12 Defensive High Dividend Stocks

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 |  Includes: BMY, LLY, MCHP, MRK, NUE, NYX, PAYX, PFE, RAI, RTN, T, TRI
by: Insider Monkey

In a previous study we showed that the average return of high dividend yielding stocks was 13.04% between 1927 and 2009. Dividend stocks beat the overall market by an average of 1.36% per year in that period. In another article, we provided a list of S&P500 stocks with market caps over $60 billion, and showed that high dividend mega-cap S&P500 stocks have performed better than both low dividend S&P500 stocks and the SPY.

Here's a list of 12 large-cap companies with high dividend yields and low debt ratios. All stocks in our list have market capitalizations above $10 billion, Total Debt / Equity ratio of below 0.6, and annualized dividend yields of at least 4%.

1- AT&T, Inc. (NYSE:T): AT&T is a provider of telecommunications services in the United States and worldwide. T recently traded at $28.9 and has a 6% dividend yield. T gained 7.5% during the past 12 months. The stock has a market cap of $169.1 billion, P/E ratio of 8.7 and Total Debt / Equity ratio of 0.58. Simons has $95 million in T and Cramer has 500 shares of T in his charitable trust. Phill Gross and Robert Atchinson hold the largest T position among the 300+ hedge funds we are tracking.

2- Reynolds American Inc. (NYSE:RAI): Reynolds American produces and sells cigarette and smokeless tobacco products. RAI recently traded at $37.7 and has a 5.6% dividend yield. RAI gained 38.2% during the past 12 months. The stock has a market cap of $22.2 billion, P/E ratio of 16.6 and Total Debt / Equity ratio of 0.55. David Winters holds the largest SO position among the 300-plus funds we are tracking.

3- Eli Lilly & Co. (NYSE:LLY): Eli Lilly and Company discovers, develops, manufactures and sells products in one business segment-- pharmaceutical products. LLY recently traded at $37.8 and has a 5.2% dividend yield. LLY gained 10.9% during the past 12 months. The stock has a market cap of $43.3 billion, P/E ratio of 8.8 and Total Debt / Equity ratio of 0.47. Jim Simons holds the largest position in LLY.

4- Merck & Co. Inc. (NYSE:MRK): Merck is a global health care company that delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. MRK recently traded at $32.7 and has a 4.7% dividend yield. MRK lost 6.7% during the past 12 months. The stock has a market cap of $100.1 billion, P/E ratio of 23.5 and Total Debt / Equity ratio of 0.33. Ric Dillon holds the largest position in MRK.

5- Paychex Inc. (NASDAQ:PAYX): Paychex provides payroll, human resource, and benefits outsourcing solutions for small to medium-sized businesses. PAYX recently traded at $27.1 and has a 4.6% dividend yield. PAYX gained 9.5% during the past 12 months. The stock has a market cap of $9.9 billion, P/E ratio of 19.2 and Total Debt / Equity ratio of 0. David Blood, Miguel Nogales, and former vice-president Al Gore hold the largest position in PAYX.

6- Bristol-Myers Squibb Company (NYSE:BMY): Bristol-Myers Squibb is a global biopharmaceutical company. BMY recently traded at $30.5 and has a 4.4% dividend yield. BMY gained 16.6% during the past 12 months. The stock has a market cap of $51.1 billion, P/E ratio of 15.6 and Total Debt / Equity ratio of 0.34. Both Samuel Isaly and Simons hold more than $100 million in BMY.

7- NYSE Euronext, Inc. (NYSE:NYX): NYSE Euronext, through its subsidiaries, operates securities exchanges. NYX recently traded at $27.7 and has a 4.3% dividend yield. NYX lost 1.7% during the past 12 months. The stock has a market cap of $7.4 billion, P/E ratio of 12.9 and Total Debt / Equity ratio of 0.31. Paulson had $103 million invested in NYX shares. Richard Perry’s Perry Capital and Frank Brosens’ Taconic Capital initiated large positions in NYX during the second quarter. Each of them holds more than $80 million worth of NYX shares.

8- Pfizer Inc. (NYSE:PFE): Pfizer Inc is an American multinational research-based pharmaceutical corporation. PFE recently traded at $18.2 and has a 4.3% dividend yield. PFE gained 12.3% during the past 12 months. The stock has a market cap of $144.3 billion, P/E ratio of 17.3 and Total Debt/Equity ratio of 0.47. David Einhorn holds the largest position in PFE.

9- Nucor Corporation (NYSE:NUE): Pitney Bowes is a provider of mail processing equipment and integrated mail solutions. NUE recently traded at $35 and has a 4.1% dividend yield. NUE lost 6.7% during the past 12 months. The stock has a market cap of $11.1 billion, P/E ratio of 23.7 and Total Debt/Equity ratio of 0.58. Jeffrey Vinik holds the largest position in NUE.

10- Raytheon Co. (NYSE:RTN): Raytheon Company is one of the leading defense contractors providing control and communication systems in the United States. RTN recently traded at $42.1 and has a 4.1% dividend yield. RTN lost 6% during the past 12 months. The stock has a market cap of $14.7 billion, P/E ratio of 7.8 and Total Debt / Equity ratio of 0.35. Alex Roepers' Atlantic Investment holds more than $100M of RTN. Ric Dillon, Steven Richman and Cliff Asness are also among RTN investors.

11- Thomson Reuters Corporation (NYSE:TRI): Thomson Reuters Corporation provides intelligent information services worldwide. TRI recently traded at $29.9 and has a 4.1% dividend yield. TRI lost 17.3% during the past 12 months. The stock has a market cap of $25.1 billion, P/E ratio of 19.5 and Total Debt / Equity ratio of 0.38. In the past five years, TRI increased its dividend payments 7.10% on average.

12- Microchip Technology Inc. (NASDAQ:MCHP): Microchip Technology develops and manufactures semiconductor products. MCHP recently traded at $34.6 and has a 4% dividend yield. MCHP gained 21.5% during the past 12 months. The stock has a market cap of $6.5 billion, P/E ratio of 15.6 and Total Debt / Equity ratio of 0.19.

Market data is obtained from Finviz.


Disclosure: I am long T.