2 Solid Stocks for the Income Investor
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In this ultra-low rate environment, investors are hard-pressed to get any return, much less any exceeding the current inflation rate of approximately 3%, as reported by the Bureau of Labor Statistics (which, of course excludes food, energy, health-care, and education, among other things consumers generally use and currently experiencing inflation considerably above the 3% level, but that's a different topic). However, the two stocks below not only have dividend yields exceeding 3%, but look poised to continue churning out healthy profits securing and quite possibly continuing to raise their great dividends.
The Dow Chemical Company (NYSE: DOW) is a giant in the chemicals industry since its founding in 1897 and last year made an enormous $60 billion in revenue and $2.8 billion in net income. The company is simply a juggernaut and looks like a quality holding for the conservative income investor. Trading at just a 13x trailing P/E, 11x forward P/E, .6x P/S, .9x EV/S, generating a strong $2 billion in FCF this past year, and rewarding shareholders with a consistent 3.3% dividend makes Dow a wise investment.
E.I. du Pont de Nemours (NYSE: DD) has been a long-time Dow component since 1935 and been around since its founding all the way back in 1802. Since those humble beginnings, the company has mushroomed in size and as of last year had approximately $38 billion in revenue and $3.5 billion in net income. Trading at just a 13x trailing P/E, 11x forward P/E, 1.1x P/S, very strong ROE of 32% exhibiting management effectiveness, generating a healthy $3 billion in FCF this past year, and rewarding shareholders with a consistent 3.6% dividend makes DD another high-quality investment.
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