In one of my earlier articles I stated that one of my favorite stocks is commonly known as a ruler stock. That was defined as "equities where earnings, if plotted on a graph, form an upward sloping straight line". These type of companies, the best of the best, are rare and those with attractive yields are few. Every income investor who values stable and growing earnings and dividends should own as many of these as possible and certainly all should be found on their watch lists. For this article we will look at 10 such stocks with current yields averaging over 3.5%.
The following table outlines 5 year growth rate estimates from First Call on the growth of each company's revenue, dividend, and earnings. In addition, from Reuter's is the current Graham & Dodd decile ranking of each company from their universe of stocks. Stocks with the lowest price premiums are in the 10th decile. Based on the Graham and Dodd decile ranking for these companies they all rank in the top three deciles. Realty Income did not have enough data to have a ranking as the rankings are based on the past 16 years of data.
|Company||Est. 5 Yr Revenue % Growth Rate||Est. 5 Yr. Dividend % Growth Rate||Est. 5 Yr. Earning % Growth Rate||Graham & Dodd Price to Value Deciles|
|Johnson & Johnson||4||9||6||8|
|Procter & Gamble||2||12||10||8|
1. Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. Yield 3.4%
2. Kimberly-Clark Corporation (KMB), together with its subsidiaries, engages in the manufacture and marketing of various health care products worldwide. Yield 4.3%
3. The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. Yield 2.90%
4. McDonald's Corporation (MCD), together with its subsidiaries, operates as a worldwide food service retailer. It franchises and operates McDonald's restaurants that offer various food items, soft drinks, coffee, and other beverages. Yield 3%
5. Realty Income Corporation (O) engages in the acquisition and ownership of commercial retail real estate properties in the United States. The company leases its retail properties primarily to regional and national retail chain store operators. Yield 5.3%
6. PepsiCo, Inc. (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). Yield 3%
7. The Procter & Gamble (PG) Company provides consumer packaged goods in the United States and internationally. The company operates in three global business units: Beauty and Grooming, Health and Well-Being, and Household Care. Yield 3.2%
8. The Clorox Company (CLX) engages in the production, marketing, and sales of consumer products in the United States and internationally. The company operates through four segments: Cleaning, Lifestyle, Household, and International. Yield 3.6%
9. Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. Yield 3.75%
10. Bemis Company, Inc. (BMS) manufactures and sells flexible packaging products and pressure sensitive materials in the United States, Canada, Mexico, South America, Europe, and Asia. Yield 3%
Disclosure: I am long ABT, MCD, KO, KMB, JNJ, PEP.