This article originally appeared on The DIV-Net January 12, 2009.
Company Description: Cullen/Frost Bankers, Inc., through its subsidiaries, provides banking and financial services primarily in Texas.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
CFR is trading at a discount to 1.) and 3.) above. If I exclude the high and low valuations and average the remaining two, CFR is trading at a 9.8% discount. CFR 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:
CFR earned one Star in this section for 3.) above. CFR has paid a cash dividend to shareholders every year since 1993 and has increased its dividend payments for 14 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:
CFR earned both of the available Stars in this section. The NPV MMA Diff. of the $7,820 is in excess of the $7,500 minimum I look for in a stock that has increased dividends as long as CFR has. CFR's current yield of 3.75% exceeds the 3.54% estimated 20-year average MMA rate.
Other: CFR is a member of the Broad Dividend Achievers™ Index. While other financial institutions are lining up for a cash infusion from the Troubled Assets Relief Program (TARP), CFR took a line from Nancy Reagan and, ‘Just said no.’
“Cullen/Frost is well capitalized now and for the foreseeable future, with sufficient capital to grow our business and take advantage of acquisition opportunities," said Dick Evans, Cullen/Frost's chairman and CEO in a 2008 statement. Operating in a robust and growing Texas economy, CFR exhibits strong credit quality in its loan portfolio and tends to produce relatively stable financial results. Trading at a discount to it historical P/E, some view CFR as an attractive takeover candidate. Risks include unfavorable changes in the slope of the yield curve, operational performance and additional deterioration of the credit market.
Conclusion: CFR 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 CFR as a 4 Star-Buy.
Using my D4L-PreScreen.xls model, I determined the share price could increase to $44.95 before CFR's NPV MMA Differential fell to the $7,500 that I like to see. At that price the stock would yield 3.69%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the needed $7,500 NPV MMA Differential, the calculated rate is 7.6%. This dividend growth rate is virtually the same as the the 7.8% used in this analysis.
By not accepting TARP funds CFR is in a position to continue to raise its dividend. With a risk rating of 1.25 (low), it is a stock that I will consider adding to my portfolio below its buy price of $44.95. For additional information, including CFR'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 CFR (0.0% of my Income Portfolio) .
What are your thoughts on CFR?
Recent Stock Analyses:
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Description: Cullen/Frost Bankers, Inc. (CFR) is a member of the Broad Dividend Achievers™ Index. The company, through its subsidiaries, provides banking and financial services primarily in Texas.
Quantitative Stock Analysis: Updated: 1-10-2009
CFR-Analysis.PDF
Share Data:
Click the Dividends tab above to see historical dividend information.
Comments: Updated: 1-10-2009
While other financial institutions are lining up for a cash infusion from the Troubled Assets Relief Program (TARP), CFR took a line from Nancy Reagan and, ‘Just said no.’ “Cullen/Frost is well capitalized now and for the foreseeable future, with sufficient capital to grow our business and take advantage of acquisition opportunities," said Dick Evans, Cullen/Frost's chairman and CEO in a 2008 statement. Operating in a robust and growing Texas economy, CFR exhibits strong credit quality in its loan portfolio and tends to produce relatively stable financial results. Trading at a discount to it historical P/E, some view CFR as an attractive takeover candidate. Risks include unfavorable changes in the slope of the yield curve, operational performance and additional deterioration of the credit market.
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This article originally appeared on The DIV-Net January 19, 2009.
Company Description: Legg Mason, Inc. is a diversified investment manager serving individual and institutional investors through offices around the United States.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
LM is trading at a discount to 1.) and 2.) above. Since LM'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, LM is trading at a 22.8% discount. LM 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:
LM earned three Stars in this section for 1.), 2.) and 3.) above. Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (1999-2002, 2000-2003, 2001-2004, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. LM has paid a cash dividend to shareholders every year since 1983 and has increased its dividend payments for 27 consecutive years. Last year's dividend payout was 44%, up from 15% in 2007. Since the increase was in excess of 15 points, a Star is deducted, leaving a net of two 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:
LM earned both of the available Stars in this section. The NPV MMA Diff. of the $239,028 is in excess of the $2,500 minimum I look for in a stock that has increased dividends as long as LM has. LM's current yield of 4.64% exceeds the 3.45% estimated 20-year average MMA rate.
Other: LM is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. The company has a strong market share and boasts an impressive historic investment performance. However, recent under performance in some of LM's flagship funds may have resulted in increased client redemptions. That combined with struggling equity markets, have resulted in sharply lower asset balances. Risks include industry cyclicality, acquisition integration further market declines and poor investment performance.
Conclusion: LM earned one Star in the Fair Value section, earned two Stars in the Dividend Analytical Data section and earned two Stars in the Dividend Income vs. MMA section for a net total of five Stars. This quantitatively ranks LM as a 5 Star-Strong Buy.
Using my D4L-PreScreen.xls model, I determined the share price could increase to $85.88 before CFR's NPV MMA Differential fell to the $3,000 that I like to see. At that price the stock would yield 1.12%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the needed $3,000 NPV MMA Differential, the calculated rate is 0.5%. This dividend growth rate is substantially below the 20.0% used in this analysis.
LM has not increased its dividend since June 2007 and runs the risk of losing its status as a Dividend Aristocrat. Before initiating a position, I would wait and determine LM's dividend policy going forward. LM's buy price is $27.26. For additional information, including LM'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 LM (0.0% of my Income Portfolio) .
What are your thoughts on LM?
Recent Stock Analyses:
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Is there any way to simplify investors search for a list of relatively stable stocks paying decent dividends? Everyone knows it is getting hard for investors to find income. With interest rates floating at next to nothing and notes yield declining, investors seeking cash payments from their investments are being pushed to become more creative. Investors can have many asset classes that can generate income. However, for several investors, stocks that pay dividend remain a top choice.
Investors are more attracted to the fact that dividend-paying stocks not only make regular cash payments, but the companies distributing the cash may also list the dividend. But picking these kind of stocks can be tricky business. One should always keep in mind that companies hold the right to cancel the dividend at any time. Five stocks discussed below have not been just paying but also raising dividends since 1995: Expeditors International of Washington (NASDAQ:EXPD), Imperial Oil Limited (USA) (NYSE:IMO), Cullen/Frost Bankers, Inc (NYSE:CFR), Essex Property Trust Inc (NYSE:ESS) and ACE Limited (NYSE:ACE).
Source: Potential Trader
Related Articles:
- How To Manage Your Dividend Portfolio In A Downturn
- The Current Financial Situation Should Concern Us All
- Finding The Perfect Dividend Stock
- The Greatest Asset For Building Wealth
- 10 Stocks With A Strong Cash To Dividend Coverage
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Yield-hungry investors don’t have a ton of options nowadays. Forget about money market accounts and CDs. And sure, Treasury yields are on the rise, but even now, a 10-year T-Note yields just 2.4%. Right now, income investors’ best play remains the stock market. While stocks might not offer the same degree of safety you’ll find in government bonds, you probably can’t expect any appreciation in Treasuries (in fact, if yields keep rising, you can expect losses).
So why not allow yourself the best of both worlds — some dividend yield, and some capital gains? So, if you’re looking for the best dividend stocks to buy, explore a little and check out some of these names that might get a little less attention thanks to their sub-3% yields, and are seemingly unloved for one reason or another, but offer a decent mix of both income and growth potential: China Mobile (CHL), Qualcomm (QCOM), Cullen/Frost Bankers (CFR), Axis Capital Holdings (AXS) and Prosperity Bancshares (PB).
Source: InvestorPlace
Related Articles:
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- Dividends vs. Stock Buybacks
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Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it's where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.
Below are the carnivals that I participated in this week, along with a link to my article:
Articles I enjoyed reading included (in no particular order):
The DIV-Net Featured Articles
Articles From DIV-Net Members
The Wealth, Money & Life Network Featured Articles
Other Articles
There are some really good articles here, please take time and read a few of them.
(Photo: Sachin Ghodke)
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Other ArticlesEach Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it's where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.
Below are the carnivals that I participated in this week, along with a link to my article:
Articles I enjoyed reading included (in no particular order):
The DIV-Net Featured Articles
Articles From DIV-Net Members
The Wealth, Money & Life Network Featured Articles
There are some really good articles here, please take time and read a few of them.
(Photo: Sachin Ghodke)
________________________________________________________________
This article originally appeared on The DIV-Net January 26, 2009.
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 valuations above. If I exclude the high and low valuations and average the remaining two, LOW is trading at a 39.5% discount. LOW 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:
LOW earned three Stars in this section for 1.), 2.) and 3.) above. Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (1999-2002, 2000-2003, 2001-2004, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. LOW has paid a cash dividend to shareholders every year since 1961 and has increased its dividend payments for 46 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:
LOW earned one Star in this section for 1.) above. The NPV MMA Diff. of the $19,636 is in excess of the $2,500 minimum I look for in a stock that has increased dividends as long as LOW has. If LOW grows its dividend at 20.0% per year, it will take 7 years to equal the cumulative earnings from a MMA yielding an estimated 20-year average rate of 3.45%.
Other: LOW is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend Achievers™ Index. The the home improvement retail industry tends to be very cyclical and relies on economic growth. However, LOW is a strong player with opportunities for growth both domestically and abroad. Aging homes and relatively high home ownership rates are powerful long-term demographic drivers that should help mitigate the continued weakness in residential construction. Consumers viewing their homes as investments will continue to spend money on home improvement projects. Risks include a continued decline in the economy, a large rise in long term interest rates and failure by LOW to execute expansion strategy.
Conclusion: LOW earned one Star in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a net total of five Stars. This quantitatively ranks LOW as a 5 Star-Strong Buy.
Using my D4L-PreScreen.xls model, I determined the share price could increase to $35.98 before LOW's NPV MMA Differential fell to the $3,000 that I like to see. At that price the stock would yield 0.92%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the needed $3,000 NPV MMA Differential, the calculated rate is 13.6%. This dividend growth rate is substantially below the 20.0% used in this analysis, thus providing a margin of safety.
LOW has an S&P Quality Ranking of A+ from its consistent historical earnings and dividend growth. It has held up much better than its chief rival Home Depot (HD). I have followed LOW for some time, but have been hesitant to initiate a position in a cyclical company with such a low dividend yield. I calculate LOW's buy price at $33.11. For additional information, including LOW'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 LOW (0.0% of my Income Portfolio) .
What are your thoughts on LOW?
Recent Stock Analyses:
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