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Is JNJ A Good Stock To Buy?

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Is JNJ A Good Stock To Buy?

Posted on 24 September 2013 by DividendInvestr

Is JNJ A Good Stock To Buy?“Is JNJ A Goog Stock To Buy” was written 2 years ago. Please read on and share your thoughts with us.

Johnson & Johnson (JNJ) is a high dividend stock. With a dividend yield of 3.52%, it is popular among defensive investors who seek to protect themselves from inflation. Additionally, the company has more than 250 operating companies conducting business worldwide. Therefore, it is also a good choice for investors who want to have foreign market exposure. JNJ is very popular among hedge funds. Warren Buffett had $2.8 billion invested in JNJ. Ken Fisher, Ric Dillon, Bill Miller, Jean-Marie Eveillard and many other famous hedge fund managers were also bullish about the stock. We are going to take a closer look at Johnson and its comparable companies, including Abbott Laboratories (ABT), Covidien (COV), and Novartis AG (NVS) to determine which stocks promise higher returns for investors.

The company reported revenues of $16 billion for the third quarter of 2011. Second quarter operating income declined 19% to $3.7 billion. The company has $10.95 billion in net cash on its balance sheet. Its EPS is $4.90 during the past 12 months. Johnson is expected to earn $4.97 in 2011 and $5.24 in 2012. The stock recently traded at $64.78. Its current PE ratio is 15.77.

Valuation:

Johnson’s earnings are expected to grow at 6% over the next five years. This implies that its PE ratio using its 2014 earnings is around 11.00. Abbott’s expected growth rate is 8.11% and its corresponding PE ratio is 9.10. Covidien is expected to grow at 11.29% and its PE ratio using its 2014 earnings is around 8.70. Navartis is expected to grow by 5.45% over the next 5 years and its PE ratio using its 2014 earnings is around 8.78. Johnson looks overvalued compared to other stocks in the group. Covidien and Navartis seem to be trading at a discount as their PE ratios in 2014 are below 9.

Volatility:

Volatility is generally used as a measure of risk. Johnson’s beta is 0.62, Abbott’s beta is 0.31, Covidien’s beta is 0.90 and Navartis’ beta is 0.67. All these stocks are less risky than the market and Abbott is the most stable one. Johnson’s beta is the second lowest among the group, which means that investors bear relatively low risk purchasing JNJ.

Hedge Fund Ownership:

Stocks that are favored by hedge funds tend to outperform the market by a few percentage points on the average. Johnson was the most popular stock among hedge funds at the end of second quarter. It was held by 57 hedge funds. Abbott was the second popular stock. 39 hedge funds were bullish about it. Ken Fisher, Ric Dillon, and Bill Miller were bullish about both JNJ and ABT. There are 33 hedge funds bullish about Covidien and 21 bullish about Navartis.

Insider Purchases:

Stocks purchased by insiders tend to outperform the market on the average. Johnson and Covidien both were purchased by one insider during the past six months. Other stocks do not have insider purchases during the same period.

Overall our analysis points out that Johnson & Johnson is a bit overvalued compared to other stocks in the group. However, other statistics of the stock beat its comparables. JNJ has low risk and is the most popular stock among hedge fund managers and corporate insiders, indicating some form of perceived value in the stock. We like Johnson & Johnson and we urge investors to do an in-depth analysis of the stock for their portfolios.

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Insiders Are Selling These 4 Dividend Stocks

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Insiders Are Selling These 4 Dividend Stocks

Posted on 19 June 2012 by DividendInvestr

Insider TradingThere are many reasons why insiders sell stock in their own company. Some decide to diversify their holdings, others may do it for tax reasons, while many investors see a rally in the company’s stock as excessive and find the current price level as a good opportunity to unload their shares. Insider sales could be potential red flags, sending a strong signal to investors that, perhaps, now may be a good time to sell the shares. Here are four dividend-yielding stocks that recently insiders have been selling heavily.

FirstEnergy (FE) is a $20.3 billion diversified energy company providing electric power to 6 million customers in six U.S. states. The utility company pays a dividend yield of 4.6% on a payout ratio of 81%. FirstEnergy’s peers Dominion Resources (D) and American Electric Power Co. (AEP) pay dividend yields of 3.9% and 4.7%, respectively. The company’s shares have hit 52-week high of $48.49 and are up 13.3% from the beginning of the year.

Since the beginning of May, there have been four insider sales of FirstEnergy stock. (read the rest of the article here)

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Cheap Dividend Stocks

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7 Cheap Dividend Yielding Stocks with Upside Potential

Posted on 06 February 2012 by DividendInvestr

Cheap Dividend StocksDividend stocks outperformed the market in 2011. This was a result of the huge decline in long-term interest rates. However, not all dividend stocks performed well in that environment. Some stocks lost a chunk of their market cap and as a result their current dividend yields increased enough to attract some dividend investors. These stocks aren’t for conservative dividend investors though. These are potentially cheap stocks that can appreciate significantly if they can get over with the problems that have been bugging them during the past year. The dividend yield pays investors while they wait for the potential capital gains. Continue Reading

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Highest Dividend Yield

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5 Cheap Stocks To Buy Now

Posted on 27 January 2012 by DividendInvestr

Cheap Stocks To Buy NowWhen it comes it investing, it can be difficult to know whether a company is trading in momentum, meaning that the price is artificially low or high because of a temporary surge in trading activity. To prevent buying a stock at high momentum, which could greatly limit the potential upside, an investor could look at the stock’s Relative Strength Index (RSI). This measures looks at the strength of a stock’s pricing by looking at recent close transactions. The closer to 50 a stock’s RSI, the more accurate its pricing. If the stock has a low RSI (i.e. Under 40), it has been oversold and the lower the RSI, the greater the likelihood the stock priced artificially low. Conversely, if a stock’s RSI is over 60, it could be overbought. The higher the RSI, the more likely that this has caused the stock’s share price to swell.

The companies on this list are priced have low RSIs (under 40) and low forward P/E ratios, indicating that they are priced to buy: Continue Reading

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Blackrock

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6 High Dividend Stocks With Excellent Profits

Posted on 11 January 2012 by DividendInvestr

High Dividend StocksProfit margin of a company is one of the most important elements which determines future performance of the stock. The companies with the consistent high profit margins made Warren Buffett one of the richest people in the world. Coca-Cola (KO) is a good example for the stocks with consistent high profit margins. Buffett made his first investment in Coca-Cola in 1988 by buying 6.2% of the company. Between 1988 and 2011, the market cap of Coca Cola rose from $18 billion to $153.8 billion.  Coca-cola now has a gross profit margin of 61.7% and net profit margin of 29.8%. Currently Buffett’s stake in the company is 8.7%. Buffett made more than $7 billion with his Coca Cola investment. Warren Buffett’s all other favorite stocks such as Moody’s (MCO), Burlington Northern Santa Fe Railway, Mastercard Incorporated (MA) and Verisk Analytics (VRSK) have high net profit margins. Continue Reading

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Jim Cramer

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Jim Cramer’s 5 Favorite Stocks

Posted on 11 January 2012 by DividendInvestr

Jim Cramer is one of the most famous TV personalities in America. He is the host of Mad Money on CNBC. Cramer obtained his law degree from Harvard College in 1984. He ran his own hedge fund between 1987 and 2001. Cramer has also authored six money management books.
We prepared a list of five stocks that have been recommended at least three times by Cramer on Mad Money during the last 30 days. Here are Jim Cramer’s stock picks. Continue Reading

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Top 10 Warren Buffett Dividend Stocks

Posted on 10 October 2011 by DividendInvestr

Warren Buffett, the “Sage of Omaha”, is one of the world’s premier fund managers. The first 50 years of his career was record-breaking, earning him nods from his investing peers, as well as the mainstream media. His performance since the turn of the century has been down to say the least; Warren Buffett’s alpha dropped from 10-12% per year to around zero. However, he still has a good eye for large cap, dividend yielding stocks. Here is a list of his top 10 dividend stocks:

1. Coca-Cola Company (KO), the famous soft drink company, is Buffett’s largest stock. His position is valued at $13.4 billion. It recently traded at $65.42 and has a dividend yield of 2.80%. The stock has a $150.21 billion market cap and a price to earnings ratio of 12.19. Boykin Curry of Eagle Capital Management is also a fan.
2. Procter & Gamble Co. (PG) is a global consumer packaged goods company and it is Buffett’s fourth largest position at $4.88 billion. PG has a market cap of $172.67 billion and a dividend yield of 3.30%. It recently traded at $62.84 and has a price to earnings ratio of 15.99.
3. Kraft Foods, Inc. (KFT) is Buffett’s fifth largest position; he owns a $3.5 billion stake in the company. KFT is a food manufacturing company and has a market cap of $58.42 billion and a price to earnings ratio of 18.90. It has a dividend yield of 3.50%. It recently traded at $33.08 a share.
4. Johnson & Johnson (JNJ) is one of the world’s leading healthcare companies. Buffett owns a $2.8 billion position in the company. JNJ offers a dividend yield of 3.60%. It boasts a market cap of $170.12 billion and a price to earnings ratio of 14.85. JNJ recently traded at $62.08.
5. ConocoPhillips (COP) is a global energy company. It has a dividend yield of 4.20% and a market cap of $83.74 billion. COP has a 7.69 price to earnings ratio; it recently traded at $60.99 per share. Buffett owns a more than $2 billion stake in the company.
6. M&T Bank Corporation (MTB) provides commercial and retail banking. It has a 4.00% dividend yield and recently traded at $68.52 a share. It has a market cap of $8.61 billion and a price to earnings ratio of 9.66. Buffett owns $471.7 million in the company. MTB is also a favorite of Jean-Marie Eveillard, First Eagle Investment Management.
7. Sanofi Aventis (SNY) is a global healthcare services company. Buffett owns $163 million in the company. SNY offers a 4.00% dividend yield and a price to earnings ratio of 14.61. It has a market cap of $85.58 billion and recently traded at $31.88.
8. General Electric Co. (GE) is a diverse company; it provides media, technology and financial services worldwide. Buffett owns $146.7 million in the company. GE has a dividend yield of 3.990% and recently traded at $14.69 per share. It has a $155.72 billion market cap and a price to earnings ratio of 11.56.
9. United Parcel Service, Inc. (UPS) is a global package delivery service that delivers a 3.30% dividend yield. It has a market cap of $61.02 billion and a price to earnings ratio of 15.33. UPS is Buffett’s 19th largest position by value, at $104 million. It recently traded for $62.22/share.
10. GlaxoSmithKline (GSK), the drug manufacturer, is Buffett’s 21st largest position at $64.8 million. GSK has an impressive dividend yield of 5.00%. It recently traded at $40.53. GSK boasts a market cap of $103.56 billion and a price to earnings ratio of 20.66. Ken Fisher, Fisher Asset Management is also a fan.

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