10 dividend stocks for shaky times

Cautious investors seeking steady dividends and strong fundamentals should consider these stocks.

By TheStreet Staff Feb 18, 2010 1:08PM

TheStreetBudget © Radius Images/CorbisBy Jake Lynch, TheStreet

 

Stocks have struggled this year in the wake of the 2009 rally, prompting many investors to turn to defensive names.

 

Cautious investors seeking steady dividends should consider these 10 stocks. They're rated "buy" and rank in the top 1% of our 5,000-stock coverage universe for financial strength.

 

10. Raytheon (RTN) is an aerospace and defense contractor, specializing in high-tech systems. Fourth-quarter net income rose 20% to $504 million and earnings per share climbed 27% to $1.30, boosted by a lower share count. Revenue rose 9.5% to $6.7 billion. Raytheon's operating margin widened from 10% to 11%. The stock advanced 19% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 2.3%
  • Price-to-Book Ratio: 2.1 vs. industry average of 5.6
  • Three-Year Annualized Profit Growth: 15%

 

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9. Becton, Dickinson and Co. (BDX) sells medical devices and diagnostic equipment. Fiscal first-quarter profit increased 1.4% to $316 million, or $1.30 a share, as revenue increased 12% to $1.9 billion. Becton, Dickinson's operating margin narrowed from 24% to 23%. Its stock increased 13% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 1.9%
  • Price-to-Book Ratio: 3.5 vs. industry average of 4.1
  • Three-Year Annualized Profit Growth: 22%

 

 8. C.R. Bard (BCR) sells medical products, such as catheters and stents, to health care providers. Fourth-quarter profit dropped 29% to $106 million, or $1.08 a share. Revenue advanced 6.7% to $677 million. Bard's operating margin expanded from 27% to 29%. Its stock declined 3.4% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 0.8%
  • Price-to-Projected-Earnings Ratio: 13 vs. industry average of 18
  • Three-Year Annualized Profit Growth: 19%

 

 7. National Health Investors (NHI) is a real estate investment trust that owns nursing homes and assisted-living centers. The company is scheduled to report fourth-quarter results on Feb. 22. Third-quarter net income climbed 9.5% to $17 million, but earnings per share jumped 31% to 63 cents. Revenue increased 32% to $21 million. The operating margin hit 82%. The REIT advanced 43% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Cash Distribution Yield: 6.1%
  • Price-to-Book Ratio: 2.3 vs. industry average of 1.8
  • Three-Year Annualized Profit Growth: 1.8%

 

6. Procter & Gamble (PG) sells household products, including Gillette razors and Tide detergent. Fiscal second-quarter net income dropped 6.9% to $4.7 billion, but earnings per share increased 13% to $1.01. Revenue climbed 6.4% to $21 billion. Procter & Gamble's operating margin widened from 21% to 24%. Its stock appreciated 25% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 2.8%
  • Price-to-Book Ratio: 2.7 vs. industry average of 14
  • Three-Year Annualized Profit Growth: 11%

 

5. Baxter International (BAX) makes health care products, ranging from intravenous fluids to surgical sealants. Fourth-quarter profit increased 0.5% to $572 million, or 94 cents a share. Revenue grew 11% to $3.5 billion. Baxter's operating margin remained steady at 23%. Its stock declined 0.3% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 2%
  • Price-to-Projected-Earnings Ratio: 12 vs. industry average of 18
  • Three-Year Annualized Profit Growth: 16%

 

4. Abbott Laboratories (ABT) sells medical supplies and diagnostic products. Fourth-quarter net income was unchanged at $1.5 billion, but earnings per share jumped 10% to 98 cents. Revenue increased 11% to $8.8 billion. Abbott's operating margin narrowed from 26% to 24%. Its stock advanced 1.7% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 2.9%
  • Price-to-Projected-Earnings Ratio: 11 vs. industry average of 11
  • Three-Year Annualized Profit Growth: 50%

 

3. Oracle (ORCL) sells business software and servers. Fiscal second-quarter profit rose 13% to $1.5 billion, or 29 cents a share. Revenue increased 4.5% to $5.9 billion. Oracle's operating margin widened from 36% to 39%. Its stock gained 42% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 0.8%
  • Price-to-Book Ratio: 4.3 vs. industry average of 4.7
  • Three-Year Annualized Profit Growth: 16%

 

2. Colgate-Palmolive (CL) sells household products, including toothpaste and soap. Fourth-quarter profit increased 27% to $631 million, or $1.21 a share, as revenue grew 11% to $4.1 billion. Colgate-Palmolive's operating margin rose from 23% to 25%. Its stock increased 32% during the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 2.6%
  • Price-to-Projected-Earnings Ratio: 15 vs. industry average of 15
  • Three-Year Annualized Profit Growth: 19%

 

1. McDonald's (MCD) sells hamburgers and soft-drinks through its franchises. Fourth-quarter profit increased 23% to $1.2 billion, or $1.11 a share. Revenue jumped 7.3% to $6 billion. The company's operating margin expanded from 26% to 28%. Its stock increased 15% over the past year.

 

  • Financial Strength Score: 9.9 out of 10
  • Dividend Yield: 3.4%
  • Price-to-Projected-Earnings Ratio: 13 vs. industry average of 35
  • Three-Year Annualized Profit Growth: 8.7%

 

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