The Oldest Dividend Paying Stocks in America - Part 3

In Parts 1-2 of this series we listed the oldest dividend paying stocks in the U.S., and profiled two of them - York Water, (YORW), and DuPont, (DD). In this article we'll profile some additional companies worth looking into. Here are the 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 - Industrial Diversified
 Chemicals

COLGATE-PALMOLIVE - 1806 - Consumer Goods



VALSPAR - 1806 - Industrial



JOHN WILEY & SONS - 1807 - Publishing



HARTFORD GROUP - 1810 - Insurance



CITIGROUP - 1812 - Bank



YORK WATER - 1816 - Utility



First, let's look at America's oldest dividend paying company, Lorillard, (LO). Many key measurements look attractive for this venerable 249-year old company, which has a very strong balance sheet:

Today's opening price: $67.04

Dividend Yield: 5.49% ($3.68/share)

EPS next year: $5.82/share

Dividend Payout Ratio: 63.2%

Debt/Equity: 0

Long Term Debt/Equity: 0

Quick Ratio: 1.23

Current Ratio: 1.44

Management efficiency measurements look good also:

Return on Assets (ROA): 32.8%

Return on Equity (ROE): 114.49%

Return on Investment: 75.35%

In terms of price, LO is over 32% above its 52-week low of $50.97, and only 8.61% below its 52-week high of $74.02, so, more conservative investors might want to wait for a possible price pullback here.

Alternatively, you could purchase LO and sell covered calls. The Jan. 2010 $70.00 call option, (LOAN), is currently worth a $3.90 bid.

Here are the data for this trade:

Share Price: $67.04

Call Bid Price: $3.90 (5.82%)

Dividends collected during term: $.92/share, ( 1.37%)

Static Yield, if shares don't get assigned, (sold away from you): $4.82/share, 7.19%, over this 186-day period, (14.1% annualized).

Assigned Yield, if shares rise to or above $73.90, ($70 strike price plus $3.90/share call bid premium): 4.4% An additional $2.96/share, ($70.00 strike - $67.04 cost)

Total Potential Assigned Yield: $7.78/share, 11.06%, or 22.77% annualized).

Beakeven: $62.22, ($67.04 - $3.90 call premium - $.92 in dividends).

Our next profile is for Valspar, (VAL), an industrial goods company which is in the General Building Materails sub-industry. Here are some key figures for Valspar, which is a bit more leveraged firm than Lorillard, but still pretty solid:

Today's opening price: $22.27

Dividend Yield: 2.70% ($.60/share)

EPS next year: $1.82/share

Forward Dividend Payout Ratio: 33%

Debt/Equity: .67

Long Term Debt/Equity: .48

Quick Ratio: .87

Current Ratio: 1.17

Management efficiency measurements are fair, not dazzling:

Return on Assets (ROA): 3.78%

Return on Equity (ROE): 8.33%

Return on Investment: 5.03%

VAL has run up over 58% form its 52-week low of $14.14, and currently sits at only 9.43% off its 52-week high of $24.74.

Unfortunately, the put premiums aren't very rich for VAL. Selling puts into Jan. 2010 would only yield 6.75%, ($1.35 for a $20.00 put).

VAL's covered calls are a bit richer:

The Jan. 2010 $22.50 call, (VALAX), is currently at $2.05 bid, which yields 9.2% for approximately 6 months, or 18% annualized.

In addition, you'd collect $.60/share in dividends during this term, for another 2.7%.

Your total static yield: $2.65/share, 11.9% for around 6 months, or 23.35% annualized.

Breakeven: $19.62 ($22.27 - $2.65/call premium + dividends)

Potential Assigned Yield: $.23/share, ($22.50 strike price - $22.27 cost). This would give you an additional 1%, if VAL rises to or above $24.55, ($22.50 strike plus $2.05 call premium).

In part 4 of this series, we'll profile 2 additional firms from our list of America's oldest companies.