By Robert Hauver
The S&P sank -17.27% from July 7th to its August 8th, causing many portfolio losses. Where can you find some solid dividend stocks to help you through the next market pullback? Try the Dividend Aristocrats – an elite group of dividend stocks that have raised their dividends for at least 25 consecutive years. Four members of the Dividend Aristocrats actually declined less than the S&P, rebounded more, AND are higher than their July 7th marks. Here’s how these four dividend paying stocks performed during and after the market correction:
Three of these iconic firms offer basic items: famous brand versions of junk food, soda pop/bottled water, and apparel. Con Ed is the major diversified utility in the metro NY area.
Dividends: Con Ed is listed in the Utilities section of our High Dividend Stocks By Sector Tables.
Financials: Although McDonalds and Coca-Cola have very strong mgt. metrics and good margins, further research will show that all 4 firms have lower ROE’s and higher ROI’s than their respective industry avgs. Relatively speaking, however, their reps as safe haven stocks renders them more attractive than their peers during a downturn.
Valuations: KO has superior EPS growth stats in the table below, and is the most undervalued on a PEG basis. Of course, utility stocks, such as Con Ed, aren’t known for having great growth figures, due to the heavily regulated environment in which they operate.
Two strategies that will bolster the defensive strength of these stocks are selling covered calls and cash secured puts.
VFC has the highest options yields of these 4 stocks, and we’ve listed it in our Covered Calls and Cash Secured Puts Tables, along with many other option selling trades.
The call and put premiums for VFC’s Feb. 2012 options are over 8 times the dividend amount during this 6-month term.
Cash Secured Puts:
Disclosure: No positions at this time.
Disclaimer: This article is written for informational purposes only, and isn’t intended as individual investment advice.
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