In a world of economic turmoil and low interest rates, investors are often looking for ways to generate solid returns with minimal risk. Within the stock market, there is arguably no less risky pool of stocks than the 2012 list of dividend aristocrats, a group of 51 companies that have each increased dividend payments for at least 25 consecutive years. I recently wrote about four of the newcomers to this list, but there is another subset of this list that I'd like to bring to your attention with the goal of finding the safest of the safe dividend stocks on the list.
Of these 51 companies, only 5 have a TTM dividend yield of over 1% and a payout ratio of less than 25% per DRIP Investing’s online resources. These companies are: Exxon Mobil , Aflac , Family Dollar , Cintas and Sigma-Aldrich .
Here is a look at the strong health of each company (and its dividend!):
|CAPS Rating||5 stars||5 stars||3 stars||4 stars||4 stars|
|Market Cap (in billions)||$409.6||$22.0||$7.4||$5.2||$8.7|
|TTM Dividend Yield||2.6%||2.8%||1.3%||1.3%||1.1%|
|TTM Payout Ratio||21%||24%||21%||24%||20%|
|10-year Dividends Per Share||$15.16||$7.90||$4.83||$4.06||$4.96|
|1-year Stock Performance||24.7%||35.3%||25.8%||36.9%||16.7%|
|10-year Stock Performance||160.5%||56.3%||126.3%||-3.5%||186.6%|
|TTM Revenues (in billions)||$434.8||$24.1||$9.1||$4.1||$2.6|
|TTM Operating Margin||11.4%||17.0%||7.6%||13.2%||26.2%|
|TTM Price / Earnings||9.35||8.57||17.84||18.24||19.16|
|Forward Price / Earnings||10.97||6.83||15.01||14.84||17.03|
|Price / TTM Sales||0.93||0.89||0.81||1.25||3.34|
|TTM Levered Free Cash Flow Yield||3.8%||18.5%||-1.8%||6.4%||4.3%|
|Price / Book Ratio||2.48||1.51||5.64||2.40||3.63|
|Debt / Equity Ratio||0.09||0.27||0.41||0.60||0.32|
|Source: Yahoo! Finance on September 6, 2012|
- Exxon Mobil is the world's second largest company in terms of market capitalization, and this massive scale and worldwide presence provides it with a unique stability amongst major oil and natural gas producers. While the company does experience short term volatility relating to oil prices, it has proven itself to be a long-term market beater. When you factor in today's P/E of 9, the company's small 21% payout ratio and the current dividend yield of 2.6%, further growth in the dividend and share price appears on the horizon for the foreseeable future.
- Aflac's niche insurance businesses in the United States and Japan continue to provide the company with a competitive advantage. Market turmoil has punished many insurers recently, but the TTM P/E of 9 and forward P/E of 7 tell the story of a company that has successfully managed risk and plans to continue its growth trajectory. Like ExxonMobil, Aflac's earnings power, dividend yield of 2.8% and payout ratio of just 24% support the thesis that Aflac's dividend will keep growing.
Copyright © 2009 The Motley Fool, LLC. All rights reserved.
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