Buy and Forget These 5 Dividend Stocks in 2013
I have had more than my share of people asking for a list of stocks to own in 2013. I limited my list to stocks with large, increasing dividends that are appropriate to buy and forget about.
Predicting a year in advance is no small endeavor, especially if you want any hope of getting it right. Difficult doesn't mean impossible, however. It's difficult to predict short-term moves, too, but historical data allow us a way to peek into the markets of 2013.
Unsurprisingly, dividend-paying stocks tend to outperform over the long run. Stocks with price-to-earnings ratios under 20 also tend to outperform the latest craze. Emotion plays a short-term role in valuation, and we can measure emotion, in part, with the PE ratio.
For a company to exceed a PE ratio of 20, both earnings and revenue must be growing proportionately higher. Many people make the mistake of ignoring earnings growth and focusing on revenue. Ignoring revenue is a mistake.
The reason both revenue and earnings must be counted is because many companies are able to grow but fail to make a profit. Once growth slows (and it always does), if a company hasn't grown earnings to support an increase in stock price you quickly learn what the term "bag holder" means.
Background: Corning creates leading-edge technologies for the fastest-growing markets of the world's economy. Corning manufactures optical fiber, cable and photonic products for the telecommunications industry; and high-performance displays and components for television and other communications-related industries.
52-Week Range: $10.62 to $14.62
Price To Book: 0.9
Earnings Payout Percentage: 24%
Glass may not initially appear sexy, but after you look at the profits the view becomes more exciting. Corning incorporates everything you want for a long-term "buy it and forget about it" type of hold.
Corning has an oversized dividend that is likely to increase, a large R&D budget, and the company is not sitting on its laurels. Corning may begin to realize inroads into the automobile industry with products for windows and windshields.
The dividend is small enough that investors may reasonably expect increases in the payout. Corning currently has an annualized dividend of 36 cents, yielding 2.8%.
In the last month, the stock has really moved higher with a 67.4% increase. Over half the analysts covering Corning rate it as a buy or strong buy. In the last 52 weeks, the shares are about even, with a small gain of 2%. Corning has an average analyst target price of $14.62.