Top 5 best Blue-Chip Stocks to invest for January in 2012

This month, I’m shaking up the Top 5 list. Although I’m keeping two Top 5 veterans on the list, three blue-chip companies are also poised to pop this month, and I want to make sure that you’re ready to capitalize on this opportunity.

I want to have a smooth ride going into the new year, so this month’s Top 5 is made up of all conservative stocks that thrive during the late winter months. Be sure to add some of these premium stocks before they take off.

Top 5 Best Blue-Chip Stocks to invest for January in 2012:Alexion Pharmaceuticals

Alexion Pharmaceuticals LogoAlexion Pharmaceuticals (NASDAQ:ALXN) continues its winning streak this month as the No. 1 Top 5 stock on my buy list. In early December, the company enjoyed a major windfall as European Union regulators approved a new use for Soliris, the company’s only approved drug. Soliris will now treat atypical Hemolytic-uremic syndrome, a severe blood disorder that became an epidemic in Germany in May 2011. This treatment, which will launch in the first half of the new year, will be a boon to the company because Alexion gets the benefit of a new customer base with relatively minor up-front costs.

Also, the company is headed toward another stunning earnings announcement on Feb. 6. Analysts currently expect Alexion to grow sales by 41.7% and earnings by 30.8%. In addition, the analyst community has revised its earnings-per-share estimates 13% higher in the past three months, which suggests another hefty earnings surprise for Q4 2011.
Top 5 Best Blue-Chip Stocks to invest for January in 2012: Reynolds American

Reynolds American (NYSE: RAI)Reynolds American (NYSE:RAI) is the ultimate value stock. After releasing Q3 earnings results in late October, the tobacco giant increased its already-hefty dividend by 5.7%. A few weeks later, company leadership authorized a massive $2.5 billion stock buyback program to be carried out over the next two-and-a-half years. And signs are pointing to tremendous Q4 operating results when the company releases earnings on Jan. 30.

Analysts currently expect the company to grow earnings by 15%, a significantly higher rate than the 9.9% forecast for the rest of the tobacco industry. Also, in the past month, analysts have revised their earnings estimates 3% higher, whereas they have decreased their earnings estimates for many of its competitors — analyst earnings revisions like this typically precede earnings surprises.

Top 5 Best Blue-Chip Stocks to invest for January in 2012: McDonald’s

MCDMcDonald’s (NYSE:MCD) is an institution in the fast-food industry, but this company is doing anything but sitting on its laurels. In the past month, this company has switched out one of its major egg suppliers and announced a $400 million plan to upgrade its restaurants with flat-screen TVs, padded seats and wooden tables.

All of these developments have clearly paid off — management recently announced that McDonald’s global same-store sales boomed 7.4% in November. Even in the U.S., sales rose 6.5% — according to management, the McCafe Peppermint Mocha succeeded in bringing in customers looking for an inexpensive holiday treat. In Europe, McDonald’s also brought in a 6.5% gain. All of these figures easily topped the 4.2% sales growth forecast by Street analysts. McDonald’s is living proof that an “old dog” can learn new tricks, and I’m excited to see what other changes this company announces.
Top 5 Best Blue-Chip Stocks to invest for January in 2012:Dominion Resources

dominion resourcesDominion Resources (NYSE:D) is the perfect winter-weather stock. Its customers in Virginia and North Carolina are cranking up the heat as the temperature continues to drop, which means increased profits for its Dominion Virginia Power segment. This makes conditions ripe for stunning Q4 earnings. One of the reasons I added this company to my buy list in December is because this company is incredibly resilient. In Q3, Dominion weathered not only Hurricane Irene, but also a 5.9-magnitude earthquake that struck its North Anna nuclear power station. Despite the combined $87 million cost from these natural disasters, the company still managed to grow earnings more than expected.

Looking forward, management expects higher revenues for Q4, as well as an increase in earnings per share thanks to the company’s aggressive stock buyback programs. The company doesn’t report earnings until Jan. 23, so there is plenty of time to load up on this stock in anticipation of the earnings report.
Top 5 Best Blue-Chip Stocks to invest for January in 2012: VF Corp.

VF Corp LogoIn my article “New Year’s Prediction #4: Retail, the Hottest Sector of 2012,” I mentioned I had another retail recommendation up my sleeve for 2012. With more than $9 billion in annual sales, VF Corp. (NYSE:VFC) is the world’s largest apparel company, and it’s easy to see why. The company is responsible for designing and manufacturing apparel, footwear and travel accessories for at least 20 major brands. In Q4 2011, VF Corp.’s sales rose 23% to $2.75 billion compared with $2.23 billion in Q3 2010.

Looking to Q4 2011 , the analyst community predicts 37% sales growth and 32% earnings growth. In the past three months, the analyst community has revised their consensus earnings estimate 7.6% higher. Typically, like with Reynolds American, positive earnings estimates precede future earnings surprises. VF Corp. is anticipated to benefit immensely from strong consumer spending this holiday season. This company also has the fourth-highest dividend yield in the Apparel industry, weighing in at 2.1%.

Top 10 Dow Dividend Stocks to invest in 2012

It was a crazy year for every component of the Dow Jones Industrial Average. The best Dow stock was McDonald’s (NYSE:MCD), up 31%, and the worst was Bank of America (NYSE:BAC), down almost 60%. But despite those outliers, the broader index moved only slightly upward to tally a 6% gain on the year.

Of course, dividend investors got an even better return if they played the right stocks with the right yields. Many Dow stocks pay an annual dividend worth 3% of their current share price — not a bad return on your investment in this choppy market! And some pay dividends as high as 6%.

So which companies make the best income investments in the Dow? Here’s a list of the top 10 Dow dividend stocks so you can see for yourself:

Top 10 Dow Dividend Stocks to invest in 2012#10: Kraft, Chevron, JPMorgan and Microsoft

There is a very crowded pack in the Dow when it comes to stocks with a yield of around 3%, give or take a few hundredths of a percentage point. The companies include:

* Kraft (NYSE:KFT) — the consumer staples powerhouse locked in gains of 19% in 2011.
* Chevron (NYSE:CVX) — the oil powerhouse climbed 17% in 2011.
* JPMorgan Chase (NYSE:JPM) — a loss of 22% sounds ugly, but not compared to many of its big banking peers.
* Microsoft (NASDAQ:MSFT) — a lackluster 7% loss in 2011 held back this top tech stock.

Rather than cherry-pick a company (Kraft is the nominal winner with a 3.09% yield as of Friday’s close) only to have the list reorder in a few days, it seems best to list them all — though personally I find the presence of JPMorgan most noteworthy, as financial stocks have only recently been returning to the ranks of dividend payers.

Top 10 Dow Dividend Stocks to invest in 2012#9: Procter & Gamble

Procter & Gamble (NYSE:PG)Current Dividend Yield: 3.1%
2011 Performance: +4%

Procter & Gamble (NYSE:PG) has pretty much tracked the broader Dow Jones Industrial Average this year, squeaking out a small gain of around 4% for all of 2011. The consumer products giant has relied on the power of P&G brands like Gillette, Pampers and Duracell to provide reliable revenue — and reliable dividend payments to shareholders. Revenue and profits haven’t been growing at a breakneck pace, to be sure, but there’s something to be said for stability in a volatile market. The company has paid dividends since 1891.

Top 10 Dow Dividend Stocks to invest in 2012#8: Intel

Intel INTCCurrent Dividend Yield: 3.4%
2011 Performance: +16%

Semiconductor giant Intel (NASDAQ:INTC) might not seem like the place to look for big dividends. However, its 3.4% yield easily ranks it in the top 10 Dow dividend stocks. You also might think INTC isn’t doing so well right now, considering weak consumer and business spending. Wrong on that count, too. The chipmaker has posted big gains in 2011 thanks to impressive baseline demand for high-tech items. After all, it’s not like computers are becoming less common because of the downturn — if anything, they are more crucial than ever before to boost productivity. INTC is riding eight straight quarters of year-over-year revenue growth right now.

Top 10 Dow Dividend Stocks to invest in 2012#7: Johnson & Johnson

Johnson & Johnson (NYSE:JNJ)Current Dividend Yield: 3.5%
2011 Performance: +6%

The first health care stock on the list of top 10 Dow dividend stocks is Johnson & Johnson (NYSE:JNJ) — but a few more are yet to come. The company is part-pharmaceutical giant thanks to prescription drug offerings like vaccines, and part-consumer health company thanks to products like Band-Aid and Tylenol. Revenue admittedly has been a bit stagnant at J&J during the past few years; however, earnings per share continue to improve. J&J is a sleepy play, but tracking the market for a decent gain — and a 3.6% dividend to boot — doesn’t seem like anything to sneeze at after a challenging 2011.

Top 10 Dow Dividend Stocks to invest in 2012#6: DuPont

Dupont (NYSE:DD)Current Dividend Yield: 3.6%
2011 Performance: -8%

E.I. du Pont de Nemours & Company (NYSE:DD), a.k.a. DuPont, has lagged the market so far in 2011. Dividend investors still should take note of this chemical giant, however. The 3.6% yield is one of the best in the Dow Jones Industrial Average, and DuPont could be a good long-term investment for the inevitable recovery — because even if there is a tough market for another year or two, DuPont will hang tough and pay a good dividend while you wait. As a specialty chemical company, DD provides materials for a host of products in all corners of the market. Once demand picks up, so will DD stock.

Top 10 Dow Dividend Stocks to invest in 2012#5: General Electric

General Electric GECurrent Dividend Yield: 3.8%
2011 Performance: -2%

General Electric (NYSE:GE) might forever be tarnished in the minds of some dividend investors after slashing its payout by two-thirds during the financial crisis. While the quarterly dividend remains about half of what it was — at just 17 cents vs. 31 before the market meltdown — the subsequent flop in GE stock managed to result in a very respectable yield. Revenue continues to slide for the conglomerate, which is a concern, but earnings remain robust and the dividends remain rich in relation to the stock’s current valuation.

Top 10 Dow Dividend Stocks to invest in 2012#4: Pfizer

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2011 Performance: +24%

Pfizer (NYSE:PFE) has outperformed the market nicely in 2011 with one of the best returns in the entire Dow Jones. Yes, it faces the same challenge that persists across all of Big Pharma — looming patent expirations, challenges from generic medications and the frantic race to lock up patients in emerging markets. But the company has a decent research pipeline with some up-and-coming drugs that could rotate in to prop up revenues. Most importantly for dividend investors, the company has $29 billion in cash as of its third-quarter earnings report. With a forward P/E of less than 10 even after this run, there may be more upside for Pfizer in 2012. And if the stock gains don’t blow you away, that 4% dividend is a nice benefit.

Top 10 Dow Dividend Stocks to invest in 2012#3: Merck

Merck & Co. (NYSE:MRK)Current Dividend Yield: 4.5%
2011 Performance: 5%

Merck (NYSE:MRK) is very similar to Pfizer, except for its mostly market-tracking performance in 2011. It, too, faces patent expirations and is hoping its pipeline will step up to fill the void. It, too, is trading for a bargain P/E of under 10. It, too, pays a dividend well north of 4%. A huge $41 billion buyout of rival Schering-Plough in 2009 should help provide new areas of growth, and the company has managed to post four straight year-over-year revenue beats in the quarters since Schering-Plough was integrated into operations. Throw in solid cash flow and a history of dividends since 1935, and you can understand why this stable company is a bedrock buy for many portfolios.

Top 10 Dow Dividend Stocks to invest in 2012#2: Verizon

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Of course, dividend investors got an even better return if they played the right stocks with the right yields. Many Dow stocks pay an annual dividend worth 3% of their current share price — not a bad return on your investment in this choppy market! And some pay dividends as high as 6%.

2011 Performance: +12%

Verizon (NYSE:VZ) is the leading wireless telecom provider in the U.S. by subscriptions. The company also is one of the top high-speed Internet providers in America via its FiOS fiber optic network. As the world becomes increasingly wired, it’s more important than ever before for companies like Verizon to be involved with the operations of businesses and the lives of regular Americans. This provides a very stable revenue stream that accounts for huge dividends. What’s more, Verizon’s EPS for the fiscal year are on track to tally over $2.20 — easily double the 90 cents per share earned in fiscal 2010. A target of $2.50 for fiscal 2012 shows there’s more growth to come, too.

Top 10 Dow Dividend Stocks to invest in 2012#1: AT&T

AT&T TCurrent Dividend Yield: 5.8%
2011 Performance: +3%

One of the biggest stories in 2011 was that AT&T (NYSE:T) tried to leapfrog rival Verizon in the wireless market via a buyout of T-Mobile. But regulators ran interference, and AT&T abandoned its bid. Don’t think that means the biggest dividend payer in the Dow Jones Industrial Average should be cut loose from your portfolio. With a dividend yield of about 6%, this is a heck of an income play. After all, 10-year T-Notes are around 2% — roughly a third of AT&T’s dividend yield. Red-hot growth might not be ahead, but AT&T is a stable company with a great dividend that’s not going anywhere. That’s the kind of investment many investors are impressed with after a volatile 2011.

5 Cruise and Car Stocks to Sell in 2012

Are you thinking about taking a cruise anytime soon? How about buying a new car?

No? Well, not surprisingly, many investors are feeling the same way. In this economy, people are scaling back and saving up. That new car is being eschewed for auto maintenance, and that Disney cruise with the family is being sidelined for a road trip to your Aunt Mary’s. Although the auto industry isn’t as bad as it was during the bailouts, companies like Ford (NYSE:F) and General Motors (NYSE:GM) haven’t exactly been bastions of growth and excitement, save for Ford’s late-to-the-party, lower-than-average dividend payout.

I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. This week, I’ve got five automotive and international cruise line stocks to sell.

Here they are, in alphabetical order. Each one of these stocks gets a “D” or “F” according to my research, meaning it is a “sell” or “strong sell.”


5 Cruise and Car Stocks to Sell in 2012 : Carnival (NYSE:CCL) is an international cruise company. In the last 12 months, CCL shareholders have watched the stock slip 29%. CCL stock gets a “D” for operating margin growth and a “D” for cash flow. For more information, view my complete analysis of CCL stock.

5 Cruise and Car Stocks to Sell in 2012:Ford (NYSE:F) is likely the most well-known American automaker. Year-to-date, F stock is down 37% compared to a gain of 4% for the Dow Jones Industrials. F stock gets a “D” for operating margin growth and a “D” for earnings growth in my Portfolio Grader tool. For more information, view my complete analysis of F stock.

5 Cruise and Car Stocks to Sell in 2012:General Motors (NYSE:GM) is another giant global automotive maker. Since the start of 2011, GM stock has lost a staggering 45% compared to gains by the broader markets. GM stock gets an “F” for earnings growth, an “F” for earnings momentum and a “D” for its ability to exceed the consensus earnings estimates on Wall Street in my Portfolio Grader tool. For more information, view my complete analysis of GM stock.

5 Cruise and Car Stocks to Sell in 2012:Johnson Controls (NYSE:JCI) provides a variety of products, including automotive interiors and energy-saving products for buildings. JCI has suffered a loss of 22%, year-to-date. JCI stocks gets a “D” for operating margin growth, a “D” for its ability to exceed the consensus earnings estimates on Wall Street and a “D” for the magnitude in which earnings projections have increased over the past month in my Portfolio Grader tool. For more information, view my complete analysis of JCI stock.

5 Cruise and Car Stocks to Sell in 2012:Royal Caribbean (NYSE:RCL) is the second large cruise line that makes the list. Since the start of 2011, RCL is down 48% compared to gains by the broader markets. RCL stock gets an “F” for cash flow in my Portfolio Grader tool. For more information, view my complete analysis of RCL stock.

Get more analysis of these picks and other publicly traded stocks with Louis Navellier’s Portfolio Grader tool, a 100% free stock-rating tool that measures both quantitative buying pressure and eight fundamental factors.