Wednesday, November 25, 2015

Weekly Purchase 11 - DOV

For this week's sharebuilder purchase, I added to my existing position in Dover (DOV).


DOV appeared in the November screen which looks for M*/S&P BBB+ rated companies with lower than average P/Es and higher than average yields. I bought DOV a few months ago and I am averaging down on my existing position.


Details of Purchase


On Tuesday, I bought 15.19 shares of Dover (DOV).


Action
Security
Price
Quantity
Amount
Buy
DOV
$65.53
15.19
1000


This purchase increases my forward annual dividends by $25.52.



About Dover (DOV)


You can read more about DOV here: http://www.wikinvest.com/stock/Dover_(DOV)


Please see below for my criteria checklist.


DOV 11/2015
Area
Criteria
CheckList
Comment
Quality Company
Dividend Growth
>5 years
Yes
60 Years
ROE/Op Margin
Stable
Yes
Stable
Long term Avg Growth
Stable
Yes
Stable
FCF over Dividends
Yes
Yes
FCF covers Dividends
M* Moat
Wide Moat
Yes
Narrow
M* & S&P
Credit Rating
> BBB+
Yes
A
Cash to Debt & Interest Coverage, Debt to Equity
Cash Debt >1 or Interest Coverage > 5
Yes
Cash to Debt 0.25
Interest Coverage 9.23
Debt to Equity 75.32
M* & S&P Stars
> 3 Stars for both
Yes
M* 3 Stars
S&P CapIQ 3 Stars
Payout Ratio
<60%
No
41%
Dividend Growth
& Yield
Dividend Yield
>3%
No
2.58%
Dividend Growth
>5%
Yes
9.30%
Chowder
>12%
No
11.88%
Valuation
Yield/Avg Yield
>1.1
Yes
1.27
Dividend Yield Theory Mid Point
Below Mid Point
Yes
Mid Point 77.
Low Point 42
P/E
Below Mid Point
Yes, but not forward PE
Median 13.64 Current 11.71 Forward 16.11
DRRM
~10%
Yes
Assuming 8% growth; projected return=10.05%
M* Estimate
<M* est
Yes
M* 70
S&P Estimate
< S&P cap IQ est
No
S&P Cap IQ 64


I see many risks with Dover. It is heavily tied with the energy sector which is in a deep slump. Also, Dover spun off Knowles, which is one of its high growth businesses and they don’t have anything to replace it. Lastly, the industrial sector has been completely hammered - just look at CAT, DE, etc, and you know it’s not good.


So why am I buying. Overall, I am buying into the dip. I believe DOV is pretty safe in terms of its financials. The dividends should be safe in the near term. I see some stagnation in growth, but I am holding this for 10+ years, so I am okay to slowly build up this position over time.


Fair Price Calculation


I use the dividend yield theory, PE analysis and DDRM for fair price calculation. Based on these methods, I estimate the fair price to be in the low 70s. Therefore, I believe DOV is trading at fair value.


Yield Theory


That's it for now! What do you think of DOV?

D4s

6 comments:

  1. Nice pick up with DOV. I have added to my position about a month ago and see it as my energy sector proxy. I still like it a lot long term but in November it has all been about adding to my health REITs and ADM when it started to yield over 3%. Thanks for sharing.

    ReplyDelete
    Replies
    1. Thanks DivHut! Yes - it is very much an energy proxy. I am also loading up on ADM and REITs. I look at add to my HCP and also add new positions on OHI, etc. These will be in my tax deferred portfolio.
      D4s

      Delete
  2. Really like DOV and hope to add it to my portfolio in the future. There's way too many companies that I'm finding that I want to initiate positions in or add to existing positions but sadly no capital available.

    ReplyDelete
    Replies
    1. PIP,
      Thanks fir sharing your thoughts. I really like DOV and the depressed prices are good for me to average down. I honestly don't know when the cycle will go the other way - but I am happy to sit, collect and reinvest the dividends.
      D4s

      Delete
  3. Nice buy at a good value. ADM is a great price right now. Momentum is terrible, long-term great entry point.

    ReplyDelete
    Replies
    1. Chimp, I assume you mean DOV. I agree the momentum is terrible. For ADM also. But the price for these solid dividend payers are very attractive. Can't miss a good sale.
      D4s

      Delete