5 Dividend Stocks Defeating Bonds
As many investors continue to ‘buy-and-hold’ bonds out of a dissatisfaction for stocks, or a lack of confidence in the recession recovery, or even foggy conditions heading into November political elections, the bottom line is dividend stock yields are becoming even more attractive. A Bloomberg News headline caught my attention two days ago, titled, “Dividends are Beating Bond Yields by Most in 15 Years.” Rewind two weeks ago, and another headline from Reuters was “Home Sales at 15-year Lows.” If we take a big step back and really assess this 15-year mark, it puts us all back at 1995, a time when technology was driving innovative growth and the stock market was brewing what became an evident tech bubble down by 2000. Today, dividend stock yields are surpassing bond yields and home sales are in the gutter. As plenty of cash is on the sidelines, there is momentum building for stocks paying dividends. Are dividend stocks the first toe in the water for the rest of the stock market? Only time will tell, but for now let’s look at 5 Dividend Stocks beating the average sub-3% bond yields:
Hudson City Bancorp (HCBK): $12.04 and 5.1% Dividend Yield
The Paramus, NJ-based retail banking services company has met or beat earnings in the past 4 quarterly reports, a sign of consistent delivery. The trailing P/E ratio is 10.54 and the forward P/E ratio is 10.65. Also, HCBK is trading slightly above a book value of $11.25. Over the past year, the HCBK have traded between $11.35 and $14.75. Currently, HCBK shares are trading above the 50-day moving average of $11.97. As analysts have assessed Hudson City’s credit risk, most believe the company possesses a very attractive loan portfolio. As an economic recovery continues to realize, the demand for more loans continue to rise and HCBK has the ability to strengthen its loan portfolio, so long as they choose their loans wisely.
BCE, Inc. (BCE): $31.87 and 5.5% Dividend Yield
Canada’s largest telecommunications company has also met or beat earnings the past 4 quarters in a row. The trailing P/E ratio is 12.09 and the forward P/E is 11.08. BCE raised its dividend twice this year already. The ability of BCE to generate strong free cash flow allows the telecom bellwether to deliver and raise a hefty dividend, in addition to an appreciating stock price. Over the past year, BCE shares have traded as high as $32.09 and as low as $23.57. Shares of BCE are currently trading above 50-day and 200-day moving averages of support.
Progress Energy Inc. (PGN): $43.84 and 5.7% Dividend Yield
The Raleigh, NC-based utility holdings company primarily generates, sells and distributes electricity to Florida, South Caroline and North Carolina. Coming off the heels of a hot Summer, PGN stands to benefit from higher cash flow from high customer energy use and higher energy bills. Over the past 4 quarters, PGN has met or beat quarterly earnings estimates. The trailing P/E is 16.13 and the forward P/E is 13.85. PGN is currently trading above its 50-day and 200-day price moving averages as shares trade at the upper end of the 52-week price range.
Verizon (VZ): $30.83 and 6.5% Dividend Yield
I wrote about the Dow Darling on July 23rd when it was trading at $27 per share. Fast forward to today, Verizon shares have risen 14% in just 1 and a half months, with a very solid dividend. The company has met or beaten earnings the past 4 quarters, a great sign of consistency in the current economic environment. Also, VZ delivers over $38 revenue per share. The forward P/E is around 13. With a Price-to-Sales of under 1, the over 200,000 Verizon employees have many data points to be confident about owning shares in their company. VZ is a Dow component offering more satisfaction to investors than boring bonds. VZ is now trading above both its 50-day and 200-day moving averages.
Eli Lilly (LLY): $35.26 and 5.7% Dividend Yield
The Indianapolis-IN based pharmaceutical heavyweight stands to benefit from an aging baby boomer generation ready to treat any ill condition as soon as it arises. Heavy growth drivers for LLY include Alimta, Cymbalta, Humalog, Cialis and Effient. With a solid cash position and the ability to reward loyal shareholders with a 5.7% dividend, it’s a matter of time before LLY steps into the M&A action and selects the right pharma company target to integrate into their platform, or to release a potential future blockbuster after brewing up a breakthrough in their own laboratory. The trailing P/E is 8.71 and the forward P/E is 7.96. LLY has beaten earnings 3 out of the past 4 quarters. Shares of LLY have traded as high as $38 and as low as $32 over the last 52 weeks. LLY shares are currently treading above both the 50-day and 200-day moving averages, even if by a slight margin.