Are you carrying around dead weight? 11 stocks to sell from your passive income dividend portfolio…

By: ispeculatornew
Date posted: 04.21.2011 (4:53 am) | Write a Comment  (3 Comments)

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Earlier this month, we did some screening looking for dividend stocks that had good potential in our free newsletter. Our starting point was a bit different as we were looking for companies that were already paying a dividend yield of 5% or more. We did come up with 3 results that are now being discussed in our newsletter, for more information, just sign up here:

In any case, one of the comments that I received after sending out my analysis of the first name that came out was that I should be more focused on dividend growth. I couldn’t agree more in general and I have often discussed the importance of looking for dividend growth. That got me thinking… how many of us carry dead meat in our portfolios? I bet we all do to some extent right? I mean it’s always tempting to go after stocks that already offer a high dividend yield. So I did some more screening and came up with the worst of the worst…:

Weyerhaeuser Co (WY)
Masco Corp (MAS)
Nicor Inc (GAS)
Sempra Energy (SRE)
Northeast Utilities (NU)
CenterPoint Energy Inc (CNP)
H&R Block Inc (HRB)
NiSource Inc (NI)
Constellation Energy Group Inc (CEG)
Molson Coors Brewing Co (TAP)

Why are these companies to sell and how did I come up with them?

First off, I simply took all companies in the S&P500 that pay a dividend of 2% or more. From there, it was quite simple. Do any of these companies have sales declining by 5% (or more) on average over 5 years? I mean you have to do very badly to regress by so much over 5 years don’t you think? Sales are the number one way for me to find this dead meat because a company that has declining sales will usually have declining profits and eventually declining dividends. There’s always a possibility that declining sales would be caused by the sale of a unit or part of a company and further analysis will be required for that.

Here are the complete numbers for these companies:

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Do you agree? What are your thoughts and would you own a company that has such negative momentum in its underlying business? If so, under what circumstances?

Weyerhaeuser Co (WY)
Altria Group Inc (MO)
Masco Corp (MAS)
Nicor Inc (GAS)
Sempra Energy (SRE)
Northeast Utilities (NU)
CenterPoint Energy Inc (CNP)
H&R Block Inc (HRB)
NiSource Inc (NI)
Constellation Energy Group Inc (CEG)
Molson Coors Brewing Co (TAP)
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3 Comments

  1. Comment by Nate — April 21, 2011 @ 8:55 am

    With respect to your screen, can you please go further into the specific details for Altria? You’ve posted a ‘Sales change 5 year average’ of -18.98%’.

    Looking it up, net revenues increased from 2008 to 2009 to 2010. Revenue was higher in 2007 but that was because in 2008 Altria spun off Philip Morris International, which was a huge chunk (about $60 M) of the revenues. Did your screen account for PM revenues as well?

    What I mean is, a lot of times people don’t take into account the spinoff when considering Altria, so their numbers are thrown off, and I’m wondering if that’s the case here. Would appreciate clarification.

  2. Comment by IS — April 21, 2011 @ 1:10 pm

    @Nate – No doubt, it’s very true and that’s why I had discussed spinoffs because they would cause this type of problem. I will take out MO now that you let us know, thanks for the comment. Others might have similar reasons as well which is why this is just a preliminary analysis.

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