Market Wrap-up for Mar. 31 - Winners and Losers from Q1
Daniela Pylypczak-Wasylyszyn Mar 31, 2015
Today marks the end of the first quarter of 2015. And while major equity benchmarks are on track to eke out small gains for Q1, some companies have managed to fare much better than others. Today, we highlight some of the best and worst performers of the quarter.
To narrow down the dividend-paying stock universe, I will only mention those companies with a DARS rating of 3.2 and higher and a dividend yield of at least 2.0%. You can use our Dividend Stock Screener to create your own list. Note that YTD returns are as of 3/31/2015 10:30 ET.
The Top Performers
Kraft Foods Group (KRFT ), Up 41%
If you looked at the chart of this dividend favorite it doesn’t look too impressive up until the middle of last week when the stock skyrocketed from roughly $61 a share to about $88. The jump occurred after the company announced its merger agreement with privately-owned ketchup maker, H.J. Heinz (which happened to be jointly owned by Buffett’s Berkshire Hathaway and 3G Capital).
The merger makes Kraft the third largest food and beverage company in North America, and the fifth largest in the world. With the merger, Kraft shareholders will be receiving a 49% stake in the combined equity, as well as a special cash dividend of $16.50 per share. Those lucky enough to hold KRFT have certainly benefited this quarter.
Darden Restaurants (DRI ), Up 19%
Owner of the restaurant chains Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, and Seasons 52, Darden stock has gained an impressive 19% year-to-date. In it’s last earnings release, the company beat analyst EPS and revenue estimates and lifted its FY2015 outlook. In the last few quarters, the company has focused on cutting costs and increasing sales across its chains, boosting the once-struggling company’s profit margins.
Extra Space Storage (EXR ), Up 16%
This REIT, which operates over 651 self-storage properties, logged in an impressive 16.5% gain during the first quarter. EXR, which has a market cap of roughly $7.9 billion, easily beat analyst earnings and revenue estimates in its most recent earnings results. The REIT has also increased dividends over the last four years and currently yields 2.75%.
The Worst Performers
Seagate Technology (STX ), Down 21%
Seagate Technolgy, a manufacturer of hard disk drives, fell over 20% in the first quarter. Despite its sour performance and underwhelming earnings report, many analysts beleive the company is far into oversold territory and remain bullish on STX. The company has increased dividends every year since 2011 and currently yields 4.13%. To put things a bit into perspective, STX’s share price has gained over 175% over the last five years. The stock is off roughly 23% from its all time high of about $68 per share, seen in late December of 2014.
Empire District Electric (EDE ), Down 16%
This electric utilities company posted an over 16% decline in the quarter, taking a steep hit at the beginning of February. By March, the company recorded a significant increase in short interest, a bearish sign for most investors. And though EDE managed to raise its quarterly dividend last year by 2.0% and reported earnings in-line with expectations, the stock continues to struggle. Since falling more than 20% from its high in January of 2015, EDE’s price has traded narrowly in the $24.7 – $25.03 range.
Bank of Montreal (BMO ), Down 15%
This dividend-favorite struggled in the first quarter of 2015, dropping roughly 15.7% YTD. In its last earnings report, the bank posted lower income and earnings, missing analyst EPS estimates. BMO warned investors that the next few months will likely see more headwinds, due primarily to the steep drop in oil prices, changes in long-term interest rates, and a weaker Canadian dollar. The bank did however raise its dividend at the end of last year; the stock currently yields roughly 5.38%.
An Uncertain Outlook
While many dividend-paying companies easily outperformed the broader market, a lot of stocks did not fare as well. Even more so, the last earnings season had some surprising upsets, with some heavy-weight firms reporting narrower profit margins and announcing lower outlooks. We encourage all of you to focus on fundamentals before deciding to scale into or out of any positions in the upcoming quarters, especially given the fact that most equities are in overbought territory.
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