Saturday, September 4, 2010

"Some stocks to hang your hat on that include bonus dividends in an increasingly volatile stock market "

Dow Jones 10447.93  (UP) Week Ending  09/03/2010

Has this stock market been tossing you around like a roller coaster ride at Dorney Park?  Well you are not alone. We have been in this 10,000 - 10,600 trading range all summer and people are having trouble getting their bearings. The high unemployment continues to raise questions of whether we might have a double dip recession.  Remember though, that the highest unemployment is seen at the end of a recession. The numbers I am seeing tell me it looks like the stock market put in a bottom in early June 2010. No matter what happens you can beat your cash/treasuries holdings with these four stocks that give you growth at a reasonable price and a nice dividend.

The first one is Coca-Cola Co. (Symbol KO, $57.56). Yeah Warren Buffet gets it right with this one. This soda fountain of cash generation pays a 3% dividend even before you start getting returns for it's growth . KO is projected to have earnings of $3.75 per share in 2011. The companies 1 Yr % Change (TTM) is 16.10%. You can do the math, this is a no brainer compared to the return on your money market fund.

 The next one is Honeywell International Inc. (Symbol HON, $42.82).  Collect your 2.83% dividend up front, this stock is up 18.5% over the last 12 months. Another stock you will not lose sleep over in this computer trading dominated market. We need you retail investors back! This company has a great return on equity and
it continues to gobble up small profitable security and monitoring companies. 2011 earnings are projected at $3.04 per share.

 E.I. DuPont de Nemours & Co (Symbol DD, $42.51) has had a nice run up since June and pays you a 3.86% dividend. This company does not have much sales growth but has a 40.90% Return on Equity and the stock has a 37.4% total return for the last 12 months. Is your stable asset fund giving you that??  Projected earnings for 2011 is $3.23 per share.  Remember , chemical stocks traditionally are the first to lead the way out of recession. Kick in lower oil prices which is a benefit to DuPont's bottom line and you have a pretty good idea here. With a PE of only 12, Dupont is a fairly safe bet.

Stock analyst generally hate Airline stocks because they are always
going bankrupt. But Ken Heebner in 2010 has made good money with them with US Airways and UAL, so I thought I would add my own pick. Southwest Airlines Co. (Symbol LUV, $11.57). Southwest is the sweetheart from the UAL/Continental merger deal and they pickup 36 slots at Newark Liberty International Airport in the lucrative New York City market. This could be a catalyst for growth in the stock. If you have ever been out to Chicago's Midway airport you know that Southwest fires off jets out of there like clockwork and their whole fleet is all exactly the same Boeing 737 jet to keep their cost down. No dividend here really (0.16%), but the companies 1 Yr % Change (TTM) is 37.57% which easily makes up for it. Earnings for 2011 projected at .95 cents per share according to Barron's and could pop over into triple digits, (over a $1.00) which would pop it up on analysts radar. I would not be surprised to see this stock get back to $15.00 per share.

So let the market go where it wants to and enjoy your fall with some stock buys that will
steer you through the turbulence.



1 comment:

  1. Always nice to see a spirit of optimism in these times. Great post.