E I Du Pont De Nemours And Co (DD), Praxair, Inc. (PX): Five Value Line’s Dividend Picks to Play It Safe in the Materials Sector

Editor’s Note: Related tickers: Praxair, Inc. (NYSE:PX), Air Products & Chemicals, Inc. (NYSE:APD), Sonoco Products Company (NYSE:SON), Bemis Company, Inc. (NYSE:BMS), E I Du Pont De Nemours And Co (NYSE:DD), Syngenta AG (ADR) (NYSE:SYT), Monsanto Company (NYSE:MON)

Following a weak second half of 2012, the industrial materials sector has shown some signs of picking up pace. Even though the fiscal cliff concerns dampened demand across the U.S. economy and weak growth overseas continued to exert pressure in the first quarter, better days for the industrial materials are likely in the quarters ahead. The risks to the downside persist, but the outlook is more optimistic.

Among stocks in the materials sector, Value Line identifies a few dividend-payers with a proven track record of long-term price stability—referring to low volatility of price returns—and sound financial strength—implying solid corporate balance sheets.

Below is a closer look at five of its best-rated dividend payers, each yielding more than the average indicated dividend yield of the S&P 500 Composite Stock Price Index, and boasting a market cap of at least $3.6 billion. Not unlike this market-beating strategy, ardent investors would be wise to pay attention.

Praxair, Inc. (NYSE:PX)

The company is also focused on delivering productivity savings of at least 5% of total cost stack each year, which is helping boost, its operating cash flow. Praxair, Inc. (NYSE:PX)’s operating cash flow, at $2.8 billion in 2012, has grown at a 12% CAGR since 1992. As regards its financial performance in 2013, the company expects “base volumes to grow modestly given the current uncertainty in the macro-economic environment,” with adjusted EPS projected to grow by between 6% and 9%. The stock is valued at 17.2x forward earnings. Billionaire Steve Cohen significantly boosted his stake in Praxair, Inc. (NYSE:PX) during the first quarter; see Steve Cohen’s top picks.

Air Products & Chemicals, Inc. (NYSE:APD)

It now expects a full fiscal year 2013 EPS growth of between 0.9% and 3.7%. A faster pace of the global economy’s expansion in the second half could surprise to the upside. Valued at 15.5x forward earnings and boasting an EPS growth rate of 10.5% for the next year, Air Products & Chemicals, Inc. (NYSE:APD), like Praxair, is listed among the new Goldman Sachs’ cyclical stocks picks with “lower valuations and stronger growth expectations than the market,” as described by a MarketWatch article.