I have outlined why fundamentals look best at market highs, and worst at market lows. Just like we n...
3 Top Blue-Chip Dividend Stocks
10/20/2011 9:22 am EST
Harry Domash of DividendDetective shares three solid companies that not only pay good yields, but are determined to grow their dividends every year, in this exclusive interview with MoneyShow.com.
The people who are interested in buying stocks, I don’t know how many of them there are, but those who are seem to be looking at more stable dividend-paying stocks. Now, you look at those a lot. Can you give us a couple of names of some big-name blue-chip companies that you think look attractive now?
Well, DuPont (DD) is one that I really like right now. They’re in a lot of different fields. They make Corian, they make Kevlar, all sorts of chemicals, and they’re big in agriculture. Right now, they’re gaining market share from Monsanto in the seeds and that sort of area.
DuPont is paying about 3.7% yield right now, which is high…
As we’re recording this, you mean?
Yes, which is high for a company that size. They’re a fast grower, amazingly fast grower for that size of company, because they’re really big in emerging markets, and that’s where the action is in terms of growth these days.
So DuPont is a major growth stock paying a good dividend, mainly because they were beaten down a lot in the last few months so the yield went up to where it’s paying 3.7%. Compare that to what you get in the bank and it’s worth doing.
And the Treasuries…
Well, there’s McDonalds (MCD). We all know McDonalds. They are similar to DuPont in that a lot of their growth is coming from emerging markets now.
Okay. Well, they get about a third, I think, of their revenues from emerging markets. What happens if emerging markets slow down? They’ve been affected by the world economy too. Inflation is low there. Do you see that as having an effect on it too?
Well, I could, but a number of stores are going up a lot faster. You compare McDonalds here—the number of stores is relatively stable, whereas it’s growing a lot there. They’re adding stores everywhere.
So, the growth would slow if emerging markets slowed, but it would still be growing. It’s a good stock to have.
And what dividends are they paying now?
They’re paying 3.1%, which is not high—but they’re a grower. They grow their dividends. McDonalds about three years ago got religion in terms of dividends, started paying quarterly dividends, and they’ve been growing them. You can expect a dividend to grow about 10% a year probably.
Okay, and one more you say that looks good?
Well, Altria (MO). They make the US…
It’s the old Philip Morris, right?
The US Philip Morris company. They’re paying a 6% dividend yield.
All cigarette stocks are out of favor, always out of favor, because of their products, and because people think they are going to be sued, and so on…
But a lot of those suits, didn’t they have those and settle those years ago?
Well, the suits are always coming and going, but they never lost any significant ones.
Well, they settled for billions of dollars in a huge settlement with the states…
With the states, but like this year there were individual lawsuits from people who died from smoking and that sort of thing. They don’t lose many of those suits.
Despite it being a stable industry, they seem to grow their dividend about 5% a year, so it’s a good income play and there’s not a lot of risk to it. It goes up and down with the market, but it’ll go back up when the market goes…
Now, they also split their international division off into Philip Morris International?
Yes, so this MO is just the US company.
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