Yearning for Year After Year of Yield
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Screening for stocks that have raised dividends year after year I was surprised to find some well-known favorites like Altria and Coca-Cola were surpassed in longevity of consecutive dividend raises. Less than 10 names have raised dividends for more than 55 years and mostly they weren’t household names.
They aren’t the names you see on the business network scrawls and definitely not names you hear about on the evening news. But they are reliably dependable names that can satisfy any portfolio’s need for yield. The three top names and how many years they have consecutively raised dividends are: Diebold Incorporated (NYSE: DBD) 59 years, American States Water Company (NYSE: AWR) 58 years, and Dover Corporation (NYSE: DOV) 57 years.
Is Diebold a Dividend ATM?
If you wanted a diversified portfolio of names that are historically dependable dividend raisers you’d probably want Diebold at the top of the list. It has a 3.40% yield (at a payout ratio of 38%) and a 10.97 P/E. The PEG is 1.03. Diebold is in the business of providing integrated self-service delivery and security systems and services to financial, commercial, government, and retail markets worldwide. It’s a big name in bank security making ATM’s, vaults, safes, alarm systems, and electronic security. It recently inked a deal to provide state of the art data centers for Verizon.
Diebold has quietly risen 21.78% over 52 weeks. Its quarterly earnings growth is 27.40% and quarterly revenue growth is 12.20%. The name has still pulled back from its 52 week high of $42.93 five months ago. The company also has total debt of $691.5 million to total cash of $591.40 million.
The company is innovating, testing video banking as is its larger competitor NCR Corp, but NCR has a P/E of 33.06 and no yield. Diebold’s P/E is still under the industry average of 12.24. Diebold reports again on October 22.
Water, Water Everywhere
American States Water has a yield of 3.30% (at a payout of 45%) and a P/E of 17.76. Free cash flow of $38.7 million is not as hot as one would like as net income is larger at $47.5 million. There is a big drag on that free cash flow from capital expenditures, draining away 65.2% of the FCF.
The company engages in the purchase, production and distribution of water in 75 communities in ten California counties and various military installations. The company also supplies electricity to the City of Bear Lake, CA and parts of San Bernardino. It has a debt/equity ratio of 1.77. Another thing of note is that it is lightly covered by analysts and was downgraded in the last three months by Robert W. Baird from outperform to neutral. Brean Murray also downgraded the stock from buy to hold reversing its last upgrade of March 2011. One last thing to remember is that this water utility stock is not very liquid (pun intended) only trading at an average volume of 122,500 shares.
While the water sector may remind you of the plot of the movie “Chinatown," water in California is still a big deal. American Water was founded in 1929, that Chinatown era. Citi and Goldman Sachs have both released notes this year about water as the "next big thing." Since the early 1990’s the stock has risen from a share price below $10 to an all time high of $45.40 this August. On November 7 they will report earnings.
Dover Corporation pays a 2.30% yield (at a payout ratio of 27%) and has a P/E of 13.03. Dover is in the business of manufacturing and selling specialized products, components and related services and consumables. It operates in four segments: Communication Technologies, Energy, Engineered Systems, and Printing & Identification.
While the share price has risen 26.06% over a year it has pulled back from its February high of $67.20. The debt/equity ratio is 2.52, pretty high for Foolish investors. Quarterly earnings growth isn’t so hot at negative 14.30%, either. However, it does have the lowest P/E among its direct competitors, Cooper Industries, Ingersoll-Rand, and Weatherford International.
William Blair analyst Nicholas Heymann said on September 24 that diversified manufacturer Dover is one of his favorite names this year with possible 20-30% upside by mid-2013 as economic conditions improve after the election. Dover reports again on October 17.
Maybe your eyes are already glazing over but these stocks are just the sort of stocks you can tuck in your back pocket and just let your dividends protect you come market turbulence. No, you won’t be discussing these avidly at a party, but who chit chats about portfolio insurance? Of the three the overall fundamentals look best for Diebold, but only you know what your portfolio needs.
leglamp has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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.If you have questions about this post or the Fool’s blog network, click here for information.