| 07/03/2009: | Dropped from Database: LEA |
| 06/29/2009: | Added to Enrollment Service: NSC |
| 07/02/2009: | Change in Information: HCBK and More |
| 07/01/2009: | Capsule Review Updated : WY and More |
Login Below
DRIP Investing
Financial Independence
Is Within Reach.
Each of us has the ability to take ownership of our own financial future. You can use the same strategies as wealthy investors, at a fraction of the cost. We will show you how--and help you to do so.
Vita Nelson, Editor & Publisher
Stock Buybacks
A ccording to preliminary results, S&P 500 companies spent $30.8 billion on stock repurchases during the first quarter of 2009, down 73% from a year earlier, and the lowest level since the second quarter of 2003.
But some companies are still buying back shares. And those companies are worthy of a closer look. Why? For three good reasons: Corporate funds being allocated for buybacks indicate companies that:
1. Have the cash flow to do so, which means they are not hurting financially.
2. See their shares as undervalued.
3. Have confidence in their future prospects.
A good example is Burger King (BKC), the fast-food restaurant chain. Management has been authorized to repurchase $200 million worth of its shares, or about 11,7 million shares at current prices, equaling 8.7% of the outstanding shares. The company is about to launch its BK® Kids Fresh Apple Fries, distributing to approximately 10,000 supermarkets nationwide in the fall. These apple fries are fresh-cut, skinless red apples sliced to resemble French fries. Since introduced last year, BKC has sold more than 29 million servings at its restaurants. Management feels it has a winner with both parents and kids.
Another company that appears to have significant upside potential is Supervalu Inc. one of America’s largest food wholesalers and retailers. It posted a one-time, non-recurring charge of $3.5 billion last year for the impairment of goodwill and intangible assets. Absent that charge, SVU earned $2.20 per share in fiscal 2008 (ended in February 2009), compared with $2.76 in 2007. A buyback program has been authorized to purchase up to $70 million worth of the company's common stock. This comes after the repurchase of 641,500 shares in 2008, at a cost of $16.6 million. Also, $519 million in company debt has been tendered in connection with a cash tender offer to purchase up to $975 million of outstanding notes. Paying down debt and reducing share count will have a very positive effect on future earnings. The stock has strong upside potential, while the dividend yield of over 4% can only add to the total return.
A few companies qualified for this month’s portfolio but were not included because they were featured in recent issues. These companies are ExxonMobil, Medtronic, Tim Hortons, and Johnson & Johnson.
Insider ownership of 10% or more for companies on this month’s list are as follows: Aetna, 15%; American Greetings, 53.1%; C.R. Bard, 23.4%; Burger King, 65.9%; Cooper Industries, 29%; Harleysville Group, 60.6%; Nordson, 35.3%; Supervalu, 21.1%; UMB Financial, 28.9%; United Technologies, 17.7%; Wal-Mart, 43.6%; Weyerhaeuser, 28.1%; and W.P. Carey, 15.2%.
As usual, to be included in this portfolio, each selection had to have passed muster with our panel of experts, Bob Briechle, Dave Fish, and Mike Burke. Companies with fees are indicated with an !. Make larger investments (even if less frequently) to keep fees to no more than 1%. For instance, for a DRIP with a fee of $2.50, invest at least $250.
Become enrolled in Direct Investment Plans (also known as Dividend Reinvestment Plans or DRIPs) of any of the approximately 1000 companies currently available through the Temper Enrollment Service
Invest through the only DRIP Mutual Fund MP 63 Fund (DRIPX) is made up of 63 companies, all of which offer investor-friendly DRIPs Closing NAV | Latest Month-End Performance and Top 10 Holdings
