Five Shareholder-Friendly Stocks that Might be Good Investments for 2013
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
A shareholder-friendly company holds certain advantages over a typical stock, if in fact it returns capital to shareholders in terms of performance as well as in yield. In this market there are numerous examples of such stocks, and in this article I am looking at five that are raising their dividend and might fit into your portfolio.
The auto industry has been one of the few bright spots of the last two years in the U.S. economy, yet because of economic turmoil in Europe, auto stocks have underperformed. As a result, Ford trades with a price/sales of just 0.41 and a forward P/E ratio of 9.66.
Aside from being cheap, Ford is also becoming quite a shareholder-friendly company. Ford recently increased its dividend by 100%, taking its forward yield to 2.96%. With such an attractive yield, an undervalued price, and balance sheet improvements, it is very possible that Ford will be a top performer in 2013.
Western Refining has had a great year in terms of stock performance, near doubling, but remains greatly undervalued. The company trades with a price/sales of just 0.30 and a forward P/E ratio of 6.80. The company has great institutional and insider ownership, and is considered by many to be one of the better value plays in the energy sector.
The company implemented its dividend back in Q1 of 2012, but is making strides in becoming a high-yield investment. Right now the stock trades with a forward yield of just 1.58%, but its 50% increase in yield is worth noting. Therefore, with operating cash flow of more than $700 million and a $2.60 billion market cap, this is definitely a stock to watch over the next year.
Kaiser Aluminum is a basic materials company with modest growth, consistency, and a large institutional presence. Its forward yield of just 1.88% is not attractive by itself, but what is attractive is the rate at which this company is improving its margins. The stock has seen a consistent rally higher since the financial crisis, and has increased its dividend by about 90% over the last five years. Therefore, if you are looking for a slow and steady provider of gains then Kaiser might be a good choice.
The technology company Agilent is currently trading near 52-week highs, after a two-month trend from 52-week lows. The company has seen some major improvements but continues to operate in a struggling sector. Therefore, this weakness in its sector has left the stock trading with attractive metrics for a technology company. Yet due to this weakness, the company has implemented a dividend, and for the first time increased its yield by 20%. Perhaps this is a sign that the company will make strides to become more shareholder-friendly in the future.
One trend that I’ve noticed during this earnings season is that Investment Services companies have performed exceptionally well. BlackRock was perhaps the leader of the pack, with strong quarterly performance where it beat both top and bottom line expectations, grew margins, and expanded in emerging markets including China.
With a 25% return over the last year, BlackRock has been a consistent performer, and is now trading at 52-week highs and near all-time highs. Yet the stock continues to trade with attractive metrics, forward ratio of 13.62, and an industry leading yield. Therefore, it was encouraging when the company raised its dividend 12%, giving it a forward yield over 3%. The company has increased its dividend by 116% over the last five years, and continues to be at the top of my list as the best-in-class.
Besides each company on this list raising their dividends, they all share another similarity -- all are presenting value. Seeing as how each trades in a different industry, it’s hard to know for sure whether or not each will trade higher in 2013. However, with more due diligence, you might find that one, several, or even all of these companies would make a great addition to your portfolio, as safe, undervalued, high-yield investments that could still trade considerably higher.
BrianNichols owns shares of Ford. The Motley Fool recommends BlackRock and Ford. The Motley Fool owns shares of Ford and Western Refining. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!