Don't Miss These Enticing Dividends
Candice is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In an effort to cheer myself through the long hard months of winter monotony, I find my self singing from the ‘Sound of Music’ – ‘These are a few of my favorite things.’
As a woman, I tend to have a different style, different interests and different motivations than the typical Wall Street investor. These personality differences – caution, seeking to understand the business and asking questions – are particularly great strengths when investing for the long term at least in my opinion.
With that, here are a few of my favorite stocks and why they are my favorites.
I usually do not pick stocks that have anything to do with technology, as they are far too volatile. If Wall Street really likes them, they shoot up in price quickly but when they fall from favor they also drop far too rapidly. Fortunately, Corning (NYSE: GLW) is a bit off the beaten track for Wall Street. For those of you who do not cook, they make glassware. I remember my mother coveting a nice all-purpose glass bowl from Corning to cook with, but now they make TV screens, laptop screens and touch screens for mobile devices. They also have four other divisions, which have products in optical communication, life sciences and more.
The current problem with Corning is that television and laptop sales have dropped and other sales have not compensated for this deficiency. I believe this is a short-term problem that will resolve itself through Corning’s new products (like Gorilla Glass) and continuing research and product improvement.
The current price is a nice $12.31 – and that combined with a P/E of 9.7 - makes it easy to stock up. The net margin is an attractive 35% with very little debt on their balance sheet. The stock also has a dividend of almost 3%.
I have previously been a pharmacist, so I guess I will always have a soft spot in my heart for healthcare stocks. Demographics also make healthcare an attractive investment over the next 20 years or so. The baby boomers are aging and living longer than any other generation. This means lots of age related illness and obesity related illness. Diabetes and cardiovascular disease are hot topics at any medical conference and Glaxosmithkline (NYSE: GSK) is working feverishly to develop its pipeline of products to answer this unmet need. They also have biopharmaceuticals and vaccines in the works, which are less susceptible to generic replacement after a patent expires and are increasingly, diversified worldwide.
The stock price is $44.75 with a reasonable P/E of 14. I am not as comfortable with the debt level as I am with that of Corning, but they have accumulated it by settling lawsuits and restructuring which Glaxo defends by saying they have taken measures to avoid these situations in the future.. The net margin is also a healthy 18% with a tasty dividend of 5%.
Being a Canadian, I need a little Canadian content. For the Americans in the crowd, Cineplex (TSX: CGX) is a national chain of theaters. Lots of people talk of the recession and how that has affects our disposable income. People are becoming more and more particular about spending their hard earned dollars at overpriced theaters. The downside to this stock is that attendance at movie theaters is basically flat. The good news about Cineplex is Mr. Ellis Jacob the CEO is finding ways to max the potential of the theater going experience. He has opened new upscale theaters, which cater to the adult movie patrons by charging a bit more for tickets and serve alcoholic beverages. He also strives to run his operations as efficiently as possible because, after all, who wants to wait in line to pay $10 for popcorn?
All this to say, it is working. Attendance is flat but Mr. Jacob is driving profits through efficiency and innovation. The Globe and Mail recently published a great article that summarizes Mr. Jacob’s endeavors this past year and his plans for expansion in the future.
The financial case for Cineplex is a little harder to make than for either Corning or GSK. Their net margin is just under 5%. This does seem a little tight in an industry that is having trouble attracting new customers, but the dividend is a nice 4% which allows us to ‘get paid to wait’ while Mr. Jacobs leads us to a new era in entertainment. The debt to equity is a comfortable 40%. The sad news at least for me, is the stock is not exactly on sale. The P/E is just under 20 and really close to a 52 week high. I still really like the stock, I am just not happy about the inflated price. However, I may have to pay the price because everyone is really excited about Mr. Jacob’s new plans.
These are my favorite stocks so far this year. Maybe it is not such a bleak prospect after all. The year is young and there are plenty of opportunities and hope for the future. And the snow will melt too. Eventually.
Fool blogger Candi Munroe does not currently have positions in any of the stocks mentioned in this post. The Motley Fool recommends Corning. The Motley Fool owns shares of Corning. 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!