Three Dividend Payers For 2013

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

2012 was a turbulent year in the stock market with many ups and downs. When all was said and done we ended up with a 13.41% gain in the S&P 500. Here’s hoping for a prosperous 2013 for everyone, perhaps with a little less volatility this time!

To get my 2013 articles going I’m going to outline my favorite dividend picks of the year (we can revisit them in 2014 to see how right, or even wrong I was). They will all be dividend based stocks, the kind that I outlined the criteria of in my previous article.

AstraZeneca (NYSE: AZN)

AstraZeneca is a global biopharmaceutical company that offers medical solutions in a variety of areas including cardiovascular, gastrointestinal, oncology and respiratory, to name a few. The company has a wide selection of products already on the market and many more are outlined in their pipeline document.

I think that AstraZeneca will continue to grow throughout the world come 2013 and I will consider picking the company up on a drop.

<table> <tbody> <tr> <td><strong>Yield</strong></td> <td>3.8%</td> </tr> <tr> <td><strong>P/E</strong></td> <td>9.85</td> </tr> <tr> <td> <p><strong>Forward P/E</strong></p> </td> <td>8.34</td> </tr> <tr> <td><strong>Payout Ratio</strong></td> <td>58%</td> </tr> <tr> <td><strong>2012 Performance</strong></td> <td>+2.12%</td> </tr> </tbody> </table>

 

As you can see from the table, AstraZeneca has an attractive P/E ratio. The company also has a 3.8% yield, which is more than the 3% we were looking for. AstraZeneca does have a weird dividend pattern that is paid semiannually with a large payment in February and a smaller one in August. 

AstraZeneca's dividends remained somewhat stagnant prior to 2005, but have increased each year since then. The frequent increases and the 10+ year history of frequent payments gives this dividend payer a sense of high reliability.

Unilever (NYSE: UL)

Unilever is a consumer goods manufacturer that operates around the globe. The company offers products for personal hygiene such as Axe (Lynx), Dove and Vaseline, as well as some popular food and cleaning products such as Hellmann’s, Ben & Jerry’s and Surf.

Unilever has paid dividends on their stock since 1937 and they show no signs of stopping just yet, even despite having to cut payments in half in 2010.

Regardless of the drop I do consider Unilever an incredible company and they are worth the investment dollar. The company’s brands will always be sustainable and slight fixes at certain levels of the business will allow them to increase revenues and profits worldwide. Higher profits will lead to dividend increases and bigger smiles upon our faces!

<table> <tbody> <tr> <td><strong>Yield</strong></td> <td>3.3%</td> </tr> <tr> <td><strong>P/E</strong></td> <td>20.83</td> </tr> <tr> <td><strong>Forward P/E</strong></td> <td>16.53</td> </tr> <tr> <td><strong>Payout Ratio</strong></td> <td>65%</td> </tr> <tr> <td><strong>2012 Performance</strong></td> <td>+15.5%</td> </tr> </tbody> </table>

The dividend yield at Unilever meets my expectations. The P/E is slightly above 20 currently, but the forward P/E sits right around the 16.5 mark, a reasonable number. The payout ratio is a bit high at 65% which could prevent Unilever from increasing their dividend in 2013, something that we’ll have to watch out for.

Enterprise Products Partners (NYSE: EPD)

Enterprise Products Partners is a North American MLP that moves natural gas, natural gas liquids, crude oil and other chemicals around the states making large sums of money and paying a solid 5% dividend out to investors.

Over the last ten years the dividends have continued to get a boost from Enterprise Products Partners at an average rate of 7.6%. They will likely continue to boost the dividend for years to come as they make even more money in their position as the largest pipeline MLP in the United States.

<table> <tbody> <tr> <td><strong>Yield</strong></td> <td>5.2%</td> </tr> <tr> <td><strong>P/E</strong></td> <td>18.09</td> </tr> <tr> <td><strong>Forward P/E</strong></td> <td>19.17</td> </tr> <tr> <td><strong>Payout Ratio</strong></td> <td>87%</td> </tr> <tr> <td><strong>2012 Performance</strong></td> <td>+7.98%</td> </tr> </tbody> </table>

As you can see from the table above, we do have a nice P/E below the 20 mark that dividend investors should look for. The payout ratio is on the high end but MLPs do not pay their own taxes, that is left to the investor (don’t worry, this is not a complicated process). The trailing yield is 5.1% and forward is at 5.2%, both very enticing figure.

CAPS Loves These Stocks

AstraZeneca has a solid 4 stars on The Motley Fool’s CAPS game where most of the players love it, but the Wall Street guys are pretty mixed.

Both Unilever and Enterprise Products Partners have five star ratings. Enterprise Products Partners, unlike Unilever and AstraZeneca, is loved by Wall Street with none of the CAPS votes being on the negative side.

 


Ash1402 has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P. and Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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