Dividend Stocks to Buy – PPL, AWR, NS, RTN, CH, CPL, VZ

Put Your Lazy Money to Work This Summer

Are you playing it “dangerously safe”? Surveys say that investors, gun-shy after the 2008 crisis, are sitting on too much low-yielding (even zero-yielding!) cash. It’s time to start deploying your lazy cash into more productive channels.

At this stage of the market cycle, though, you need to place your bets very carefully. Market breadth (the plurality of advancing stocks over decliners) is narrowing. We’re long past the point where you could throw darts and make a fortune.

To put the odds on your side, you should invest in low-risk stocks with the built-in “genetic code” to spawn double-digit profits for years to come. One of the most reliable indicators of a stock bound for glory is that it pays a rich, growing dividend. So we’ve put together a list of high-yielding dividend stocks that should also deliver big capital gains.

Here are your top dividend stocks to buy for June:

PPL Corp. ( PPL)

This Pennsylvania-based electric utility PPL Corp. (NYSE: PPL) generates and markets electricity to approximately 4 million retail, commercial and industrial customers. The company is making itself over, acquiring local power-distribution firms in Kentucky and the United Kingdom to reduce its dependence on the volatile wholesale generation business. I applaud these steps, since it may take several years before wholesale profit margins on electricity bounce back to 2007–2008 levels. Meanwhile, I project that PPL’s 2011 earnings will cover the dividend by an ample 180%. PPL currently yields 5%.

Verizon Communications (VZ)

Recommended by: Bryan Perry, Editor, Cash Machine

Recent surveys conducted show Verizon Communications’ (NYSE: VZ) FIOS to be stretching its lead over AT&T (NYSE: T), Comcast, Cox, DIRECTV (NASDAQ: DTV) and Dish Network (NASDAQ: DISH) in terms of broadband service to the business and home. Its bundled services of Internet, TV and phone are getting a further jolt from the recent addition of Apple (NASDAQ: AAPL) as a new provider of iPhones, iPads and the thousands of applications that are streaming across the company’s networks.

The stock pays a dividend yield of 5.2% and is set to trade much higher going forward.

American States Water (AWR)

American States Water (NYSE: AWR), the pint-sized ($600 million market value) water utility, based in California, has pumped up its dividend in each of the past 57 years. The latest increase, declared in May, amounted to 7.7% — handsome indeed for one of the steadiest businesses on Earth. AWR currently yields 3.3%.

The company’s pee-wee market capitalization could make it a tempting takeover target for one of the industry’s bigger players. In a buyout, I reckon AWR could fetch $40 a share, maybe a tad more – a nice 20%-30% premium above today’s share price.

CPFL Energia S.A. (CPL)

Recommended by: Bryan Perry, Editor, Cash Machine

Electric utility CPFL Energia S.A. (NYSE: CPL) is the largest in Sao Paulo, Brazil, the industrial base of the country, and is one of my big themes for the next five years. The company pays dividends twice per year and currently yields 4. 3%, mainly because the stock has risen so fast. Brazil is in the very early innings of an industrial revolution that demands rising electricity for its industrial grid. The stock is up 24% in six months and headed higher.

NuStar Energy (NS)

Master-limited partnership NuStar Energy (NYSE: NS) operates 8,417 miles of crude-oil and refined-product pipelines, 90 terminal and storage facilities, and two asphalt refineries. In addition, NS recently purchased a small oil refinery in San Antonio.

Largely because of the pronounced seasonality in asphalt output (Yankees don’t pave roads in the winter!), NS’ quarterly earnings tend to be lumpy– hard for Wall Street analysts to predict. Q1 this year was a case in point. Over the course of 2011 as a whole, however, I expect that NS will generate more than enough cash to support its current distribution rate. Meanwhile, thanks to a stiff pullback in the share price since late April, you can nail down a bountiful 6.8% yield, mostly tax deferred.

Raytheon (RTN)

With Washington in a mood to rein in weapons spending, defense contractor Raytheon (NYSE: RTN) is tilting its product mix toward cybersecurity, including border control — applications the company can sell to foreign governments as well as our own.

Raytheon has upped its dividend seven years in a row, most recently by a plump 15% in late March. The stock currently yields 3.4%. Also, Raytheon bought back $312 million of stock in Q1.

Dividend Stocks