As I was editing the notorious 101 Centavos Dividend Portfolio that is featured on this site, it occurred to me that some of the dividend picks shared certain characteristics that would not be out of place wherever banjos are playing and teeth are few and far between.
What do rednecks call duct tape? Chrome.
Lot of blog posts in the personal finance arena devoted to retirement. Have your house paid off, do whatever you want, when you want it, with good friends and quality time. Well, if you think about it, there’s plenty of rednecks how have that kind of lifestyle right now. Now, they may not have much in the way of material goods (call them minimalists), but they sure can go fishin’ when everybody else is commuting. They have developed sources of reliable passive income. Sure, it’s in the way of food stamps and welfare assistance, but they sure don’t have to expend a lot of effort for it.
Vast swaths of the country are painted red(neck). It just could be, that’s about as reliable a consumer constituency as you could hope to find. Hell, we could be ridin’ a gravy train on biscuit wheels.
Armadillo… it’s the other ‘possum meat. Only on the half shell.
The portfolio, as it now stands, has more than a couple of companies that cater to this consumer group. Take a gander at this:
Beer, cigarettes, pork rinds and trailer parks. Seems like a natural fit to me. Yeee-ha!
Famous redneck last words: “Hey y’all, watch this!”
So what other companies could be a good inclusion in this profitable niche?
Can’t hardly find a redneck that’s not well armed. Trouble is, many well-known names are either foreign companies or privately owned, or if publicly traded, don’t really offer a good dividend.
Case in point is Ruger, officially known as Sturm, Ruger & Company (NYSE: RGR). Good profitable company, with high ROA and ROE rates than are purtier’n a speckled pup (as the saying goes). The company just churns good and dependable products. Their recently introduced lines of compact pistols and revolvers designed for concealed carry has been hugely popular and profitable. The endlessly customizable Model 10/22 rifle has almost a cult following. And their .38 and .357 revolvers have a well-deserved reputation for being indestructible.
But they’ve only recently (and spottily) started paying a dividend, and at a skimpy 1.18% yield, not exactly a barn-burner. Also, as you can see from the five-year chart below, their stock price has gone ballistic (hah! pun entirely intended) in the last year from below $20 to over $40 a share. Don’t feel much like chasing trends.
Perhaps a better candidate for dividend investing would be Olin Corporation (NYSE: OLN). They’re the outfit that bought out the ammunition side of Winchester. Most of their business, about 65%, is dedicated to the commodity chemical sector, producing Chlor Alkali products like bleach and caustic soda. The rest is ammo. The dividend yield is a not bad $0.20 a share or 3.62% per annum. Good Steady Eddie company (low P/E), been around forever, and paying divvies since the late 80′s. Good profit and ROI numbers, and a not too outrageous price-to-book.
I have some minor doubts about OLN‘s enjoyed synergy between the two business groups. Sort of like making lawn chairs and steel beams, or pretzels and fighter jets. But only it’s a minor concern. Nothing like compared to doggies like Smith and Wesson. What a turd of a stock. The management must be as useful as chickenshit on a pump handle. Shameful way to screw up a great brand.
What do a divorce in Arkansas, a tornado in Kansas and a hurricane in Florida have in common? Someone’s fixin’ to lose ‘em a house trailer.
Illinois Tool Works (ITW – 2.79% yield) - Bubba’s gotta work somewhere…
Molson Coors Brewing Company (TAP – 2.91% yield) – When the Bud runs out, Coors is a good second choice. Molson, on the other hand, only for the fancy folks in the double-wides (err, sorry, manufactured homes). Or Canadians.
So, dear readers, what do you think about this portfolio concept? Nuttier’n than a tree full of squirrels, or smarter than a barn full of owls?
Any ideas on which undervalued dividend-paying stock could be a good fit for this under-served consumer segment? I’m open to suggestions.