rating of C3, thus carriers a little more risk than I want to add to my portfolio at this time. However, I have added it to my watch list with a $13.97 Buy Below price. For additional information, including SVU’s dividend history, please refer to its data page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in SVU (0.0% of my Income Portfolio) .

What are your thoughts on SVU?

SUPERVALU INC (SVU)

D4L — Mon, 01 Oct 2007 07:00:20 +0000

Description: SUPERVALU INC. is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. The company is one of the largest U.S. food wholesalers, this company is also one of the biggest supermarket retailers in the U.S.

Quantitative Stock Analysis: Updated: 3-1-2009
SVU-Analysis.PDF

Share Data:

Click here for full page view.
Click the Dividends tab above to see historical dividend information.

Comments: Updated: 3-1-2009
SVU is the largest U.S. food distributor to supermarkets, and the second largest conventional food retailer. It is the company’s strategy to leverage its retail food and supply chain services by benefiting from economies of scale and its low-cost supply chain network.

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