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WALL STREET, CALIFORNIA | STREET STRATEGIES / JON D.
MARKMAN

Dividend and Conquer

Two money managers track stocks' yields to find issues worth buying.

December 03, 1996|JON D. MARKMAN

Weiss says her list of undervalued and rising stocks has slightly outperformed the S&P 500 this year; her 10-year record is among the best tracked by Hulbert Financial Digest, a newsletter that tracks other newsletters' performance.

Her current advice: "Anyone who sticks to good quality and good value doesn't have to do anything exotic to consistently beat the market averages. It's all about consistency--investing not for today or tomorrow, but at least three years down the road."

Street Strategies explores tactics that the nation's savviest private and institutional investors use to maximize gains and minimize risk. Jon D. Markman is a Times staff writer. He can be reached at jon.markman@latimes.com

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Hunting for Higher-Dividend Stocks

Nancy Tengler's Choices .

*--*

Mon. Div Company Ticker close yld P/E* RDY* General Mills GIS $64.38 3.1% 25 160% Bristol-Myers Squibb BMY 115.75 2.6 26 140 Weyerhaeuser WY 47.13 3.5 15 170 J.C. Penney JCP 54.13 3.9 16 200 Philip Morris MO 103.25 4.6 14 240

*--*

Comments

General Mills

Nation's No. 2 domestic cold cereal producer, it took 3% market share from Kellogg recently; strong innovator; RDY at 30-year high; increasing dividends 6% a year; buying back 2% of stock a year; with 12% earnings per share growth expected, implied total return is 15.5%. Expect double in 3 years.

Bristol-Myers Squibb

Cheapest drug company on relative-yield and P/E basis; has three drugs with blockbuster sales potential (anti-cholesterol, anti-cancer, anti-diabetic); Clairol unit reviving amid aging of baby boomers; recently linked executive compensation to stock price.

Weyerhaeuser

Largest private owner of premium softwood lumber in the world, 20 million acres; CEO focused on generating superior stock returns; insider ownership 12%; highest RDY ever; has never cut dividend; annual compound growth rate 28%; highest-rated forest-products company.Largest private owner of premium softwood lumber in the world, 20 million acres; CEO focused on generating superior stock returns; insider ownership 12%; highest RDY ever; has never cut dividend; annual compound growth rate 28%; highest-rated forest-products company.

J.C. Penney

Most attractive retailer on RDY basis; nation's largest retailer of Nike products and diamonds; largest operator of beauty salons; as cheap as it's ever been; other times this low have been followed by double and triple stock price performance over 2-3 years.

Philip Morris

Price depressed by litigation risk and anti-tobacco campaigns, but only 17% of revenues come from domestic tobacco sales; foreign growth explosive; relative yield at all-time high; dividend raised 20% three times; stock up 100% since Marlboro price cut of April 1992; expect at least a double in 3 years.

Geraldine Weiss' Choices .

*--*

Mon. Div Percent Percent Company Ticker close yld P/E* upside downside AMP AMP $38.63 2.6% 17 126% 15% Dun & Bradstreet DNB 22.63 3.9 NA 127 25 Bob Evans Farms BOBE 13.00 2.5 23 123 0 Ennis Business Forms EBF 9.63 6.1 10 209 0 Ethyl EY 9.00 5.6 12 250 11 The Limited LTD 18.25 2.2 14 456 10 Luby's Cafeteria LUB 21.75 3.6 13 182 0 Enova ENA 22.25 7.0 11 78 10 Consolidated Edison ED 28.75 7.2 10 103 18 Delmarva Power DEW 49.75 7.7 11 205 19

*--*

Comments

AMP

Electronics equipment firm offers high-tech exposure; very low debt.

Dun & Bradstreet

Price depressed mostly because of restructuring; no debt.

Bob Evans Farms

Price irrationally depressed by infighting among family insiders; no debt

Ethyl

Chemical manufacturer

The Limited

Women's apparel chain very cheap on historical basis; generous, regular dividend increases.

Luby's Cafeteria

Cafeteria operator in Texas and Midwest has recovered from shock of shooting rampage at Killeen, Texas, outlet; regularly raises dividend.

Enova

New name for San Diego Gas & Electric; stock is in a rising trend.

Delmarva Power

Utility generates power in Delaware, Maryland, Virginia. Competitive in deregulated world.

*Key: RDY: relative dividend yield; P/E: price-to-earnings ratio, based on trailing 12-month earnings per share

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