Jim Cramer of CNBC's "Mad Money" show has been bullish on dividend stocks, and recently gave a buy rating to a few blue chip companies. Dividend stocks have been working for investors, and they have held up well in market sell-offs. When stocks saw the first "mini-correction" of 2012, just days ago, dividend stocks fared much better than others because investors are so hungry for income in a low-yield world. The Federal Reserve has promised to keep rates low for the next couple of years, so it makes sense for Cramer to stay focused on companies that have stable revenues and pay solid dividends, since they can beat savings accounts and even some bonds. Here is a closer look at some of Cramer's favorite stocks which are likely to continue outperforming and even possibly make new 52-week highs in 2012. I would buy these stocks on pullbacks in order to maximize gains:
The Coca Cola Company (KO) shares are a great way to collect a solid dividend and have upside growth without taking excessive risks. This global beverage giant has a stable source of revenues and profits with brands like Sprite, Vitamin Water, Minute Maid Orange Juice, Dasani, and more. In an uncertain world, one of the few certainties left is that consumers will continue to drink the beverages made and distributed by Coca Cola. This makes these shares attractive to both income investors thanks to the dividend and also to growth investors since the stock has capital gains potential. Coca Cola recently announced better than expected results, and profits jumped about 8% for the first quarter of 2011.
Analysts had been expecting about 87 cents per share in profits, but Coca Cola earned a profit of $2.05 billion, or 89 cents a share. This was a higher profit than the same quarter last year, which was $1.9 billion, or 82 cents a share. This good news propelled the stock to a new 52-week high. Investors should consider buying this solid company on any pullbacks.
Here are some key points for KO:
Current share price: $73.95
The 52 week range is $63.34 to $74.48
Earnings estimates for 2012: $4.08 per share
Earnings estimates for 2013: $4.47 per share
Annual dividend: $2.04 per share which yields 2.8%
Kimberly-Clark (KMB) is another dividend stock that looks poised to make new 52-week highs. Since this company sells many items that fill basic needs such as diapers, paper towels, etc., it has one of the most stable product lines a company could hope to have. This company owns well-known consumer brands such as Kleenex, Cottonelle, Viva, Huggies diapers, etc. These popular products have allowed the company to raise dividends consistently for many years. In 1997, it paid an annual dividend of 94 cents per share, but thanks to annual dividend raises, the company pays out $2.96 per share. That means the dividend tripled in about 15 years, and that kind of track-record keeps investor interest high for these shares, especially on any dips. The average stock in the S&P 500 Index yields about 2%, and Kimberly-Clark shares offer investors a payout that is twice as large. A strategy of buying this dividend stock on dips is likely to reward long-term investors.
Here are some key points for KMB:
Current share price: $75.50
The 52 week range is $61 to $75.50
Earnings estimates for 2012: $5.10 per share
Earnings estimates for 2013: $5.50 per share
Annual dividend: $2.96 per share which yields 4%
JP Morgan Chase (JPM) recently posted solid financial results, and the stock is inching closer to a 52-week high. The company announced a net profit of $5.4 billion or $1.31 per share for the first quarter of 2012. These results boosted the already strong balance sheet, and the company raised the dividend and announced a new $15 billion common share repurchase plan. JP Morgan is revered as one of the most solid and well-run banks in the world. This stock still looks very undervalued, as it trades below book value of $47.64 and for about 8 times earnings. However, the bank and other financial stocks are more prone to declines when economic uncertainty is running high. With many major issues remaining with the European debt crisis, there is a good chance more buying opportunities will come for bank stocks in 2012, so waiting for dips makes sense.
Here are some key points for JPM:
Current share price: $43.90
The 52 week range is $27.85 to $46.49
Earnings estimates for 2012: $4.85 per share
Earnings estimates for 2013: $5.54 per share
Annual dividend: $1.20 per share which yields 2.8%
International Paper (IP) shares have been in an uptrend ever since trading around $28 per share in December. This company is a major manufacturer of paper and packaging products, and it operates globally. International Paper was started in 1898, and it makes everything from tissue to writing paper to coated paperboard. As economic activity and retail sales improve in the U.S. and elsewhere, International Paper will benefit. This company has a solid balance sheet, with about $4 billion in cash, and the book value is $15.15 per share. The dividend yields about 3.2%, which is far better than the roughly 2% dividend paid by the average stock in the S&P 500 Index. These shares are just about $3 away from the 52-week high, and as the year progresses and the economy expands, it is likely that this stock will reach new highs.
Here are some key points for IP:
Current share price: $33.22
The 52 week range is $21.55 to $36.50
Earnings estimates for 2012: $2.69 per share
Earnings estimates for 2013: $3.51 per share
Annual dividend: $1.05 per share which yields 3.2%
Data is sourced from Yahoo Finance. No guarantees or representations are made. 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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.