25 Cash Cows to Ride Out the Storm- Barron's 20 comments
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As the credit crisis grows more severe, cash-rich companies are looking increasingly attractive. Barron's Dimitra Defotis finds 25 cash cows likely to survive the current crisis. The companies are all U.S.-based, with market values of at least $10B, and with long-term debt-to-capital ratios well below the S&P 500's average of around 35%. The companies also have 2009 estimated earnings greater than the expected 2008 results.
Blue-chip stocks like Coca-Cola (KO) and Microsoft (MSFT) made the list, as did Illinois Tool Works (ITW), 3M (MMM) and CME Group (CME).
Some of the stocks offer a dividend as an added safety net to investors. Pfizer (PFE), for example, yields a healthy 6.8%, so investors shouldn't feel too despondent while waiting for a turnaround. Likewise, Allstate (ALL) and General Dynamics (GD) both provide respectable dividends.
For some cash-rich stocks, the question isn't whether they can survive the financial storm but whether now is the time to buy. Altria Group (MO) and T.Rowe Price (TROW) are less attractive bargains than some others on this list because they've fallen less than 5% over the last year.
The energy sector may boast some of the market's best values. Schlumberger (SLB), Smith International (SII) and Baker Hughes (BHI) should all benefit from a contracts backlog, even if oil and natural gas prices continue to fall.
- The rest of the list: ABX, ACN, ADP, AMAT, AOC, HPQ, INTC, MFC, MRK, NYX, SYK, TEL.
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This article has 20 comments:
Dividend yields are nice if the stock price holds up. But a good yield isn't much of a safety net with the share price drop many companies have had. It takes too long to recover. And you still have to hope they don't cut the dividend. In my opinion, in this environment you are better off to forget dividends and look for companies that have a reasonable chance to avoid a further big selloff.
I wonder if there is pressure that they will have to lower prices because of health care expense concerns, no matter who wins the election.
disclaimer: I am as pissed as anyone losing 66 K this qtr. in my 401K but trying to stay positive and look beyond this minute in time.
Read his latest interview at: jimrogers-investments....
No, you might not make more than that dividend, but you're surely not going to lose as much as you would in other sectors such as large US financials or global equities facing crisis.
No KFT, no JNJ, I guess no one consulted Mr. Buffett.
KO was $58 a year ago, now its $47.41 (down 3.83% today).
MSFT was $30 a year ago, now its $23.01 (down 0.95% today)
MMM was $95 a year ago, now its $57.37 (down 4.34% today)
SLB was $104 a year ago, now its $66.14 (down 0.99% today)
TROW was $57 a year ago, now its $46.05 (donw 1.98% today).
CASH COWS FOR WHO? WALL STREET? THE CORPORATIONS? Sure, go ahead and BUY NOW IN THE GREAT DEPRESSION # 2 and catch a FALLING KNIFE.
You either are a Wall Street/Corporate Stooge or you are misinformed. What difference does a small dividend make if you are losing 25% per year?
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