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

Page 1 of 2

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.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!