The Oldest Dividend Paying Stocks in America - Part 3
In Parts 1-2 of this series we listed the oldest dividend paying stocks in the U.S., and profiled two of them - York Water, (YORW), and DuPont, (DD). In this article we’ll profile some additional companies worth looking into. Here are the members of this “Old Timer’s Club”:
LORILLARD - 1760 - Consumer Goods
BANK OF NY ? 1784 - Bank
CIGNA - 1792 - Insurance
WASHINGTON TRUST - 1800 - Community Bank
DUPONT - 1802 - Industrial Diversified Chemicals
COLGATE-PALMOLIVE - 1806 - Consumer Goods
VALSPAR - 1806 - Industrial
JOHN WILEY & SONS - 1807 - Publishing
HARTFORD GROUP - 1810 - Insurance
CITIGROUP - 1812 - Bank
YORK WATER - 1816 - Utility
First, let’s look at America’s oldest dividend paying company, Lorillard, (LO). Many key measurements look attractive for this venerable 249-year old company, which has a very strong balance sheet:
Today’s opening price: $67.04
Dividend Yield: 5.49% ($3.68/share)
EPS next year: $5.82/share
Dividend Payout Ratio: 63.2%
Debt/Equity: 0
Long Term Debt/Equity: 0
Quick Ratio: 1.23
Current Ratio: 1.44
Management efficiency measurements look good also:
Return on Assets (ROA): 32.8%
Return on Equity (ROE): 114.49%
Return on Investment: 75.35%
In terms of price, LO is over 32% above its 52-week low of $50.97, and only 8.61% below its 52-week high of $74.02, so, more conservative investors might want to wait for a possible price pullback here.
Alternatively, you could purchase LO and sell covered calls. The Jan. 2010 $70.00 call option, (LOAN), is currently worth a $3.90 bid.
Here are the data for this trade:
Share Price: $67.04
Call Bid Price: $3.90 (5.82%)
Dividends collected during term: $.92/share, ( 1.37%)
Static Yield, if shares don’t get assigned, (sold away from you): $4.82/share, 7.19%, over this 186-day period, (14.1% annualized).
Assigned Yield, if shares rise to or above $73.90, ($70 strike price plus $3.90/share call bid premium): 4.4% An additional $2.96/share, ($70.00 strike - $67.04 cost)
Total Potential Assigned Yield: $7.78/share, 11.06%, or 22.77% annualized).
Beakeven: $62.22, ($67.04 - $3.90 call premium - $.92 in dividends).
Our next profile is for Valspar, (VAL), an industrial goods company which is in the General Building Materails sub-industry. Here are some key figures for Valspar, which is a bit more leveraged firm than Lorillard, but still pretty solid:
Today’s opening price: $22.27
Dividend Yield: 2.70% ($.60/share)
EPS next year: $1.82/share
Forward Dividend Payout Ratio: 33%
Debt/Equity: .67
Long Term Debt/Equity: .48
Quick Ratio: .87
Current Ratio: 1.17
Management efficiency measurements are fair, not dazzling:
Return on Assets (ROA): 3.78%
Return on Equity (ROE): 8.33%
Return on Investment: 5.03%
VAL has run up over 58% form its 52-week low of $14.14, and currently sits at only 9.43% off its 52-week high of $24.74.
Unfortunately, the put premiums aren’t very rich for VAL. Selling puts into Jan. 2010 would only yield 6.75%, ($1.35 for a $20.00 put).
VAL’s covered calls are a bit richer:
The Jan. 2010 $22.50 call, (VALAX), is currently at $2.05 bid, which yields 9.2% for approximately 6 months, or 18% annualized.
In addition, you’d collect $.60/share in dividends during this term, for another 2.7%.
Your total static yield: $2.65/share, 11.9% for around 6 months, or 23.35% annualized.
Breakeven: $19.62 ($22.27 - $2.65/call premium + dividends)
Potential Assigned Yield: $.23/share, ($22.50 strike price - $22.27 cost). This would give you an additional 1%, if VAL rises to or above $24.55, ($22.50 strike plus $2.05 call premium).
In part 4 of this series, we’ll profile 2 additional firms from our list of America’s oldest companies.
Robert Hauver publishes The Double Dividend Stock Alert. a monthly newsletter that features “high yield investing for low risk investors”. If you’re looking for “the place where high yield meets low risk”, visit: www.DoubleDividendStocks.com Article Source:http://www.articlesbase.com/finance-articles/the-oldest-dividend-paying-stocks-in-america-part-3-1037579.html
Leave a Reply