7 Attractive Dividend Stocks

When investors purchase their initial position in a stock, it is usually after their most rigorous research. Once a stock is in their portfolio, some investors relax on the research for subsequent purchases. Each and every time you purchase a stock, you should run it through the same process as if you were buying it for the first time.

Case in point - my income portfolio currently consist of 8 ETFs and 27 individual stocks. Of the 27 individual stocks, only 7 of them would I consider purchasing today based on their valuation. They are listed below along with their buy below price and other information as of 9/12/2008:

AFLAC Inc (AFL) - Yield: 1.65%
Buy Below: $66.75
9/12 Close: $58.60
NPV MMA Diff: $13,075
Concern: The above data assumes a very aggressive dividend growth rate of 20%. With a low yield of 1.65%, AFL needs the high growth rate to be viable. From 1998-2007 the dividend growth rate averaged 22.3% with a low of 11.8% in 2001 to a high of 45.5% in 2007. Another concern is AFL's currency exposure in Japan, where roughly 75% of the company's earnings are derived.

BB&T Corporation (BBT) - Yield: 5.72%
Buy Below: $35.79
9/12 Close: $34.05
NPV MMA Diff: $10,573
Concern: BBT's exposure to the banking industry's current issues with funding and credit quality.

BP Plc (BP) - Yield: 6.29%
Buy Below: $83.28
9/12 Close: $54.79
NPV MMA Diff: $34,463
Concern: Failure to come to an understanding with Russia over its operations in the region (TNK-BP), inability to diversify away from Russia and terrorism could adversely affect BP's future performance.

General Electric (GE) - Yield: 4.40%
Buy Below: $32.69
9/12 Close: $26.75
NPV MMA Diff: $8,103
Concern: Slower-than-expected global economic growth, as well as manufacturing and regulatory problems and the potential for higher delinquency rates in GE's financial services segment.

Paychex Inc (PAYX) - Yield: 3.65%
Buy Below: $49.88
9/12 Close: $34.01
NPV MMA Diff: $149,426
Concern: The highly competitive nature of the outsourcing industry as well as the threat of new entrants into the human resources segment could pose problems for PAYX in the future.

Pfizer Inc. (PFE) - Yield: 6.96%
Buy Below: $27.72
9/12 Close: $18.62
NPV MMA Diff: $56,099
Concern: Patent expirations and pipeline uncertainties could cause PFE significant problems in the future if left unresolved.

Royal Bank of Canada (RY) - Yield: 3.99%
Buy Below: $49.08
9/12 Close: $46.46
NPV MMA Diff: $250,334
Concern: A further weakening of the Canadian economy, which grew at only 0.3% in the June quarter, a prolonged housing-related downturn in the United States economy, and unexpected sharp currency fluctuations.

The buy below price is the minimum of the Mid-2 (as described in Fair Value Data) and price needed to generate the minimum NPV MMA Diff. (as described in Measure What's Important). As always, you will need to do your own research and reach your on conclusion as to appropriateness of adding any of these securities to your portfolio.

Disclosure: Long all the aforementioned securities.

Comments

[Tom B:]

Unless you plan to hold for at least 5 years, I'd skip PFE for now. Lipitor goes generic in 2010; Celebrex around 2012. These are BIG drugs.

Now probably IS a good time to get GE; they'll been "beat down" in the market the past 12 months.

Hey, Div4life, you like any Utes? I've got some DUK.

2008 Sep 16 02:40 PM

[Dividends4Life:]

I would speculate the PFE is the most risky of the group. I have not purchased any since 10/2007.

I am holding ED and PGN, both are trading above my buy price. It has been a while since I have looked at DUK.

D4L

2008 Sep 16 02:56 PM

[john s. gordon:]

PFE has been a disappointment, they have lots of cash on their balance sheet but management doesn't seem to know what to do with it. maybe return it to the stockholders as a special dividend?
> jack

2008 Sep 17 08:38 AM

[Donald Johnson:]

PFE's sinking. It's point and figure price objective is $8, down from $17.87. GE is at $22.62 and its objective is $13. It's being shorted on its huge financial exposure regardless of what it says. PAYX is sinking on weekly charts. It's at $32.12 with an objective of $52. PAYX rallies in anticipation of rising interest rates, which don't seem to be in the cards at the moment. I just sold BBT because it's a bank.

2008 Sep 17 12:47 PM

[jackooo:]

Inflation is 5.2% and recommend these stocks?

2008 Sep 17 04:38 PM

[G23ROCKS:]

I would add EXM to the list. 7.6% dividend. .18 PEG. EXM, a shipping company, engages in the ownership and operation of bulk carrier vessels. The company provides seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grain, steel products, fertilizers, cement, bauxite, sugar, and scrap metal. With the Olympics over, China should start ramping up its import of coal, steel, etc. With EXM, you get attractive yield plus a good shot at attractive price appreciation (from this level).

2008 Sep 17 07:40 PM

[Chuckhh:]

Many advisors over the years have touted GE. My wife insisted I buy GE for her retirement account many years ago. My retirement account is 5 times the size of hers and I convinced her a few years back to dump GE. Her account is now growing...

2008 Sep 17 09:40 PM

[WEBISKING:]

If you want the combination of growth and safety choose DOW KFT MO PM KO and JNj

2008 Sep 18 08:04 AM

[PeteK:]

None of my lawyer friends own any shares of any drug companies, wonder why ?

2008 Sep 18 08:09 AM

[Gaucho:]

TRY CALM this company has a yield of 5.12 and the dividend for this quarter is going to produce a yeild of around 8%. Add sugar to the pie with the fact that the shorts are stuck with over 100% of the shares shorted and a PEG of about .6.

You will not hear about this stock in financials since they are controlled by the hedge funds that are sorting this stock to their great regret.

2008 Sep 19 11:33 PM

[pennystocks...:]

@ Jeff J.

Maybe it's because your lawyer friends are dumb. Get a load of this: Due to five stock splits between 1978 and 2008, 100 shares of Johnson & Johnson bought in September 1978 for $ 82 apiece are now worth around $ 331.200.

2008 Sep 21 03:52 PM