3 Light Blue-Chip DRIPs
01/16/2013 11:15 am EST
The power of compounding is best exemplified in dividend reinvestment plans, and these stocks are timely picks now, observes Charles Carlson of DRIP Investor.
"Light blue chips" are those companies lacking the size and seasoning of the well-known blue-chip stocks, but are nonetheless strong players in their industries. The following are reviews of three attractive light-blue chips poised for gains in 2013.
Eastman Chemical (EMN)
This company sells a variety of chemicals, plastics, and fiber products. The company was spun off from Eastman Kodak at the end of 1993. Eastman Chemical has been posting solid growth numbers, beating Wall Street's consensus earnings estimate in each of the last three quarters.
Record per-share profits of around $5.38 are expected when final figures come in for 2012, and profits should jump to $6.31 per share in 2013. The dividend was recently increased 15%, giving these shares a current yield of 1.8%. Eastman Chemical has solid Quadrix numbers, with an Overall score of 89 (out of a possible 100).
The stock has done well of late and could pull back should the overall market correct. However, investors who would like to add a chemical play to portfolios should consider these shares.
Eastman Chemical's direct-purchase plan has a minimum initial investment of $250. Subsequent investments are a minimum $25. There is no enrollment fee. Purchase fees are $2.50 plus 10 cents per share.
Dividend reinvestment fee is 2% of amount reinvested ($2.50 maximum) plus 10 cents per share. Selling fees are $15 plus 10 cents per share. The plan administrator is American Stock Transfer and Trust. For enrollment information call (877) 322-4908 or visit www.amstock.com.
ITC Holdings (ITC)
This is probably a stock most readers have never encountered. Yet, the firm is a top player in its field and worthy of the "light-blue chip" moniker.
The company is the largest independent electricity transmission company in the country. The firm acts as a conduit, transmitting power from generators to local distribution systems either through its own system or in conjunction with neighboring transmission systems.
I like companies that represent plays on utility infrastructure, and ITC is one of the more attractive opportunities in the group. The company has posted higher per-share profits every year since 2006-that includes the recession of 2008-2009-and record per-share profits are slated for 2013. The stock, yielding 1.9% and sporting a Quadrix Overall score of 86, is a solid buy for long-term investors.
ITC's direct-purchase plan has a minimum initial investment of $250. The firm will waive the minimum if an investor agrees to automatic monthly investments via electronic debit of a bank account of at least $50.
There is no enrollment fee. Purchase fees are $5 ($2.50 if purchases made with automatic monthly debit) plus 5 cents per share. Selling fees are $15 for a batch sale and $25 for a market order plus 12 cents per share. The plan administrator is Computershare. For enrollment information call (877) 373-6374 or visit www.computershare.com.
Valmont Industries (VMI)
This company designs poles, towers, and structures for lighting, wireless communications, and utility markets. The firm also provides irrigation equipment, as well as tubing for commercial and industrial applications. This amalgam of operations has been quite profitable for the firm.
Per-share profits will be up around 38% for 2012 when final numbers are tallied, and per-share profits should post a 12% gain in 2013. While the stock's yield is on the low side at 0.7%, dividend growth has been impressive. The dividend has more than doubled since 2008, with the most recent increase being a 25% bump in 2012. I expect another double-digit dividend increase in 2013.
The stock scores an impressive 95 for Quadrix Overall. Also, I wouldn't be surprised to see these shares split in 2013. The stock is a nice fit for any investor portfolio.
Valmont's direct-purchase plan has a minimum initial investment of $100. Subsequent investments are a minimum $100. There is a $10 one-time enrollment fee, but no ongoing purchase fees. Selling fees are $15 for a batch sale and $25 for a market order plus 12 cents per share.
The plan administrator is Wells Fargo Shareowner Services. For enrollment information call (800) 468-9716 or visit www.shareowneronline.com.