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10 Low-Risk Dividend Stocks for a Volatile Market - views
MILLBURN, N.J. (Stockpickr) -- Last September, when we were in the midst of an earlier round of European sovereign and bank debt panic, I introduced a portfolio of 10 Low-Volatility Stocks for a Rising Volatility Environment, which included such stocks as Procter & Gamble (PG) and Wal-Mart (WMT).
The two criteria for inclusion in the portfolio were one-year historical volatility less than that of the S&P 500 and current dividend yields in excess of that of the S&P 500.
Once again, we are in the middle of a European centric credit crisis. The global stock markets have fallen, and volatilities have surged for the S&P 500 to levels not experienced since the fourth quarter of last year.
With that in mind, I have selected 10 more stocks that meet the same criteria. (As of the day I ran the search, the one-year realized volatility for the S&P 500 was 23.4%, and the index’ dividend yield was 2.1%.)
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Vector Group (VGR) operates two very disparate businesses. First is the tobacco business, through both the Liggett Group and Vector Tobacco. Vector’s cigarette businesses are the fifth leading producer of cigarettes in the U.S. Furthermore, the company was the first to settle with the US Government on tobacco litigation.
The other business is New Valley, a real estate business that also owns a 50% interest in Douglas Elliman Realty, the largest real estate brokerage company in New York City.
PPL (PPL) is an energy generation and marketing company in the U.S. and United Kingdom. The company is based in Pennsylvania and services markets from Montana to Wales. PPL controls or owns about 19,000 megawatts of generating capacity and delivers electricity and natural gas to 10 million customers worldwide. Its businesses are stable and cash-generating in nature.
National Retail Properties
National Retail Properties (NNN) is a real estate investment trust that specializes in single-tenant retail properties. The company owns a portfolio of nearly 1,500 freestanding properties, with a total of approximately 17.0 million square feet across 47 states. According to the company, National Retail Properties has increased its dividend for 22 consecutive years and has returned on average 12.5% to shareholders over the past 15 years.
HJ Heinz (HNZ) is a Pittsburgh-based food producer, most known for its Heinz 57 brand of ketchup. The company has a large portfolio of products and brands, including Ore-Ida Potatoes, Smart Ones and TGI Friday’s. The company operates for sales to consumers and foodservice establishments throughout the world.
Heinz was also featured recently in "7 Stocks Shoveling More Cash to Investors."
Lockheed Martin (LMT), which I also included in a portfolio of 7 Dividend Stocks Promising Growth and Protection earlier this year, is a U.S.-based defense contractor. In 2011, earnings per share and sales rose between 1% and 2%. 2012 is likely to be much the same for Lockheed Martin, due to the fiscal challenges of world governments.
Despite all of that, the company has managed to maintain a strong balance sheet and grow its dividends by about 22% a year for the past five years. After two years of slow growth and fiscal restraint, aging defense equipment and new technologies will spur on more growth in 2013 and beyond.
Lockheed Martin also shows up on a recent list of 9 High-Yield Stocks to Consider in Lieu of Bonds.
Allete (ALE) is an energy provider to 144,000 customers in the upper Midwest states of the U.S. through its Minnesota Power electric utility company. The company has also expanded into renewable energy via a wind unit, coal mining, natural gas and other clean energy ventures.
Bristol-Myers Squibb (BMY) is one of the world’s largest biopharmaceuticals in the world, manufacturing such popular and well-known pharmaceutical products as Abilify, Coumadin and Plavix. The company has also invested heavily in research and development into its pipeline of products, which focuses in many medical disciplines such as oncology, virology, neuroscience and cardiovascular disease.
Dr Pepper Snapple
Dr Pepper Snapple (DPS), one of the world's largest beverage companies, produces and markets a wide variety of carbonated and non-carbonated beverages worldwide. The company’s brands include Dr Pepper, Snapple, Nantucket Nectar, A&W Root Bear, Schweppes and Yoo-Hoo. The company is growing at a faster rate than PepsiCo (PEP) and pays a dividend yield in excess of both PepsiCo and Coca-Cola (KO).
Hershey (HSY) is world-known for its brand of chocolates and candies, including Hershey Kisses, Resse’s Peanut Butter Cups, Twizzler and York Peppermint Patties. The company is becoming increasing savvy by introducing gluten-free products, which is a growing market.
For a staid food company, with an above-average dividend, Hershey has a surprisingly low double-digits earnings growth rate. Hershey is also a member of the 7 Dividend Stocks Promising Growth and Protection porfolio.
Weis Markets (WMK) may not be a household name, but this $1.2 billion market cap company has been around since 1912 and is celebrating its 100th anniversary. The company operates supermarkets in Pennsylvania, Maryland, New Jersey, New York and West Virginia. Weis steadily and consistently grows revenues in the low single-digit percentages and earnings per share in the high single- to low double-digit percentages.
To see these stocks in action, visit the 10 More Low-Volatility Stocks for a Rising Volatility Environment portfolio.
-- Written by Scott Rothbort in Millburn, N.J.
At the time of publication, author had no positions in stocks mentioned.
Scott Rothbort has over 25 years of experience in the financial services industry. He is the founder and president of LakeView Asset Management, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of TheFinanceProfessor.com, an educational social networking site, and publisher of The LakeView Restaurant & Food Chain Report. Rothbort is also a professor of finance at Seton Hall University's Stillman School of Business.