The market continues to be quite volatile from investor uncertainty following a lame-duck debt ceiling deal in the US and an equally disappointing debt deal in the Eurozone. The Standard & Poor’s downgrade of the USA’s credit rating hasn’t helped.
Still, keen investors should never rest on their laurels. The markets could rebound at any moment (or they could fall precipitously, beware), and share prices are usually most attractive after a significant contraction. It could be like a Black Friday at your local WalMart: great prices, but crazy and not for the feint of heart. Caution is prudent.
“People have that fear of losing money again, but there are fundamental reasons why we think this could be a good time to look at opportunities for clients’ portfolios… Corporate fundamentals are strong and economic fundamentals are very weak, so that means opportunity,” said Darrell Cronk of Wells Fargo Private Bank (via Bloomberg).
Cronk and other managers quoted by Alexis Leondis and Ryan Mac of Bloomberg believe in buying into “the biggest, most-well known U.S. companies,” particularly those with strong dividends.
Mark Luschini of Janney Montgomery Scott LLC suggests Johnson and Johnson (JNJ) and Microsoft (MSFT) as two prime examples. Todd Morgan of Bel Air Investment Advisors recommends Starbucks (SBUX), Apple (AAPL), and Proctor & Gamble (PG).
Tom Gardner, Motley Fool co-founder and CEO, and Stock Advisor co-advisor, looks for companies with the following traits: easy access to capital, substantial future opportunities in foreign markets, a stellar history of operating results, the reputation of being a cost-saver for consumers, world-class leadership, and a steady dividend. He recommends Costco (COST).
There are many more ideas out there. Here is a sample of a few stock picks that satisfy the large market cap (over $10bn) and dividend payment criteria.
Note: Stock recommendations, even by top analysts, are not a substitute for one’s own scrutiny.
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List sorted by market cap.
1. Microsoft Corporation (MSFT): Application Software industry with a market cap of $205.1B and a dividend yield at 2.61%. It is engaged in developing, manufacturing, licensing and supporting a range of software products and services for different types of computing devices including operating systems for personal computers, servers and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software development tools, and video games.
2. Johnson & Johnson (JNJ): Major Drug Manufacturers industry with a market cap of $167.54B and a dividend yield at 3.73%. It engaged in the research and development, manufacture and sale of a range of products in the health care field. It has more than 250 operating companies conducting business worldwide. Its operating companies are organised into three business segments: Consumer, Pharmaceutical and Medical Devices and Diagnostics. Brands include Johnson’s Baby, Aveeno, Clean & Clear, Neutrogena, Band-Aid, Splenda, Tylenol, and Sudafed, among many others.
3. Procter & Gamble Co. (PG): Personal Products industry with a market cap of $165.5B and a dividend yield at 3.54%. It is focused on providing consumer packaged goods. Its products are sold in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores and high-frequency stores, the neighbourhood stores, which serve many consumers in developing markets. Its brands include Olay, Braun, Pringles, Bounty, among others.
4. Bristol-Myers Squibb Company (BMY): Major Drug Manufacturers industry with a market cap of $45.B and a dividend yield at 5.00%. It is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of pharmaceutical products on a global basis. Its products are sold worldwide, primarily to wholesalers, retail pharmacies, hospitals, government entities and the medical profession. Its products include Plavix, Sustiva, Avapro/Avalide, and Abilify, among others.
5. Costco Wholesale Corporation (COST): Discount, Variety Stores industry with a market cap of $30.92B and a dividend yield at 1.36%. It operates membership warehouses that offer its members low prices on a limited selection of branded and selected private-label products in a range of merchandise categories. It buys the majority of our merchandise directly from manufacturers and route it to a cross-docking consolidation point (depot) or directly to its warehouses. Its warehouses operate on a seven-day, 69-hour week. It carries an average of approximately 3,900 active stock keeping units (SKUs) per warehouse in its core warehouse business. Many consumable products are offered for sale only in case, carton, or multiple-pack quantities only.
6. Starbucks Corporation (SBUX): Specialty Eateries industry with a market cap of $25.52B and a dividend yield at 1.53%. It purchases and roasts whole bean coffees and sells them, along with handcrafted coffee and tea beverages and a variety of fresh food items, through Company-operated retail stores. It also sells coffee and tea products and licence its trademarks through other channels, such as licensed retail stores, and produces and sells a variety of ready-to-drink beverages. In addition to its flagship Starbucks brand, its portfolio includes brands, such as Tazo Tea, Seattle’s Best Coffee, and Starbucks VIA Ready Brew.
7. Kinder Morgan Energy Partners LP (KMP): Oil & Gas Pipelines industry with a market cap of $21.29B and a dividend yield at 7.12%. It owns an interest in approximately 28,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide and other products. Its terminals store petroleum products and chemicals and handle bulk materials, such as coal and petroleum coke.
8. Chesapeake Energy Corporation (CHK): Independent Oil & Gas industry with a market cap of $17.89B and a dividend yield at 1.29%. As of December 31, 2010, it owned interests in approximately 46,000 natural gas and oil wells that produced approximately 3 billion cubic feet of natural gas equivalent (bcfe) per day, 87% of which is natural gas. It operates in three segments: exploration and production; marketing, gathering and compression, and service operations, which include its wholly owned drilling and trucking operations. oilfield service assets.
9. Consolidated Edison Inc. (ED): Diversified Utilities industry with a market cap of $14.75B and a dividend yield at 4.76%. It is a holding company of Consolidated Edison Company of New York, Inc. (CECONY), Orange and Rockland Utilities, Inc. (O&R) and the competitive energy businesses. CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. O&R’s principal business operations are its regulated electric and gas delivery businesses. Its competitive energy businesses sell electricity to wholesale and retail customers, provide certain energy-related services, and participate in energy infrastructure projects.
10. Waste Management, Inc. (WM): Waste Management industry with a market cap of $13.3B and a dividend yield at 4.83%. It provides collection, transfer, recycling and disposal services. It is also a developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States. The services it provides include collection, landfill (solid and hazardous waste landfills), transfer, waste-to-energy facilities and independent power production plants, recycling and other services.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.