DJ Credit Suisse Unveils Roster Of Dividend-Paying Stocks To Consider (DJ)

Credit Suisse has come up with a list of relatively stable stocks offering dividends yields that exceed miniscule bond yields. In a research note Friday, Credit Suisse's U.S. equity strategist Douglas Cliggott looked at companies with a market capitalization exceeding $15 billion, firms that offer yields of 2.75% or greater, and a volatility beta that is 0.75 compared with the rest of the Standard & Poor's 500 index.

"We believe the sharp decline in long-dated U.S. Treasury yields is an important event," Cliggott wrote. The trend toward higher prices for government debt continued into Friday, with yields on the 10-year Treasury note and the 30-year bond plumbing multi-month lows at 2.53% and 3.60%, respectively. Bond prices move inversely to their yields. "We believe the demand for U.S. financial assets with relatively high yields and relatively low volatility could remain elevated for several years," Cliggott said.

He found 24 companies that met the three criteria and, on average, offered twice the yield and 60% of the volatility. They also trade at 10% less than the trailing operating earnings of the S&P 500. The bottom line: cellphones and tobacco are the hot commodities in this department; pharmaceuticals and power companies are next on the list.

At the top of Cliggott's list is Verizon Communications Inc. (VZ), which offers yields of 6.5%, according to FactSet Research data. Verizon shares, part of the Dow Jones Industrial Average, have been trading at the top end of the volatility metric, but the shares are trading
generally within a range of $25 to $30. Cliggott, however, looked at returns over the last three months and found that Verizon's are among the highest, though that took a hit with Friday's down market. The cellphone company also has a market cap of $82.7 billion
and a price/earnings ratio of 13.2, according to FactSet.

The next two companies are tobacco giants Reynolds American Inc. (RAI), parent of R.J. Reynolds Tobacco Co., and Altria Group (MO), parent of Philip Morris. Reynolds is paying a dividend of 6.4% while Altria weighs in at 6.2%, according to FactSet. Reynolds' shares have steadily risen from the mid-$40 range a year ago to the mid- to high-$50 level now. With a P/E ratio of 11.3, its market cap is $16.5 billion. Altria's stock ride has been bumpier than that of Reynolds, but shares are up from around $18 a year ago to nearly $23 now. Total company market value is $47.5 billion with a P/E ratio of 12.

Those offering yields in the 5% range are Eli Lilly & Co. (LLY) and utility operators Duke Energy (DUK) and Southern Co. (SO).

The rest of the list is a who's who of Dow 30 and other top names, regardless of whether investors have profited from the stock price in the last 90 days. They include a number of names that have been down of late, such as Johnson & Johnson (JNJ), Kellogg Co (K), Lockheed Martin (LMT) and Colgate-Palmolive Co. (CL)

Also on Cliggott's list: Bristol-Myers Squibb Co. (BMY), American Electric Power Co. (AEP), Dominion Resources Inc. (D), Kimberly-Clark Corp. (KMB), PG&E Corp. (PCG), Kraft Foods Inc. (KFT), NextEra Energy Inc. (NEE), Abbott Laboratories (ABT), Sysco Corp. (SYY), Procter & Gamble Co. (PG), General Mills Inc. (GIS), Coca-Cola Co. (KO), McDonald's Corp. (MCD) and
PepsiCo Inc. (PEP).

The yields range from Verizon's 6.5% to Colgate-Palmolive's 2.8%, averaging more than 4%.

But there certainly are others for the dividend-minded to consider, according to MarketWatch columnist Mark Hulbert. In his newsletter, Hulbert says there also are considerable yields from such names as AT&T Inc. (T), now paying at 6.4%. There is also Exelon Corp. (EXC), with a dividend yield of 5.2%, as well as blue chips Pfizer Inc. (PFE) at 4.5% and E.I. du Pont de Nemours & Co. (DD), at 4.1%, according to FactSet.