Buy and ho-ho-hold: 5 stocks for dividend lovers

Stocks beat socks any day, so here are some gift ideas for that special someone.

By MoneyShow.com Dec 13, 2012 11:50AM

Tetra Images JupiterimagesBy John Heinzl, Globe Investor.

 

What investing style does Santa prefer? Buy and ho-ho-hold, of course.

 

With that in mind, Yield Hog has put together a list of holiday-themed dividend growth stocks to consider for that special someone on your gift list. Imagine the surprise when little Caitlin wakes up Christmas morning to find 100 shares of Wal-Mart (WMT) or Enbridge (ENB) under the tree!

 

Dividend stocks are the gifts that keep on giving. Long after this year's hottest toys are forgotten and the latest electronic gadgets are piling up in a landfill, these stocks should still be cranking out dividends. And, if past trends continue, the dividends will be growing for many years to come.

 

I'll take that over a necktie any day. (Hint, hint.) Consider this a starting point for further research.

 

Tim Hortons (THI)
Dividend yield: 1.8%
5-yr. dividend growth: 24.6%

 

Nothing says "I love you, honey" like a Tim Hortons gift card. And nothing says "I really, really love you, honey" like a board lot of Tim Hortons shares.

 

Tims stock has cooled considerably -- it's down more than 20% from its 52-week high -- as same-store sales growth has slowed. But that's a good thing because the stock is now reasonably priced, with a forward price-to-earnings multiple of a little more than 15.

 

The modest yield won't make you rich, but Bloomberg estimates that Tims will boost the dividend by 19% in February.

 

Mattel (MAT)
Dividend yield: 3.4%
5-yr. div. growth: 10.6%

 

Mattel's stock has been on a roll, boosted by strong sales of Fisher-Price, American Girl, and Monster High products, which have offset weakness in Barbie and Hot Wheels. Yet the stock still trades at a reasonable 13 times estimated 2013 earnings, and the dividend is growing, with a 16% increase expected in February, Bloomberg estimates.

 

The toy industry has been pressured by the popularity of tablets and video games, but the growing middle class in China, India, Brazil, and Russia -- where toy spending is still a fraction of that in North America -- will increase demand for Mattel's products.

 

Enbridge (ENB)
Dividend yield: 2.9%
5-yr. div. growth: 12.9%

 

What does a pipeline company have to do with holiday season, you ask? Well, among other things, Enbridge owns a natural gas utility, so my family doesn't have to freeze our buns off while we open presents on Christmas morning.

 

What I really like about Enbridge, though, is its predictable dividend growth: With $30 billion of "secured" and "highly certain" projects on the way, the company is projecting double-digit growth in earnings and dividends for the next five years. The next dividend hike, expected this week, will be about 13%, Bloomberg estimates.

 

Wal-Mart (WMT)
Dividend yield: 2.2%
5-yr. div. growth: 13.5%

 

Wal-Mart has increased its dividend every year since making its first payment back in 1974, so the trend is your friend with the world's biggest retailer.

 

With its US operations back on track, Wal-Mart had its "best ever" Black Friday, just days after it reaffirmed the top end of its full-year earnings per share guidance -- which, if achieved, would represent an 8.6% increase from a year earlier.

 

The stock's had an impressive run, but the forward P/E of 13.4 isn't out of line, and Bloomberg expects Wal-Mart to boost its dividend by about 10.7% in February.

 

Apple (AAPL)
Dividend yield: 1.8%
5-yr. div. growth: n/a

 

Caution: Apple is a volatile stock that may not be suitable for risk-averse investors.

 

That said, some analysts say the company is poised for a blowout quarter that could send the stock skyward. That's what happened after last year's holiday results beat expectations, and it could happen again given reports of strong iPhone 5 sales.

 

Apple's cash hoard of $121 billion -- and growing -- virtually guarantees the company will raise its dividend, which it introduced at $2.65 a quarter earlier this year. There's even talk of a special dividend to beat a potential tax increase next year, but that's not a slam dunk.

 

The writer personally owns shares of Enbridge, Tim Hortons, and Wal-Mart. Read more from Globe Investor here...

 

More from MoneyShow.com

23Comments
Dec 13, 2012 2:49PM
avatar
Dividend stocks are not worth buying at this time, the greedy politicians will be taxing the gains away from you. Wall street will be adjusting the price downward on dividend stocks due to this loss of return on investment. The lying politicians making the Sunday talk show circuit say this won't hurt the average senior citizen, but the truth of the matter is retired folks will be hit hard by the increased tax rate on dividends. Many on fixed incomes have been depending on stock dividends as a key supplement to social security income since banks pay next to nothing on CDs and money market accounts, and bond yields are kept low by the Feds manipulation in the markets.
Dec 13, 2012 3:46PM
avatar

Everytime....A bunch of experts or even pundits....Come up with a list...

Most of us could come up ( I can) with a better list....Or just as good.

 

Given the Criteria...It's not Rocket Science.

Altria...Tobacco and other consumables....5.6% apx.(MO)        

Phillip Morris...Tobacco..............................3.8%  "   (PM)

Reynolds....Tobacco...................................5.6%  "  (RAI)

Target.....Retail...........................................2.3%  "  (TGT)

General Electric...Conglomerate.................3.6%  "   (GE)

Medtronics....Medical devices/healthcare...2.5%  "  (MDT)

Walgreens....Drugs and Retail....................3.0%  "  (WAG)

Waste Management...Hauler/recycler.........4.2%  "   (WM)

Kinder Morgan mlp....Pipelines...................5.1%  "  (KMP)

Conagra.....Food and Processor.................3.7%  "  (CAG)

Statoil...adr....Oil/Ngas................................4.4%  "  (STO)

REITS.....real estate..bear watching..pay...12-16%

other MLPs, LPs....diff. taxing...........pay.....5-8%

 

Disclosure: commentor own shares in these companies..

Dividends vary some and have increased within last 5 years on many.

Also some equities have appreciated in FMV, by 20-50% over last 2-3 years.

Dec 13, 2012 5:12PM
avatar
well ////dividends getting eaten like a shark frenzy ...no where  to hide and make a few bucks off money you have already had stolen by the federal government ....THANK AN OBAMA VOTER !!!!!
Dec 13, 2012 4:27PM
avatar

Majesty824.....Yes I would certainly add AT&T and Verizon to the list...Very Good.

We used to own several blocks of AT&T.....Sold all quite a while back...Years.

Call it diversification...

But do own a lot of Frontier (FTR) ,did not list because of depreciation and "Lowering of dividend."

Still pays.....pays 10% and is increasing back in value...

But with dividends that we have recieved over the last few years, we are a little above even.

And if an Investor had bought shares 6 months ago, it would have made the list...I put together.

 

Most equities in the Telcom Sector are doing "fairly well" the last couple of years....

The old "widow stocks."

Dec 13, 2012 9:17PM
avatar

Delmar......Excellent choices also.. And there are more then a few that have doubled since 2008 or 2009 Spring......I mentioned KMP as one of our holdings, it's excellent..Increased most every year.

 

We have 4 holdings that are in the 10%+ plus range...

Including starting with Frontier (telcom).

The others are REITS or MLPs/LPs..

I tried to list strong dividend payers/increasing and appreciative(gainers) stocks/equities.

MLPs are treated a little different as far as taxing..

Also didn't want list anything under 2.0%

Our best legitimate gainer is Home Depot (HD), more then a doubler, only pays 1.85% dividend now because of price appreciation....Think Phillip Morris is second place.

Also with REITS or mREITS.....they are becoming questionable probably within the next year or two, because of interest rates, or maybe even div. cuts.

Traders can do what they want....And I don't deal with day-trader type stocks..Too old.

 

Dec 13, 2012 5:31PM
avatar
Dividends are taxed as ordinary income not like a capital gain.  Raising capital gains tax will only hurts you if you sell and probably only an additional 5% hit.  It could be a lot worse, remember the fifties?
Dec 14, 2012 5:43PM
avatar
The best way to invest and have dividends is not in US dollars.Ex an ADR such as TTM indian stock! The Rupee is more stable than the dollar which is in decline.
Dec 13, 2012 3:13PM
avatar

I guess the take-away here...Would be some people won't buy stocks, PERIOD...

 

No dividend paying, nor appreciating or risk growth....That pretty much covers any of them worth buying.

Dec 14, 2012 11:46AM
avatar
there are a lot of better stocks with higher yields and capital gain potential
Dec 13, 2012 5:23PM
avatar
Don't Blame Greedy Politicians about raising Dividend taxes.  remember- Someone named Bush had USA in 2 wars without paying for them ( except with the blood of our young GIs.)  Time to start paying!
Dec 13, 2012 4:31PM
avatar
Endeavor......I always thought it was "Beener",which is what someone ought to do, to him.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125
125 rated 1
264
264 rated 2
485
485 rated 3
679
679 rated 4
640
640 rated 5
617
617 rated 6
632
632 rated 7
493
493 rated 8
276
276 rated 9
153
153 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.