The companies that have long-term competitive advantage tend to have higher gross margins than those that don't. Gross margin shows the percentage of surplus generated per unit of the product or service sold. To have a high gross margin, a company should have pricing power to recover not only the costs of the product or service sold, but also the costs of acceptance of risk, operating expenses, and the costs of debt.
We believe one of the best alternatives for conservative income investors is selecting dividend stocks with high gross margins. Below, we complied a list of five stocks that have gross margins of higher than 60%, market caps of over $20 billion, dividend yields of higher than 3%, and their EPS is expected to grow by over 8% over the next five years. We obtained market data from Finviz and Morningstar.
Abbott Laboratories (ABT)
BlackRock, Inc. (BLK)
Intel Corporation (INTC)
Newmont Mining Corp. (NEM)
Southern Copper Corp. (SCCO)
Abbott Laboratories : Abbott is a global healthcare company that provides pharmaceuticals, nutritional and medical products, including diagnostics and cardiovascular devices worldwide. Abbott has approximately 91,000 employees; more than 100 research, development and operation locations; and customers in more than 130 countries. Abbott has increased its dividend payout for 40 consecutive years.
ABT recently traded at $66.59 and has a 3.1% dividend yield. ABT gained 41.3% during the past 12 months. The stock has a market cap of $104.8 billion, P/E ratio of 21.6 and Total Debt/Equity ratio of 0.65. ABT also had an EPS growth rate of 22% during the last five years.
BlackRock : BlackRock is an investment manager that has 24 investment centers worldwide with account managers in 69 cities across 27 countries. BLK recently traded at $173.19 and has a 3.5% dividend yield. BLK gained 9.7% during the past 12 months. The stock has a market cap of $30 billion, P/E ratio of 13.9 and Total Debt/Equity ratio of 0. BLK also had an EPS growth rate of 26.2% during the last five years.
Intel Corporation : Intel Corporation designs, manufactures, and sells integrated digital technology platforms worldwide. Recently, Intel Corporation announced its Q2 earnings report, posting earnings per share of 54 cents, which beat estimates by 2 cents per share.
INTC recently traded at $26.23 and has a 3.4% dividend yield. INTC gained 28.8% during the past 12 months. The stock has a market cap of $132 billion, P/E ratio of 11.1 and Total Debt/Equity ratio of 0.15. INTC also had an EPS growth rate of 22.8% during the last five years. There were 50 hedge funds in Intel at the end of March. Intel was Renaissance Technologies 7th largest holding, with a position of $272 million.
Newmont Mining : Newmont Mining Corporation is in the business of acquisition, exploration, and production of gold and copper properties. NEM recently traded at $44.67 and has a 3.1% dividend yield. NEM lost 16% during the past 12 months. The stock has a market cap of $21.9 billion, P/E ratio of 42.1 and Total Debt/Equity ratio of 0.47. NEM had an EPS growth rate of -4.4% during the last five years.
Southern Copper Corp. : SCCO recently traded at $32.45 and has a 6.2% dividend yield. SCCO gained 12.6% during the past 12 months. The stock has a market cap of $27.6 billion, P/E ratio of 11.2 and Total Debt/Equity ratio of 0.61. SCCO also had an EPS growth rate of 3.7% during the last five years. Richard Chilton's Chilton Investment Company holds the largest position on SCCO with its $6.8 million investment.