Buy These Large-Cap Stocks for Sustainable Income

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

Following the recent article relating to the search for large cap dividend stocks, which have a record of paying sustainable dividends with decent yields, this article will unveil three more stocks with the similar screening criteria but a bit lower standard in terms of growth and yield. The screen has been run with five main criteria: (1) a minimum 10 years of historical dividends, (2) market cap more than $10 billion, (3) dividend yield is at least 3%, (4) payout ratio is at maximum 50%, and (5) the 10-year dividend growth is at least 5%. We have discovered Intel, Lockheed Martin and AstraZeneca in the previous posts, and we will discover three more in this article. Interestingly, those 3 companies are based outside of the US.

Bank of Montreal (NYSE: BMO), or BMO Financial Group, has nearly two centuries of operation in the financial services area. It is considered to be the second largest Canadian bank in terms of number of branches in North America. As of fourth quarter 2012, BMO had a total $532 billion in total assets and $328.3 billion in total deposits, with 1,571 branches. The majority of BMO’s net income was from personal and commercial banking, of $3.92 billion, accounting for 61% of the total net income. BMO is reported to have the longest dividend payment record in any company in Canada, of 184 years. In the last 10 years, the dividend payment has grown from $1.33 in 2003 to $2.86 in 2011, marking annualized growth of nearly 8% for the last 10 years. Currently, BMO is trading at $60.86 per share, with a total market capitalization of more than $39.6 billion. The current dividend yield is 4.6%, with the payout ratio of nearly 46%.

Royal Bank of Canada (NYSE: RY) is the largest bank in Canada with operations in 51 countries and 15 million clients worldwide. As of fourth quarter 2012, the bank had around $836 billion in assets and nearly $515 billion in deposits. Like BMO, the majority of its earnings were from personal and commercial banking, accounting for 56% of total earnings in 2012. The bank has reported that it has a target of payout ratio in the range of 40%-50%. Since 2010, it has had a payout ratio of less than 50%. The dividend has grown from $0.85 in 2003 to $2.31 in 2012, marking a growth of more than 10.5%. Currently, Royal Bank of Canada is trading at $59.82 per share, with the total market capitalization of $86.46 billion. The dividend yield is 3.8%, with the current payout ratio of 46%.

Total SA (NYSE: TOT) is a French oil and gas corporation with the operation in more than 130 countries, including the exploration and production operations in more than 40 countries. Total SA is considered to be the fifth largest publicly traded oil and gas company globally, with nearly $243 billion in revenue in 2011. As of December 2011, Total SA reported to have 11.4 billion BOE in its proved reserves. For the last 10 years, Total SA has paid consistent dividends, from $1 per share in 2002 to $2.51 per share in 2011, marking 10-year annualized growth of more than 9.6%. The current payout ratio is only 40.9%. The company is trading at $50.86 per share, with a total market capitalization of $114.82 billion. The dividend yield is quite decent at 5%.

Foolish Bottom Line

All those three companies mentioned above are having market-leading positions in the field they are operating in. In addition, they are paying sustainable dividends with reasonable payout ratios and decent yields to shareholders. Income investors might choose all three to be in their long-term income portfolios.

 

 

 

 

 

 


hoangquocanh has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Total SA. (ADR). 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!

blog comments powered by Disqus