After taking a brief hiatus, I have returned with an interesting idea to kick off earnings season. There are many uncertainties surrounding today's market, so picking up a few shares of the stocks I have outlined below would make a nice addition to any investors portfolio. The screener I developed produced companies going ex-dividend within the next 30 days and have a higher dividend yield than the S&P 500 average (2.41%).
But before we begin, I wish to outline two market events and the possible repercussions that each could have in the near future. As always, it would only be prudent to outline the risks when making an investment recommendation. The first issue is the debt ceiling. With seemingly no progress being made, it's only a matter of time before investors become nervous and the risk-off trade resumes. However, I do not our think lawmakers would do the inconceivable and not raise the debt ceiling. The "drop dead" date is August 2 and social security payments are scheduled to be sent out the following day. However, the Treasury technically has until August 15 before interest payments are due on outstanding notes and bonds before we actually default. The second market event that will continue to pressure stocks is the European peripheral debt crisis. Events overseas are likely to control the markets for the time being. Until the situation is resolved, it is tough for me to turn bullish on stocks. With this being said, I hope to help construct a defensive portfolio to set up against any future "black swans."
Now that we have a solid understanding of the risks ahead of us, I will present the list of companies that match the criteria listed in the first paragraph.
One of my favorites is Lowes (L). The company currently has 11 buy recommendations according to Bloomberg, with target prices in the high $20s. Lowes is a company that will benefit from increased consumer demand once we get past this transitory soft patch. The company pays a slightly higher dividend yield than the S&P 500 average but that is compensated with the potential for higher upside price appreciation. Their 100-day moving average just passed through their 50-day MA to the upside. They also announced a $0.14 dividend, a 27% increase. Adding a sizable position long position to your portfolio offers a solid yield in the coming quarters, with the potential for strong upward price appreciation. The ex-dividend date is July 18, so investors have roughly 1 week to make a decision.
Hasbro (HAS) offers a solid 2.79% dividend yield. Their ex-dividend date is July 28, a little further out leaving some time to contemplate an investment decision. The company has produced improving liquidity ratios and has a decent leveraged position. The stock price has moved 3.48% around earnings time. With the stock recently drifting lower, it is trading cheaper compared to recent months. With 10 buy recommendations and targets in the mid 50s, Hasbro would serve as a fine addition to the everyday investors portfolio.
Pfizer (PFE) has produced impressive margins and holds a solid leverage position. The company currently yields a juicy 4% dividend. The company's ex-dividend date is on August 3, so investors have some time to decide on a course of action regarding this stock. An interesting note regarding Pfizer came across the wires recently. It detailed an attempt by Pfizer and JOhnson & Johnson (JNJ) rging lawmakers to ease regulations on a new Alzheimer's drug. With the disease affecting millions of Americans and countless people across the globe, this is a battle I'd like to see them win. With 20 buy recommendations and price targets in the upper 20s, picking up some shares of Pfizer will surely help to diversify your portfolio's exposure to the overall market.
The companies I have recommended come on the heels of a now uncertain global economic recovery. With a great deal of headwinds facing investors in the coming months, it is important to set up defensive positions to gain that all important alpha. The list above provides 12 companies approaching their ex-dividend date that would be strong additions to any investors portfolio.