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In my previous post, I tried to determine if the five stocks that have the highest dividend growth record among the stocks included in the S&P 500 Dividend Aristocrats index are currently a bargain.

In this article, I tried to determine if the five stocks that have the highest dividend yield among the stocks included in the S&P 500 Dividend Aristocrats index are currently a bargain. The Dividend Aristocrats are S&P 500 constituents that have increased their dividend payouts for 25 consecutive years.

In this article, I will give the corresponding fundamental parameters for these five companies and my own opinion about them. Nonetheless, these data and my opinion should only serve as a basis for further research. All the data for this article were taken from Yahoo Finance and finviz.com on February 09.

The table and the chart below present the top five highest dividend yielders, their forward annual dividend rate, the forward yield, the payout ratio and the dividend rate of growth for the past five years.

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Pitney Bowes Inc. (NYSE:PBI)

Pitney Bowes Inc. provides software, hardware, and services to enable physical and digital communications.

Pitney Bowes has a very low trailing P/E of 6.41, a very low forward P/E of 7.91, and the price to sales ratio is also very low at 0.57. The forward annual dividend yield is very high at 10.84%, and the payout ratio is at 69.4%. The annual rate of dividend growth over the past five years was at 2.6%.

The stock price is 10.80% above its 20-day simple moving average, 19.28% above its 50-day simple moving average and 7.44% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

PBI has a total cash per share of $4.74 and it is expected to post a profit of $1.91 a share in the current year and $1.75 in the next year, which should be enough to sustain dividend payments of $1.50.

On January 31, Pitney Bowes reported its results for the fourth quarter and full year of 2012, which beat EPS expectations by $0.06 and beat slightly on revenues.

Highlights

  • Fourth quarter revenue of $1.3 billion; Adjusted EPS of $0.56; GAAP EPS of $0.55.
  • Year-over-year revenue growth in Management Services; first since 2008.
  • Year-over-year revenue growth in International Mailing, Software and Mail Services.
  • Revenue trends continue to improve in the SMB group.
  • Full year revenue of $4.9 billion; Adjusted EPS of $2.18, which includes a first quarter $0.11 per share tax benefit; GAAP EPS of $2.21.
  • Full year free cash flow of $769 million.
  • Results reflect International Mail Services ((NYSE:IMS)) as a discontinued operation.
  • The Board of Directors approved a first quarter 2013 dividend of $0.375 per share for the Company's common stock.

The table below presents the compound annual growth rate (OTCPK:CAGR) of holding the stock for the last five years, ten years and twenty years. The returns without dividends (capital gains) and with dividends are shown separately, in order to emphasize the importance of the dividend yield.

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Holding the PBI stock during the last five years has given an average annual loss of 11.5%, without the dividends the average annual loss would be even bigger 17.6%. Holding the PBI stock during the last ten years has given an average annual loss of 3.2%, and during the last twenty years an average annual return of 1.8%.

The cheap valuation metrics, the very rich dividend, the long history of steadily increasing dividend, the better-than-expected 4Q financial results, and the fact that the stock is in an uptrend are all factors that make PBI stock quite attractive.

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Data: Yahoo Finance

PBI Dividend Yield Chart

PBI Dividend Yield data by YCharts

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Chart: finviz.com

AT&T, Inc. (NYSE:T)

AT&T Inc., together with its subsidiaries, provides telecommunications services to consumers, businesses, and other providers worldwide.

AT&T has a trailing P/E of 29.15 and a low forward P/E of 13.01. The forward annual dividend yield is very high at 5.10%, and the payout ratio is very high at 146.3%. The annual rate of dividend growth over the past five years was at 2.4%.

The stock price is 2.78% above its 20-day simple moving average, 3.90% above its 50-day simple moving average and 2.51% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

AT&T has a total cash per share of $0.87, and it is expected to post a profit of $2.52 a share in the current year and $2.70 in the next year, which should be enough to sustain dividend payments of $1.80.

On January 24, AT&T reported its results for the fourth quarter and full year of 2012, which missed EPS expectations by $0.01 and beat slightly on revenues. In the report, Randall Stephenson, AT&T chairman and chief executive officer, said:

We had an excellent 2012. We grew revenues, increased adjusted earnings per share by 8.5 percent and generated cash from operations at record levels. We used this cash to invest aggressively in the future of our business and returned $23 billion to shareowners through dividends and share repurchases. Looking ahead, our key growth platforms - mobile data, U-verse and strategic business services - all have good momentum with a lot of headroom. We're off to a strong start executing Project VIP, our plan to expand our high-growth platforms to millions more customers, and our 4G LTE network deployment is ahead of schedule, delivering outstanding performance.

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Holding the AT&T stock during the last five years has given an average annual return of 6.1%, without the dividends the average annual return would be a loss of 1.7%. Holding the AT&T stock during the last ten years has given a nice average annual return of 11.1%, and during the last twenty years an average annual return of 6.1%.

The rich dividend, the long history of steadily increasing dividend, the good 4Q financial results and the fact that the stock is in an uptrend, make AT&T stock quite attractive.

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Data: Yahoo Finance

T Dividend Yield Chart

T Dividend Yield data by YCharts

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Chart: finviz.com

HCP, Inc. (NYSE:HCP)

HCP, Inc. is an independent hybrid real estate investment trust. The fund invests in real estate markets of the United States.

HCP has a trailing P/E of 30.92 and a forward P/FFO of 16.92. The forward annual dividend yield is very high at 4.50%, and the payout ratio is very high at 134.4%. The annual rate of dividend growth over the past five years was at 2.9%.

The HCP stock is trading 1.21% above its 20-day simple moving average, 3.3% above its 50-day simple moving average and 7.56% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

HCP has a total cash per share of $0.21 and it is expected to post FFO of $2.76 a share in the current year and $2.97 in the next year, which should be enough to sustain dividend payments of $2.10.

HCP will report its latest quarterly financial results on February 11. HCP is expected to post a profit of $0.71 a share, a 6.0% rise from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the stock price in the short term.

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Holding the HCP stock during the last five years has given a very high average annual return of 16.2%, without the dividends the average annual return would be 8.9%. Holding the HCP stock during the last ten years has given a very high average annual return of 17.0%, and during the last twenty years a nice average annual return of 13.9%.

In my opinion, the HCP stock is a bit expensive right now.

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Data: Yahoo Finance

HCP Dividend Yield Chart

HCP Dividend Yield data by YCharts

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Chart: finviz.com

Consolidated Edison Inc. (NYSE:ED)

Consolidated Edison, Inc., through its subsidiaries, provides energy services to residential, commercial, industrial, and government customers in the United States.

Consolidated Edison has a trailing P/E of 15.00, and a low forward P/E of 14.77. The forward annual dividend yield is quite high at 4.30%, and the payout ratio is at 63.5%. The annual rate of dividend growth over the past five years was at 0.8%.

ED has a total cash per share of $0.24 and it is expected to post a profit of $3.81 a share in the current year and $3.86 in the next year, which is enough to sustain dividend payments of $2.46.

On January 31, Consolidated Edison reported its results for the fourth quarter and full year of 2012, which missed EPS expectations by $0.04 and missed on revenues. For the fourth quarter of 2012, net income for common stock was $207 million or $0.71 a share compared with $190 million or $0.65 a share in the fourth quarter of 2011. Earnings from ongoing operations for the fourth quarter of 2012, which exclude the net mark-to-market effects of the CEBs, were $203 million or $0.69 a share compared with $219 million or $0.74 a share in the fourth quarter of 2011. Con Edison also announced that it is increasing its dividend for the 39th consecutive year. The company declared a quarterly dividend of 61 1/2 cents a share on its common stock, payable March 15, 2013 to shareholders of record as of February 13, 2013, an annualized increase of 4 cents over the previous annualized dividend of $2.42 a share. Con Edison also announced that it is increasing its dividend for the 39th consecutive year. The company declared a quarterly dividend of 61 1/2 cents a share on its common stock, payable March 15, 2013 to shareholders of record as of February 13, 2013, an annualized increase of 4 cents over the previous annualized dividend of $2.42 a share. In the report, Robert Hoglund, senior vice president and chief financial officer, said:

The dividend reflects our continued emphasis on providing a return to our investors, who play an important role in raising capital to make infrastructure investments at the lowest cost to our customers.

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Holding the ED stock during the last five years has given a high average annual return of 12.1%, without the dividends the average annual return would be 5.5%. Holding the ED stock during the last ten years has given an average annual return of 9.2%, and during the last twenty years an average annual return of 8.2%.

The quite cheap valuation metrics, the rich dividend, the long history of steadily increasing dividend are all factors that make ED stock quite attractive.

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Data: Yahoo Finance

ED Dividend Yield Chart

ED Dividend Yield data by YCharts

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Chart: finviz.com

Leggett & Platt, Incorporated (NYSE:LEG)

Leggett & Platt, Incorporated designs and produces various engineered components and products worldwide.

Leggett & Platt has a trailing P/E of 23.98 and a forward P/E of 18.36. The price to free cash flow is at 30.08, and the average annual earnings growth estimates for the next 5 years is at 15%. The forward annual dividend yield is at 3.90%, and the payout ratio is 91.9%. The annual rate of dividend growth over the past five years was at 3.0%.

The LEG stock is trading 2.51% above its 20-day simple moving average, 6.81% above its 50-day simple moving average and 24.15% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

LEG has a total cash per share of $2.53 and it is expected to post a profit of $1.62 a share in the current year and $1.90 in the next year, which should be enough to sustain dividend payments of $1.16.

On February 04, Leggett & Platt reported its results for the fourth quarter and full year of 2012, which beat EPS expectations by $0.01 and missed on revenues.

Highlights

  • 2012 full-year EPS was a record $1.70, including unusual non-cash net tax benefits; at high end of guidance
  • 2012 full-year EPS from Continuing Operations was a record $1.46, excluding net tax benefits
  • 4Q EPS, excluding the net tax benefit, was $.32, at the high end of guidance issued in October
  • Fifth consecutive year that Leggett & Platt stock generated a higher return than the S&P 500 index
  • 2013 EPS guidance is $1.50-1.75, on sales of $3.75-3.95 billion

In the report, David S. Haffner, President and CEO, commented:

It's now been five years since our November 2007 announcement of a critical change in strategic direction and focus for Leggett & Platt. We are quite proud of the results we've been able to deliver to our shareholders, and are confident that our very strong 5-year stock performance stems, at least in part, from our decision to change strategy. Operationally, I'm very satisfied with the notable progress we made during 2012. Though the economy held sales growth to a modest level, we significantly improved EBIT and expanded EBIT margin by 270 basis points. We generated more than enough cash from operations to readily fund dividends and capital expenditures, something we've accomplished for over 20 years.

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Holding the LEG stock during the last five years has given an extremely high average annual return of 18.3%, without the dividends the average annual return would be 9.4%. Holding the LEG stock during the last ten years has given an annual return of 8.9%, and during the last twenty years an average annual return of 9.2%.

In my opinion, the LEG stock is a bit expensive right now.

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Data: Yahoo Finance

LEG Dividend Yield Chart

LEG Dividend Yield data by YCharts

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Chart: finviz.com

Conclusion

In my opinion, among the five Dividend Aristocrats top-dividend yielders, only PBI seems to be a bargain stock right now. AT&T and ED are quite attractive, and HCP and LEG are bit expensive right now.

Source: 5 Dividend Aristocrats Top-Dividend Yielders; Are They Bargain Stocks Now?