5 Dividend Stocks Sitting Out the Rally: Corning Incorporated (GLW), The Dow Chemical Company (DOW) and More

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The market is off to a quick start this year.

We're just a month into 2013, and already the S&P 500 is up more than 5%. Hundreds of stocks are testing all-time highs. The bad news for dividend seekers in this kind of an environment is that solid yields are even harder to come by.

Corning Incorporated (NYSE:GLW)But a few dividend stocks have been left out of this year's rally, and still yield better than 2%. Here's a look at some high-yielders that have gotten cheaper relative to the market in 2013.

Company Yield Payout Ratio YTD Return
Coach (NYSE:COH) 2.3% 31% (8%)
Time Warner Cable (NYSE:TWC) 2.9% 31% (8%)
Dow Chemical (NYSE:DOW) 3.9% 87% (1%)
Aflac (NYSE:AFL) 2.6% 22% 0%
Corning (NYSE:GLW) 3% 27% (5%)

Source: Yahoo! Finance.

Starting at the top, luxury handbag and accessory producer Coach reported surprisingly weak sales over the holiday quarter. Yes, the company's stellar brand helped it keep up growth overseas. And that was particularly true in China, where sales rose by 40%. But a slowdown in the U.S. market has investors worried that those sales can't grow fast enough to make up for soft growth domestically. CEO Lew Frankfort says that the dip stateside was due to "near-term challenges" like Hurricane Sandy and consumer worries over the fiscal cliff. Investors who agree have a chance to snap up shares at less than 15 times earnings, cheaper than they've traded for years.

Moving down the list, Time Warner Cable just booked 9% revenue growth for last quarter and a 6% rise in operating income. But continued losses in the company's cable video division helped slow residential services growth to just 1.1%. On top of that, programming costs are rising fast, especially for access to expensive sports broadcasts. Unfortunately, these trends show no signs of reversing. And it looks like cable subscribers will increasingly cut the cord as Time Warner tries to keep passing along all of those extra costs.

Dow Chemical is the biggest yielder in this group, but also lists a dangerously high payout ratio that's near 100%. But keep in mind that the ratio is inflated by huge restructuring and impairment charges that Dow took in the last year. Stripping that out, the company generated strong cash flows of more than $4 billion last year, more than enough to help management fund a 34% increase in the dividend payout. But while its true that Dow's nearly 4% dividend looks safe, business is hardly booming. Revenue fell last quarter by 1%. And a tepid global recovery won't be creating much of a tailwind for Dow in 2013, either.

Next up is Aflac, which boasts one of the lowest payout ratios around. The company distributed $464 million to shareholders through the first nine months of 2012, while booking 2.3 billion in net earnings. But that doesn't mean the insurance giant is being cheap with its investors. Aflac is a Dividend Aristocrat, and the company has raised its payout for 30 consecutive years. It is slated to report fourth-quarter earnings next week, when analysts think it will show a slight profit increase on a 9% boost in sales. The weaker yen might crimp results this quarter, but investors can be confident that Aflac will stay conservative with its payout ratio while aiming to keep boosting that dividend.

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