Yesterday the following PRNewswire press release reported that S&P indices announced a powerful uptrend in dividend increases for calendar year 2011. This provides continued validation of the unique opportunity that blue-chip dividend paying stocks offer investors today.
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Five Dividend Paying Blue Chips Offering Yields Above the 10-year Treasury Bond
The following table lists five blue-chip companies with long histories of increasing their dividends that are currently trading at discounts to their historical valuations. Consequently, these five blue chips are also offering investors abnormally high entry-level yields greater than available from a 10-year treasury bond. But best of all, each offers the opportunity for their yields to increase at above-average rates into the future.
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Five Blue Chips - A Pictorial Review
The following pictorial review depicts five leading blue chips through the lens of F.A.S.T. Graphs™, the fundamentals analyzer software tool that correlates stock price to earnings. In addition to the earnings and price correlating graphs, the associated performance results for the time period with a dividend cash flow table are included. Since these are all well-known companies, this article will let the graphs speak for themselves based on the "essential fundamentals at a glance" as they are presented. A short video will follow the graphics which will provide more detail on what the graphics portray and how to interpret the information.
Kimberly-Clark Corp. (KMB)
Unilever PLC-ADR (UL)
Abbott Laboratories (ABT)
Novartis AG-ADR (NVS)
Procter & Gamble Co. (PG)
Watch this video for a more detailed interpretation of the F.A.S.T. Graphs™ on these five blue chips.
We believe the most important take away from this article is what we consider to be the rare opportunity that these large-cap blue-chip dividend paying companies offer investors today. With interest rates at historical lows, extremely high-quality blue chips like these should be expected to be trading at premiums. Since fixed income is less competitive at low rates, the price earnings ratios of common stocks, especially high-quality large-cap blue chips, should be sitting at all-time highs. Instead, the market, for no apparent reason that we can understand, is behaving directly opposite of what logic would dictate.
Therefore, this window of opportunity where high-quality dividend paying blue chips can be bought with dividend yields approximately double what they would normally be could very possibly quickly close. As always, we suggest that investors do their own due diligence on each example company cited. On the other hand, the essential fundamentals as depicted in the graphs provide a comprehensive starting point. Consequently, we believe that each of these companies should be given careful consideration by the dividend growth investor seeking an increasing yield on cost from conservative equities.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.