Top 10 Dividend Stocks to Buy Now

Blue chips Lockheed and RAI make list beside cinemas and small-cap manufacturers

Top 10 Dividend Stocks to Buy Now

More Than Just Big Yields

3381885 money in the hands e1283372289994 Top 10 Dividend Stocks to Buy NowFinding the best high-yield dividend stocks is no easy task. Zeroing in on companies with high dividends is only part of the equation, because those dividends need to be sustainable. And once you find a high dividend yield that is sustainable, you have to make sure the stock is going to be able to at least track the market and not offset its dividends with a slumping share price.

So which dividend stocks provide more than just a big headline yield? Well, I’ve made a list of 10, but more importantly, I’ve crafted a checklist of five items you should focus on when making a dividend stock investment:

1. Good Dividend History: A decent dividend increase in the last year.
2. Big Dividends Now: A current yield of at least 3.5%.
3. Potential for Dividend Growth: Considerable dividend growth projected over the next few years.
4. Solid Stock Performance: Share performance that has at least tracked the market over the past 12 months.
5. Strong Outlook for Shares: A compelling reason to think the stock will continue to perform.

Based on these benchmarks, here’s my list of the top 10 dividend stocks to buy now: Cinemark (NYSE: CNK), Leggett & Platt Inc. (NYSE: LEG), Lockheed Martin (NYSE: LMT), Kimberly-Clark (NYSE: KMB), National CineMedia (NASDAQ: NCMI), Reynolds American (NYSE: RAI), SCANA Corporation (NYSE:SCG), Sinclair Broadcasting Group (NASDAQ: SBGI), TAL International (NYSE: TAL) and Unisource Energy (NYSE: UNS).

Dividend Stock #1 Cinemark (CNK)

cnk Top 10 Dividend Stocks to Buy NowCinemark Holdings Inc. (NYSE: CNK) owns movies theaters across the United States and Latin America, with a total of about 5,000 screens in America alone.

  • Current Yield: 4% (84 cents a share annually)
  • Dividend History: In June 2010, Cinemark paid a quarterly dividend of 18 cents a share. This July, it will pay 21 cents, for a nearly 17% increase.
  • Dividend Outlook: According to Bloomberg, the three-year expected dividend growth rate of CNK is 2.5%.
  • Recent Performance: Cinemark has surged over 20% so far in 2011, more than doubling the market. It is approaching a new 52-week high as of this publication.
  • Strong Outlook for Shares: Cinemark has seen improving revenue each year since 2007, connecting with movie-goers despite the recession. That’s in part because of growth and acquisitions — most recently it plans to buy a 12-screen cinema in South Carolina. The movie industry may not be booming right now, but CNK could cash in big time when box office receipts improve thanks to its growth over the last few years.

Dividend Stock #2 Leggett & Platt (LEG)

leg Top 10 Dividend Stocks to Buy NowFounded in 1883, Leggett & Platt Inc. (NYSE: LEG) designs and manufactures a wide range of products used in items from home furnishings to automobile interiors to wires and tubing for industrial use.

  • Current Yield: 4.1% ($1.08 a share annually)
  • Dividend History: In July 2010, Leggett & Platt paid a quarterly dividend of 26 cents a share. This July, LEG it will pay 27 cents, or a nearly 4% increase. LEG has paid dividends since 1939.
  • Dividend Outlook: According to Bloomberg data, LEG’s three-year dividend growth rate is expected to be 3.6%.
  • Recent Performance: Leggett & Platt has underperformed across the last year, but has really taken off in 2011. The manufacturer has doubled the market with a nearly 15% gain since Jan. 1, and is up against a new 52-week high.
  • Strong Outlook for Shares: Part of the reason Leggett & Platt has performed so well is because of strong earnings at the end of April, which showed a 10% jump in sales, beating expectations, and higher guidance for fiscal 2011. Big growth of 28% in the specialized products segment gives investors reason to be optimistic about LEG stock for the rest of the year.

Dividend Stock #3 Lockheed Martin (LMT)

LockheedMartinLogo e1305045062401 Top 10 Dividend Stocks to Buy Now

Lockheed Martin Corp. (NYSE: LMT) is America’s premiere aerospace and defense company, and consistently ranks at or near No. 1 in the list of U.S. federal contractors.

  • Current Yield: 3.9% ($3 a share annually)
  • Dividend History: In June 2010, Lockheed Martin paid a quarterly dividend of 63 cents a share. This July, it will pay 75 cents, or a 19% increase.
  • Dividend Outlook: According to Bloomberg, the three-year expected dividend growth rate of Lockheed is a stunning is 15%.
  • Recent Performance: Though flat over the past 12 months, as the crisis in Libya has brought defense spending into focus, LMT shares have rallied 14% in 2011, despite talk of federal spending cuts.
  • Outlook for Shares: Lockheed has proven it is a necessary player in the U.S. defense budget, and even if that budget sees some reductions, you can bet that Lockheed will still benefit. For instance, it is currently working on the F-35 Lightning II joint strike fighter, a contract worth hundreds of millions of dollars, which will be delivered at the latter part of this decade. Lockheed has the reputation and resources to thrive even if leaner spending lies ahead.

Dividend Stock #4 Kimberly-Clark (KMB)

kmb Top 10 Dividend Stocks to Buy NowKimberly-Clark Corp. (NYSE: KMB) is a paper products giant, best known for brands such as Kleenex, Scott, Huggies and Kotex. It sells products in more than 150 countries.

  • Current Yield: 4.1% ($2.80 a share annually)
  • Dividend History: In July 2010, Kimberly-Clark paid a quarterly dividend of 66 cents a share. This July, it will pay 70 cents, or a 6% increase. Also, the company has paid dividends since 1935.
  • Dividend Outlook: According to Bloomberg, the three-year expected dividend growth rate of KMB is 5.6%.
  • Recent Performance: Kimberly-Clark has tracked the market so far in 2011, but has been rallying strongly in the past 30 days. KMB stock is up against a new 52-week high as of this writing.
  • Strong Outlook for Shares: Part of the reason Kimberly-Clark has been on a tear is because it raised revenue guidance in its April 25 earnings report. The company’s global reach grants it stability, and its big brand names and connection with consumers means KMB products will be in demand even if the economy sours.

Dividend Stock #5 National CineMedia (NCMI)

ncmi Top 10 Dividend Stocks to Buy NowNational CineMedia (NASDAQ: NCMI) is a massive in-theatre advertising network across North America, serving ads on screen and throughout cinema properties that reach almost 18,000 movie screens.

  • Current Yield: 5% (80 cents a share annually)
  • Dividend History: In June 2010, the company paid 18 cents a share for its quarterly dividend. This year, CineMedia will pay 20 cents a share. That’s an 11% dividend increase.
  • Dividend Outlook: According to Bloomberg, National CineMedia has a three-year expected dividend growth rate of 10.3%.
  • Recent Performance: The biggest flaw in NCMI is its recent performance. The company recently swung to a quarterly loss in its latest earnings report, and shares are off almost 20% year-to-date in 2011.
  • Strong Outlook for Shares: Though a bit risky due to its recent earnings and stock performance, NCMI may be a strong growth buy as advertisers return to the screen and movie-goers head back to the theater. Revenue increased 9% from 2009 to 2010, and is set to grow 9% again this year. As we enter the blockbuster summer movie season, NCMI may be a good buy before a rebound.

Dividend Stock #6 Reynolds American (RAI)

ReynoldsAmerican Top 10 Dividend Stocks to Buy NowReynolds American (NYSE: RAI) is the tobacco giant behind such iconic brands as Winston, Camel and Kool cigarettes.

  • Current Yield: 5.5% ($2.12 a share annually)
  • Dividend History: In June 2010, the company paid 45 cents a share for its quarterly dividend (adjusted for a 2-for-1 split). This year, it will pay out 53 cents a share in June. That’s a nearly 16% increase.
  • Dividend Outlook: According to Bloomberg, Reynolds American has a three-year expected dividend growth rate of 8.2%.
  • Recent Performance: Reynolds American stock is up about 27% in the past year, compared with about 17% gains for the Dow Jones Industrial Average.
  • Strong Outlook for Shares: Amid economic uncertainty and a lack of other income investments, the reliability of Big Tobacco is popular with many investors. That buying pressure is good for shares, and coupled with the fact that “sin stocks” selling guilty pleasures tend to do well in tough times, RAI has a strong sales outlook.

Dividend Stock #7 SCANA Corp. (SCG)

scg Top 10 Dividend Stocks to Buy NowSCANA Corporation (NYSE: SCG) is a regional utility serving over 300,000 customers in South Carolina.

  • Current Yield: 4.6% ($1.94 a share annually)
  • Dividend History: In July 2010, the company paid 47.5 cents a share for its quarterly dividend. This year, it will pay out 48.5 cents a share in July. That’s a 2% increase. Dividends have been paid since 1946.
  • Dividend Outlook: According to Bloomberg, SCANA has a 3-year expected dividend growth rate of 2.5%. Not blockbuster, but respectable.
  • Recent Performance: SCG stock is up about 11% in the last year, lagging the broader market a bit. However, shares are very close to a new 52-week high.
  • Strong Outlook for Shares: Utility stocks are safe-haven investments, and while some money has been moving out of these sleepy income plays in the last year, the recent focus on U.S. debt woes and fears of inflation are driving some traders back to low-risk plays like utilities. SCANA may not be sexy and won’t double your money, but shares should stay strong.

Dividend Stock #8 Sinclair Broadcasting (SBGI)

sbgi Top 10 Dividend Stocks to Buy NowSinclair Broadcast Group (NASDAQ: SBGI) is a television station owner that serves 35 markets across the United States.

  • Current Yield: 4.8% (48 cents a share annually)
  • Dividend History: After cutting its dividend of 20 cents a share in 2009, Sinclair reinstated its dividend in February at 12 cents. That’s down from pre-recession levels, but much better than the zero cents it was paying a year ago.
  • Dividend Outlook: According to Bloomberg, Sinclair Broadcasting has a three-year expected dividend growth rate of 8.3%.
  • Recent Performance: Thanks in large part to a pop after its dividend announcement, SGBI shares are up over 22% so far in 2011. But Sinclair was going strong before that, too, tallying gains of 40% in across the past 12 months.
  • Strong Outlook for Shares: Fiscal 2010 revenue topped pre-recession levels, and after a few shortfalls in the depths of the recession Sinclair has seen five straight quarterly profits. Advertisers are starting to return to the airwaves once more, and that means Sinclair could have momentum on its side now that it is back in favor with dividend investors.

Dividend Stock #9 TAL International (TAL)

tal Top 10 Dividend Stocks to Buy NowTAL International Group (NYSE: TAL) sells and leases storage and shipping gear to freight companies, including containers and chassis for trucks. TAL has 1 million 20-foot equivalent units of dry cargo, refrigerated and specialized containers.

  • Current Yield: 6.1% ($2 a share annually)
  • Dividend History: In June 2010, the company paid 30 cents a share for its quarterly dividend. This year, it will pay out 50 cents a share in June. That’s a whopping 66% dividend increase.
  • Dividend Outlook: According to Bloomberg estimates, TAL International Group has a three-year expected dividend growth rate of 12.3%.
  • Recent Performance: TAL stock is up about 32% in the last year, nearly double the Dow Jones.
  • Stock Outlook: As economic activity increases and shipping demand rises, TAL will continue to prosper. What’s more, strong demand for food commodities like corn and grain will lead to higher demand for container shipping as the need for U.S. exports rises.

Dividend Stock #10 Unisource Energy (UNS)

uns Top 10 Dividend Stocks to Buy NowUnisource Energy (NYSE: UNS) is an energy utility based in Arizona that provides gas and electric service in the Southwest across some 1,200 square miles.

  • Current Yield: 4.5% ($1.68 a share annually)
  • Dividend History: In June 2010, Unisource paid a quarterly dividend of 39 cents a share. This June, it will pay 42 cents, or a nearly 8% increase.
  • Dividend Outlook: According to Bloomberg, Unisource has a very impressive three-year dividend growth rate expected to be 16.9%.
  • Recent Performance: UNS stock has basically tracked the market over the last year or so, but more importantly, this low-risk utility has added about 25% in the last five years — more than double the Dow.
  • Strong Outlook for Shares: While there’s nothing to indicate this utility will blow the doors off in 2011, Unisource is a low-risk income investment that has seen good revenue growth from 2009 to 2010, and is on track for another solid year. Shares are approaching a new 52-week high and could continue to march higher.

Jeff Reeves is editor of InvestorPlace.com. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, http://investorplace.com/2011/05/dividend-stocks-to-buy-cnk-leg-lmt-kmb-nci-rai-scg-sbgi-tal-uns/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.