The point of a stock screen is to find new potential investments you normally would not find. If I were to run the same exact screen every month then I wouldn't find very many new ones. We can already see how I keep getting duplicates. In light of that, this month I am changing things up a bit...
Dividend Score: Yield, DGR A/D, EPS Payout.
Fundamental Score: P/E, Graham Valuation, Tweed number
This month I dropped the 5 year dividend growth rate (DGR) and went with the acceleration deceleration 5 year vs 10 year dividend growth rate. The higher this number the larger the 5 year dividend growth rate is vs it's 10 year. A company can have a huge 10 year dividend growth rate but if its growth was high 8 years ago and its recent growth small it would still show a high average and the company's best years are behind it. Or a company could have had a 1 time amazing raise 2 years ago and it also incorrectly gives an image of a consistent grower. By using the DGR A/D stat I can see which companies are increasing the rate of their dividend raises giving bigger ones then the past.
Companies quick to cross off...
Dividend Score: Yield, DGR A/D, EPS Payout.
Fundamental Score: P/E, Graham Valuation, Tweed number
This month I dropped the 5 year dividend growth rate (DGR) and went with the acceleration deceleration 5 year vs 10 year dividend growth rate. The higher this number the larger the 5 year dividend growth rate is vs it's 10 year. A company can have a huge 10 year dividend growth rate but if its growth was high 8 years ago and its recent growth small it would still show a high average and the company's best years are behind it. Or a company could have had a 1 time amazing raise 2 years ago and it also incorrectly gives an image of a consistent grower. By using the DGR A/D stat I can see which companies are increasing the rate of their dividend raises giving bigger ones then the past.
| Name | Symbol | Industry | Score | Div | Fund |
| China Petro&Chem Corp. | SNP | Oil&Gas | 9 | 4 | 5 |
| PSB Holdings Inc. | PSBQ | Banking | 8 | 4 | 4 |
| Landmark Bancorp Inc. | LARK | Banking | 7 | 3 | 4 |
| Chesapeake Financial Shares | CPKF | Banking | 7 | 3 | 4 |
| Helmerich & Payne Inc. | HP | Oil & Gas | 6 | 3 | 3 |
| Travelers Companies | TRV | Insurance | 6 | 3 | 3 |
| Lyons Bancorp Inc. | LYBC | Banking | 6 | 2 | 4 |
| Reinsurance Group of Am | RGA | Insurance | 5 | -1 | 6 |
| Unum Group | UNM | Insurance | 5 | 1 | 4 |
| Edison International | EIX | Utility-Electric | 5 | 2 | 3 |
| Chevron Corp. | CVX | Oil & Gas | 5 | 2 | 3 |
| Maiden Holdings Ltd. | MHLD | Insurance | 4 | 1 | 3 |
| CCFNB Bancorp Inc. | CCFN | Banking | 4 | 2 | 2 |
| Cambridge Bancorp | CATC | Banking | 4 | 1 | 3 |
| Rent-A-Center Inc. | RCII | Retail-Specialty | 4 | 1 | 3 |
| Universal Corp. | UVV | Tobacco | 4 | 0 | 4 |
| Rock-Tenn Company | RKT | Packaging | 4 | 1 | 3 |
| ACE Limited | ACE | Insurance | 4 | 0 | 4 |
| Northeast Indiana Bancorp | NIDB | Banking | 4 | 0 | 4 |
| First Robinson Financial Corp. | FRFC | Banking | 4 | 0 | 4 |
| PennyMac Mortgage Inv Trust | PMT | REIT-Residential | 4 | 0 | 4 |
Companies quick to cross off...
ACE: Crossed off in previous weeks
CATC: Small regional bank
CCFNB: Small regional bank
CPKF: Small regional bank
FRFC: Small regional bank
LARK: Small regional bank
LYBC: Crossed off in previous reviews
NIDB: Small regional bank
PSBQ: Small regional bank
RKT: Already own
SNP: China stock
TRV: Already own AFL which has better stats
UVV: Tobacco. After having witnessed the addiction of tobacco I personally cannot invest in them. I hold no ill will or think lesser to anyone who does.
New companies for possible review
CVX: Chevron. Normally I would cross off big oil from my list because I already have COP. However COP's dividend raise last year annoyed me and they are on the chopping block. COP has a better yield and DGR.
EIX: Edison International. A holding company for Southern California Edison Company which provides electricity to 14 million people in southern California. They have a high DGR A/D only because the 10 year is 0% growth and the 5 year is 2%. Screens can only capture what they are intended to capture so yes the 5 year is bigger then the 10 but the actual rates aren't anything I want.
MHLD: Maiden Holdings Ltd. A Bermuda based re-insurance company that looks to have started in 2009. As if I didn't already have enough problems figuring out the re-insurance industry (ACE, RE) now we can toss in Bermuda laws and a management team formed after the Great Recession. Pass.
PMT: PennyMac Mortgage Investment Trust. Its very rare to find a REIT on my screen because their EPS numbers are almost always terrible. That's how REITs are but the screen doesn't work well for them. Their dividend score is low because their EPS Payout ratio is high but all REITs are you have to look at FFO for payout which is beyond the scope of this screen. They have only been around since 2009 so don't have a 10 year DGR to track. For a mortgage based REIT, I am surprised at how they haven't collapsed in 2013 and in fact kept raising their dividend. Take a look at NLY, AGNC, and HTS and you will see what I mean by collapse.
Their FFO is $1.59 so I don't know why their EPS is listed as $3.36. Every REIT I have seen has the FFO higher than the EPS. After taking a quick look at them it appears they buy distressed (late) mortgages from other lenders for a big discount (50% in some cases) then they offer loan adjustments to allow people to keep paying. I was always confused at how banks would refuse to give adjustments to the loans so people would walk away. Instead of getting something they now get nothing. PMT seems to have figured out there is still a way to make money here. However with the economy improving I don't know if this will continue to work for them. Their existing loans will be safer from default but will they be able to get new loans and grow? For now I'm passing. They are too new of a company having just started in 2010.
RCII: Rent-A-Center Inc. You can have great dividend numbers when you are at 5% payout ratio and have room for big raises. Their EPS growth of 4.1% is not the greatest. Then again it's business is renting lamps and tables to people who can't afford to just go buy one.
RGA: Re-insurance Group of America Inc. Just how many re-insurers are out there anyways? I'm willing to ignore a 50% drop in EPS if that is what the sector norm is. However I cannot invest in a company who keeps their payout ratio under 10%. They failed to raise their dividend for 5 years and their payout ratio was 6% - 12%. To me that shows they really aren't interested in a dividend culture. They are paying it because they feel they have to.
UNM: Unum Group. A disability insurer. Well at least its not another re-insurer but then again their EPS acts like it and drops to $0 some year and down by -71% in others. Course then it jumps 300% the next year. Maybe I need to invest in an antacid company and cater to the existing re-insurance investors.
This month's research screen winner is...
HP: Helmerich & Payne. Every time I see this ticker I think of Hewlett-Packard (HPQ). HP is a driller of natural gas and oil wells. HP has the annoying practice of giving a raise every 6 quarters. When you look at yearly totals vs yearly totals you get raises but not a yearly raise in the sense that most investors would think. I really hate that.
However I can forgive a lot with a company whose 10 year DGR is 27% and their 10 year EPS growth rate is 44%. My concern is that all the DGR comes from this year and they normally give 3%-8% raises. I'll have to do a more intensive review then what this screen covers.
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.
CVX: Chevron. Normally I would cross off big oil from my list because I already have COP. However COP's dividend raise last year annoyed me and they are on the chopping block. COP has a better yield and DGR.
EIX: Edison International. A holding company for Southern California Edison Company which provides electricity to 14 million people in southern California. They have a high DGR A/D only because the 10 year is 0% growth and the 5 year is 2%. Screens can only capture what they are intended to capture so yes the 5 year is bigger then the 10 but the actual rates aren't anything I want.
MHLD: Maiden Holdings Ltd. A Bermuda based re-insurance company that looks to have started in 2009. As if I didn't already have enough problems figuring out the re-insurance industry (ACE, RE) now we can toss in Bermuda laws and a management team formed after the Great Recession. Pass.
PMT: PennyMac Mortgage Investment Trust. Its very rare to find a REIT on my screen because their EPS numbers are almost always terrible. That's how REITs are but the screen doesn't work well for them. Their dividend score is low because their EPS Payout ratio is high but all REITs are you have to look at FFO for payout which is beyond the scope of this screen. They have only been around since 2009 so don't have a 10 year DGR to track. For a mortgage based REIT, I am surprised at how they haven't collapsed in 2013 and in fact kept raising their dividend. Take a look at NLY, AGNC, and HTS and you will see what I mean by collapse.
Their FFO is $1.59 so I don't know why their EPS is listed as $3.36. Every REIT I have seen has the FFO higher than the EPS. After taking a quick look at them it appears they buy distressed (late) mortgages from other lenders for a big discount (50% in some cases) then they offer loan adjustments to allow people to keep paying. I was always confused at how banks would refuse to give adjustments to the loans so people would walk away. Instead of getting something they now get nothing. PMT seems to have figured out there is still a way to make money here. However with the economy improving I don't know if this will continue to work for them. Their existing loans will be safer from default but will they be able to get new loans and grow? For now I'm passing. They are too new of a company having just started in 2010.
RCII: Rent-A-Center Inc. You can have great dividend numbers when you are at 5% payout ratio and have room for big raises. Their EPS growth of 4.1% is not the greatest. Then again it's business is renting lamps and tables to people who can't afford to just go buy one.
RGA: Re-insurance Group of America Inc. Just how many re-insurers are out there anyways? I'm willing to ignore a 50% drop in EPS if that is what the sector norm is. However I cannot invest in a company who keeps their payout ratio under 10%. They failed to raise their dividend for 5 years and their payout ratio was 6% - 12%. To me that shows they really aren't interested in a dividend culture. They are paying it because they feel they have to.
UNM: Unum Group. A disability insurer. Well at least its not another re-insurer but then again their EPS acts like it and drops to $0 some year and down by -71% in others. Course then it jumps 300% the next year. Maybe I need to invest in an antacid company and cater to the existing re-insurance investors.
This month's research screen winner is...
HP: Helmerich & Payne. Every time I see this ticker I think of Hewlett-Packard (HPQ). HP is a driller of natural gas and oil wells. HP has the annoying practice of giving a raise every 6 quarters. When you look at yearly totals vs yearly totals you get raises but not a yearly raise in the sense that most investors would think. I really hate that.
However I can forgive a lot with a company whose 10 year DGR is 27% and their 10 year EPS growth rate is 44%. My concern is that all the DGR comes from this year and they normally give 3%-8% raises. I'll have to do a more intensive review then what this screen covers.
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.
I also have that problem when I look at the ticker for HP. I completely missed a chance to "buy what you know" as I was doing more and more work on H&P rigs and in the last 2 years I think I've done 1 or 2 jobs that wasn't on an H&P rig. The low yield is what always kept me from investing there. I never looked further into it but raising every 6 quarters is annoying. I have to say that's the first company I've come across that does that.
ReplyDeleteI may have to rescend my 6 quarter statement. It seems hit or miss. Still you are right about the yield. Generally it being low keeps me away and I am not sure long term if HP will keep a current 3% yield or it price will rise and it goes back to being low. 0.5% is way too low and at that level you can have very high growth in percent terms but not get much in dollar terms.
DeleteInteresting collection of businesses.
ReplyDeleteI think there's some shenanigans going on with some of those Bermuda stocks. I don't trust 'em. TWGP is a Bermuda insurance company that had been trading around $20 for a while. Next thing you know it fails to release financial statements on time, is almost delisted, reports massive losses, eliminates dividends all together, and agrees to be bought out at $3 per share to a different Bermuda company. Pretty fishy.
Oh absolutetly. FRO is a Bermuda oil shipper. They have spun of and created subsidiaries that buy and sell different ships between each other. When you look at how the CEO is a major own of FRO its obvious he is just offloading problems onto shell companies. I want nothing to do with Bermuda companies. TWGP... wow look at that chart. What a collapse.
DeleteTheirs a lot of financial service stocks on the list. I cannot get used to the idea of buying anything in the financial services sector. Maybe a ETF but not single stocks.
ReplyDelete