Build Diversity: Part 5 Consumer Stocks

22 Mar 2014 14:06
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All stock information will be culled from David Fish’s “Dividend Champions List” at which provides a list of all stocks that have continually grown their annual dividend payouts for 5 years or more in a row.

Welcome to Part 5 of our “Build Diversity” series. Today we will be looking at the Consumer sector (both staples and discretionary).

To start with a list we will use basic search criteria of:

  • min div yield 3% or greater
  • payout ratio less than 65%
  • debt to equity ratio less than 1
Company Symbol Yrs of Div Growth Div Yield Payout Ratio TTM P/E Debt/Equity
Cracker Barrel Old Country CBRL 11 3.02% 59.29% 19.65 0.84
Frisch's Restaurants Inc. FRS 7 3.02% 44.17% 14.61 0.14
Mattel Inc. MAT 6 4.07% 58.46% 14.35 0.49
McDonald's Corp. MCD 38 3.41% 58.38% 17.14 0.89
Rent-A-Center Inc. RCII 5 3.66% 38.82% 10.61 0.62
Sturm Ruger & Company RGR 5 3.32% 40.30% 12.14 0.00
Procter & Gamble Co. PG 57 3.06% 65.03% 21.26 0.52
Universal Corp. UVV 43 3.54% 39.08% 11.04 0.38

The search yielded 8 stocks. For companies that have increased dividends for more than 20 consecutive years we have MCD, PG, & UVV. For payout ratios FRS, RCII, RGR, & UVV are below 50%. The largest dividend payouts are MAT, RCII, and UVV but while MAT & RCII have the highest yields they also have some of the shortest history of consecutive dividend growth.

Looking at average dividend growth rates we see not all are created equal. MCD comes in the strongest with a 10 year average of 22.8% and UVV the lowest with a 10 year average of 3.34%.

Company Symbol 1 Yr DGR 3 Yr DGR 5 Yr DGR 10 Yr DGR
Cracker Barrel Old Country CBRL 78.6% 45.0% 27.6% 36.66%
Frisch's Restaurants Inc. FRS 3.1% 6.9% 6.6% 5.68%
Mattel Inc. MAT 5.5% 18.8% 15.6%
McDonald's Corp. MCD 8.7% 11.3% 13.9% 22.80%
Rent-A-Center Inc. RCII 31.3% 91.3%
Sturm Ruger & Company RGR 64.0% 85.8%
Procter & Gamble Co. PG 7.0% 7.9% 8.8% 10.59%
Universal Corp. UVV 2.0% 2.1% 2.1% 3.34%

Unfortunately, UVV has a growth rate for all averages that is barely above the 10 year average inflation rate of 2.39%. UVV with a dismal growth rate now reduces our list from 8 to 7 perspective stocks.

Our quick search has yielded 7 potentially attractive examples to add to your portfolio. Like any investment you should research further before purchasing any equity as this report is nothing more than a result of some surface level values and ratios.

Cracker Barrel Old Country (CBRL): Cracker Barrel Old Country Store, Inc. develops and operates the Cracker Barrel Old Country Store concept in the United States. It operates full-service restaurants, which provide breakfast, lunch, and dinner. The company also operates gift shops that offer various decorative and functional items.

Frisch's Restaurants (FRS): Frisch’s Restaurants, Inc., together with its subsidiaries, operates restaurants in the United States. The company operates its full service family-style restaurants under the Frisch’s Big Boy name in various regions of Ohio, Kentucky, and Indiana.

Mattel (MAT): Mattel, Inc. designs, manufactures, and markets a range of toy products worldwide. The company operates in three segments: North America, International, and American Girl. It also publishes Advice and Activity books and the American Girl magazine.

McDonald’s (MCD): McDonald’s Corporation franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company’s restaurants offer various food items, soft drinks, coffee, and other beverages, as well as breakfast menus.

Rent-A-Center (RCII): Rent-A-Center, Inc., together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates in four segments: Core U.S., Acceptance Now, International, and Franchising. It offers durable products, such as consumer electronics, appliances, computers, furniture, and accessories under rental purchase agreements.

Sturm Ruger & Company (RGR): Sturm, Ruger & Company, Inc. designs, manufactures, and sells firearms in the United States. The company provides single-shot, auto loading, bolt-action, and sporting rifles; single-action and double-action revolvers; and rim fire and center fire auto loading pistols, as well as shotguns under the Ruger name. It also provides accessories and replacement parts for firearms.

Procter & Gamble (PG): The Procter & Gamble Company, together with its subsidiaries, manufactures and sells branded consumer packaged goods. The company operates through five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care.

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