Recently I read a book on stock screening entitled The Standard & Poor's Guide on Selecting Stock (here). Later I used the Screener function of ShareInvestor.com to select some income stocks for my customers. The main criteria is high DY for the past 3 years and the secondary criteria is PER of 15 times (slightly lower than market PER now) and Net Debt to Equity of 0.5 times (to avoid stocks with high borrowings). The list I have gotten is appended below:
Diagram 1: Screener Results for Stocks with High Dividend Yield (Source: ShareInvestor.com)
The list includes 4 REITs and 2 companies. As I am not interested in REITs, that leaves me with BJToto and MediaC.
Fianncial Performance & Dividend Record: BJToto & MediaC
I have appended below the quarterly P&L, profit margin and Dividend for BJToto and MediaC below:
Diagram 2: BJToto's last 42 quarterly P&L & Dividend Record
Diagram 3: MediaC's last 28 quarterly P&L & Dividend Record
Research Reports: BJToto & MediaC
Then I referred to Kenanga's research reports on these 2 companies. I appended below the Summary of Earnings tables for both companies.
Table 1: BJToto's Summary Earnings (Source: Kenanga Research)
Table 2: MediaC's Summary Earnings (Source: Kenanga Research)
A quick look at the Summary of Earnings tables will reveal that EPS for MediaC is projected to decline from 9.3 sen for FY2014A to 8.8 sen for FY2016E. With that, its DY will drop from 6.7% to 6.1%. On the other hand, BJToto's EPS is expected to rise 28 sen for FY2015E to 30 sen for FY2017E. DY would rise from 7.5% to 8.1%. However, it will be noted that MediaC has lower PER & P/BV than BJToto. Kenanga placed a Fair Value of RM0.71 for MediaC (currently at RM0.68) and a Fair Value of RM4.25 for BJToto (currently at RM3.30). Based on the foregoing, I would prefer BJToto to MediaC.
Technical Outlook: BJToto & MediaC
We will now look at the chart of BJToto. I always have problem looking at BJToto's chart because I feel that the price data has not been adjusted accordingly.
This stock did a Rights Issue of ICULs in 2002 on the basis of RM27 of nominal value of ICULs for every 20 BJToto shares held. At the same time, it proposed a Special Dividend of 170% (comprising of 45% tax exempt & 125% less tax of 28). The amount of this Special Dividend receivable was RM1.35 for every BJToto share owned (or RM1350 per 1000 shares owned). That's exactly the same as the subscription amount of RM1350 nominal value of ICULs for every 1000 shares owned.
The conversion price of the ICULs is RM1.20 and shall be by way of surrendering 1 ICUL plus cash payment of RM0.20. So effectively, it is a Bonus Issue of 1-for-1 (except for the negligible 20 sen cash payment for conversion of ICULs to share). Chart 1 is the unadjusted chart from ShareInvestor.com while chart 2 is the adjusted chart, with adjustment made by myself.
Chart 1: BJToto's unadjusted monthly chart as at April 7, 2015 (Source: ShareInvestor.com)
From Chart 2, we can see that BJToto broke its uptrend line, SS in late 2008. Since then, it had seesawed within a triangle, ABC. It broke to the downside of that triangle in 2013 and is now resting at the immediate support of RM3.30. If this support fails, it should find support at the horizontal line of RM3.00.
Chart 2: BJToto's adjusted monthly chart as at April 7, 2015 (Source: ShareInvestor.com)
MediaC has also broken its long-term uptrend line, SS at RM1.10 in 2013. It has recently tested its horizontal support at RM0.65.
Chart 3: MediaC's monthly chart as at April 7, 2015 (Source: ShareInvestor.com)
Based on technical consideration, I believe both BJToto & MediaC's downside to be fairly limited.
Conclusion
Based on the above, I believe both BJToto & MediaC would give steady income while we wait for a recovery in their share prices. As an income stock, BJToto holds a slight edge over MediaC as its dividend payment is quarterly as compared to half-yearly for MediaC. In addition, BJtoto's DY is higher & is expected to inch up while MediaC's dividend may dip due to lower bottom-line.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, BJToto & MediaC.
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