It seems the trend of moving to defensive stocks is getting popular with big fund managers, and it's always good to review companies that might make a good investment. Here are two defensive stocks with respectable dividends, both with yields above 6%. I believe both are worth taking the time to explore more deeply if, as an investor, you are looking for a defensive stock to possibly invest in.
Northeast Utility Systems (NU)
Northeast Utilities is the largest utility in New England, operating in Connecticut, Western Massachusetts, and New Hampshire. The company's regulated businesses distribute electricity and natural gas, while its competitive business generates power for sale to other distributors.
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Deutsche Bank recently lowered the utility company to hold from buy, as the stock price has been approaching the $40 price target. It had a good quarter; analysts, on average, expected earnings of $0.45 per share on sales of $1.3 billion. Northeast Utilities actually reported earnings of $0.45 per share on sales of $1.6 billion; it tied EPS estimates and beat revenue estimates by $289.9 million. Perhaps it could have done better if it wasn't for the merger earlier in the year. Expenses related to Northeast Utilities' merger with Boston-based NStar caused second-quarter earnings to take a $30 million nosedive.
Presently trading at $38.60, the June dividend represents an increase of approximately 17% over the dividend Northeast Utilities paid on March 30, 2012. Annual dividend yield stands at 3.56%, and the company maintains a dividend payout ratio of 75.36%. It is a good stock to consider and looks even stronger because of the merger.
Murphy Oil (MUR)
Murphy Oil is an oil and natural gas company that produces, refines and markets petroleum products. The company owns and operates oil and natural gas wells in North America, the North Sea, Ecuador, Malaysia and the Congo, and runs three refineries.
Income from continuing operations was $295.40 million in the 2012 second quarter, up from $280.00 million in the second quarter 2011. The company's refining and marketing earnings from continuing operations were $76.3 million in the first six months of 2012, compared to earnings of $60.4 million in the same 2011 period. This quarter, it offered a 13.6% increase from the prior dividend, and the annual yield on the dividend is 2.3%.
All but two of Murphy Oil's 976 stations are located in front of Wal-Mart Supercenters in the South and Midwest. This partnership benefits both Murphy Oil, with an increased customer base, and Wal-Mart, with the additional service the stations provide its customers.