Life is good when investors can find the best of all possible worlds. And for those who seek a big name combined with income and strong recent price performance - all at a reasonable price - that time may have arrived.
The following four large cap stocks have massive institutional participation, reasonable to very good dividend yields, relatively small P/Es and strong price momentum. Could it be that you've arrived in investor heaven?
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Altria (NYSE:MO) has a market cap of $35 billion and operates in the defensive, consumer non-cyclical businesses of tobacco and beer. Altria pays a very handsome and secure 7.57% dividend yield and sells at a very reasonable P/E multiple of 11.45. But what's perhaps most compelling is the institutional ownership behind the stock. A full 66% of the company is held closely by institutional investors. As of the April 24 close, the stock traded for $16.92, up over 10% from its 52-week low of $14.34. The market recently shrugged off reports of a 76% decline in quarterly profits, and the shares are trading higher now than when the news broke.
McDonald's (NYSE:MCD) is another household name that is currently priced for perfection. This mega burger of a company has a market cap of over $60 billion and currently offers investors a solid 3.68% dividend yield. It trades with a P/E multiple of only 14.20, and has a whopping 75% institutional support. (Institutional investors tend to be longer term holders, which is a big plus for those who want to avoid volatile swings in stock price.) During economically troubled times like ours, consumers tend to visit McDonald's more often than their favorite, more upscale eateries.
Verizon (NYSE:VZ), one of the nation's largest telecommunications companies, has a market cap of $88 billion and an annual shareholder payout of 5.94%. Sixty percent of the company is institutionally held and the P/E is very reasonable at 13.77. The company's shares have appreciated over 30% since bottoming at $23.07 in October 2008.
Finally, take a look at ADP (Nasdaq:ADP), one of the world's largest providers of payroll and tax support services. With a market cap of nearly $18 billion and 77% institutional support, ADP is already on most investors' watch lists. Add a dividend yield of 3.73% and a P/E of 15.24 and there's very little reason not to own this stock. The stock is up about 15% since hitting its 52-week low last fall.
Some big name stocks look very inviting here, for a number of solid, fundamentals-based reasons. Institutions are loading up after the recent lows. Perhaps it behooves investors to do the same? (Find out which catalysts can turn struggling stocks around to create tidy profits in Turnaround Stocks: U-Turn To High Returns.)