Monday, December 1, 2014

6 High-Yielding Mega-Cap Stocks

There is perceived safety in size. Giant corporations aren't randomly grown. Instead, they are carefully built through superior management and foresight. Often these are more mature companies that also offer stability and predictability, usually at the expense of dynamic growth. These are your mega-cap stocks.

There is no universal definition of mega-cap stocks. Many define mega-cap as companies with a market cap exceeding $100 billion. Needless to say, most mega-cap companies are headquartered in the U.S., Europe and Japan. The 2000's commodity boom resulted in many energy and resource companies achieving mega-cap status, while the financial crisis resulted in some of the financial institutions losing mega-cap status.

Mega-caps are generally viewed as a stable safe-haven for stock investors during times of uncertainty due to their size and industry dominance. The recent turmoil in Europe from debt concerns global left investors fleeing the euro into dollar-denominated assets like Treasuries and mega-cap stocks.

In a 2012 New York Time article, Wallace Weitz, president of the Weitz Funds, said, “I’ve been doing this for more than 40 years, yet it still surprises me that people look away from good companies because they ‘haven’t done anything’ for a long time.” That’s exactly where value-minded investors ought to be looking for attractively priced shares, he said.

This week, I screened my dividend growth stocks database for stocks with a market cap over $100 billion and with a dividend yield above 2.75%. The results are presented below:

Exxon Mobil Corp. (XOM), formed through the merger of Exxon and Mobil in late 1999, is the world's largest publicly owned integrated oil company. The company has paid a cash dividend to shareholders every year since 1882 and has increased its dividend payments for 32 consecutive years.
Yield: 2.9% | Market Cap: $409.9B

The Procter & Gamble Company (PG) is a leading consumer products company that markets household and personal care products in more than 180 countries. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 57 consecutive years.
Yield: 2.9% | Market Cap: $239.4B

Abbvie Inc. (ABBV) is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013. AbbVie's key drug is Humira for rheumatoid arthritis. The company has paid a cash dividend to shareholders every year since 1926 and has increased its dividend payments for 42 consecutive years. See full analysis here.
Yield: 2.9% | Market Cap: $107.3B

Chevron Corporation (CVX) is a global integrated oil company (formerly ChevronTexaco) has interests in exploration, production, refining and marketing, and petrochemicals. The company has paid a cash dividend to shareholders every year since 1912 and has increased its dividend payments for 27 consecutive years.
Yield: 3.7% | Market Cap: $224.2B

Verizon Communications Inc. (VZ) is the largest U.S. wireless carrier, Verizon also offers wireline and broadband services primarily in the northeastern U.S. The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 10 consecutive years.
Yield: 4.4% | Market Cap: $208.4B

AT&T Inc. (T) provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 31 consecutive years.
Yield: 5.2% | Market Cap: $183.0B

As with past screens, the data presented above is in its raw form. Some of the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 250+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long XOM, PG, ABBV, CVX, T in my Dividend Growth portfolio, and long VZ in my High-Yield portfolio. See a list of all my dividend growth holdings here.

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