The stock market continues to be very volatile and that is likely to continue as there seems to be very little chance that Europe will resolve the debt crisis in the near future. Some analysts think the market turmoil could last for years. Each trading day often has more to do about the bond yields in Italy than it does with individual companies or the economic data in the U.S. This leaves investors in a very difficult position because cash and savings in traditional money market and certificates of deposit pay almost nothing in terms of yield, and at the same time the stock market as a whole seems downright risky. Many investors are seeking "safety" in gold and Treasuries, but gold is proving to be very risky and Treasuries offer minimal returns.
There are alternatives that will actually pay you to hold them and still offer some safety. In this kind of environment, the best place to put money to work is in dividend paying stocks, because they offer potential growth, dividend yields that beat money market rates, and are less volatile and safer than the market in general. The traders on the "Fast Money" show recently offered some top stock picks, and a recent CNBC article details 10 of the Fast Money Gang's "10 Top Stocks For The Long-Term Investor." Here is a closer look at 6 of the top picks, which I selected due to the dividend yield as well as the fact that these are "Blue Chips," which are likely to be less volatile and let shareholders sleep at night and "get rich" slowly:
Philip Morris International (NYSE:PM) is a maker of tobacco products including cigarettes well known brand names such as Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, etc. The dividend is solid and completely covered by earnings. This stock has been performing very well in a weak market and it will probably continue to do so. It makes sense to buy on any dips. Here are some key points for PM:
Current share price: $76.70
The 52-week range is $55.85 to $77.03
Earnings estimates for 2011: $4.87 per share
Earnings estimates for 2012: $5.22 per share
Annual dividend: $3.08 per share, which yields 4.1%
Kimberly-Clark (NYSE:KMB) makes a variety of well known consumer products such as Kleenex, Cottonelle, Viva, Huggies diapers, etc. With oil prices falling, it could improve profit margins on the products manufactured by this company. It looks like the earnings are sufficient enough to allow the company to raise the dividend in the future. The yield here beats many alternatives and it makes sense to buy, especially on dips.
Here are some key points for KMB:
Current share price: $72.60
The 52-week range is $61 to $73.23
Earnings estimates for 2011: $4.82 per share
Earnings estimates for 2012: $5.25 per share
Annual dividend: $2.80 per share, which yields 4%
JP Morgan Chase (NYSE:JPM) is one of the largest banks in the United States. JPM is also one of the best managed banks in the market and has less risk to mortgage exposure compared with other major banks. This stock looks very undervalued for long-term investors and trades for less than 7 times 2012 earnings. It also trades below the book value of $45.95. This company is viewed to have less risk with mortgage exposure and excellent management. The dividend will pay investors to wait for higher stock prices.
Here are some key points for JPM:
Current share price: $32.21
The 52-week range is $27.85 to $48.36
Earnings estimates for 2011: $4.58 per share
Earnings estimates for 2012: $4.93 per share
Annual dividend: $1 per share, which yields 3.2%
Cisco Systems, Inc. (NASDAQ:CSCO) is a leading networking hardware company. A few months ago, CEO John Chambers began plans to transform this company into a leaner and faster growing company. The restructuring plan included layoffs, other cost cutting moves, and a refocusing on the core product lines, and seems to be paying off. The earnings could support a much higher dividend payout, so Cisco might increase it regularly. I think Cisco is a good stock to buy on dips for long-term investors.
Here are some key points for CSCO:
Current share price: $18.41
The 52-week range is $13.30 to $22.34
Earnings estimates for 2011: $1.77 per share
Earnings estimates for 2012: $1.93 per share
Annual dividend: 24 cents per share, which yields 1.3%
Microsoft Corporation (NASDAQ:MSFT) is a leading maker of computer software and hardware products as well as consumer products, like the Xbox. Microsoft has a huge cash position on their balance sheet. The stock dividend yields about 3%, and it trades for just about 8 times earnings. Microsoft offers investors a low risk way to to benefit from growth in the technology sector, plus a solid dividend that is likely to rise over the years
Here are some key points for MSFT:
Current share price: $26.02
The 52-week range is $23.65 to $29.46
Earnings estimates for 2011: $2.77 per share
Earnings estimates for 2012: $3.07 per share
Annual dividend: 80 cents per share, which yields 3.1%
Intel Corporation (NASDAQ:INTC) is a leading maker of chips used in notebooks, netbooks, desktops, mobile phones, consumer electronics devices, etc. This company has a rock solid balance sheet, sells for only about 9 times earnings and pays a dividend that beats most bonds and other income investments. Intel shares recently hit new highs, but then dipped on news that the next quarter would be impacted by floods in Thailand. This dip is providing long-term investors a solid buying opportunity.
Here are some key points for INTC:
Current share price: $23.84
The 52-week range is $19.16 to $25.78
Earnings estimates for 2011: $2.45 per share
Earnings estimates for 2012: $2.56 per share
Annual dividend: 84 cents per share, which yields 3.6%
Data sourced from Yahoo Finance. No guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.