10 Dividend Companies for the Enterprising Investor – December Update

The following screen is the basis of the Dividend Portfolio.  The screen is of the 140 companies in the Modern Graham valuation database’s for the top dividend payouts from companies suitable for the enterprising investor.  Later today I will have another post that includes the update for the portfolio.

This screen targets the top dividend payouts out of the companies I follow here on Modern Graham that pass the tests for the enterprising investor, updated from Benjamin Graham’s tests presented in The Intelligent Investor.

Specifically, here are the tests required for the enterprising investor:

Enterprising Investor – must pass at least 4 of the following 5 tests:

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1
3. Earnings Stability – positive earnings per share for at least 5 years
4. Dividend Record – currently pays a dividend
5. Earnings growth – EPSmg greater than 5 years ago

Additionally, a company can qualify for the enterprising investor if it passes the tests for the defensive investor.

This month, the screen produced the following companies:

• EVEP – EV Energy Partners (11.64% dividend yield) – EV Energy Partners is a limited partnership engaged in the exploration, development and production of oil and natural gas properties.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be only $1.04, considerably lower than last year’s $11.14.  However, normalized earnings per share (based on a five year weighted average of the earnings per share) will remain at $4.28.  This is the first time EVEP has appeared in this screen (in response to some reader comments I decided to include limited partnerships in the screen).
• PMD – Psychemedics Corp (9.6%) – Psychemedics Corp provides testing services for substance abuse.  The company passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $0.24 and normalized earnings per share will be $0.58.  This is the third consecutive month PMD has appeared in this screen.
• NRP – Natural Resource Partners LP (9.05%) – Natural Resource Partners is a limited partnership involved in coal properties in the United States.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $0.92, the lowest level since 2003.  However, normalized earnings should be $1.43.  This is the first time NRP has appeared in this screen.
• BGS – B&G Foods Inc (7.94%) – B&G Foods produces and sells food products.  The company passes four out of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $0.59, and normalized earnings per share should be $0.45.  This is the third consecutive month BGS has appeared in this screen.
• SPH – Suburban Propane Partners LP (7.47%) – Suburban Propane Partners is a limited partnership focused on energy distribution products.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $4.98 and normalized earnings per share will be $3.82, both increases over last year.  This is the first time SPH has appeared in this screen.
• ISH – International Shipholding Corp (6.02%) – International Shipholding Corp provides marine trasportation through charters.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $4.97 and normalized earnings per share will be $3.50, both increases over last year.  This is the third consecutive month ISH has appeared in this screen.
• NPK – National Presto Industries (5.96%) – National Presto is primarily a producer of small appliances.  The company is a favorite of mine (and was a favorite of Graham himself – see chapter 15 of The Intelligent Investor) and passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $7.67 and normalized earnings per share will be $6.11, both significant increases over last year.  This is the third consecutive month NPK has appeared in this screen.
• BMY – Bristol-Myers Squibb Company (4.90%) – Bristol-Myers Squibb is a pharmaceuticals company.  The company passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $1.70 and normalized earnings per share will be $1.34.  This is the third consecutive month BMY has appeared in this screen.
• OLN – Olin Corp (4.77%) – Olin is a chemical and ammunitions producer.  The company passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $0.64 and normalized earnings per share will be $1.37, both decreases from last year.  This is the third consecutive month OLN has appeared in this screen.
• DD – E.I. du Pont de Nemours and Company (4.74%) DuPont is a diversified company.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $1.78 and normalized earnings per share will be $2.41.  This is the third consecutive month DD has appeared in this screen.

Photo by Benjamin Clark.

Full Disclosure:  At time of publication, author was long NPK.  See a list of the author’s current holdings.