With the Fed announcing that they intend to attempt to further manipulate downward long-term Treasury bond yields and the uncertain economic debt status of Europe and the U.S., the ten-year Treasury bond yield has dropped well below 2%. At the same time, dividend yields on most equities have jumped due to the recent stock pullback, creating increased income opportunities in the equity markets. For companies that consistently pay dividends, the dividend helps shelter their stock prices from extreme downward pressure because the dividend yield will increase and become more attractive to income investors with every drop in price. Reinvested dividends also allow investors to continually buy small amounts of additional shares, allowing for compounded dividend growth. The five companies below all have dividend yields of at least 3.5% and are known to regularly increase dividend payments to investors.
Chevron Corporation (NYSE:CVX) is involved in the exploration, production, refining, transportation, and marketing of petroleum, natural gas, and chemicals. Chevron has a strong presence in the Western U.S., and is the second-largest oil company headquartered in the United States behind Exxon Mobil. The firm has a five-year estimated earnings growth rate of 4.5%, a PEG ratio of 1.48, and a return on equity of 21.3%. Chevron also has extensive renewable energy operations. The company is the world leader in geothermal energy production and has large solar, biofuels, and fuel cell divisions that work towards developing new energy solutions.
Lockheed Martin Corporation (NYSE:LMT) produces advanced technology in the areas of aeronautics, electronics, information systems, and space primarily for the U.S. government and the governments of foreign nations. The company has a five-year estimated earnings growth rate of 9.5%, a PEG ratio of 1.02, and a return on equity of 77.0%. Lockheed Martin last week announced an increase in the quarterly dividend of 33% and a $2.5 billion increase in the company’s share repurchase program. In the company’s press release, Chairman and CEO Bob Stevens re-iterated Lockheed Martin’s commitment to rewarding shareholders by announcing that “we continue to deliver on our long-standing goal to return at least 50 percent of free cash flow to them.”
Mattel Inc. (NASDAQ:MAT) designs, produces, and markets toys all over the world and is the world’s largest toy company by revenue. The firm has a large stable of valuable, established brands that include: Barbie dolls, American Girl dolls, Fisher Price, Hot Wheels and Matchbox cars. Mattel also stays current on new trends with recent releases such as its Monster High product line and toys based on children’s movies. The company has a five-year estimated earnings growth rate of 13%, a PEG ratio of 0.94, and a return on equity of 28.4%. Despite the threat of a double-dip recession, Deloitte recently forecasted an increase in holiday spending of 2.5-3.0 percent.
NYSE Euronext (NYSE:NYX) operates several stock exchanges under the NYSE or Euronext labels, including the New York Stock Exchange, Paris, Amsterdam, and Brussels exchanges. The company has a five-year estimated earnings growth rate of 12.5%, a PEG ratio of 0.75, and a return on equity of 8%. With the development of program traders and automation, NYSE Euronext has benefitted from increased trading volumes. More program traders provide an increased trading source to help offset any revenue lost during periods of decreased trading by individual investors. According to the company’s news release, during the week of September 12-16th, program trading made up 40.2 percent of the over one billion shares traded each day on average. One potential downside of the increase in program traders is the appearance of “flash crashes,” but increased attention to circuit breakers has helped mitigate this issue.
Philip Morris International, Inc. (NYSE:PM) is a cigarette and tobacco manufacturer that sells its vast portfolio of major brand names to countries outside the United States. The company offers a five-year estimated earnings growth rate of 13.3%, a PEG ratio of 1.03, and an amazing return on equity of 152.4%. While cigarette and tobacco use declines in more mature markets like the U.S. and Canada, other areas of the globe, such as Asia, have fewer regulations and health awareness of the potential long-term effects. Cigarette production is a high margin industry, providing the company with strong cash flow as it continues to increase its market share in new growth segments.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.