6 Conservative Stocks to Buy Before January Ends

by Bryan Perry | January 21, 2012 5:30 am

When you think of defensive stocks, you often don’t think of a sense of urgency. But at the same time, it’s never too soon to jump into a good thing. With that in mind, here are six conservative stocks to buy before the first month of 2012 expires:

Duke Energy

The latest big trend within the utility industry is the conversion of coal-fired plants to cheaper and cleaner-burning natural gas. The efficiencies and future expanding profit margins bode well for major utility holding companies such as Duke Energy (NYSE:DUK[1]). The stock is in a powerful uptrend and should be bought on this minor dip. It’s one of the five best-managed utilities in the United States. Yield: 4.7%.

Franklin Templeton Limited Duration Income Trust Common Shares of Beneficial Interest

It’s my view that interest rates have bottomed for the current economic cycle and that bond yields will rise 1% to 2% as the economy tacitly improves in 2012. In such a scenario, floating-rate corporate debt with short maturities will be a smart place to have capital positioned. Enter the Franklin Templeton Limited Duration Income Trust Common Shares of Beneficial Interest (NYSE:FTF[2]). Not only are investors getting a very attractive yield in the corporate debt market, but they’re simultaneously removing the risk of principal erosion if rates push higher. Yield: 7.8%.


Defensive stocks have taken a back seat to more cyclical sectors since the first of the year, providing what I believe to be an excellent entry point for stocks such as Lorillard (NYSE:LO[3]). The tobacco sector is one of the most lucrative businesses for investors to capture strong dividend growth and capital gains. Profit growth is as steady as ever, and the technical chart for LO is very constructive as the long-term trend shows big upside ahead. Yield: 4.7%.

New York Community Bancorp

Our other new recommendation, New York Community Bancorp (NYSE:NYB[4]), gives us a foray into the hot regional bank sector while collecting the highest dividend yield available among all major bank stocks. The recent good news from the labor and housing markets is a major positive for future lending demand, and that’s the basis for the sector rally. Yield 7.7%.


Unilever (NYSE:UL[5]) shares have come off their 52-week high, with some profit-taking in the European markets amid further concerns about sovereign credit downgrades. UL has strong exposure to the fastest-growing emerging markets, and a weaker euro only helps boost profit margins in light of favorable exchange rates. Use this pullback to get long a world-class name. Yield: 3.8%.


The nation’s largest wireless services provider, Verizon (NYSE:VZ[6]), reported profit margins dropped in the fourth quarter thanks to record-high sales of Apple (NASDAQ:AAPL[7]) iPhones, which typically cost more to purchase than other smartphones and handsets. This shortfall will be more than made up by data usage in the months ahead, so this share pullback should be brief. Use it as a buying opportunity. Yield: 5.3%.

  1. DUK: http://studio-5.financialcontent.com/investplace/quote?Symbol=DUK
  2. FTF: http://studio-5.financialcontent.com/investplace/quote?Symbol=FTF
  3. LO: http://studio-5.financialcontent.com/investplace/quote?Symbol=LO
  4. NYB: http://studio-5.financialcontent.com/investplace/quote?Symbol=NYB
  5. UL: http://studio-5.financialcontent.com/investplace/quote?Symbol=UL
  6. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  7. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL

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