Screening can turn up some good US stock values in today’s market (see my article “Investors Give up on Value Stocks – Should We?” for explanation). Below is an example in which I set the hurdles high, yet still had 7 leading companies clear every one.

The examples' importance is not the specific companies my screening produced. Rather, it’s the fact that well-known, high quality companies are priced so attractively that they can pass multiple stiff requirements. This is highly unusual and why it behooves investors to turn off the news programs and hit the computers with their own criteria. They likely will be surprised at the companies that score “desirable.”

By Keith Kohl

Energy is, and always will be, a profitable long-term play. You should know that by now. If you don't believe it, you're better off burning your cash for warmth.

The 2nd tenet of my investing blueprint is Act Like an Owner. The 8th tenet is Practice Patience. A great business generates wealth over time. Owners of privately held great businesses know they have something special that is worth holding on to and passing on. They are likely to be naturally patient in holding on to their businesses. I recently came across an example that powerfully reinforces this lesson and shows that the rewards of private business ownership are also available in the stock market.

I saw a comment on an investing forum where a contributor noted that Berkshire Hathaway (BRK.A) now enjoys a 27% dividend yield on its original purchase of Coca-Cola (KO). The stock currently pays a dividend of $1.76 on an annualized basis and Berkshire’s cost in the stock is $6.50 per share on a split-adjusted basis ($1.76 / $6.50 = 27%).

We recommend the common stock of Exxon Mobil (XOM) as a Contrarian Buy with unlevered appreciation potential of 40% to a McDep Ratio of 1.0 where stock price would equal Net Present Value (NPV) of $89 a share. Second quarter results released today displayed a reassuring recovery in downstream oil and chemical profits. The most distinctive advantage XOM has over its integrated oil industry peers is greater concentration on natural gas, the most rapidly growing large scale energy source, at 29% of NPV.

Interrupted by the issuance of shares in the acquisition of XTO Energy, aggressive stock repurchases resume at the rate of $3 billion for the current quarter in addition to the cash dividend of $2.2 billion a quarter. Essentially, a dividend yield of 2.9% a year doubles to a combined distribution yield of more than 6%. At the same time, the low financial risk implied by XOM’s minimal use of corporate debt means investors can own more XOM stock than that of more leveraged alternatives for the same risk to the investor. On the negative side, U.S. political leadership has been outspoken about intending to increase taxes on XOM and other successful companies. That may be contributing to a downward trend in stock prices and oil and gas prices with current quotes below 200-day or 40-week averages. We are hopeful that the downtrend reverses with U.S. elections approaching in the fall.

The Dividend Champions spreadsheet has been updated through 8/31/10

To download the latest version of the U.S. Dividend Champions spreadsheet or PDF, go here.