Dividends and Undervalued Companies: Manager Spotlight on Laureola

The goal of portfolio manager Laureola's Dividend Payers model is to outperform the market by investing in companies that are undervalued. This portfolio makes sure to focus on dividend-paying companies with strong credit profiles. In general, the profile attempts to invest in U.S. companies only, although some exceptions are made.

One of Dividend Payer’s top holdings is PH Glatfelter Co (NYSE:GLT). PH Glatfelter is a company that makes specialized paper and paper products including the carbon-free paper used for signing some credit card receipts. Luckily, since this style of receipt is being used less and less, and since many vendors don’t even make consumers sign receipts for purchases under a certain dollar amount, PH Glatfelter also creates papers used in book making, food packaging and labeling. The company has a low price to earnings ratio and a dividend yield currently around 3%. The stock did a nosedive in 2009 but has finally reached highs not seen since 2008.

Not surprisingly, Edison International (NYSE:EIX) (another top holding in the Dividend Payer portfolio) is a company that provides electric energy to parts of California. It is hard to imagine the intangible process of selling energy, but they both generate and distribute electrically generated power. One of the interesting things about Edison is that they acknowledge the environmentally challenging nature of electrical energy development and distribution. They also complete impact assessments before starting any project to ensure that the project will have minimal impact on the environment. Their price to book, price to sales and price to earnings ratios are all competitive and they offer about a 3.5% dividend yield. From 2002 to 2007, EIX enjoyed steady growth with minimal dips. In 2008 a drop in price began that did not start to correct itself until 2009. While the stock has remained consistently higher than its 2009 low, it has yet to regain the highs it enjoyed in 2007.