In the wake of Fed's policy to keep interest rates low till 2014, investors are looking for stocks that offer high dividend yields and are relatively safe. Dividend stocks, with their continuous payments, are an excellent investment in a low interest rate environment. They present a good alternative to volatile stocks and low-yield Treasury bonds. Through this article, I guide you to five dividend stocks offering yields of around 5%, and are expected to provide sustainable income and a safe investment for 2012.
SuperValu Inc. (SVU) engages in the operating of retail food store across the United States. It has a market capitalization of $1.5 billion. The company's stock is currently trading at $7 per share. Its stock has traded between $6.26 and $11.77 over the last 52 weeks. SuperValu offers a dividend yield of 5.1%.
SuperValu is currently reporting a lower five-year expected price/earnings-to-growth ratio of 0.96, versus 1.41 reported by its competitor Wal-Mart Stores, Inc. (NYSE:WMT). Wal-Mart is also reporting a higher price-to-sales ratio of 0.47, versus SuperValu's 0.04. Wal-Mart and The Kroger Company (NYSE:KR), another competitor, are offering lower dividend yields of 2.4% and 1.9%, respectively. Despite SuperValu's significant debt problems, the company is expecting a turnaround. It is presented as a solid bargain opportunity which makes me bullish on the stock.
Avon Products (AVP) manufactures and markets beauty and beauty-related products. It has a market capitalization of $7.9 billion. The company's stock is currently trading around $18 per share. It generated a profit margin of 6.5%, and a return-on-equity of 44%. Avon offers a dividend yield of 5%.
L'Oreal SA (OTCPK:LRLCY), a competitor of Avon, reported a price-to-earnings ratio of 20.3 versus Avon's 10.8. L'Oreal also had a higher price-to-sales ratio of 2.4 versus 0.7 reported by Avon. Revlon (NYSE:REV), another peer, reported a five-year expected price/earnings-to-growth ratio of 2.6 versus Avon's 1.6. Both L'Oreal and Revlon do not pay dividends. Avon's history of increasing dividends for 22 consecutive years is expected to continue, supported by the company's financials. I think that the replacement of its CEO will likely increase investor faith in the company.
Lockheed Martin Corporation (LMT) is a researcher, designer, and manufacturer of advanced technology systems relating mainly to defense. It has a market capitalization of $25.4 billion. The company's stock is currently trading at $82 per share. Lockheed Martin generated a profit margin of 6.3% and a return-on-equity of 82%. It also has a dividend yield of 4.9%.
Boeing Company (NYSE:BA) reported a price-to-earnings ratio of 14.7, versus 9.6 reported by Lockheed Martin. Boeing also had a higher price-to-sales ratio of 0.85, versus 0.56 reported by Lockheed Martin. The industry averages were also higher for both ratios, indicating that Lockheed Martin is currently trading at a relatively cheaper price than most of its competitors. Boeing and Northrop Grumman Corporation (NYSE:NOC) reported lower dividend yields of 2.3% and 3.4%, respectively. Despite expected cuts in military spending, the company's relative performance against its peers and its strong backlog has resulted in analysts giving it a strong buy rating.
People's United Financial, Inc. (PBCT) is a bank holding company that provides commercial banking, retail, and business banking facilities. It has a market capitalization of $4.4 billion, and its stock is currently trading near $13 per share. Over the last 52 weeks, its stock was trading between $10.50 and $13.96 per share, also indicated by the company's beta value of 0.44. The company generated a profit margin of 17%, and a return-on-equity of 3.8%. It has a dividend yield of 5%.
Bank of America Corporation (NYSE:BAC) reported a significantly high price-to-earnings ratio of 729, versus only 22 reported by People's United Financial. People's United Financial also had a lower five-year expected price/earnings-to-growth ratio of 0.8, versus the industry average of 1.6, indicating that its future earnings growth is relatively cheaper than most of its competitors. Bank of America is currently offering a dividend yield of only 0.5%, while another competitor, BankUnited, Inc. (NYSE:BKU), is offering a dividend yield of 2.4%. With the company's profit rising in the double digits for the fifth consecutive quarter, coupled with a high dividend yield, I believe the company is set to continue its positive trend through its cost cutting strategy.
Leggett & Platt, Inc. (LEG) engages in the design and production of engineered components and products. It has a market capitalization of $3.1 billion, and its stock is currently trading near $23 per share. Leggett & Platt generated a profit margin of 4.9%, and a return-on-equity of 12.6%. Also, it had a dividend yield of 4.9%.
Genuine Parts Company (NYSE:GPC), a competitor of Leggett & Platt, reported a higher five-year expected price/earnings-to-growth ratio of 2, versus 1.2 reported by Leggett & Platt. Genuine Parts also had a similar price-to-sales ratio of 0.82, versus 0.89 reported by Leggett & Platt. Genuine Parts and Flexsteel Industries, Inc. (NASDAQ:FLXS) are offering lower dividend yields of 2.8% each. Leggett & Platt recently acquired Western Pneumatic Tube Holding, LLC; a move that is expected to be accretive to the company's shares. The company's strong financials and a high dividend yield make it a worthy stock.