Linked here is a PDF copy of my detailed analysis of Chevron Corporation (CVX) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Chevron Corporation (formerly ChevronTexaco) is a global integrated oil company that has interests in exploration, production, refining and marketing, and petrochemicals.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
CVX is trading at a discount to 2.), 3.) and 4.) above. If I exclude the high and low valuation and average the remaining two, CVX is trading at a slight discount. CVX 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:
CVX earned one Star in this section for 3.) above. CVX has paid a cash dividend to shareholders every year since 1912 and has increased its dividend payments for 21 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:
CVX earned no Stars in this section. The NPV MMA Diff. of the $1,082 is below the $7,500 minimum I look for in a stock that has increased dividends as long as CVX has. If CVX grows its dividend at 7.5% per year, it will take 11 years to equal the cumulative earnings from a MMA yielding an estimated 20-year average rate of 4.61%. The 11 years is more than the 10 years maximum I like to see.
Other: CVX is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. The oil and gas industry in which CVX operates is both cyclical and capital-intensive. CVX's diversified and strong business profile help to partially mitigate this environment. The 2001 Texaco merger has helped improve CVX's returns and earnings stability. CVX's three-year (2004-2006) reserve replacement rate was good but below the peer average while associated costs were above the peer average..
Conclusion: CVX earned one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a net total of two Stars. This quantitatively ranks CVX as a 2 Star-Weak stock.
Using my D4L-PreScreen.xls model, I determined the share price would have to drop to $57.57 before CVX's NPV MMA Diff. increases to the $7,500 NPV MMA Diff. I like to see. At that price CVX would yield 4.39%. From a value standpoint, CVX maybe worth a second look. It closed on 8/15/2008 below its Graham Number.
As a potential dividend investment, CVX shows much more promise than Exxon (XOM). While XOM is an Aristocrat and thus has a lower NPV MMA Diff. target, XOM's calculated value is negative. CVX will need to increase dividends for 4 more years before it is eligible to be become an Aristocrat.
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 had no position in CVX (0.0% of my Income Portfolio).
What are your thoughts on CVX?
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This article originally appeared on The DIV-Net August 11, 2008.
Linked here is a PDF copy of my detailed analysis of Air Products and Chemicals Inc. (APD) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Air Products and Chemicals Inc. produces industrial gases and specialty and intermediate chemicals and also has interests in environmental and energy-related businesses.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
APD is trading at a premium to all four valuations above. If I exclude the high and low valuation and average the remaining two, APD is trading at a 24.0% premium. APD had a Star deducted for trading at a premium in excess of 5%.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
APD earned two Stars in this section for 3.) and 4.) above. APD has paid a cash dividend to shareholders every year since 1954 and has increased its dividend payments for 26 consecutive years. It's one year dividend growth rate exceeded its 5-year growth rate. This could indicate the growth rate is accelerating.
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:
APD earned no Stars in this section, and had one Star deducted for a negative NPV MMA Diff. The negative NPV MMA Diff. means that on a NPV basis for every $1,000 invested in APD you would earn $802 less than a MMA earning a 20-year average rate of 4.61%. If APD grows its dividend at 10.4% per year, it will never equal the cumulative earnings from a MMA yielding an estimated 20-year average rate of 4.61%.
Other: APD is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. On the plus side, the industrial gases industry tends to have stable growth versus commodity chemicals. On the minus side, APD experiences volatile raw material cost in the chemical segment. APD has a relatively strong balance sheet.
Conclusion: APD lost one Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and lost one Star in the Dividend Income vs. MMA section for a net total of zero Stars. This quantitatively ranks APD as a 0 Star-Avoid stock.
Using my D4L-PreScreen.xls model, I determined the share price would have to drop to $61.74 before APD's NPV MMA Diff. increases to the $3,000 NPV MMA Diff. I like to see. At that price APD would yield 2.75%. Given APD's current valuation, I will not be purchasing shares anytime soon.
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 do not own shares of APD (0.0% of my Income Portfolio).
What are your thoughts on APD?
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Linked here is a PDF copy of my detailed analysis of Family Dollar Stores Inc. (FDO) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Family Dollar Stores Inc. operates a chain of more than 6,500 retail discount stores in 44 states across the U.S.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
FDO is trading at a discount to 1.) and 3.) above. If I exclude the high and low valuation and average the remaining two, FDO is trading at a 12.9% premium. FDO had a Star deducted for trading at a premium in excess of 5%.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
FDO earned one Star in this section for 3.) above. FDO has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 25+ 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:
FDO earned no Stars in this section, and had one Star deducted for a negative NPV MMA Diff. The negative NPV MMA Diff. means that on a NPV basis for every $1,000 invested in FDO you would earn $1,123 less than a MMA earning a 20-year average rate of 4.61%. If FDO grows its dividend at 9.1% per year, it will never equal the cumulative earnings from a MMA yielding an estimated 20-year average rate of 4.61%.
Other: FDO is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. FDO has seen earnings decline in recent years in part as a result of difficult economic conditions for its core lower-income customers. To offset this the company has focused on new merchandising and productivity initiatives aimed at boosting sales and profit margins going forward.
Conclusion: FDO lost one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and lost one Star in the Dividend Income vs. MMA section for a net total of negative one Star. Since my scale bottoms out at zero, this quantitatively ranks FDO as a 0 Star-Avoid stock.
Using my D4L-PreScreen.xls model, I determined the share price would have to drop to $15.68 before FDO's NPV MMA Diff. increases to the $3,000 NPV MMA Diff. I like to see. At that price FDO would yield 3.06%. In short, FDO is overvalued and not a good dividend investment at this time. Thus, I won't be buying FDO any time soon.
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 did not own shares of FDO (0.0% of my Income Portfolio).
What are your thoughts on FDO?
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This article originally appeared on The DIV-Net August 4, 2008.
Linked here is a PDF copy of my detailed analysis of Stanley Works (SWK) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Stanley Works is a worldwide producer of tools, hardware and specialty hardware for home improvement, consumer, industrial and professional use.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
SWK is trading at a discount to only 3.) above. Since SWK's tangible book value is not meaningful, a Graham number can not be calculated. If I exclude the high and low valuation and average the remaining two, SWK is trading at a 16.1% premium. SWK had a Star deducted for trading at a premium in excess of 5%.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
SWK earned one Star in this section for 3.) above. SWK has paid a cash dividend to shareholders every year since 1877 and has increased its dividend payments for 41 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:
SWK earned no Stars in this section, and had one Star deducted for a negative NPV MMA Diff. The negative NPV MMA Diff. means that on a NPV basis for every $1,000 invested in SWK you would earn $2,013 less than a MMA earning a 20-year average rate of 4.61%. If SWK grows its dividend at 3.3% per year, it will never equal the cumulative earnings from a MMA yielding an estimated 20-year average rate of 4.61%.
Other: SWK is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. Though SWK has a strong brand name and is well positioned versus it competitors, SWK is is experiencing a cyclical downturn from a weak housing market and slowing U.S. economy. Overseas growth has been able to partially offset this downturn.
Conclusion: SWK lost a Star in the Fair Value section, earned a Star in the Dividend Analytical Data section and lost a Star in the Dividend Income vs. MMA section for a net total of -1 Stars. Since my scale bottoms out at zero, this quantitatively rates SWK as a 0 Star-Avoid stock.
Using my D4L-PreScreen.xls model, I determined the share price would have to drop to $26.32 before SWK's NPV MMA Diff. increases to the $3,000 NPV MMA Diff. I like to see. At that price SWK would yield 4.79%. Given SWK's current valuation, I will not be purchasing shares anytime soon.
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 do not own shares of SWK (0.0% of my Income Portfolio).
What are your thoughts on SWK?
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Linked here is a PDF copy of my detailed analysis of M&T Bank Corporation (MTB) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association, which provides commercial and retail banking services.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
MTB is trading at a discount to 1.) and 3.) above. If I exclude the high and low valuation and average the remaining two, MTB is trading at a 8.0% discount. MTB 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:
MTB earned one Star in this section for 3.) above. MTB has paid a cash dividend to shareholders every year since 1979 and has increased its dividend payments for 25+ consecutive years. Last year's dividend payout was 44%, up from 31% in 2006. Since the increase was in excess of 15 points, a Star is deducted, leaving a net of zero Stars in this section.
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:
MTB earned both of the available Stars in this section. The NPV MMA Diff. of the $5,590 is in excess of the $2,500 minimum I look for in a stock that has increased dividends as long as MTB has. If MTB grows its dividend at 7.7% per year, it will take 4 years to equal the cumulative earnings from a MMA yielding an estimated 20-year average rate of 4.61%. MTB earned a Star since its Years to >MMA of 4 is less than 5 years.
Other: MTB is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. MTB's loan portfolio has a history of profitability and is considered to have good credit quality. The company operates in a highly competitive and fragmented industry, but
is able to produce relatively stable financial results. As assets reprice at lower rates, MTB's net interest margin will come under pressure in 2008. Some analysts believe that MB will have to take an impairment charge on its 20% stake in BayView Lending, a commercial lender
that securitizes loans. BayView Lending earnings have been declining.
Conclusion: MTB earned a Star in the Fair Value section, earned a net of zero Stars in the Dividend Analytical Data section and earned two Stars in the Dividend Income vs. MMA section for a net total of 3 Stars. This quantitatively rates MTB as a 3 Star-Hold.
Using my D4L-PreScreen.xls model, I determined the share price could go up to $81.65 before MTB's NPV MMA Diff. drops to the $3,000 NPV MMA Diff. I like to see. At that price MTP would yield 3.43%. I placed MTB "On The Shelf" earlier this year. In effect, I am not making any additional purchases until MTB proves itself to be a worthy investment or as a stock that needs to be sold. To date, I have seen nothing that change this classification.
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 owned shares of MTB (0.9% of my Income Portfolio).
What are your thoughts on MTB?
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This article originally appeared on The DIV-Net July 28, 2008.
Linked here is a PDF copy of my detailed analysis of Kimberly-Clark Corporation (KMB) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: This leading consumer products company's global tissue, personal care and health care brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
KMB is trading at a discount to 1.) and 3.) above. If I exclude the high and low valuation and average the remaining two, KMB is trading at a 5.9% premium. KMB had a Star deducted for trading at a premium in excess of 5%.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
KMB earned one Star in this section for 3.) above. KMB has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 36 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:
KMB earned both available Stars in this section. With a NPV MMA Diff. of $8,952, KMB is well above the $3,000 I look for in a company that is both an Achiever and an Aristocrat. KMB's current yield of 4.19%, exceeds the 20-year expected MMA rate of 4.61%.
Other: KMB is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. The generally static demand for household and personal care products are usually not affected by changes in the economy or political events. KMB's 2008 earnings should benefit from the 2005 strategic cost reduction program, but for the most part, it will be over shadowed by higher commodity costs.
Conclusion: KMB lost a Star in the Fair Value section, earned a Star in the Dividend Analytical Data section and two Stars in the Dividend Income vs. MMA section for a net total of 2 Stars. This quantitatively rates KMB as a 2 Star-Weak stock.
Using my D4L-PreScreen.xls model, I determined the share price could go up to $73.97 before KMB's NPV MMA Diff. drops to the $3,000 NPV MMA Diff. I like to see. At that price KMP would yield 3.14%. Like the analysis on LLY earlier this month, KMB is a 2 Star-Weak stock that is very close to being a 4 Star-Buy. Given KMB's strong NPV MMA Diff., I would be very comfortable initiating a position at $55.50, or 5% above the $52.87 calculated fair value. This would be a $0.49 or 0.9% decrease from KMB recent price of $55.99.
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 do not own shares of KMB (0.0% of my Income Portfolio).
What are your thoughts on KMB?
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Linked here is a PDF copy of my detailed analysis of Sherwin-Williams Co (SHW) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Sherwin-Williams Co (SHW) is the largest U.S. producer of paints, is also a major seller of wallcoverings and related products primarily in North and South America with additional operations in the United Kingdom, Europe, India and China.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
SHW is trading at a discount to 1.), 2.) and 3.) above. If I exclude the high and low valuation and average the remaining two, SHW is trading at a 12.0% discount. SHW 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:
SHW earned one Star in this section for 3.) above. SHW has paid a cash dividend to shareholders every year since 1979 and has increased its dividend payments for 29 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:
SHW earned one Star in this section. With a NPV MMA Diff. of $3,722, SHW is above the $3,000 I look for in a company that is both an Achiever and an Aristocrat. With SHW's current yield of 2.70% and its dividend is growing at 11.1%, it would take 10 years for SHW's dividend earnings exceed the earnings from a hypothetical money market account earning 4.61%.
Other: SHW is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. SHW's business is cyclical in nature. It relies primarily on new housing starts and remodeling. From a risk perspective, SHW is exposed to lead pigment litigation. However, with the Rhode Island Supreme Court overturning a verdict against SHW relating to lead paint, makes future negative rulings less likely.
Conclusion: SHW earned a Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and one Star in the Dividend Income vs. MMA section for a net total of 3 Stars. This quantitatively rates SHW as a 3 Star-Hold.
Using my D4L-PreScreen.xls model, I determined the share price could go up to $54.22 before SHW's NPV MMA Diff. drops to the $3,000 NPV MMA Diff. I like to see. At that price SHW would yield 2.58%. I have added SHW to my watch list.
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 do not own shares of SHW (0.0% of my Income Portfolio).
What are your thoughts on SHW?
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This article originally appeared on The DIV-Net July 21, 2008.
Linked here is a PDF copy of my detailed analysis of Consolidated Edison, Inc. (ED) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Consolidated Edison, Inc., through its subsidiaries, provides electric, gas, and steam utility services in the United States serving parts of New York, New Jersey and Pennsylvania.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
ED is trading at a discount to 1.), 3.) and 4.) above. If I exclude the high and low valuation and average the remaining two, ED is trading at a 14.8% discount. ED 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:
ED earned one Star in this section for 3.) above. ED has paid a cash dividend to shareholders every year since 1885 and has increased its cash dividend payment 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:
ED earned both available Stars in this section. With a NPV MMA Diff. of $4,321, ED is well above the $3,000 I look for in a company that is both an Achiever and an Aristocrat. ED's current yield of 6.16%, exceeds the 20-year expected MMA rate of 4.61%.
Other: ED is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. As a regulated electric and gas utility, ED produces a strong and steady cash flows. It has a solid balance sheet, an A- credit rating and operates in a historically supportive regulatory environment.
Conclusion: ED earned a Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and two Stars in the Dividend Income vs. MMA section for a net total of 4 Stars. This quantitatively rates ED as a 4 Star-Buy.
Using my D4L-PreScreen.xls model, I determined the share price could go up to $41.39 before ED's NPV MMA Diff. drops to the $3,000 NPV MMA Diff. I like to see. At that price ED would yield 5.65%. I would be very comfortable adding to my position at the current price of $38.48 and a 6+% yield.
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 own shares of ED (2.9% of my Income Portfolio).
What are your thoughts on ED?
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Linked here is a PDF copy of my detailed analysis of PPG Industries, Inc. (PPG) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: PPG is a leading manufacturer of coatings and resins, flat and fiber glass, and industrial and specialty chemicals.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
PPG is trading at a discount to 3.) and 4.) above. If I exclude the high and low valuation and average the remaining two, PPG is trading at a 8.7% discount. PPG 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:
PPG earned one Star in this section for 3.) above. PPG has paid a cash dividend to shareholders every year since 1899 and has increased its quarterly cash dividend payments for 36 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:
PPG earned no Stars in this section, and had one Star deducted for a negative NPV MMA Diff. In effect, if you invested equal amounts in a MMA earning of an average of 4.61% for 20 years and PPG stock with a dividend yield of 3.41% and growing at 2.0% annually, you would end up with $1,424 less in PPG dividend earnings per $1,000 invested.
Other: PPG is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. The company has a diversified business mix and large market shares in key products. However, commodity chemicals business and auto supply business are highly cyclical in nature. The SigmaKalon purchase expanded PPG's coatings business, while the planned sale of the auto glass businesses would reduce its exposure to the domestic auto market.
Conclusion: PPG earned a Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and lost one Star in the Dividend Income vs. MMA section for a net total of one Star. This quantitatively rates PPG as a 1 Star-Very Weak stock.
Using my D4L-PreScreen.xls model, I determined the share price would have to drop to $39.62, or its dividend growth rate would have to increase to 7.8%, before PPG obtained the $3,000 NPV MMA Diff. I like to see. I don't see either happening in the near-term, so PPG won't be getting an invitation to join my portfolio.
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 do not own shares of PPG (0.0% of my Income Portfolio).
What are your thoughts on PPG?
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This article originally appeared on The DIV-Net July 14, 2008.
Linked here is a PDF copy of my analysis of Abbott Laboratories (ABT) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a diversified line of healthcare products including: drugs, nutritional products, diabetes monitoring devices and diagnostics.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
ABT is trading at a discount to only 3.) above. If I exclude the high and low valuation, and average the remaining two valuations, ABT is trading at an astounding 61.6% premium. A Star is deducted since ABT is trading at a premium in excess of 5%.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
ABT earned two Stars in this section for 3.) and 4.) above. It has paid a cash dividend to shareholders every year since 1903 and has increased its quarterly cash dividend payments for 36 consecutive years. The 1-Yr. > 5-Yr Growth metric indicates that dividend growth has been accelerating.
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:
ABT was deducted one Star in this section for 1.) above. At its current yield of 2.51% and a dividend growth rate of 7.1%, ABT will under-perform a MMA averaging 4.61% by $957 per $1,000 invested over 20 years.
Other: ABT is a member of the S&P 500, is an Achiever and an Aristocrat. Like all drug companies, ABT is facing challenges to their branded patents, drug development and regulatory issues. However, ABT has a relatively strong new product pipeline, with possible significant launches in both the medical device and pharmaceutical areas.
Conclusion: ABT lost a Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and lost one Stars in the Dividend Income vs. MMA section for a net total of 0 Stars. This quantitatively rates ABT as a 0 Star-Avoid stock.
Using my D4L-PreScreen.xls model, I determined the share price would have to drop to $40.55 for the NPV of MMA Differential to reach the $2,500 minimally acceptable level for from a company that is both an Achiever and an Aristocrat. In short, ABT is overvalued and not a good dividend investment at this time. Thus, I won't be buying ABT any time soon.
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 do not own shares of ABT (0.0% of my Income Portfolio).
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Linked here is a PDF copy of my analysis of Lowe's Companies, Inc. (LOW) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Lowe's Companies, Inc. and its subsidiaries operate as a home improvement retailer in the United States and Canada. The company offers a range of products and services for home decoration, maintenance, repair, remodeling, and property maintenance.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
LOW is trading at a discount to all four of the metrics above. If I exclude the high and low valuation, and average the remaining two valuations, LOW is trading at an astounding 41.4% discount. A Star is added since LOW 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:
LOW earned three Stars in this section for 1.), 2.) and 3.) above. LOW has paid a cash dividend to shareholders every year since 1961 and has increased its quarterly cash dividend payments for 25 consecutive years (calendar). The Rolling 4-yr Div. > 15% means that LOW has grown its dividend in excess of 15% in every consecutive 4 year period during the last 10 years. This metric identifies a company that has historically grown its dividend on a high and consistent basis.
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:
LOW earned one Star in this section for 1.) above. I like to see a NPV MMA Diff. of $3,000 for a company that is both an Achiever and an Aristocrat; and $10,000 for a company that is neither. At $13,836, LOW's NPV MMA Diff. is quite strong.
Other: LOW is a member of the S&P 500, is an Achiever and an Aristocrat. The home improvement retail industry is cyclical in nature and is strongly reliant on economic growth. Home ownership rates are near historical highs and the homes are aging. That coupled with an increased net worth of baby boomers make for a powerful long-term driver for LOW's growth. In addition, LOW has favorable growth opportunities in for international expansion in both Canada and Mexico.
Conclusion: LOW earned a Star in the Fair Value section, earned three Stars in the Dividend Analytical Data section and one Stars in the Dividend Income vs. MMA section for a net total of 5 Stars. This quantitatively rates LOW as a 5 Star-Strong Buy.
Using my D4L-PreScreen.xls model, I determined the share price could go up to $29 before LOW dropped to the $3,000 NPV MMA Diff. I like to see; or its long-term dividend growth could drop to 15.9% and LOW would still be a buy. As a long-time Home Depot (HD) shareholder, I have not been pleased with HD as a retail operation. I would drive past HD to shop at LOW. This has created a desire in me to own LOW, but the numbers never would work - until now. Barring a significant change in LOW's fundamentals or valuation, I will likely initiate a position in LOW during the month of August.
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 do not own shares of LOW (0.0% of my Income Portfolio).
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This article originally appeared on The DIV-Net July 7, 2008.
Linked here is a PDF copy of my analysis of Eli Lilly and Co. (LLY) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: Eli Lilly and Company discovers, develops, manufactures and sells prescription drugs that offers a wide range of treatments for neurological disorders, diabetes, cancer, and other conditions. The company also sells animal health products.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
LLY is trading at a discount to 1.) and 3.) above. If I exclude the high and low valuation, and average the remaining two valuations, LLY is trading at a 9.3% premium. A Star is deducted since LLY is trading at a premium in excess of 5%.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
LLY earned two Stars in this section for 3.) and 4.) above. It has paid a cash dividend to shareholders every year since 1885 and has increased its quarterly cash dividend payments for 40 consecutive years. The 1-Yr. > 5-Yr Growth metric indicates that dividend growth has been accelerating.
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:
LLY earned one Star in this section for 1.) above, and was very close to earning a Star for 2.) above. A company earns a Star for Years to >MMA if it less than 5 years and LLY is at 5 years.
Other: LLY is a member of the S&P 500, is an Achiever and an Aristocrat. Drug companies are facing challenges to their branded patents, drug development and regulatory issues. However, LLY's drug portfolio has limited near-term patent expiration exposure and it has a healthy pipeline in place.
Conclusion: LLY lost a Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned one Stars in the Dividend Income vs. MMA section for a net total of 2 Star. This quantitatively rates LLY as a 2 Star-Weak stock.
LLY is a good example of why you don't stop with a mechanical quantitative analysis. The NPV MMA Diff. is one of the main metrics I look at and at $4,355 it exceeds the $3,000 I look for in a company that is both an Achiever and an Aristocrat. In the case of LLY, the rating is purely a valuation issue and even there it is extraordinarily close. If LLY had closed at $45.10, instead of the $46.98 used in this valuation, this $1.88 (4%) decline would have made LLY a 4-Star Buy.
Using my D4L-PreScreen.xls model, I determined the dividend growth rate could drop more than a full point to 5.7% and still generate the $3,000 NPV of MMA Differential that I look for from a company that is both an Achiever and an Aristocrat. I have added LLY to my watch list.
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 do not own shares of LLY (0.0% of my Income Portfolio).
What are your thoughts on LLY?
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