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Analyzing 5 Dividend Stocks for ‘Buy’ Ideas

Dividend yielding stocks provide a great way for investors to hedge losses and maximize returns, if the yield is reinvested. They can even be used to provide regular income, much like a bond but with a bit more upside. While there is always a risk that the company will not pay out, the companies on this list have track records of consistent payouts that are decades long:

hedge fund research

1.   Intel Corporation (INTC) offers a dividend yield of 3.60%. The technology company recently traded at $23.26, near its 52-week high of $23.96. INTC has a 2.18 EPS and a 10.68 P/E ratio. Its nearest competitor is Texas Instruments Incorporated (TXN). INTC’s EPS is lower than TXN’s EPS of 2.60. INTC also has the lower P/E ratio, compared to TXN’s 11.67. Lansdowne Partners’ Paul Ruddock and Steve Heinz are fans of INTC. The pair increased their position in the company by 37% in the second quarter, bringing the total value of their position to $510 million.

2.   The Coca-Cola Company (KO) has a 2.80% dividend yield. The soft drink giant recently traded at $67.35 a share, down from a 52-week high of $71.77. KO has an EPS of 5.37 and a P/E ratio of 12.55. Pepsico (PEP), its closest competitor is trading at $61.93 down from its 52-week high of $71.89. It has a 15.53 P/E ratio and an EPS of 3.93. Warren Buffett has over $13.4 billion of Berkshire Hathaway’s fund portfolio invested in KO.

3.   McDonald’s Corp. (MCD) has a 3.10% dividend yield. MCD recently traded at $89.09, up from a low of $72.14, near its 52-week high of $91.22. It has a 4.94 EPS and an 18.03 P/E ratio. Its biggest competitor is Yum! Brands (YUM), the company behind names like Taco Bell, KFC and Pizza Hut. Yum is currently trading at $51.33, near the middle of its 52-week range. YUM has a lower EPS at 2.49 and a higher P/E ratio at 20.14. MCD is a favorite of Jim Simons’ Renaissance Technologies. He increased his fund’s position in the fast food chain by 35% in the second quarter, bringing his fund’s total stake to over $207 million.

4.   Lockheed Martin Corporation (LMT) offers a dividend yield of 5.30%. The aerospace and defense company recently traded at $75.57. It has an EPS of 7.99 and a P/E ratio of 9.46. Its nearest competitor is Boeing (BA). Boeing is trading at $62.40 a share, down from a 52-week high of $80.65. It has a lower EPS at 4.73 and a higher P/E ratio at 13.19. Jean-Marie Eveillard likes LMT for his First Eagle Investment Management fund, holding a position in the company worth over $277 million.

5.   Merck & Co. Inc. (MRK) has a dividend yield of 4.60%. It is trading at $32.67, near the median of its 52-week range. MRK has been trending up since hitting its 52-week low of $29.46 on August 10, 2011. It has an EPS of 0.93 and a P/E ratio of 35.20. The company is a little low, losing 7.63% over the last 52 weeks, whereas the SPY reports a 52 week return of 6.42% The pharmaceutical company is a favorite pick of John Levin, Levin Capital Strategies. He increased his fund’s holding by 78% during the second quarter, bringing its stake in MRK to a value over $123 million.