Why Wouldn’t You Acquire These Stocks?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As the market continues to struggle and find its footing, many investors are scratching their heads wondering what investment strategy to use. I believe it is safe to say that virtually all people personally invest to find the right balance between risk and reward, and many studies have shown that high quality stocks that pay consistent dividends fit this billing. Granted, finding "high quality" stocks is much easier said than done, but after some extensive research and follow-up analysis, below are a few stocks that I believe will outperform the market in the long run while proving to be high quality and providing some nice dividend income along the way.
Consumer and household products maker Clorox Company (NYSE: CLX) has a number of well-known brands, including its namesake cleaner, Hidden valley salad dressing, and Kingsford coal. The company is celebrating its 100th anniversary this year, and since its founding it has become a high quality company with $5.5 billion in revenue the past twelve months and a market capitalization near $10 billion. The company has been range-bound the past year, but this seems to have created a buying opportunity, as it now yields a very nice 3.4% dividend while sporting a small 59% payout ratio.
Investors can expect the dividend to be increased yet again, and with the company trouncing consensus analysts’ estimates the past two quarters, a higher share price should soon follow. One of its main competitors and one of my favorite holdings, Procter & Gamble (NYSE: PG), is worth a look as well, and I would even considering splitting a position between these two. PG is far bigger with a revenue base exceeding $82 billion and a market capitalization nearing $190 billion; it has demonstrated its staying power, as it just celebrated its 195th anniversary this past year (the company was founded in 1837). The company also sports an attractive 3.3% dividend yield, and with just a 61% payout ratio, investors can be confident that PG will raise its dividend yet again as it has done so beautifully for decades.
Dow behemoth and conglomerate United Technologies (NYSE: UTX) has been around since 1934, and since that time it has simply made money for investors. Now generating over $58 billion in revenue and $5 billion in net income the past twelve months, one would think that UTX does not have much more room to grow. However, one would be sorely mistaken, as this company will be a nice beneficiary of the continued growing global middle class (happening predominately in the Brazil, Russia, China, and India [“BRIC”] countries) while also expecting a pick-up in domestic sales, as the general economy is showing signs more and more each month of slow, but steady growth. Analysts seem to agree, expecting annual growth of almost 11% per year over the next five years, although they have shown to be conservative as United Technologies has greatly exceeded their estimates the past three quarters. With a tasty 2.5% dividend yield, investors are paid a comparatively nice amount, and at just a paltry 35% payout ratio, they can rationally expect that to be raised yet again in the near future.
I’d like to also say I appreciate you reading my thoughts and reiterate that these are just the views of the blogger and should not serve as a substitute for any professional financial advice or counsel in general. Respectful comments and questions are always welcome below on the comment board.
Wiseinvestors owns shares of The Procter & Gamble Company. The Motley Fool recommends The Procter & Gamble Company. The Motley Fool owns shares of The Clorox Company. 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!