Here my second analysis for Polliesdividend. I’ve been less active around my blog lately. Not that I’ve lost interest in it. Far from it. The last weeks have been pretty crazy with work and in my private life. But don’t worry I have plenty of ideas to talk about and stock to invest. Now I only need a little bit of free time 😉
This analysis is on American States Water Company (AWR).
Company (from google finance): American States Water Company (AWR), is the parent company of Golden State Water Company (GSWC) and American States Utility Services, Inc. (ASUS) and its subsidiaries (Fort Bliss Water Services Company (FBWS), Terrapin Utility Services, Inc. (TUS), Old Dominion Utility Services, Inc. (ODUS), Palmetto State Utility Services, Inc. (PSUS) and Old North Utility Services, Inc. (ONUS)). AWR operates in three segments: water, electric and contracted services. Within the segments, AWR has two principal business units, water and electric service utility operations, conducted through GSWC, and contracted services conducted through ASUS and its subsidiaries. GSWC is a California public utility company engaged principally in the purchase, production and distribution of water in 75 communities in 10 counties in the State of California.
Dividend Aristocrat: American States Water Co. is paying Dividend for 60 years in a row! And is a Dividend Champion. It’s number 2 on the CCC-list form David Fish! Duh! That’s a Passed!
Dividend Yield > 2.5%: The dividend Yield of AWR is 2,81%. It’s way above the industry average of 1.8%. AWR has a healthy dividend that can offer investors higher returns if they choose to reinvest it. American States Water Co. passed the second Pollie-code.
Dividend payout <70%: The current dividend is $0.85 and AWR has an earnings projection of $ 1.47. The dividend payout is roughly 55%. This is way below the maximum ratio. So also passed for this point.
DGR 1 year > 0%: The dividend growth rate for 1, 3, 5 en 10 years are 19.7, 13.5, 8.7 and 5.6. This negative trend is makes my eyebrow twitch. This is not what I like to see. I haven’t found a good explanation for this decline. If you know the reason, please let me know. For this moment it is a fail for AWR on the fourth Pollie-code.
P/E-ratio < 15: This is an easy metric that is well documented. It can be used as a quick metric to identify stocks that may potentially be undervalued. I use this to identify stocks that may be discounted compared to the overall stock market. The industry average is 15.5. AWR has a current P/E ratio is 20.1. This is another fail on the Pollie-code.
EPS > 0: The EPS is 1.60. So AWR also passed the sixth Pollie-Code
ROE > 10%: Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. The current ROE is 13.1%. Another passed.
Market Cap. > 100M: No problem at this point. More than 1.174 $Mil. Another passed.
Chowder Rule > 12: Named after “Seeking Alpha” member Chowder. This is a method of identifying candidates for purchase based on a combination of yield and (5-year) dividend growth rate. When the sum of these elements is above 12%, the company
presents an attractive entry point (8% for utilities). When the figure is above 8%, an existing holding is still considered worthy of being retained. The current Chowder rule is 11.5. So AWR, as a utility stock, also passed the ninth Pollie-code.
Stock price 52wk high-25%: The 52 wk high and low are: 34.00 and 25.07. This means that AWR will be in my buying zone when the stock price is below 31.77 ((34.00-25.07)*0,75 + 25.07).
Beta: I think it’s important to have low Beta stocks in my portfolio. This helps to have a stable income all the time, even when the market has a rapid decline. The Beta for AWR is 0.68.
Conclusion: When I look at the analysis, AWR passed 8 out of 10 from the Pollie-code. The Pollie-code that failed was the P/E-ratio and the DGR. Considering all the data AWR at this moment is not a buy for me. The biggest problem is the decline in DGR. It is a great stock but not suitable for a buy for me (yet).
What are you – the readers, thoughts on American States Water Company? Is it a buy? Do you know why there is a decline in DGR?
Please comment on my analysis and thanks for stopping by!