Value Investing / Main Index / previous / next

March, 2006


The last time we checked, our relatively high dividend and low risk stock lists had provided an average gain of about 6%, before income from dividends had been added in, assuming one had bought them the next business day following our official issue date (the 21st of each month) and held them for a year (technically for a year-and-a-day, to qualify for long-term capital gain tax provisions), this at a time when the S&P 500 had barely been positive at all, even after dividends were added in, on a compound annual total return basis. In other words, our low risk, high dividend recommendations, on average, beat a major market index and with lower risk of permanent loss of capital.

While past performance, this time as always, is no guarantee of future returns, and each investor again is urged to carry out his or her own careful due diligence before purchasing any asset, whether recommended here or otherwise, it may be useful to do this exercise anew. Chances are, the securities picked will, taken as a group, once more have somewhat lower volatility and yet better returns than the major averages.

Here, then, are ten new candidates in this category, each of which has a dividend at least 50% above the average US markets yield (about 1.6%), relatively low debt, a dividend payout ratio of .5 or below, positive free cash flow, and at least one low price to value ratio (i.e., low P/E, P/BK, P/S, or P/CF) in its favor. I would recommend that, unless one is using a tax deferred account for such investments, any of the selections chosen be held for a year and a day or more and then reevaluated.

Chevron Corp.CVX$57.188.743.10%0.270.690.21
Dataram Corp.DRAM$5.767.733.60%
Ennis, Inc.EBF$19.6013.293.20%0.440.870.40
Friedman Ind.FRD$8.7311.373.80%0.410.330.00
Golden Telecom, Inc.GLDN$30.0014.432.70%0.391.630.01
International AluminumIAL$39.5211.843.10%0.360.640.00
Paula FinancialPFCO$1.9310.883.20%0.470.660.09
A. Shulman, Inc.SHLM$24.0820.032.40%0.380.500.11
Unitrin, Inc.UTR$49.3313.423.50%0.461.100.23
Worthington Ind.WOR$20.3412.763.40%0.430.590.45

(In the next issue: A Fresh Look at Portfolio Allocation)


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

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