As we near the year end and investors start to look forward to 2012, the financial media start publishing their best stocks for 2012 lists. We see this every year at this time but we never compare the list or aggregate the stocks listed. I thought it would be interesting to compare best stocks across the list and determine the average ratings and average of dividend yields for each publisher. Here is a listing of the published best stock listing included in this discussion:
- Fortunes Best Stocks for 2012 (CNBC : 12/8/2011)
- Kiplinger: 8 Stock Picks for 2012 (12/7/2011)
- Gloomy Goldman Sachs Is Bullish on These 10 Stocks (12/8/2011)
- TheStreet.com - 10 Best Dow Dividend Stocks for 2012 (12/01/2010)
- Get Rich Investments – Seekingalpha.com: The Best Dividend Stocks For 2012 - Part 1, 2 & 3
The table below displays the stocks chosen for each stock list by publisher. At the bottom of the chart you see the average equity score of each stock list compiled by the average of each stocks equity score (aggregate rating among all analyst following the stock) and the average of the dividend yields of stocks. The street.com stock list for 2012 has the highest equity score with an average of 6.93 while the Fortune best stock list has the lowest equity score of 6.13. This indicates that while the stock lists are composed of mostly different stocks, they are very similar in equity scores. The individual investor may best be served by selecting their stocks from the aggregate list of 37 stocks. This method will allow the investor to select the best stocks meeting their investment criteria and objectives for 2012.
For dividend yield, Get Rich Investments has the highest average yield of 3.29% compared to the Goldman Sachs best stock list with an average yield of 1.85%.
Microsoft (MSFT) is the most listed stock (3 times) among the stock listings from included publishers. It has a bullish rating and a nice dividend yield of 3.12%. Other standout stocks on the list include Intel (INTC) and Lockheed Martin (LMT) both rated very bullish by their equity scores. Both Apple (AAPL) and Procter & Gamble (PG) made the top 10 listing with equity scores in the bearish range.
Microsoft (MSFT) generates $70 billion in annual sales, up from $50 billion five years ago. It has $52 billion in cash on its balance sheet. This makes for a very safe stock as it has enough cash to get through almost every obstacle. MSFT appears undervalued based on its Price/Earnings (TTM) of 9.68, which is less than the Information Technology sector’s bottom quintile value of 10.43. Today, MSFT pays an annual cash dividend of $0.80 per share compared to $0.41 in 2007. At just a 3.16% yield, it doesn't look big now. Microsoft's dividend has a historical growth rate of 22.26% per year. MSFT's recent dividend increase was 25%, from $0.16 to $0.20 per quarter in 2011.
Intel (INTC) is trading at $24.71 and the stock price has done nothing over the last 10 years but its value is the dividend growth. Today, Intel pays an annual cash dividend of $0.84 per share compared to $0.08 in 2003. At just a 3.5% yield, it doesn't look big now. But it has raised its dividend every year for the last eight years in a row. Intel's dividend has a historical growth rate of 28.35% per year.
Lockheed Martin (LMT) engages in the research, design, development, manufacture, integration, operation, and sustainment of advanced technology systems and products in the United States and internationally. LMT has a p/e of 9.6 with a great dividend yield of 5.13%. Revenue growth is 4.29 with an EPS growth of 13.80%. LMT appears undervalued based on its Price/Earnings (TTM) of 9.6, which is less than the Industrials sector’s bottom quintile value of 12.74
The best stocks of 2012 lists are very close in equity scores and vary more in average dividend yield. Only time will tell which list will perform the best in 2012. We will follow the performance of each list to determine the best list of stocks for 2012. For now, the investor is the winner as they have a nice selection of stocks to consider for their portfolios such as MSFT, INTC, LMT and many others.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.