We continue to look for dividend stock ideas as we think that
dividend bearing stocks can assist in bridging the income gap as
interest rates continue to be at record lows. In addition, companies
that can afford to and then make dividend payments are often well
run companies.
Rebecca Lipman from kapitall.com noted this trend and looks into the
question:
"Is
there more room for growth?" Rebecca noted that Richard Shaw,
the managing principal of QVM Group LLC, compares the median values
and simple averages of the 100 largest non-dividend stocks to the
100 largest dividend-paying stocks. Using the median value
eliminates extremes in P/E ranges. The result: dividend stocks are
becoming more attractive, not less attractive and none of the
dividend stock median values are in the “unreasonable” or expensive
range.
To find a list of attractively priced dividend stocks they used the
ratio levered free cash flow/enterprise value. When a stock has a
relatively high ratio, it may indicate that it is undervalued.
Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm’s value from all ownership sources: market cap, outstanding debt, and preferred shares.
Here is Rebecca's top seven:
- Cedar Shopping Centers Inc. (CDR): Owns, operates, develops and redevelops US supermarket-anchored community shopping centers and drug store-anchored convenience
- Statoil ASA (STO): Engages in the exploration, production, transportation, refining, and marketing of petroleum and petroleum-derived products.
- Intersil Corporation (ISIL):
Engages in the design, development, manufacture, and marketing
of analog and mixed-signal integrated circuits.
- Bristol-Myers Squibb Company (BMY):
Develops, and delivers innovative medicines that help patients
prevail over serious diseases.
- Nokia Corporation (NOK):
Provides Internet and digital mapping and navigation services
worldwide.
- World Wrestling Entertainment Inc. (WWE):
An integrated media and entertainment company, engages in the
sports entertainment business.
- Tele Norte Leste Participacoes S.A. (TNE): Provides telecommunication services primarily in Brazil.
This is an eclectic set of stocks and certainly not the usual
suspects. Talking about suspects, I am concerned about the
inclusion of Nokia in any list for long term investors as there
are so many questions over the future of that cell phone handset
erswhile leader. Anyway, this is supposed to be a blind filter and
is worthy of comparing with our dividend ETF benchnark portfolio.