|Written by GSCR Staff
|Wednesday, 22 May 2013 07:53
We rarely mention blue chip stocks in these pages but sometimes you gotta do what you gotta do. For those market watchers that are concerned about any modest decline in the stock market having a more pronounced effect on small cap stocks, one should consider some of the bluest of the blue chips. Below are 5 diverse stocks from the DJIA that each carry a dividend yield greater than 3% and trade below $80 per share and below the 15x P/E multiple on FY13 EPS estimates, which is considered the average forward multiple on blue chip stocks and the S&P 500 Index.
With the 10-year bond yield hovering around 2%, it is a bit surprising that some of the world’s biggest and best known companies still trade at reasonable P/E multiples and offer a dividend that is at least 50% greater than the bond yield, especially considering the market rise. With that said, step right up and diversify away.
Proctor and Gamble (NYSE - PG - $78.80):
PG has an annual dividend of $2.41yielding 3.06%. This is a phenomenal play on a diverse company with a focus on consumer staples. As any broker or advisor would state, “No matter how bad the economy gets people are still going to shower.”
Intel (NASDAQ – INTC – $24.15):
Intel is the bellwether for the computer chip industry and one of the old-line technology stocks that seems to have been overshadowed by other tech stocks due to their heavy exposure to the underwhelming computer space. INTC has a current dividend yield of 3.73% paying out $0.90 per year and carries a 12.8x P/E on FY13 EPS estimates.
Pfizer (NYSE – PFE - $28.78):
PFE looks undervalued from both from a dividend yield and P/E perspective compared the other major players in the mega-cap pharmaceutical space. The annual dividend is currently at $0.96 yielding 3.34% and has a FY13 P/E of 13.1.
AT & T (NYSE – T - $36.94):
‘Ma Bell’ is still around and kicking with a dividend yield of 4.87% and $1.80 annual payout. While there may be better growth options in telecom, this stock is stable and the company has expanded its products and offerings by adding more income sources. Its P/E is a reasonable 14.7x.
General Electric (NYSE- GE – $23.66):
A lot of active traders and growth investors do not like the GE as one prevailing sentiment is that the company is ‘over-diversified’. The criticism may be fair but the company’s multi-sector strategy makes the stock attractive from a low volatility and income generating perspective. GE is currently paying out $0.76 annually yielding 3.21% and has a 14.5x P/E multiple on FY13 EPS.
Have a great day.
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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