As 2010 draws to a close, investors are once again breathing a sigh of relief. The year may not have produced the stellar market gains that some were hoping for, but the S&P 500 will finish with double digit gains nonetheless. Most importantly, investor fears of a double-dip recession appear to have subsided and we are becoming more confident that the worst is behind us.
While the overall market will close 2010 with a respectable 12-13% gain for the year, some dividend stocks have posted monster gains this year, like Caterpillar’s (NYSE:CAT) 67% gain and DuPont’s (DD) 48% increase. Hopefully you were able to capture some of those nice gains in 2010. If not, there is always next year. Either way, now is the time that investors should start looking for the big stock winners of 2011 to add to their portfolio.
Here are five top dividend stocks for 2011 that we at eDividendStocks have highlighted for investors.
Cinemark Holdings (NYSE:CNK)
Cinemark is the highest yielding stock on this list, a 4.4% dividend yield. However, there is more to this stock than just a nice yield. The theater operator is expected to grow earnings by 40% this year and Wall Street is looking for earnings to jump another 16% in 2011.
Despite the impressive growth rate, CNK trades at only 12x consensus 2011 earnings estimates. As a result Wall Street is bullish on the stock and analysts have an average $22 price target on the stock.
Merck is going to end 2010 as one of the most disappointing stocks in the Dow Jones index. Despite the overall gains in the market, Merck will likely end 2010 in the red. Fortunately, investors can take solace in the stock’s impressive 4.2% dividend yield.
Wall Street analysts are expecting the pharmaceutical giant to get on track in 2011 with earnings climbing 13%. With the stock trading at less than 10x consensus 2011 estimates, the stock looks attractive at these prices. And of course investors get a 4.2% dividend yield as well.
Dr. Pepper Snapple (NYSE:DPS-OLD)
Dr. Pepper has millions of die-hard fans, but no bigger fans than its investors this year. DPS shares soared 27% in 2010 and the beverage stock delivered an impressive 67% dividend increase in May.
We are looking for another strong year from Dr. Pepper Snapple in 2011 with earnings expected to increase by over 17%. Investors can likely expect another dividend increase next year on top of the stock’s current 2.5% dividend yield.
The holiday shopping season has shown that consumers are once again opening their wallets to buy toys (both for their children and themselves). No one is more thrilled to see this than No. 1 toy maker Hasbro. The stock has been on a roll of late with the stock up 51% since the beginning of the year.
Wall Street expects Hasbro to continue its momentum into 2011 with earnings growth expected to accelerate to nearly 20% next year. Hasbro has been one of the best dividend stocks over the last 3 years and has the potential be a top dividend performer in 2011. We aren’t concerned about Hasbro’s 17x P/E multiple and expect to see the toy stock trading in the $50s next year.
International Paper (NYSE:IP)
International Paper stock price will finish the year deceivingly flat. However, the real story is that the stock is up over 25% since September. That impressive performance was largely fueled by International Paper’s stellar third quarter results. In fact, last quarter’s earnings results were the best since 1995.
The company’s strong financial results have investors bullish on International Paper in 2011. The company is expected to raise its dividend next year and Wall Street is looking for 24% earnings growth. However, the stock is still attractively priced at only 10x consensus 2011 earnings estimates.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.