Friday, February 15, 2008

Top 3 Dividend Stocks

I ran a quick scan for dividend paying stocks on MSN Screener with the following parameters:

  • Current Dividend Yield >= 5%
  • Market Capitalization >= 100,000,000
  • Div Yield: 5-year average >= 5%
  • EPS growth YTD vs YTD >= 25%
  • EPS growth Qtr vs Qtr >= 15%
  • Return on Equity >= 17%

    The screener returned eleven stocks; best of the bunch were

    [1] Terra Nitrogen Co. LP (TNH): This has the added advantage of belonging to Agricultural Chemicals, ranked strongest sector according to The weekly chart is looking tired with falling volume on new highs combined with a bearish divergence in the MACD trigger line. Should the stock trade inside a $72-$126 range it would be an attractive dollar-cost-average candidate. Those looking to pick a single entry price should look to the Fibonacci levels: $103.71, $106.66, $114.92 and/or the 50-day MA. Re-invest the somewhat erratic dividend and this could be a great long term hold as commodities (and their associated stocks) tend to enjoy longer bullish environments than is typical (commodity bull markets can last up to 35 years).

    [2] National Health Investors (NHI) is a Healthcare facilities REIT. Unlike Terra Nitrogen it is undergoing a much more sedate consolidation, with good supporting strength in the technicals. There is no dividend chart (Yahoo didn't offer one???), but as one can see from its historical payout it doesn't disappoint. Go long on a break from the consolidation triangle.

    [3] W.P. Carey and Co (WPC) is in the area of Property Managemnent and has seen steady growth in its dividend. Technically, it is the weakest of the three picks with a clear bearish divergence in the MACD trigger line, combined with a distribution trend in on-balance-volume (associated with new price highs - not good). Best to wait for this to fall back into the clutches of Fibonacci retracement before taking the plunge. Provides value in the $26.50-$30.00 range.

    There were two other honorable mentions on the scan: Southern Peru Copper (PCU) is a stock I hold in my dollar-cost-average account because of its great dividend (its sharp price rise has been a bonus). I have talked about this back in June and April of last year so no need to go on about it again. The other stock of potential interest was Lloyds TSB ADR (LYG) which has seen a 40% trim off its 2007 highs and is only a few dollars off its 2006 lows. When big names like this languish in the dump you should whip out your wallet out and start buying little bits at a time. Dollar cost average over the next 12-18 months and you will be holding this at a very nice price.