After the short term sell-off and bounce back last week I think its time to take a quick look at yield averages on each stock on the safe dividend list. Average dividend yield is a good valuation metric because its is always tied to stock price. It becomes even more reliable on companies that have a long track record of increasing dividends. Each company on this list has increased its dividend for 20 years or more.
When a stock’s current yield is below its 5 year average it could be considered over bought, or overvalued. So of course the opposite is true when the yield is above its 5 year average.
All of this info is available on Yahoo Finance under key stats. The results are in and I’m not surprised that only 8 of the 63 stocks on this list are trading with a higher yield than average. In fact this list suggests that these stocks as a whole could be as much as 15% over valued.
It was interesting though to see that Exxon and Wal-Mart are both trading with a higher dividend yield than normal.
A couple of quick notes:
- A positive “value difference” means the stock is trading with a yield more than its average and could be under bought.
- A negative “value difference” means the stock is trading with a yield less than its average and could be over bought.
| Company | Symbol | Yrs of Div Increases | Current Yield | 5yr Yield Ave | Value Difference |
|---|---|---|---|---|---|
| Sigma-Aldrich | SIAL | 29 | 1 | 1.1 | -10.00% |
| Family Dollar Stores | FDO | 34 | 1.7 | 1.6 | 5.88% |
| Raven Industries | RAVN | 24 | 1.6 | 1.6 | 0.00% |
| Ecolab Inc | ECL | 25 | 1.1 | 1.4 | -27.27% |
| Sherwin-Williams | SHW | 31 | 1.1 | 1.8 | -63.64% |
| Grainger (W.W.) | GWW | 39 | 1.4 | 1.7 | -21.43% |
| Cintas Corp | CTAS | 28 | 1.4 | 1.7 | -21.43% |
| UMB Financial | UMBF | 20 | 1.6 | 1.9 | -18.75% |
| Hormel Foods | HRL | 44 | 1.7 | 2.1 | -23.53% |
| VF Corp | VFC | 38 | 1.9 | 3 | -57.89% |
| Lowe's Companies Inc. | LOW | 49 | 1.7 | 1.8 | -5.88% |
| Target Corp | TGT | 39 | 2 | 2 | 0.00% |
| McCormick & Co | MKC | 25 | 1.9 | 2.4 | -26.32% |
| Archer-Daniels Midland | ADM | 36 | 2.3 | 2.1 | 8.70% |
| Dover Corporation | DOV | 55 | 1.8 | 2.4 | -33.33% |
| T. Rowe Price Group | TROW | 25 | 2 | 2.1 | -5.00% |
| Chubb Corp | CB | 46 | 2 | 2.5 | -25.00% |
| PPG Industries, Inc. | PPG | 39 | 1.6 | 3.2 | -100.00% |
| Wal-Mart Stores Inc | WMT | 35 | 2.5 | 2.2 | 12.00% |
| Becton Dickinson & Co | BDX | 38 | 2 | 2 | 0.00% |
| Colgate-Palmolive | CL | 25 | 2.3 | 2.4 | -4.35% |
| Stanley Black & Decker Inc | SWK | 43 | 2.5 | 2.7 | -8.00% |
| Exxon Mobil Corporation | XOM | 28 | 2.8 | 2.3 | 17.86% |
| Illinois Tool Works Inc | ITW | 25 | 2.1 | 2.9 | -38.10% |
| Coca-Cola Co | KO | 48 | 2.7 | 2.9 | -7.41% |
| Medtronic, Inc. | MDT | 34 | 2 | 2.2 | -10.00% |
| 3M Co | MMM | 52 | 2.3 | 2.7 | -17.39% |
| Aqua America Inc | WTR | 20 | 2.5 | 2.9 | -16.00% |
| Automatic Data Processing | ADP | 35 | 2.5 | 3.1 | -24.00% |
| McDonald's Corporation | MCD | 34 | 3.1 | 3.2 | -3.23% |
| Walgreen Company | WAG | 35 | 2.2 | 2.2 | 0.00% |
| Genuine Parts Co | GPC | 54 | 2.8 | 3.5 | -25.00% |
| General Dynamics | GD | 20 | 2.8 | 2.6 | 7.14% |
| Air Products & Chemicals | APD | 28 | 3 | 2.7 | 10.00% |
| 1st Source Corp | SRCE | 20 | 2.8 | 3.1 | -10.71% |
| Diebold Inc | DBD | 57 | 3.6 | 3.6 | 0.00% |
| PepsiCo Inc | PEP | 39 | 2.8 | 3.1 | -10.71% |
| American States Water | AWR | 57 | 3.1 | 3 | 3.23% |
| Eaton Vance | EV | 29 | 2 | 2.7 | -35.00% |
| Questar Corp | STR | 31 | 2.9 | 3.6 | -24.14% |
| RPM International | RPM | 37 | 2.8 | 3.9 | -39.29% |
| Bemis Co | BMS | 25 | 2.6 | 3.1 | -19.23% |
| AFLAC Inc | AFL | 28 | 2.5 | 2.5 | 0.00% |
| Emerson Electric | EMR | 54 | 2.8 | 3.1 | -10.71% |
| Chevron | CVX | 20 | 3.3 | 3.3 | 0.00% |
| Procter & Gamble | PG | 57 | 3.1 | 3.2 | -3.23% |
| Clorox Co | CLX | 34 | 3 | 3.2 | -6.67% |
| Kimberly-Clark | KMB | 36 | 3.3 | 3.9 | -18.18% |
| UGI Corp | UGI | 20 | 2.9 | 3.4 | -17.24% |
| McGrath RentCorp | MGRC | 20 | 2.9 | 3.5 | -20.69% |
| Johnson & Johnson | JNJ | 48 | 3.1 | 3.3 | -6.45% |
| Sysco Corp | SYY | 35 | 3.3 | 3.6 | -9.09% |
| Community Bank System | CBU | 20 | 3.6 | 3.9 | -8.33% |
| Northwest Nat Gas | NWN | 55 | 4.2 | 3.8 | 9.52% |
| Consolidated Edison | ED | 36 | 4.3 | 4.8 | -11.63% |
| Nucor | NUE | 39 | 3.3 | 3.3 | 0.00% |
| Atmost Energy | ATO | 20 | 3.4 | 4.4 | -29.41% |
| Vectren Corp | VVC | 35 | 4.2 | 5.2 | -23.81% |
| HCP Inc | HCP | 25 | 4.4 | 5.3 | -20.45% |
| ATT | T | 26 | 5.1 | 5.6 | -9.80% |
| Leggett & Platt | LEG | 39 | 3.6 | 5.1 | -41.67% |
| National Retail Properties | NNN | 21 | 4.4 | 6.5 | -47.73% |
| Universal Health REIT | UHT | 20 | 5.5 | 6.5 | -18.18% |
| Average | - | - | - | - | -15.25% |
Wow, pretty clear there’s not a lot of great discounts to be had when looking at this list. I’m still interested in a couple of these where the yield / historical yield disparity is <5% and the business is a quality one (ie Colgate)
I agree. You have to look at each stock on a individual basis and decide for yourself. It’s hard to say a small deviation from the average really means its over valued.