6 Dividend Stocks With Recent Broker Upgrades

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 |  Includes: BBY, CEO, DPS, DUK, HSBC, JNJ
by: Vytautas Drumelis

I ran a screen for broker rating changes last week and picked out only the stocks that have been upgraded by brokers and have a relatively high dividend yield (higher than 3%). This list is a quick-pick list only that requires further research into each of the stocks before making an investment decision. However, I believe it can give some food for thought if you are looking for stocks with high dividend yields and recent positive fundamental changes.

1) HSBC Holdings plc (HBC) provides various banking and financial products and services.

On June 13, 2012, HSBC Holdings plc was upgraded from Neutral to Outperform at Credit Suisse.

The company has 4.80% trailing annual dividend yield, 4.20% forward annual dividend yield, 4.40% 5-year average annual dividend yield and pays out 50.03% of its earnings as dividends. Other market ratios: P/E Ratio: 10.68, Forward P/E Ratio: 6.38, P/S Ratio: 2.89, P/B Ratio: 1.04, PEG Ratio: 0.45.

The median target price projected by analysts is $41.84.

2) Progress Energy Inc. (PGN), a utility holding company, engages in the generation, transmission, distribution, and sale of electricity in North Carolina, South Carolina, and Florida.

On June 12, 2012, Progress Energy Inc. was upgraded from Sell to Hold at ISI Group.

The company has 4.10% trailing and forward annual dividend yield, 5.00% 5-year average annual dividend yield and pays out 118.01% of its current earnings as dividends. Other market ratios: P/E Ratio: 33.12, Forward P/E Ratio: 18.21, P/S Ratio: 2.03, P/B Ratio: 1.79, PEG Ratio: 6.57.

The median target price projected by analysts is $55.88.

3) Best Buy Co. Inc. (NYSE:BBY) operates as a retailer of consumer electronics, computing and mobile phone products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China.

On June 14, 2012, Best Buy Co. Inc. was upgraded from Sell to Neutral at Citigroup.

The company has 3.90% trailing annual dividend yield, 3.20% forward annual dividend yield and 1.80% 5-year average annual dividend yield. Other market ratios: P/S Ratio: 0.13, P/B Ratio: 1.87, PEG Ratio: 0.97.

The median target price projected by analysts is $21.50.

4) Johnson & Johnson (NYSE:JNJ) engages in the research, development, manufacture, and sale of various products in the health care field worldwide.

  • On June 13, 2012, Johnson & Johnson was upgraded from Hold to Buy at Jefferies.
  • On June 13, 2012, Johnson & Johnson was upgraded from Neutral to Overweight at JP Morgan.
  • On June 13, 2012, Johnson & Johnson was upgraded from Market Perform to Outperform at Raymond James.

The company has 3.50% trailing annual dividend yield, 3.70% forward annual dividend yield, 3.10% 5-year average annual dividend yield and pays out 61.72% of its earnings as dividends. Other market ratios: P/E Ratio: 18.10, Forward P/E Ratio: 12.11, P/S Ratio: 2.79, P/B Ratio: 2.95, PEG Ratio: 2.18.

  • On June 14, 2012, Johnson & Johnson announced the completion of the acquisition of Synthes, Inc. for a total purchase price of $19.7 billion in cash and stock. Synthes will be integrated with the DePuy franchise to establish the DePuy Synthes Companies of Johnson & Johnson.
  • On June 13, 2012, Reuters reported that Johnson & Johnson expects to complete its $19.7 billion purchase of Swiss medical device maker Synthes Inc. on Thursday and that the deal will slightly boost company profit this year, rather than being a moderate drag on earnings as previously expected.
  • On June 12, 2012, Reuters reported that Johnson & Johnson had won U.S. antitrust approval to buy Swiss medical device company Synthes Inc if it sells some assets, according to the the Federal Trade Commission.

The median target price projected by analysts is $72.00.

5) CNOOC Limited (NYSE:CEO), through its subsidiaries, engages in the exploration, development, production, and sale of crude oil, natural gas, and other petroleum products.

On June 14, 2012, CNOOC Ltd. was upgraded from Buy to Conviction Buy at Goldman Sachs.

The company has 3.40% trailing annual dividend yield, 3.30% forward annual dividend yield, 3.10% 5-year average annual dividend yield and pays out 27.65% of its earnings as dividends. Other market ratios: P/E Ratio: 8.03, Forward P/E Ratio: 7.36, P/S Ratio: 2.34, P/B Ratio: 2.14, PEG Ratio: 0.83.

The median target price projected by analysts is $225.00.

6) Dr Pepper Snapple Group, Inc. (NYSE:DPS) engages in the ownership, manufacture, and distribution of non-alcoholic beverages in the United States, Canada, Mexico, and the Caribbean.

On June 12, 2012, Dr Pepper Snapple Group, Inc. was upgraded from Market Perform to Outperform at Wells Fargo.

The company has 3.10% trailing annual dividend yield, 3.20% forward annual dividend yield and pays out 46.79% of its earnings as dividends. Other market ratios: P/E Ratio: 15.63, Forward P/E Ratio: 13.38, P/S Ratio: 1.52, P/B Ratio: 4.00, PEG Ratio: 2.24.

The median target price projected by analysts is $42.50.

Comparison Charts

Below is the chart comparison with the stock price changes as a percentage for the selected companies for the last one-year period:

Click to enlarge

HBC ChartClick to enlarge

HBC data by YCharts

Here is a chart showing dividend yield history for the selected companies.

HBC Dividend Yield ChartClick to enlarge

HBC Dividend Yield data by YCharts

This chart shows historical dividend changes as a percentage for the selected companies.

HBC Dividend ChartClick to enlarge

HBC Dividend data by YCharts

Sources: Yahoo Finance, Google Finance, Finviz, YCharts.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.