May has traditionally not been kind to stockholders, and this May was especially cruel. As of this writing, the S&P 500 is off 5.8% for the month. In addition, this year, the benchmark indices have broken down technically putting the near-term and intermediate-term market trends sideways.
Clear support rests at the following zones: S&P 500 1,293 to 1,264; Dow 12,100 to 12,300; and Nasdaq 2,737 to 2,775. Resistance for each is: S&P 500 1,340; Dow 12,716; and Nasdaq 2,900.
But the long-term bull market is still intact, and the summer patterns of the past two years appear to be repeating with projections of a sideways market through the summer.
With this in mind, this month’s top stocks to buy are all large-cap, high-quality dividend producers with a history of holding their uptrends in similar market conditions.
Here are your top stocks to buy for June:
Top Stock to Buy #1 – CVS Caremark Corp. (CVS)
CVS Caremark Corp. (NYSE:CVS) is the largest pharmacy health care provider in the United States. Earnings have been on a steady climb with estimates of $3.35 in 2012, up from $2.59 last year. The stock has a dividend yield of about 1.5%.
The chart is powerful. With a breakout from a “W” formation in December, the stock vaulted to a new high and appears to be consolidating for another breakout.
Fundamentalists have a target of $56, but the stock is in a strong uptrend and could break $60 before year’s end.
Top Stock to Buy #2 – Pfizer (PFE)
Pfizer (NYSE:PFE) is the world’s largest pharmaceutical company producing a wide range of drugs. In October 2009, it acquired Wyeth.
The stock has a long history of earnings improvements that have resulted in increasing dividends. The current dividend yield is 3.98%. Analysts have raised their price target to $26-$28.
Technically PFE is in danger of breaking a small head-and-shoulders pattern neckline at just under $22. This should be a cornerstone pharmaceutical stock in long-term portfolios. Thus a pullback to under $20.50 would be a bargain. Buy for long-term accounts.
Top Stock to Buy #3 – Kraft Foods (KFT)
Kraft Foods (NYSE:KFT), a worldwide manufacturer and marketer of packaged food and grocery products, has been in a bull market since March 2009.
Kraft has been a steady earnings and dividend producer for years. In 2012, it is expected to earn $2.47 versus $1.99 in 2011, and it has a dividend yield of 3%.
A series of breakouts has moved the stock steadily higher with support at its intermediate bullish support line and 200-day moving average. But profit-taking has dropped the stock to its 50-day moving average, and the stochastic has issued a strong buy signal. The next target is $44-plus.
Top Stock to Buy #4 – Southern Company (SO)
Southern Company (NYSE:SO) is a large-cap electric utility that owns Alabama Power, Georgia Power, Gulf Power and Mississippi Power. According to Credit Suisse, it remains a “best-in-class” utility offering a combination of strong annual earnings growth at 5% to 7%, along with a 4.3% yield.
Over the past 10 years, with dividend reinvestment, investors would have received a compounded annual return of over 11%.
Credit Suisse analysts look for a target of $49. This may seem modest, but the stock’s steady appreciation and dividend increases make it a haven in times of uncertainty.
Technically, the stock’s near-term objective is in the high $40s and is recommended as a long-term buy. Continue to hold SO for its dividend income, stability and performance.
Top Stock to Buy #5 – Ventas Inc. (VTR)
Real Estate Investment Trust (REIT) Ventas Inc. (NYSE:VTR) has geographical diversity with a portfolio of senior housing and health care properties throughout the United States.
VTR has a dividend yield of 4.27% and a target of $61 by fundamental analysts. Its recent head-and-shoulders bottom suggests a trading target of $62. But this could be conservative because of an increase in demand due to economic conditions. Buy VTR at market.
Top Stock to Buy #6 – Wal-Mart Stores (WMT)
Wal-Mart Stores (NYSE:WMT), the largest retailer in North America has been in a bull market since March 2008. WMT is the premier name in its sector with most fundamental analysts placing it on the top of their “most desired” list of retail stocks. It pays a dividend yield of 2.43%.
Technically its recent breakout at about $62 has taken it to its highest price since December 1999, and momentum in this stock is so strong that it has a target of $70-plus.