A key factor that investors have recently made it a point to look for in investments is the attractiveness of large-cap, high yielding stocks. This is because such stocks are a more secure investment compared to other stocks that perform poorly in uncertain market conditions. This has led many investors to shift their focus on achieving yield rather than capital growth. In this article, I will discuss five high quality stocks that offer attractive yields at current price levels. By my standards, an attractive, safe yield is between 2% and 5% in today's market. I have chosen these stocks because they have consistently high returns on equity, strong market position, historically consistent dividends, and strong operating cash flows.
Abbott Labs (ABT)
Abbott is a large-cap pharmaceutical and healthcare company offering a diverse product range to markets across the globe. With a beta of only 0.32, Abbott is among the few businesses that have shown greater resilience to negative and sometimes volatile market conditions. This means that the business was able to perform well in the last two quarters of 2011 amidst sluggish trading and unfavorable investor sentiment. Currently, Abbott has a massive market capitalization of nearly $88 billion with an average trading volume of more than $7 million. The trading price of the stock is currently $56, which is at its highest in the last 52 weeks. It has a price to earnings ratio of almost 19 and earnings per share of $3. The company pays
shareholders nearly 50 cents in dividends. An impressive dividend yield of nearly 3.5% has given the business favorable investor sentiment over the last three quarters. The current year has seen the business gaining from its momentum from the previous quarter. However, a recent announcement to cut down on almost 700 jobs was not taken positively by investors. With that said, Abbott has a huge international presence, and when coupled with a solid dividend yield, I believe the stock presents a strong case for investment.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb is a global pharmaceutical company with a diverse product portfolio and operations spread across the globe. The company discovers, develops and delivers innovative healthcare solutions to global audience. Last year saw the business trade relatively well with impressive growth levels achieved in the third and fourth quarter of 2011. Compared to profit and growth levels of the previous year, Bristol-Myers grew by nearly 30% amidst favorable market conditions and positive investor sentiment. The company currently has a total market capitalization exceeding $58 billion with an average trading volume of almost $11 million. A beta of just 0.54 has meant that the company is a relatively low-risk investment in volatile conditions. This has allowed the business greater resilience to negative market environment and unfavorable investor sentiment over the last few quarters. Trading price of the stock is currently poised at around $33 which is very close to its highest value in the last 52 weeks. Price to earnings ratio is good at around 15 and the company has a dividend payout ratio of almost 0.34 on earnings per share of $2.17. A dividend yield of more than 4.11% means that the business will continue to please investors with high dividend yields. The company has performed very well with profits rising by nearly 75% in the fourth quarter of 2011, and I believe that the company is one of the safest investments in 2012.
Duke Energy (DUK)
Duke Energy is a massive energy company based in Charlotte, North Carolina with huge investments in the United States, Canada and Latin America. The company impressed investors with steady growth levels and generation of sizable revenues throughout the previous financial fiscal. This year, the business has continued its upward run on the charts amidst positive market conditions and favorable market sentiment. Currently, the stock is trading at close to $21 which is a little lower than its peak price in the last 52 weeks. With a massive market capitalization of nearly $29 billion, the company has a staggering average trading volume of almost $12 million. The price to earnings ratio is currently at 16 and earnings per share of almost $1.30, while the company has a dividend payout ratio of 0.25. Dividend yield is impressive at almost 5% which has attracted good investor sentiment for the business. Furthermore, a beta of just 0.33 means that the business has the capacity to show greater resistance to volatile market conditions or unfavorable investor sentiment. The approval of a proposed merger with Progress Energy is expected to increase the company's profits substantially in 2012. With investor sentiment at its most favorable level in recent quarters and market conditions conducive of growth, I believe that Duke Energy is poised to achieve higher growth levels.
General Mills (GIS)
Over the last year, General Mills had a good run with steady growth of nearly 13.5% pushing the stock above $40. However, owing to volatile market environment and skepticism among investors in the current year, the stock has slumped to nearly $38 from its previous high of $41 at the close of the previous year. The company has a total market capitalization of nearly $26 billion. General Mills has shown consistency with a 5 year average dividend yield of 2.8%. A reasonably balanced beta of around 0.2 means that the business has shown greater resistance to a wide range of violent factors that prevails in the market lately. Because of this, I believe that General Mills will continue to reward investors with sizable dividends even in unfavorable market conditions.
H.J. Heinz (HNZ)
H. J. Heinz Company is an American food company based in Pennsylvania. The company makes thousands of food products that are manufactured in plants spread across six continents. Heinz caters to a massive market with products spread across more than 200 countries. Over the years, Heinz has fared well even where other food manufacturing businesses have failed to deliver. The business has a massive market capitalization of nearly $17 billion with an average trading volume exceeding $2 million. Trading price of the stock is currently poised at around $54 although it had reached its highest at $55 a few weeks ago as a result of renewed market activity. With a price to earnings ratio of more than 18, Heinz offers shareholders almost 50c in dividends against earnings per share of nearly $3. The stock has a dividend yield of more than 3.5% which has earned it favorable investor sentiment over the last few quarters and allowed the business a wider competitive moat. A beta of almost 0.57 has allowed Heinz to grow as much as 8% over the last year since the company has traditionally shown greater resistance to volatile market conditions. Looking at current performance and prevailing market conditions, I believe that Heinz is well set to achieve higher growth levels and additional stability.
- High Yield Dividend Stocks in Gurus' Portfolio
- Top dividend stocks of Warren Buffett
- Top dividend stocks of George Soros
About the author:
StockCrocI'm mostly interested in income investing using dividends, preferred stocks and other debt instruments, and pair trading.
I fundamentally analyze every business from the top down.
In my personal life, I have a strong Jewish faith and enjoy playing Scrabble and entrepreneurship.