Saturday, July 28, 2012

8 Oversold Large Caps With Rising Dividends, Falling Payout Ratios

When a company raises their dividend, while their payout ratio falls over the same time period, it is an especially good sign because it implies that earnings are rising, and dividends are being raised, without any compromise to dividend sustainability.

We ran a screen on large-cap stocks exhibiting these trends, with increases in dividend per share year-over-year and decreases in payout ratio, comparing the trailing-twelve-month ratio to the company’s three-year average. We screened these stocks for those that are technically oversold, with RSI(14) below 40.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

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We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks pay reliable dividends? Use this list as a starting-off point for your own analysis.

List sorted by dividend yield.

1. The Dow Chemical Company (DOW): Manufactures and supplies products used as raw materials in the production of customer products and services worldwide. Market cap of $28.95B. RSI(14) at 37.58. Dividend yield at 4.08%, payout ratio at 31.29%. Current year dividend per share estimate at $0.90 vs. last year dividend per share at $0.60. TTM payout ratio at 31.29% vs. 3-year average at 106.71%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.3). The stock is currently stuck in a downtrend, trading 8.23% below its SMA20, 16.94% below its SMA50, and 28.94% below its SMA200. It's been a rough couple of days for the stock, losing 11.58% over the last week.

2. CNOOC Ltd. (CEO): Engages in the exploration, development, production, and sale of crude oil, natural gas, and other petroleum products. Market cap of $70.43B. RSI(14) at 35.01. Dividend yield at 3.87%, payout ratio at 27.61%. Current year dividend per share estimate at $10.66 vs. last year dividend per share at $5.08. TTM payout ratio at 27.61% vs. 3-year average at 36.67%. Might be undervalued at current levels, with a PEG ratio at 0.87, and P/FCF ratio at 4.68. The stock is currently stuck in a downtrend, trading 11.39% below its SMA20, 18.02% below its SMA50, and 28.63% below its SMA200. It's been a rough couple of days for the stock, losing 7.24% over the last week.

3. Eaton Corporation (ETN): Operates as a power management company worldwide. Market cap of $12.23B. RSI(14) at 36.06. Dividend yield at 3.79%, payout ratio at 36.55%. Current year dividend per share estimate at $1.74 vs. last year dividend per share at $1.08. TTM payout ratio at 36.55% vs. 3-year average at 43.55%. The stock is currently stuck in a downtrend, trading 9.61% below its SMA20, 15.72% below its SMA50, and 26.92% below its SMA200. It's been a rough couple of days for the stock, losing 9.86% over the last week.

4. The Bank of New York Mellon Corporation (BK): Provides various products and services worldwide. Market cap of $23.17B. RSI(14) at 35.44. Dividend yield at 2.77%, payout ratio at 18.68%. Current year dividend per share estimate at $0.51 vs. last year dividend per share at $0.36. TTM payout ratio at 18.68% vs. 3-year average at 71.18%. Might be undervalued at current levels, with a PEG ratio at 0.71, and P/FCF ratio at 5.55. The stock is currently stuck in a downtrend, trading 6.91% below its SMA20, 13.18% below its SMA50, and 30.49% below its SMA200. It's been a rough couple of days for the stock, losing 7.93% over the last week.

5. MetLife, Inc. (MET): Provides insurance, annuities, and employee benefit programs primarily in the United States, Japan, Latin America, the Asia Pacific, Europe, and the Middle East. Market cap of $30.21B. RSI(14) at 39.58. Dividend yield at 2.59%, payout ratio at 32.87%. Current year dividend per share estimate at $0.91 vs. last year dividend per share at $0.74. TTM payout ratio at 32.87% vs. 3-year average at 47.89%. The stock is currently stuck in a downtrend, trading 7.58% below its SMA20, 16.91% below its SMA50, and 32.03% below its SMA200. It's been a rough couple of days for the stock, losing 9.33% over the last week.

6. Deere & Company (DE): Provides products and services primarily for agriculture and forestry worldwide. Market cap of $28.33B. RSI(14) at 35.21. Dividend yield at 2.40%, payout ratio at 22.91%. Current year dividend per share estimate at $1.35 vs. last year dividend per share at $1.16. TTM payout ratio at 22.91% vs. 3-year average at 29.64%. The stock is currently stuck in a downtrend, trading 10.56% below its SMA20, 10.06% below its SMA50, and 19.36% below its SMA200. It's been a rough couple of days for the stock, losing 11.34% over the last week.

7. Johnson Controls Inc. (JCI): Engages in building efficiency, automotive experience, and power solutions businesses worldwide. Market cap of $18.54B. RSI(14) at 35.46. Dividend yield at 2.35%, payout ratio at 26.97%. Current year dividend per share estimate at $0.58 vs. last year dividend per share at $0.52. TTM payout ratio at 26.97% vs. 3-year average at 45.55%. The stock is currently stuck in a downtrend, trading 7.83% below its SMA20, 16.25% below its SMA50, and 27.37% below its SMA200. It's been a rough couple of days for the stock, losing 9.43% over the last week.

8. CF Industries Holdings, Inc. (CF): Manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. Market cap of $10.91B. RSI(14) at 36.16. Dividend yield at 1.05%, payout ratio at 2.80%. Current year dividend per share estimate at $0.93 vs. last year dividend per share at $0.40. TTM payout ratio at 2.80% vs. 3-year average at 4.49%. Might be undervalued at current levels, with a PEG ratio at 0.9, and P/FCF ratio at 6.12. It's been a rough couple of days for the stock, losing 13.13% over the last week.

*Dividend per share and payout ratio data sourced from Screener.co, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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