Investors are keeping an eye on divided stocks for their 2012 portfolios. I believe that companies paying dividends will offer a significantly higher return to investors. Dividend stocks usually outperform other stocks by around 8% on an annual basis, and companies that are looking to increase their dividend returns provide an even more compelling outlook to investors. I have picked five stocks that are offering a dividend yield of around 5% and have shown an ability to sustain their dividend payouts.
Health Care REIT, Inc. (HCN) is a real estate investment trust. It has a market capitalization of $10.2 billion. The company's stock is currently trading around $57 per share. It has a profit margin of 17.7% and a return-on-equity of 2.6%. Health Care REIT reported a dividend yield of 5%.
HCP, Inc. (HCP) is a competitor of Health Care REIT. HCP reported a higher five-year expected price-to-earnings-to-growth ratio of 2 versus 1.5 reported by Health Care. HCP also reported a higher price-to-sales ratio of 10.7 versus 8.3 reported by Health Care. Both these ratios indicate that HCP is more expensive than Health Care REIT. Additionally, HCP has a smaller dividend yield of 4.6%. Performance-wise, Health Care REIT has been doing better than its peers. The Street recently gave it a buy rating. The company also has an 81.57% institutional ownership. Health Care REIT has shown a consistent dividend history.
Eli Lilly and Company (LLY) engages in the manufacture and sale of pharmaceutical products. It has a market capitalization of $43.6 billion. The company's stock is currently trading around $39 per share. It has a profit margin of 19% and a return-on-equity of 34%. Eli Lilly has a dividend yield of 5%.
GlaxoSmithKline (GSK), a competitor of Eli Lilly, has shown a price-to-earnings ratio of 44, versus 4.2 reported by Eli Lilly. Glaxo Smith Kline's price-to-sales ratio of 2.4 was also higher than that of Eli Lilly's 1.8. Eli Lilly reported a higher dividend yield than its competitors GlaxoSmithKline, Sanofi American Depository (SNY), and Pfizer, Inc. (PFE) at 4.8%, 3.6%, and 4.1% respectively. The rise in healthcare spending by 8% per annum bodes well for Eli Lilly, which has seen an earnings-per-share growth of 20% over the last five years. It is also one of the top dividend yield companies in the healthcare sector but the loss of its patents in the near future is not in the company's best interest.
PP&L Corporation (PPL) is an energy and utility holding company. It has a market capitalization of $16 billion. The company's stock is currently trading near $28 per share. It generated a profit margin of 13.5% and a return-on-equity of 14%. PP&L has a dividend yield of 5%.
FirstEnergy Corporation (FE) is a competitor of PP&L. FirstEnergy reported a higher price-to-earnings ratio of 17 versus 10.5 reported by PP&L. FirstEnergy also reported a higher five-year expected price-to-earnings-to-growth ratio of 6.6 versus 1.2 reported by PP&L. This shows that the future earnings growth of PP&L can be bought at a lower price. FirstEnergy has a higher dividend yield of 5.1% despite having a lower valuation. On the other hand, American Electric Power Company (AEP), another competitor, reported a lower dividend yield of 4.6%. PP&L is currently looking to spend around $45 million in order to provide a safer and more reliable service in 2012. Despite not being a Warren Buffett stock, the company's above-average returns and high dividend yield are good signs for investors.
Cincinnati Financial Corporation (CINF) is a property casualty insurance business that operates within the United States. It has a market capitalization of $5.3 billion. The company's stock is currently trading around $33 per share. Over the last 52 weeks, its shares have traded within the narrow range of $23.65 and $34.33 per share, as shown by a beta value of 0.88. The company has a dividend yield of 4.9%.
Validus Holdings (VR), a competitor of Cincinnati Financial, reported a price-to-earnings ratio of 35.8 while Cincinnati Financial reported the same ratio at 33.6. Validus Holdings also reported a higher price-to-sales ratio of 1.7 versus Cincinnati Financial's 1.4. Both ratios indicate that Cincinnati Financial is relatively cheaper than its peer. Validus Holdings and American Financial Group, Inc. (AFG) reported lower dividend yields of 3.1% and 1.9% respectively. Cincinnati Financial has been paying consecutive annual dividends for 51 years. An insider trade worth $454,000 shows that the company's management believes that the company's stock price is expected to rise in the near future. I am bullish on the company due to its good financials and the high dividend yield that it is expected to sustain.
Ameren Corporation (AEE) is a public utility company based in Missouri, and Illinois. It has a market capitalization of $7.6 billion and its stock is currently trading near yearly highs of $32 per share. The company has a beta value of 0.51, indicating that its stock is not volatile. It was trading between $25.55 and $34.11 over the last 52 weeks. Ameren offers a dividend yield of 5%.
Ameren's price-to-earnings ratio of 14 is lower than that of Great Plains Energy, Inc.'s (GXP) 17.5. Ameren also has a lower price-to-sales ratio of 1.04 versus 1.26 reported by Great Plains. Great Plains offers a lower dividend yield of 4%. Ameren is one of the high-dividend yielding stocks with a low debt-to-equity ratio, making it an attractive offering for investors due to its ability to pay consistent dividends. Ameren is also reported to be undervalued according to the Graham Number. The company's expected decrease in coal usage in the coming years makes me bullish on the stock.