Thursday, February 19, 2009

Dividend payers of note

With (accurate) earnings proving to be a difficult metric to rank stocks I took a look at stocks which paid a dividend yield of at least 5%, had no long term debt but had a market cap over $100m. The list was short, coming in at 32 stocks. Top of the list was Eaton Vance Risk Managed Diversified (ETJ); it had a quoted yield of 10.2% and has a market cap of $1.2bn. According to the blurb:

Eaton Vance Risk-Managed Diversified Equity Income Fund (the Fund) is diversified, closed-end management investment company. The Fund's primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation. The Fund invests primarily in a portfolio of common stocks and index put options. Under normal market conditions, the Fund seeks to generate current earnings in part by employing an options strategy of writing put options on individual stocks and index call options with respect to a portion of its common stock portfolio.

Other than the September/October blip the chart isn't one for momentum traders. The former trading range looks to have dropped a notch and if it was to give up $14.82 support it could drift back to $11.35 as part of a low retest.

Dominion Resources Black Warrior Trust (DOM) is on the low end of the Market Cap range at $154m. It has a reported (but sustainable?) yield of 18%. The last quarterly payment made was in November 2008 at $0.91.

Dominion Resources Black Warrior Trust is a grantor trust formed to acquire and hold certain overriding royalty interests (the Royalty Interests) burdening proved natural gas properties located in the Pottsville coal formation of the Black Warrior Basin, Tuscaloosa County, Alabama (the Underlying Properties). The only assets of the Trust, other than cash and temporary investments being held for the payment of expenses and liabilities and for distribution to Unitholders, are the Royalty Interests. The Royalty Interests consist of overriding royalty interests burdening the Company’s interest in the Underlying Properties. The Black Warrior Basin covers 6,000 square miles in west central Alabama and contains seven Pennsylvania-age multi-seam coal groups in the Pottsville formation: the Black Creek, Mary Lee, Pratt, Cobb, Gwin, Utley and Brookwood coal groups.

Dominion has done well to recover from the October collapse but now has the challenge of consolidation resistance, plus a more general resistance from what was former support around the $20s in 2008. The big gap from $17 looks ripe for a retest so there may be a little weakness in its immediate future.

Third stock of note (which is not a resource company) is Biovail (BVF). It has a reported dividend yield of 12.71% and a market cap of $1.7B. It made a recent quarterly dividend payment of $0.38 in December.

Biovail Corporation (Biovail) is a specialty pharmaceutical company that applies advanced drug-delivery technologies to improve the clinical effectiveness of medicines. The Company is engaged in the formulation, clinical testing, registration, manufacture and commercialization of pharmaceutical products. Its main therapeutic areas of focus are central nervous system (CNS) disorders, pain management and cardiovascular disease. The primary markets for its products are the United States and Canada. Biovail has a portfolio of drug-delivery technologies includes controlled release, enhanced absorption, rapid absorption, taste masking, and oral disintegration technologies, among others.

At the start of the year Biovail (BVF) enjoyed a huge gap breakout to take it past declining resistance dating back to last March. The stock subsequently based around $11 which was a resistance level from late summer 2008. The next real challenge is resistance at $12.87 but much depends on it holding $10.48, the reaction low of 2009. Given that I have entered a Zignals YourCall for a move to $12.79 with a stop at $10.39. Lets see how it gets on.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts, and stock charts website