7 Must-Own Dividend Stocks

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 |  Includes: CVX, INTC, MSFT, NVS, ORCL, SNY, T
by: Insider Monkey

Stocks with large market caps tend to be household names, a good source of modest growth, and make really strong investments, if you can get them at the right price. The key is to pay attention to how a large cap stock is priced relative to its earnings and its forecast for growth. Many large cap stocks pay dividends as well, further adding to their potential upside and generating stable income.

The stocks on this deliver on all three parameters - they are large cap companies with low forward P/E ratios, modest EPS growth, and they pay dividends. A portfolio of these seven stocks will most likely outperform the 10-year Treasuries and has the potential to deliver strong capital gains.

Microsoft Corp. (NASDAQ:MSFT) is an application software company with a $235.54 billion market cap. The company boasts a forward P/E ratio of 9.24 and pays a 2.86% dividend yield. Its earnings per share (NYSEARCA:EPS) is expected to grow 10.48% over the next five years. MSFT recently traded at $28.15 a share. Boykin Curry's Eagle Capital Management had $494.87 million invested in MSFT at the end of September after increasing its stake in the company by +4% during the third quarter.

Chevron Corp. (NYSE:CVX) is a major integrated oil and gas company with a $209.05 billion market cap. The company boasts a forward P/E ratio of 8.12 and pays a 3.09% dividend yield. Its earnings per share is expected to grow 6.90% over the next five years. MSFT recently traded at $105.68 a share. Phill Gross and Robert Atchinson's Adage Capital Management had $266.89 million invested in CVX at the end of the third quarter.

AT&T, Inc. (NYSE:T) is an application software company with a $178.49 billion market cap. The company boasts a forward P/E ratio of 12.29 and pays a 5.84% dividend yield. Its earnings per share is expected to grow 3.82% over the next five years. T recently traded at $29.98 a share. David E. Shaw's D E Shaw had $92.84 million in T at the end of September after upping its holding in the company by +128% during the third quarter.

Oracle Corp. (NYSE:ORCL) is an application software company with a $136.55 billion market cap. The company boasts a forward P/E ratio of 10.57 and pays a 0.88% dividend yield. Oracle doesn't have a high dividend yield but its earnings per share is expected to grow 12.24% over the next five years. It is likely that Oracle will boost its dividends significantly as its growth opportunities slow down. Ken Fisher's Fisher Asset Management had $588.27 million in ORCL at the end of the third quarter.

Intel Corp. (NASDAQ:INTC) is a diversified electronics company with a $131.12 billion market cap. The company boasts a forward P/E ratio of 10.82 and pays a 3.26% dividend yield. Its earnings per share is expected to grow 10.60% over the next five years. INTC recently traded at $25.19 a share. Paul Ruddock and Steve Heinz's Lansdowne Partners had $491.52 million invested in INTC at the end of the third quarter.

Novartis (NYSE:NVS) is a drug manufacturing company with a $129.89 billion market cap. The company boasts a forward P/E ratio of 9.95 and pays a 4.17% dividend yield. Its earnings per share is expected to grow 5.15% over the next five years. NVS recently traded at $55.80 a share. Ken Fisher's Fisher Asset Management had $42.47 million in NVS at the end of the third quarter.

Sanofi Aventis (NYSE:SNY) is a drug manufacturing company with a $95.92 billion market cap. The company boasts a forward P/E ratio of 8.87 and pays a 5.10% dividend yield. Its earnings per share is expected to grow 2.00% over the next five years. SNY recently traded at $35.29 a share. Warren Buffett's Berkshire Hathaway had $133.29 million in SNY at the end of the third quarter.

Disclosure: I am long MSFT, T.