4 Dividend Stocks for Safety and Yield

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Includes: INTC, MO, ORAN, VZ
by: Investment Underground

We took a look at a few high-yielders with the ability to maintain strong dividend payouts.

Intel (NASDAQ:INTC) paid an annual dividend of $0.63 in the FY2010, making its current dividend yield 2.8%. The company has been able to maintain its dividend payout for the last 73 quarters. The payout has increased by 57.5% in 2010 from that paid in 2006. With the dividend coverage ratio of around 2.01, we believe Intel will continue to support its healthy dividend payout in the future also. For these shares, the 52-week trading range is $17.60-23.96. Intel deals with the design, manufacture, and sale of the integrated circuits for computing and communication industries around the globe. More than 80 percent of the world’s PCs are been run by Intel processors. In the recent earnings announced on July 20, Intel raised its sales outlook because of better demand for the powerful chips used in business machines and servers that run data centres. With a current PE of around 11X based on 2010 earnings, we support a hold on Intel.

Altria Group Inc (NYSE:MO)'s current yield is 5.5%, and it paid annual dividends of $1.46 in 2010. The group is able to maintain the dividend cover of around 1.5 since the FY 2006. For these shares, the 52-week trading range is $21.26-28.13. Altria Group, through its subsidiaries, makes and sells cigarettes, smokeless products, and wine in the US and abroad. We maintain to buy on these shares based on the favorable valuation: The current PE is around 14X based on its FY2010 earnings; this is a perfect hedge against the inflation and any slowdown in the economic growth.

France Telecom S.A. (FTE)'s dividend yield is 4.90%. The 52-week trading range is $18.45-24.60. France Telecom provides fixed telephony and mobile telecommunications, data transmission, Internet and multimedia, and the other value-added services to the consumers, businesses, and the telecommunication operators. In 2010, the company announced that it would keep up its annual dividend payout of €1.40 through 2012. We support a buy on these shares based on a lower valuation as it trades at 7.77 times with respect to its 2010 earnings.

Verizon (NYSE:VZ)'s current dividend yield is 5.2%; the company paid the annual dividend of $1.92 in the FY2010. Verizon has increased its dividend by 18% in 2006-10. However, its EPS has decreased by 47% in 2010 from 2009. The 52-week trading range is $26.41-38.95. Verizon provides communication services. The company operates through two segments, landline and mobile. We recommend avoiding VZ shares based on the slowdown in company‘s earnings and high valuation. Verizon is now trading at around 29 times its trailing 12 month earnings.

Dividend payout for the last five years in USD (except for France Telecom)

Dividend

2006

2007

2008

2009

2010

INTC

0.40

0.45

0.5475

0.56

0.63

VZ

1.62

1.67

1.78

1.87

1.925

FTE ( in euro)

1.20

1.30

1.40

1..40

1.4

MO

3.32

3.05

1.68

1.32

1.46

Click to enlarge

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.