3 Defensive Dividend Stocks to Help You Beat the Market

by: Double Dividend Stocks

With the market turning in its worst day since 2008, and losing over 10% since July, you might be wondering if there are any dividend paying stocks that have successfully weathered this latest storm. As it turns out, we found 3 dividend stocks that have actually gained during this week, and during the past 21-day and 63-day trading periods:


Market Cap & Dividend Info:


Although none of these are high dividend stocks, all 3 of them have a reasonable dividend payout ratio, and large cap MHP, which owns Standars & Poors, is the largest member of the S&P Dividend Aristocrats, a group of stocks that have increased their dividends every year for at least the past 25 years. CTWS has been paying dividends steadily since 1992, and NRCI has increased its quarterly dividends from $.08 in 2005, to $.22 in 2011.


MHP is the only stock here that has options available.

As of the 8/4/11 close, Feb. 2012 $44.00 Covered Calls for MHP were yielding 7.2% nominally, or 12.27% annualized.

Selling cash secured puts is a conservative way you can achieve a lower break-even entry price on a stock. The Feb. $43.00 put options for MHP are selling for $3.80, an 8.8% nominal yield, or 15.11% annualized, giving you a breakeven of $49.20.

You can find more details about MHP's covered call options in our Cash Secured Puts Tables.



CTWS's Return On Assets is actually higher than its Water Utility peers' 2.70% average, and its Return On Investment is in line with its peers' 2.90% average.

NRCI, which provides data collection, performance measurement, and other services to the US and Canadian healthcare industries, is tougher to compare, since its 3 main competitors are all privately held.

MHP, founded in 1888, has metrics that dwarf its publishing competitors, whose peer averages run in the single digits for ROA, ROE, ROI, and Operating Margin.



Although utility stocks aren't normally seen as growth stocks, CTWS had impressive EPS growth this past quarter. Next fiscal year's growth seems to be settling back into a much slower pace. Many investors treat utility stocks as a defensive investment, almost like a bond, in that they hold them mainly for steady dividend income, not price appreciation.

NRCI appears to be the most undervalued on a PEG basis, with a low 1.02 PEG for its next fiscal year.

MHP operates in 4 segments: Standard & Poors, McGraw Hill Financial, Education, and Information & Media. MHP's P/E is a bit lower than its peers 17.57 avg., but its Price/Book is much higher than peers' 2.17 avg.

Disclosure: No positions at this time.

Disclaimer: This article is written for informational purposes only, and isn't intended as individual investment advice.