Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)

High-dividend stocks are very popular among defensive investors. These stocks are considered as viable options especially in inflationary environments. In order to achieve sustainable returns, defensive investors also select companies that are able to consistently pay fat dividends. We are concerned that the Fed's inflationary monetary policy will lead to inflation in the near future, and therefore we recommend investors play defensively by purchasing high-quality dividend stocks.

Below we compiled a list of high-dividend U.S. stocks that can afford to double dividend payments. All companies have at least a $10 billion market cap, a dividend yield higher than 3% and a payout ratio lower than 40%. Market data sourced from Finviz.

Ticker

Company

Dividend Yield

52-week Return

(NYSE:AFL)

AFLAC Inc.

3.02%

-22.09%

(NYSE:COP)

ConocoPhillips

3.73%

8.44%

(NYSE:CVX)

Chevron Corporation

3.04%

18.59%

(NYSE:DOW)

The Dow Chemical Company

3.06%

-6.45%

(NASDAQ:INTC)

Intel Corporation

3.35%

22.99%

(NYSE:IP)

International Paper Co.

3.31%

14.41%

(NYSE:K)

Kellogg Company

3.38%

3.00%

(NYSE:NOC)

Northrop Grumman

3.35%

1.10%

(NYSE:RTN)

Raytheon Co.

3.52%

0.87%

(NYSE:SRE)

Sempra Energy

3.43%

10.86%

(NYSE:WMB)

Williams Companies, Inc.

3.52%

35.51%

Williams Companies Inc is the best-performing stock on the list. During the past 52 weeks, WMB returned 35.51%, versus 2.13% for SPY in the same period. Williams is an integrated natural gas company. For the third quarter of 2011, the company reported net income of $272 million, versus a net loss of $1.3 billion in the same period a year earlier. WMB has a market cap of $17B, a P/E ratio of 16.72, and a dividend yield of 3.52%. At the end of September, there are 48 hedge funds with WMB positions. For example, Eric Mindich's Eton Park Capital had $200+ million invested in WMB.

Intel Corporation also performed quite well in the past 52 weeks. It returned 22.99% in that period, beating the market by more than 20 percentage points. The stock has a dividend yield of 3.35%. For the 13 weeks ending October 1, 2011, the semiconductor chip maker company reported net income of $3.5 billion, up from $3.0 billion for the same period a year earlier. INTC has a market cap of $128B and a P/E ratio of 10.84. There are 42 hedge funds reported to own INTC at the end of September. Ken Fisher's Fisher Asset Management invested $400+ million in INTC.

Another mega-cap dividend stock that can afford to double dividend payments is Chevron Corp , which has a dividend yield of 3.04%. Over the past 52 weeks, CVX returned 18.59%, outperforming the market by more than 16 percentage points. It has a market cap of $213B and a P/E ratio of 7.91. Chevron reported net income of $7.8 billion for the third quarter of 2011, up from only $3.8 billion a year ago. The stock is also very popular among hedge funds. As of September 30, 2011, there are 38 hedge funds that disclosed owning CVX in their 13F portfolios. For instance, Bill Miller's Legg Mason Capital Management had $125 million invested in CVX.

These 11 stocks returned an average of 7.93% during the past 52 weeks, beating the market by 5.8%. They all have relatively low P/E ratios and payout ratios, and they pay decent dividends as well. We strongly encourage investors to do some deep research about these stocks and consider adding some of the positions to their portfolios.

Disclosure: I am long COP.

Source: 11 High-Dividend Stocks That Can Afford To Double Dividend Payments