by James Brumley | July 31, 2012 5:45 am
Tired of chasing trends that zig just when you’re about to zag? Welcome to summer, when the market can’t do much of anything for more than a few days at a time.
The unfortunate part is, I don’t think the current lethargy is just a summertime phenomenon this time around. Between nearly immeasurable earnings growth in Q2 against an equally pathetic revenue growth rate, I’ve got an inkling that this go-nowhere lethargy is going to keep the market handcuffed for a while … at least until it becomes clear there’s a reason to pour in or file out.
Don’t worry, though — I’ve got a cure for the summertime (and beyond) blues. While the market is doing nothing until further notice, we might as well use the time to park our idle cash in some solid dividend payers. Here are the five I’d start the hunt with — and best of all, this list is narrowed down to names you’ll find in our Real America Index:
Yes, the American food industry might feel like a bit of a wild card right now, with corn prices on the rise with no ceiling in sight. The really good companies in the business, however, can manage that volatility … and even use it to their advantage. ConAgra Foods (NYSE:CAG) is one of those really good — and amazingly consistent — names.
The stock yields a solid 4%, but what’s really impressive here is the consistency with which ConAgra can crank up that payout. From 2007’s quarterly payout of 18 cents to the most recent quarterly dividend of 24 cents, the company clearly likes to share the wealth. Add in the recent purchase of Unilever’s (NYSE:UL) North American frozen foods division — which includes Bertolli and P.F. Chang’s (NASDAQ:PFCB) branding rights — against the backdrop of a forecasted 6% increase in earnings for 2013, and the company is positioned to pass a little more cash along to shareholders.
EI du Pont De Nemours And Co. (NYSE:DD) — otherwise known as DuPont to the vast majority of us — never has won an award for being an exciting stock. That’s fine. Usually the more exciting the stock is, the less dependable that 3.5% dividend yield becomes.
And make no mistake — the chemical company’s dividend and dividend growth are ridiculously reliable. DuPont has paid a quarterly dividend every single quarter for as far back as I could find (into the early 1960s), and its payout has only gone up since the early ’80s … never down.
 What list of dividend payers would be complete without a banking stock on it? However, United Bankshares (NASDAQ:UBSI) is far from the name most investors might expect to see on the list.
With a market cap of only $1.17 billion, the regional (mid-Atlantic) banking name is dwarfed by bigger banking brothers. But that 5.2% dividend yield is nothing to be ashamed of. In fact, it’s the biggest payout you’ll find right now in the Real America Index.
Oh, and just in case you were worried the dividend is forever in jeopardy, it’s not. United Bankshares recently was named to the Dividend Channel’s “S.A.F.E. 25” list — an accolade given based on a two-decade-long track record of dividend growth.
Another food company? Why not? Consumers might grumble about the rising costs of food, but none of them ever actually stop eating. Besides, H.J. Heinz (NYSE:HNZ) has been put on several media pedestals of late, for reasons above and beyond the sweet cash payout.
For instance, Fitch recently upped Heinz’ credit rating to BBB+, Jim Cramer recommended it, and billionaire Nelson Peltz is holding a huge chunk of it in his portfolio specifically because of the dividend. That’s a lot of tacit endorsement.
Even more compelling is the actual yield. HNZ is paying out 3.7% of its value. The current quarterly payout of 48 cents leaves behind more than a 20-year trail of rising payouts.
Last but not least, another name from an “old faithful” arena — utilities. Specifically, Entergy Corporation (NYSE:ETR), which is as much of an energy wholesaler as it is a producer. Both businesses have been solid of late, too, and though revenues have edged a tad lower during the past four years, cheap natural gas, coal, and nuclear fuel have left plenty of room for wider margins and healthier payouts.
And Entergy has certainly paid it out. The company has cranked up its quarterly dividend from 54 cents per share in 2007 to 83 cents per share now, translating into a dividend yield of 4.6%. Better yet, with demand for energy still insatiable while the cost of fuel is likely to remain low, Entergy is in the proverbial cat-bird’s seat.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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