Time Warner Inc. (NYSE: TWX) pays a 2.66% dividend with an earnings to dividend payout ratio of 36.7%. Its forward PE barely exceeds 11. At less than 8%, the company’s return on equity (ROE) is in the lowest of the service sector companies listed here. In Monday trading, the company’s shares closed at $35.34, up 0.6%. The 52-week trading range is $27.25 to $38.36. Time Warner Inc. trades at $35.34 a
nd has an implied upside of about 17.5% to the Thomson Reuters consensus target of $41.55.
Time Warner Cable Inc. (NYSE: TWC) pays a 2.58% dividend with an earnings to payout ratio of around 42.5%. The cable concern posts current-year earnings 18.5% higher than last year’s net. Its price to free cash flow is less than 13, among the better P/FCF numbers in this lineup of yield-oriented companies. Time Warner Cable’s shares closed at $74.40, down 0.32%. The 52-week trading range is $49.11 to 78.71. Time Warner Cable has an implied upside of about 12% to its consensus price target of $83.30.
The McGraw-Hill Companies, Inc. (NYSE: MHP) pays a 2.49% dividend with a payout ratio of 34.71%. Its forward PE is less about 12.7. Its price to free cash flow is less than 14.7, among the better P/FCF numbers from companies on this list. The company’s ROE is almost 41, highest among these companies. In Monday trading, the McGraw-Hill’s shares closed at $40.17, up 1.41%. The 52-week price range is $26.57 to 43.2. The McGraw-Hill Companies is still back above $40 at $40.17, and that leaves an implied upside of only about 11% to the $44.71 consensus price target from Thomson Reuters.
Brinker International Inc. (NYSE: EAT) pays a 2.3% dividend with an earnings to dividend ratio a tad over 35%. Its price to free cash barely exceeds 13. The restaurant concern boasts a ROE a touch less than 25. Its current-year earnings are up a reported 43% over last year’s net. In Monday trading, Brinker International’s shares closed at $23.91, up 1.49%. The 52-week price range is $13.69 to 25.96. Brinker International trades at $23.91 and the stock has an implied upside of 7.4% to the consensus price target of $25.68. This is one of the lower upside stories in the screen, but perhaps that is because of the gain of more than 71% from its 52-week low.
The Interpublic Group of Companies, Inc. (NYSE: IPG) pays a 2.1% dividend with a low earnings to dividend ratio less than 20%, best among these companies. A player in the advertising segment, this company sports a price to free cash flow barely exceeding 13. Its current-year earnings are up a reported 151% over last year’s net. Its ROE is 14%. In Monday trading, the company’s shares closed at $11.45, up 0.79%. The 52-week trading range is $6.79 to 13.22. Interpublic Group trades at $11.45 and that implies upside of almost 30% to the $14.87 consensus price target from Thomson Reuters.
Dividend screens matter for investors. Understanding the “how and why” these dividends matter and how and why they are capable of rising in the years ahead is what matters even more. When you have data screens that vary from source to source and that is often not 100% accurate, it makes screening companies even that much more difficult. As we tell investors regardless of their objectives and regardless of their goals, “Always understand what you are investing in.”
Jon C. Ogg and Jim Berdou
