There is perceived safety in size. Giant corporations aren't randomly grown. Instead, they are carefully built through superior management and foresight. Often these are more mature companies that also offer stability and predictability, usually at the expense of dynamic growth. These are your mega-cap stocks.
There is no universal definition of mega-cap stocks. Many define mega-cap as companies with a market cap exceeding $100 billion. Needless to say, most mega-cap companies are headquartered in the U.S., Europe and Japan. The 2000's commodity boom resulted in many energy and resource companies achieving mega-cap status, while the financial crisis resulted in some of the financial institutions losing mega-cap status.
Mega-caps are generally viewed as a stable safe-haven for stock investors during times of uncertainty due to their size and industry dominance. The recent turmoil in Europe from debt concerns global left investors fleeing the euro into dollar-denominated assets like Treasuries and mega-cap stocks.
In a July 2012 New York Time article, Wallace Weitz, president of the Weitz Funds, said, “I’ve been doing this for more than 40 years, yet it still surprises me that people look away from good companies because they ‘haven’t done anything’ for a long time.” That’s exactly where value-minded investors ought to be looking for attractively priced shares, he said.
This week, I screened my dividend growth stocks database for stocks with a market cap over $100 billion and with a dividend yield above 3%. The results are presented below:
Microsoft (NASDAQ:MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.
Yield: 3.4% | Market Cap: $228.1B
Chevron Corporation (NYSE:CVX) is a global integrated oil company (formerly ChevronTexaco) with interests in exploration, production, refining and marketing, and petrochemicals.
Yield: 3.3% | Market Cap: $213.0B
Johnson & Johnson (NYSE:JNJ) is a leader in the pharmaceutical, medical device and consumer products industries.
Yield: 3.5% | Market Cap: $196.5B
The Procter & Gamble Company (NYSE:PG) is a leading consumer products company that markets household and personal care products in more than 180 countries.
Yield: 3.2% | Market Cap: $191.4B
AT&T Inc. (NYSE:T) provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless).
Yield: 5.3% | Market Cap: $193.6B
Verizon Communications Inc. (NYSE:VZ) is the largest U.S. wireless carrier, Verizon also offers wireline and broadband services primarily in the northeastern U.S.
Yield: 4.7% | Market Cap: $125.6B
PepsiCo, Inc. (NYSE:PEP) is a major international producer of branded beverage and snack food products.
Yield: 3.1% | Market Cap: $108.9B
Abbott Laboratories (NYSE:ABT) is a diversified life science company that is planning to split into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals.
Yield: 3.1% | Market Cap: $102.6B
Intel Corporation (NASDAQ:INTC) is the world's largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products.
Yield: 4.4% | Market Cap: $102.2B
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However, some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the more than 220 companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long MSFT, CVX, JNJ, PG, T, PEP, ABT, INTC in my Dividend Growth Portfolio and VZ in my High-Yield Portfolio. See a list of all my dividend growth holdings here.
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