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Dividend Stock Review: Newell Rubbermaid (NWL)

I have purchased a few shares of Newell Rubbermaid (NWL) and will look to purchase some additional shares of at the stock as the consumer products market starts to make a comeback. Here is a review of NWL:

Newell Rubbermaid (NWL) is a global marketer of consumer and commercial products with sales of approximately $6 billion and a strong portfolio of brands, including Sharpie®, Paper Mate®, DYMO®, EXPO®, Waterman®, Parker®, Rolodex®, IRWIN®, LENOX®, BernzOmatic®, Rubbermaid®, Graco®, Calphalon®, Levolor® and Goody®. The company is headquartered in Atlanta, Ga., and has approximately 22,500 employees worldwide.

Products are sold through four business segments: cleaning, organization & decor (33% of 2007 sales), office products (32%), tools & hardware (20%), and home & family (15%). About 28% of 2007 sales were made outside the U.S. Sales to it's largest customer, Wal-Mart Stores and its subsidiaries, amounted to about 13% of sales in 2007.

NWL has four major strategic initiatives: 1) Create consumer-meaningful brands. The company believes that consumer-meaningful brands create more value than products alone, and that big brands provide NWL with the leveragable economies of scale. 2) Leverage One Newell Rubbermaid. NWL strives to benefit from the sharing of best practices and the reduction of costs achieved through horizontal integration and economies of scale. 3) Achieve the best total cost. NWL's objective is to reduce the cost of manufacturing, sourcing and supplying product on an ongoing basis and to leverage the company's size and scale, in order to achieve a best total cost position in relevant product categories. 4) Nurture 360-degree innovation. NWL has broadened its definition of innovation from product invention to the successful commercialization of invention.

NWL's growth strategy emphasizes internal growth, supplemented by selectively acquiring businesses with prominent end-user focused brands and improving the profitability of such businesses through the implementation of the company's strategic initiatives. Also, NWL is expanding from a U.S.-centric business model to one that includes international growth as an increasing focus.

NWL has struggled since its acquisition of Rubbermaid in 1999 to resume a consistent pattern of growth in revenues and earnings. Current leadership has been focused on improving operating margin, which have improved to 12.9% operating margin, it is still to be seen whether it can return to the pre-Rubbermaid level of better than 15%.

S&P rates NWL a 3 Star Hold rating with a 12 month target price of $19. The current price of NWL as of 10/3/08 is $16.23 with a current yield of 518%.

I believe NWL's new leadership will create better innovation and efficiency, and continue to shed lower margin, often resin-intensive product lines and invest in more profitable categories. When the consumer products market starts to improve, NWL will be positioned to gain market share through better consumer research and greater product innovation.

Disclosure: The Div Guy owns share of NWL at the time of this post.

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