As part of your homework you should determine how to narrow the field to the best options of the best stocks which have also fallen in value. Then whatever decision you make is a good one.
Recently Sean Pugliese and Allan Meyer for Wickham Investment Counsel examined the S&P 500 index for low-volatility high dividend stocks with a focus on safety and value. The criteria were:
S&P 500 index focusing on large caps names.
beta to identify our low-volatility stocks – measures how much the stock moves relative to the market, to error of safety , the beta should be less than 1.
dividend yield , focusing on yields higher than 3.5%
dividend payout is the dividend payment divided by earnings. A lower number is preferred.
debt-to-equity which is debt outstanding divided by shareholder’s equity. Less leverage is preferred even though the interest rates are very low.
price to earnings is a valuation metric. The lower the number the better.
Company Mkt Cap beta Div Div Debt/ P/E Recent Price
($ Bil) Yld % Payout Equity $
Duke Energy 66.3 0.4 4.2 73.5 130.8 17.1 90.31
Pinnacle West Cap 9.2 0.4 3.8 81.3 105.8 16.6 82.23
Verizon Comm 237.8 0.5 4.3 52.0 181.6 11.7 57.44
Southern 63.6 0.5 4.1 54.2 168.5 18.8 60.33
Exelon Corp 38.1 0.5 3.9 48.1 117.3 12.8 39.15
Kellogg 21.5 0.6 3.6 80.3 288.4 16.2 62.74
Edison Internl 21.9 0.6 4.2 64.3 121.9 13.4 60.27
Pfizer Inc 196.3 0.6 4.3 50.3 82.6 13.6 35.39
Public Service Ent 26.7 0.6 3.7 56.0 107.5 15.7 52.95
Walgreens Boots 38.6 0.6 4.2 46.1 71.6 7.6 43.98
The other companies in the listed chart are Entergy Corp, Omnicom Group, PPL Corp, United Parcel Service, Paychex and Juniper Networks
Linking to dividend paying stocks, the above will give you names to consider and how to narrow a field down. What metric is the most important to you? The reason you wish to narrow the field is the idea is to buy and receive the dividend and it is safe and will be issued every year. The idea is not to buy for capital gains although any company making money consistently will over time be traded at higher P?E multiples and capital gains will come. Take your time, narrow the field and make good choices.
There are more questions than answers, till the next time – to raising questions.