As the stock market has kept going up, many investors have thought about the possibility of another crash like 2008. Psychologically, the more I hear about it, the more I believe that it would not be another crash soon. I only worry about the market bubble when most people are certain the market has no way to go but up.
However, everything should be looked at from a fundamental viewpoint. Jack Bogle, the founder of Vanguard Group, expected a total annual return of around 7%, including 2% dividend yield and 5% earnings growth in the next ten years. In any market environment, long-term investors should stick to good, sustainable businesses that have consistently paid dividends in the past ten years. Thus I am searching for those stocks to hold in a long run with several following criteria: (1) market cap is larger than $10 billion, (2) uninterrupted dividend in the past ten years, (3) dividend yield is higher than 3%, and (4) debt/equity is at a max of 1.
Kimberly Clark Corp (NYSE:KMB)
Kimberly Clark Corp (NYSE:KMB), founded in 1928, is the world leader in the personal care business, operating in four main business segments: Personal Care, Consumer Tissue, K-C Professional and Healthcare. The majority of its operating profit, $1.66 billion, or 61.8% of the total operating profit, was generated from the Personal Care segment. The Consumer Tissue segment ranked second with $887 million in operating profit, while the operating profits of the K-C Professional and Healthcare segments were $545 million and $229 million, respectively.
In the past ten years, Kimberly Clark Corp (NYSE:KMB) has paid uninterrupted increasing dividends, from $1.36 per share in 2003 to $2.96 per share in 2012. The company is trading at around $96.70 per share, with the total market cap of $37.20 billion. The market values Kimberly Clark Corp (NYSE:KMB) at 10.34 times EV/EBITDA. The company uses reasonable leverage in its operations. Its debt/equity ratio is around 1. Income investors might like Kimberly Clark Corp (NYSE:KMB), not only because it has a terrific dividend payment record, but also the dividend yield is quite juicy at about 3.3%.
McDonald’s Corporation (NYSE:MCD)
Another dividend-paying business that income investors should pay attention to is McDonald’s Corporation (NYSE:MCD). McDonald’s is considered to be the largest quick service restaurant in the world, operating around 34,565 restaurants in 119 countries, including 27,970 franchised restaurants. McDonald’s Corporation (NYSE:MCD) generated most of its profits, $3.75 billion, or 43.6% of its total profits, in the U.S., while Europe ranked second with nearly $3.2 billion in operating income in 2012.
With the health issues relating to its fast food, McDonald’s Corporation (NYSE:MCD) has been trying to seek for new tastes for its customers. Interestingly, the company has announced a strategic partnership with the global leader in pasta, Barilla, on the new food item creations. It is really a revolution, as it is the first time that McDonald’s Corporation (NYSE:MCD) restaurants in Italy will serve pastas. McDonald’s Italy CEO Roberto Masi feels excited about the partnership: “For McDonald’s, the launch of the pasta salad represents a crucial step in its drive to get closer to Italian tastes, flavors and habits.”
McDonald’s is also a great example of consistently increasing dividend payments. Since 2003, its dividend has increased from $0.40 per share to $2.53 per share. McDonald’s is trading at $98 per share, with a total market cap of $98.2 billion. The market values McDonald’s at 10.95 times EV/EBITDA, while its debt/equity ratio stays at only 0.8. Investors could get quite a juicy dividend yield at 3.2% when investing in McDonald’s at its current price.
Pfizer Inc. (NYSE:PFE)
Pfizer Inc. (NYSE:PFE), the world’s largest pharmaceutical company, is the owner of several global leading pharmaceutical brands, including Lipitor, Viagra and Lyrica. It operates in five main segments: Primary Care, Specialty Care and Oncology, Established Products and Emerging Markets, Animal Health and Consumer Healthcare. Most of its revenue, $20.2 billion, was generated from the Established Products and Emerging Markets segment. The Primary Care segment ranked second with $15.6 billion in sales, while the Specialty Care and Oncology segment contributed $15.45 billion in revenue.
Pfizer Inc. (NYSE:PFE) has consistently paid increasing dividends. The dividend rose from $0.60 per share in 2003 to $0.88 per share in 2012. The company has the quite conservative capital structure, with the debt/equity ratio at only 0.4. Pfizer Inc. (NYSE:PFE) is trading at $27.70 per share, with the total market cap of $196.8 billion. The market values the company at only 7.8 times EV/EBITDA. Interestingly, it offers its shareholders quite juicy dividend yield, at 3.5%.
My Foolish take
Income long-term investors should really consider three of those above-mentioned stocks for their portfolios. Even with the short-term downturn in the market, those three businesses, with their global leading positions and decent operating performance, will benefit investors well in a long run.
Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark and McDonald’s. The Motley Fool owns shares of McDonald’s.
The article Three Long-Term Stocks With Juicy Dividend Yields originally appeared on Fool.com and is written by Anh HOANG.
Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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