I got to know one company on my current watch list very well one summer, while working in the mail room of my father’s law firm. This was the mid 1980s. E-mail wasn’t even a Jetson’s fantasy. The computers that were around at the time were as big as a Smart car. Needless to say, there was a mountain of mail that needed to be metered daily. The Pitney Bowes (NYSE: PBI) postage meter became one of my best friends that summer.

When the ink ran dry, I’d fill it back up with the little bottles of red ink from Pitney Bowes. When the tape on which the postage for packages was printed was used up, I’d replace the roll with new tape from Pitney Bowes. And when the postage ran out, I’d schlep the detachable part of the postage meter five blocks, in the summertime, in the South, to the post office to buy more postage. That was supplied by the U.S. Postal Service. But I’d bet money Pitney Bowes got some kind of action from that deal.

That was nearly 25 years ago. I’m out of the mail room now and my experience during those summers told me that I didn’t want to be an attorney. The world is much different now, and although physical mail isn’t much different (except for price), Pitney Bowes, like all smart companies, has quietly changed as well.

E-mail, Skype, texting… all of that is awesome. But there are a lot of things that still have to mailed the old-fashioned way. Registered mail, for example (although, in my experience, nothing good comes via registered mail), needs the post office or some other carrier to ensure physical delivery and careful handling. Pitney Bowes is the largest manufacturer of mailing systems on the planet. It also provides document management equipment as well as facilities management services. It practically owns the space. Even better, Pitney Bowes has a large recurring revenue stream. The ink and tape I would wrestle with as an office boy? Pitney sells them by the gallon and the mile. That’s what supports the company’s Steady Eddie cash flow.

Google “PBI dividend” and you’ll get about 57,000 results, most of which are articles listing high-dividend stocks. Pitney Bowes is a perennial member of those lists. The company is even a member of the hoity-toity, Dividend Aristocrats club, which Standard and Poor’s maintains to keep track of companies that have maintained or raised dividends for 25 years or more. Good company to be in. [Read StreetAuthority’s Lisa Springer giving her favorite Dividend Aristocrat picks in this article.]

However, at least to me, it seems that while Pitney Bowes is always on the list of everyone’s favorite dividend stocks, there’s a lack of in-depth explanation as to why. Analyst coverage is also a little skinny. It seems that Goldman Sachs and Deutsche Bank appear to be the only big firms to follow the company, which surprises me. So, maybe we should drill down as to what makes Pitney Bowes so superlative.

The company knows how to deliver when it comes to shareholder value…
Pitney Bowes has consistently grown its dividend by 10% every year for the last 29 years. The company has also been diligent in buying back shares, committing to bringing in $150 million worth this year alone. The earnings picture is encouraging as well. Fourth-quarter earnings per share (EPS) beat The Street, turning in $0.66 a share compared with consensus estimates of $0.61. Pitney pulled that one out even as revenue declined by 1% compared with 2009. However, revenue is expected to grow by 2% in 2011 and 3% in 2012.

And the company is focused on the future. Pitney has initiated a series of efficiency efforts that include headcount reduction, outsourcing and other programs that could help widen margins going forward. As far as adapting to change, Pitney Bowes has launched “Volly,” which is a cloud computing-based, digital mail delivery system.

Action To Take –> For a good brand name, Pitney Bowes is a decent value. Shares trade at 17.3 times trailing earnings and around 10 times forward earnings, which is a healthy discount to its peer group. The 6% dividend yield is almost three times higher than its peers in the industrials sector. Currently trading at around $24 a share, Pitney Bowes is a sensible equity income holding. Using a projected 2011 P/E of 12, a good 12-month price target would be $28.

P.S. — Few investors realize that a 20-year energy agreement between the United States and Russia is about to expire. This deal supplies 10% of America’s electricity. As broke as our government is, the situation is so serious that President Obama is asking for $36 billion to avert this crisis. And Republicans support him. Here’s what’s going on…