Colgate Total Toothbrush
In parts 1-3 of this series include an increased dividend payment of shares in the U.S., and outlined four of them – Water York – (YORW), DuPont – (DD), Lorillard – (LO), and Valspar – (VAL). In this last article, we profile two companies worth considering: Colgate-Palmolive (CL), and John Wiley & Sons (Once again, here are 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 – Diversified industrial chemicals
COLGATE-PALMOLIVE – 1806 – Consumer Goods
VALSPAR – 1806 – Industrial
JOHN WILEY & SONS – 1807 – Editorial
HARTFORD GROUP – 1810 – Insurance
CITIGROUP – 1812 – Bank
YORK WATER – 1816 – Utility
Colgate-Palmolive (CL) is a member of the prestigious S & P Dividend Aristocrats group, which has increased its dividend payout 47 years in a row. (This group requires a minimum of 25 consecutive years of increased dividends).
CL focuses on 4 areas: Oral Care, Personal Care, Home Care and Pet Nutrition. We have seen strong growth in Latin America, which contributed 26% of sales in the quarter March 2009. CL has a dominant market share in toothpaste and Manual Toothbrushes, and has also seen their market share in other categories, such as liquid cleaners, mouthwash, soap, dishwashing detergents.
The company recently completed a 4 year program restructuring should help maintain steady earnings growth.
Within its Consumer Staples – Household Products peer group, CL is second in size only to giant Procter & Gamble (PG). Its dividend yield 2.39% placed in the bottom of the 7 stocks that pay dividends within this group. Its current dividend payout ratio is a conservative 41%.
Currently sells for $ 73.65, the session just 8.5% below 52-week of $ 80.49. Since P & G, CL is often used as a defensive action, as it has a very low beta of about .54. (If you look at a comparison chart CL vs. the S & P 500, you'll often see moves reverse).
Since implied volatility is average (around 25), CL options are not very juicy. For example, the sale of a 2010 $ 75 calls January (CLAO), paid $ 3.80, an additional 5.2%, slightly less than 6 months.
By selling covered calls, also had to raise $ .88/share in dividends before maturity, which adds another 1.2% at its 6-month performance.
Its potential third party for profit here is that if its shares are allocated, which will net an additional $ 1.35 – ($ 75 strike price less than its base $ 73.65 costs).
Conversely, if they were afraid of a setback, you could consider selling puts. The $ 70.00 set in January 2010, (CLMN) is currently of $ 3.20, giving a balance of $ 66.80, which is just below the week in this population to 52-average price.
, John Wiley & Sons, (JW / A), is a very old editorial, which operates in three segments: scientific, technical, medical and scientific Professional / Trade and Higher Education.
Recently it has been degraded by JP Morgan, and has a modest dividend yield of 1.72% ($ .56/share).
Debt / Heritage Net: 1.60%
Long-term Debt / Equity: 1.47%
Currently, March 2010 35.00 Call dollars (KQWCG), is $ 2.10, a premium of 6.46% with respect JW current share price of A $ 32.49. We charge an additional $ .28/share before maturity.
In addition, if assigned their shares sold would earn another $ 2.51/share ($ 35 strike price less $ 32.49 cost of equity), which is a good profit potential of 7.72% assigned.
Static Yield: 7.33% $ 2.38/share
Potential Yield Allocation: $ 2.51/share 7.72%
Potential total of 8 months Yield: 15.05%
Although this 15% + Performance is very tasty for a term of only 8 months investment, you would be well advised to dig further into reasons for the downgrade JPMorgan new Wiley.
This article is written for informational purposes only, and the author is not liable for any errors, omissions or acts by third parties as a result of reading this article.
About the Author:
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: ArticlesBase.com – America’s Oldest Dividend Paying Stocks – Part 4
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