Wednesday, December 11, 2013

Dividend CCC review: November 2013

For this month's dividend screen I did something a bit different. My total score comes in two parts. The dividend score representing yield, 5 year dividend growth, and the EPS Payout ratio. The second part is the fundamental score based on P/E, Graham Valuation, and the Tweed number. Normally I calculate the dividend score first then any good looking dividends I calculate the fundamental score. What this does though is it leaves out undervalued stocks that don't have a strong dividend. This month I calculated each separately and I noticed some new names on the list.

As with every month, how I calculate my scores in my screen will shift slightly every month so don't take this as a buy recommendation. At this stage its just a screen so I am less interested in consistency as much as weeding out the bad equities. When I do my due diligence and place a stock on my watch list I will compare them all the same.

Name Symbol Industry Score Div Fund
Lyons Bancorp Inc. LYBC Banking 10 5 5
China Petroleum & Chemical Corp. SNP Oil&Gas 9 4 5
Nippon Telegraph & Telephone NTT Telecommunications 9 4 5
Triangle Capital Corp. TCAP BDC-Financial Services 9 6 3
China Mobile Limited CHL Telecommunications 8 4 4
Textainer Group Holdings Ltd. TGH Transportation 7 3 4
Chesapeake Financial Shares CPKF Banking 7 3 4
First Robinson Financial Corp. FRFC Banking 7 3 4
Western Union Company WU Financial Services 6 4 2
Alliance Resource Partners LP ARLP MLP-Coal 6 4 2
ConocoPhillips COP Oil & Gas 6 3 3
L-3 Communications Holdings Inc. LLL Aerospace/Defense 6 3 3
Chevron Corp. CVX Oil & Gas 6 3 3
Landmark Bancorp Inc. LARK Banking 6 2 4
Axis Capital Holdings Ltd. AXS Insurance 6 2 4
ACE Limited ACE Insurance 6 1 5
High Country Bancorp Inc. HCBC Banking 5 2 3
American Equity Investment Life Hold AEL Insurance 5 0 5
AFLAC Inc. AFL Insurance 5 3 2
Travelers Companies TRV Insurance 5 2 3
Minden Bancorp Inc. MDNB Banking 5 2 3
Rock-Tenn Company RKT Packaging 5 1 4
Farmers and Merchants Bancorp FMAO Banking 5 1 4
Vanguard Natural Resources LLC VNR MLP-Oil&Gas Services 4 4 ???

Companies quick to cross off...
LYBC: Crossed off in previous reviews
SNP: China stock. I do not invest directly in Chinese equities.
NTT: Crossed off in previous reviews
TCAP: Already on my Watch List
CHL: China stock.
TGH: Crossed off in previous reviews
CPKF: Regional bank. Too small customer base. Too low share volume traded.
FRFC: Regional bank.
ARLP: Coal MLP. I do not feel coal has a future compared to Nat Gas and green power.
COP: Already own.
LLL: Defense stock. Too many questions with Federal budget
CVX:  Conflicts with COP position.
LARK: Regional bank.
ACE: Re-insurance. Earnings too volatile
HCBC: Regional bank.
AFL: Already own.
MDNB: Regional bank. I think they have the record for smallest bank. Shares / day at 82 and the bank covers northwest Louisiana.
FMAO: Regional bank.

New companies for possible review
WU: Western Union. Falling EPS. 2.8% EPS 10 year average growth. That gives me pause.
AXS: Axis Capital Holdings Ltd. Holding. A reinsurance company. Their EPS also blew up in 2011 like the other reinsurance companies that I have seen on past screens. As with the others there was no noticeable share price drop so whatever happened must not be a big deal for this industry.
AEL: American Equity Investment Life Holding. Excluding the fact they have a ridiculously long name, I see why this never came up on previous screens. Their dividend score is 0 and at a 0.7% yield I want nothing to do with them. However they are up +102% for the year and are still fundamentally cheap. Fastgraphs has them valued at $28 so they have another 20% rise from today. They focus in on annuities which I would not have thought would be a great business model anymore. Their EPS looks really shaky. It doubles one year then drops by 40% the next. The YTD gain follows their EPS gain. I wouldn't be surprised if next year they drop by 33%.
TRV: Travelers Companies Inc. If I wasn't already long AFL this would be a solid company for further research. Unfortunately AFL has the same yield, better EPS growth, and better dividend growth.
VNR: Vanguard Natural Resources. An oil and nat gas MLP pipeline. I have looked at them before and they were a contender for my monthly energy position though NDRO eventually took that spot. I will have to take another look at them in the future because MLPs will have longevity that land trusts do not have.

This month's research screen winner is...
RKT: Rock Tenn Co. I'll be honest, when I saw Western Union's name first popup I would have thought that would have been the gem I found this month. That is until I took a look at RKT. Rock-Tenn Company is corrugated and consumer packaging company that operates in the North America, South America, and China. I'll let Fastgraphs do what it does best and show what this company is about...

I'm not a fan of plastic and cardboard packaging but I am a fan of companies that have crazy deep valuation and margins of safety. Morningstar shows RKT has been growing across most metrics. Even their margins are increasing.  My concern is that something is up with these guys because even with a 20% pullback from its high in September, the metrics tell a story that this is a deeply undervalued company.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

1 comment:

  1. RKT has solid fundamental characteristics, it just has too low of a dividend for me at current levels. This would be a great capital gains play though. Fastgraphs showed the same story for AFL last year. (Which was ultimately what drew me to it at 40 bucks a piece.)