5 Safe Dividend Plays

Includes: ADP, INTC, PEP, WM, WMT
by: Mark Riddix

The market has lost 10% of its value over the past few weeks as fears about slow growth in domestic and international economies have grown. Many individuals have gotten fearful of investing and are looking for safe assets. Investors looking for safety who want to own stocks should look for companies with good earnings and solid dividends. Here is a list of stocks with strong balance sheets and whose shares can withstand a further market drop.

Intel (NASDAQ:INTC) has been an undervalued stock for quite some time now. Intel’s shares have traded between the teens and the upper 20s for the last few years. The chipmaker’s shares have taken a nose dive over the past two weeks and the company’s yield has risen. Intel’s 84 cent dividend is looking more attractive as the stock continues to drop. At $20 a share for the stock, Intel is yielding 4%.

Wal-Mart (NYSE:WMT): The nation’s largest retailer is close to becoming a 3% yielder for dividend investors. The company currently has a dividend payout of $1.46 per share and a stock price of $50. WMT offers price stability and a dividend that is safe because of the large amount of free cash flows that the company generates.

Waste Management (NYSE:WM) has the benefit of competing in an industry with high barriers to entry and little competition. Republic Services Inc. (NYSE:RSG) is the other big player in the industry. Waste Management is trading close to its 52-week low of $29.67. The waste management company pays a dividend of $1.36 per share and has a great yield of 4.5%. The stock would be even more attractive if shares drop further.

Payroll processing company Automatic Data Processing (NASDAQ:ADP) is a big beneficiary from the positive jobs report that was reported on Friday. As the country’s leading payroll processor, ADP benefits from any growth in hiring. ADP has a dividend payout of $1.44 per share and a 3% yield. While Paychex (NASDAQ:PAYX) has a higher dividend yield at 4.6%, ADP’s dividend is safer. ADP’s payout ratio is just 56% of earnings whereas Paychex’s payout ratio is an unhealthy 87%.

PepsiCo Inc. (NYSE:PEP) is not just a traditional beverage company. The food and beverage supplier makes a variety of food and snack products. PepsiCo just reported double-digit earnings growth of 10% as the company benefited from strong organic growth. Pepsi has not allowed the global slowdown to affect its results as the company produced strong earnings in foreign markets. The nearly $3 billion in cash and $8 billion in cash flow will keep the dividend safe. PepsiCo Inc. pays a dividend of $2.06 per share and has a yield of 3.2%.

All of the aforementioned dividend stocks have strong enough balance sheets and fundamentals to survive a stock market swoon.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.