This choppy market has punished many dividend stocks this year, even members of the Dividend Aristocrats, a group of elite dividend paying stocks who have increased their dividends every year for the past 25 years. In fact, Emerson Electric (EMR) has increased its dividends for the past 54 consecutive years, and PPG (PPG) has increased its dividends for the past 28 consecutive years.
Valuations: Both firms had good earnings growth in their most recent fiscal years and quarters, but EMR looks more undervalued on a PEG basis. Both firms' Price/Book ratios are roughly in line with their peers.
Selling Options: A pathway to 20%-plus yields.
By selling options on these dividend stocks, you can earn over 10 times the dividend yield for EMR during the next four months, and nearly five times the dividend yield for PPG.
(The call and put options trades listed below expire in Jan. 2012 for EMR and in Feb. 2012 for PPG.)
You’ll find more details on this and many other high yielding covered call trades in our Covered Call Table.
These put trades also offer high options yields, and you can also attain a lower break-even price below the current 52-week low of both stocks.
You’ll find more details on this and many other high yield cash secured put trades in our Cash Secured Puts Table.
Financials: Both firms' management efficiency and margin ratios are superior to that of their industries.
Share Performance/Technical Data: Both firms are approaching the oversold threshold of 40 in their Relative Strength Index readings, and are less than 6% above their 52-week lows.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.