For investments you can count on for the duration, many investors turn to large cap dividends. At this level, companies have ironed out management and mission issues that can plague smaller companies. When considering large cap dividends, those that have produced high earnings for shareholders in the past year appear particularly attractive. Keeping this in the forefront, we developed a list of large cap dividend stocks that have yields of 3% or better and strong profit margins. Additionally, we have only included dividend stocks with recently "Buy" or better ratings from industry analysts. We think you will be pleased by this assortment of intriguing dividend stocks.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
We first looked for large cap dividend stocks. We then looked for businesses that have posted strong earnings growth for shareholders over an extended period of time (1-year fiscal EPS growth rate>10%)(Net Margin [TTM]>10%). From here, we then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any sectors.
Do you think these large-cap stocks are at too low of valuations, given their fundamentals? Use our list along with your own analysis.
1) CME Group Inc. (CME)
|Industry:||Investment Brokerage - National|
CME Group Inc. has a Dividend Yield of 3.37%, a Payout Ratio of 80.86%, an Earnings Per Share Growth Rate of 89.73%, a Net Margin of 49.71%, and Analysts' Rating of 2.30. The short interest was 2.19% as of 08/17/2012. CME Group Inc. operates the CME, CBOT, NYMEX and COMEX futures exchanges worldwide. The company provides a range of products across various asset classes, such as interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather, and real estate. It owns and operates CME Clearing, a clearing house that provides clearing, settlement, and guarantees services for exchange-traded contracts and over-the-counter derivatives transactions; and is involved in the real estate operations.
2) GlaxoSmithKline plc (GSK)
|Industry:||Drug Manufacturers - Major|
GlaxoSmithKline plc has a Dividend Yield of 4.89%, a Payout Ratio of 73.28%, an Earnings Per Share Growth Rate of 223.80%, a Net Margin of 20.00%, and Analysts' Rating of 2.20. The short interest was 0.12% as of 08/17/2012. GlaxoSmithKline plc, together with its subsidiaries, engages in the discovery, development, manufacture, and marketing of pharmaceutical products, over the counter (OTC) medicines, and health-related consumer products worldwide. It offers pharmaceutical products in various therapeutic areas comprising respiratory, HIV, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterial, oncology and emesis, vaccines, and dermatologicals. The company provides prescription medicines to treat a range of conditions, including infections, depression, skin conditions, asthma, heart and circulatory disease, and cancer.
3) Williams Companies, Inc. (WMB)
|Industry:||Oil & Gas Pipelines|
Williams Companies, Inc. has a Dividend Yield of 3.83%, a Payout Ratio of 80.85%, an Earnings Per Share Growth Rate of 662.48%, a Net Margin of 12.64%, and Analysts' Rating of 1.90. The short interest was 2.24% as of 08/17/2012. The Williams Companies, Inc. operates as an energy infrastructure company in the United States. The company's Williams Partners segment owns and operates natural gas pipeline system extending from Texas, Louisiana, Mississippi, and the offshore Gulf of Mexico through Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Pennsylvania, and New Jersey to the New York City metropolitan area. It also owns and operates mainline and lateral transmission pipelines extending from the San Juan basin in northwestern New Mexico and southwestern Colorado through Colorado, Utah, Wyoming, Idaho, Oregon, and Washington to a point on the Canadian border near Sumas, Washington.
4) Merck & Co. Inc. (MRK)
|Industry:||Drug Manufacturers - Major|
Merck & Co. Inc. has a Dividend Yield of 3.82%, a Payout Ratio of 74.76%, an Earnings Per Share Growth Rate of 634.53%, a Net Margin of 14.17%, and Analysts' Rating of 2.10. The short interest was 0.86% as of 08/17/2012. Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The company provides human health pharmaceutical products, such as therapeutic and preventive agents for the treatment of human disorders in the areas of cardiovascular, diabetes and obesity, respiratory, immunology infectious diseases, neurosciences and ophthalmology, oncology, vaccines, and women's health and endocrine. It also offers vaccines, including preventive pediatric, adolescent, and adult vaccines.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.