17 Large Caps With Limited Downside

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 |  Includes: ACE, BHP, CCL, FCX, JCI, LFC, LOW, MMM, MSFT, OXY, RIO, TEVA, TXN, TYC, UNP, WBA, XOM
by: Insider Monkey

Famous value investor Benjamin Graham always recommended investing with a margin of safety, and discussed this concept in detail in his Intelligent Investor. In recent market turmoil, we recommended investors to be cautious about the potential inflation and protect themselves by following Graham’s advice. High dividend yield is one of the important criteria for defensive investors to pick stocks, but some stocks with relatively low dividend yields may also be safe investments. These stocks’ characteristics basically comply with Graham’s rules, but their dividend yields remained low because of the larger increases in their stock prices.

Below, we compiled another list of 17 large cap stocks that may provide a margin of safety to investors. The market data are sourced from Finviz. All companies in this list have annualized dividend yields between 2% and 3%. These stocks also have market capitalizations above $20 billion, current P/E ratios below 20 and maximum total debt/equity ratios of 0.50.

Ticker

Company

P/E

Dividend Yield

Total Debt/Equity

(NYSE:TYC)

Tyco Intl

14.66

2.29%

0.3

(XOM

Exxon Mobil

9.8

2.52%

0.11

(NYSE:ACE)

ACE Limited

8.45

2.23%

0.2

(NYSE:UNP)

Union Pacific

15.25

2.07%

0.49

(NASDAQ:MSFT)

Microsoft

10.04

2.36%

0.21

(WAG)

Walgreen Co.

14.44

2.44%

0.16

(NYSE:MMM)

3M Co.

13.67

2.73%

0.32

(NYSE:BHP)

BHP Billiton Ltd.

9.22

2.56%

0.28

(NYSE:TXN)

Texas Instruments

10.7

2.44%

0.32

(NYSE:OXY)

Occidental Petroleum

12.01

2.21%

0.12

(NYSE:LOW)

Lowe's Companies

13.77

2.75%

0.39

(NYSE:RIO)

Rio Tinto plc

7.07

2.03%

0.29

(NYSE:JCI)

Johnson Controls Inc.

13.48

2.12%

0.46

(NASDAQ:TEVA)

Teva Pharma

11.05

2.25%

0.27

(NYSE:CCL)

Carnival Corporation

14.2

2.98%

0.41

(NYSE:FCX)

Freeport-McMoRan

7.1

2.40%

0.24

(NYSE:LFC)

China Life Insurance

15.47

2.52%

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Tyco International Ltd provides security products and services, fire protection and detection products and services, valves and controls, and other industrial products. TYC has a dividend yield of 2.29% and a total debt-to-equity ratio of 0.3. It returned 7.06% since the beginning of this year. It has a market cap of $20.3 million and a P/E ratio of 14.66. Phill Gross and Robert Atchinson invested $359 million in TYC.

Exxon Mobil Corporation is a manufacturer and marketer of commodity petrochemicals. XOM has a dividend yield of 2.52% and a total debt-to-equity ratio of 0.11. It returned 3.76% since the beginning of this year. It has a market cap of $362 /> million and a P/E ratio of 9.8. Phill Gross and Robert Atchinson’s Adage Capital Management, and Ken Fisher’s Fisher Asset Management both invested about $584 million in XOM shares (check out Fisher’s top stock picks).

ACE Limited is a global insurance and reinsurance organization. ACE has a dividend yield of 2.23% and a total debt-to-equity ratio of 0.2. It returned 2.06% since the beginning of this year. It has a market cap of $21.2 million and a P/E ratio of 8.45. Eric Mindich invested $132 million in ACE stocks.

Union Pacific Corporation is engaged in the transportation business. UNP has a dividend yield of 2.07% and a total debt-to-equity ratio of 0.49. It returned 0.31% since the beginning of this year. It has a market cap of $44.7 billion and a P/E ratio of 15.25. Ken Fisher had $361 million invested in UNP shares.

Microsoft Corporation is engaged in developing, licensing and supporting a range of software products and services. MSFT has a dividend yield of 2.36 and a total debt-to-equity ratio of 0.21. It returned -0.99 since the beginning of this year. It has a market cap of $227 /> million and a P/E ratio of 10.04. Boykin Curry, Jean Marie Eveillard, Ken Fisher and David Einhorn all invested over $300 million in MSFT shares. David Einhorn explained in detailed at the Ira Sohn Investment Conference why he is bullish about MSFT (read David Einhorn’s entire speech).

Walgreen Co. operates a drugstore chain in the United States. WAG has a dividend yield of 2.44% and a total debt-to-equity ratio of 0.16. It returned -3.78% since the beginning of this year. It has a market cap of $33.5 million and a P/E ratio of 14.44. Steven Cohen invested $50 million in WAG (check out Cohen’s top stock picks).

3M Company is a diversified technology company with a presence in several industries, including industrial and transportation, health care, display and graphics, consumer and office, safety, security and protection services, and electro and communications. MMM has a dividend yield of 2.73% and a total debt-to-equity ratio of 0.32. It returned -4.93% since the beginning of this year. It has a market cap of $57.1 million and a P/E ratio of 13.67. Jean-Marie Eveillard invested over $600 million in MMM.

BHP Billiton Ltd. is a natural resources company. BHP has a dividend yield of 2.56% and a total debt-to-equity ratio of 0.28. It returned -13.11% since the beginning of this year. It has a market cap of $210 million and a P/E ratio of 9.22. Ken Fisher had nearly $600 million invested in BHP shares.

Texas Instruments Incorporated designs and makes semiconductors and sells the products to electronics designers and manufacturers worldwide. TXN has a dividend yield of 2.44% and a total debt-to-equity ratio of 0.32. It returned -13.39% since the beginning of this year. It has a market cap of $32.1 million and a P/E ratio of 10.7. Jean-Marie Eveillard invested $223 million in TXN.

Occidental Petroleum Corporation is an international oil and gas exploration and production company. OXY has a dividend yield of 2.21% and a total debt-to-equity ratio of 0.12. It returned -13.82% since the beginning of this year. It has a market cap of $67.7 million and a P/E ratio of 12.01. Ralph Whitworth and Ken Fisher both invested over $500 million in OXY.

Disclosure: I am long MSFT.