3 Crash-Proof Dividend Stocks to Buy in 2012

The market is having an off week and has lost ground six of the last eight days. That has some investors wondering if the rally is “too good to be true.”
There’s no doubt we could be in store for some short-term volatility. There’s the “sell in May” seasonality at play that we hear so much about. Earnings season always is a period of uncertainty, where a few bad headlines could sink a sector or send the market running for cover. There also are continued fireworks in Europe, with Spain now the crisis du jour. And let’s not forget the fact that some jobs data at home was less than impressive and has caused some to wonder if the economy is healing fast enough — or still healing at all.
I know it’s hard to do … but if you’re a buy-and-hold investor, you have to just tune this out. There are a host of excellent low-risk dividend stocks that will serve your portfolio well over the next few years, even if they do take a short-term stumble. And if you’re smart, you can use a short-term slide as a buying opportunity.
So what picks should be on your radar right now even if the market could take a spill? Here are three of my favorite crash-proof dividend stocks to consider as long-term plays.

3 Crash-Proof Dividend Stocks to Buy in 2012 General Mills

Here’s an impressive stat for you: General Mills (NYSE:GIS) has paid a dividend for 113 years, never once cutting its payouts in over a century. The current yield is an attractive 3.1%, and the payout ratio — that is, the portion of profits that are dedicated to dividends — is a very sustainable 45%. Historically, most dividend stocks’ payout ratios are around 50%.
The trajectory of earnings and revenue at General Mills is understandably sleepy. After all, this is a packaged foods company and there’s only so much growth in the grocery aisles. However brands like Lucky Charms, Betty Crocker and Hamburger Helper are some of the most powerful names in the business. That means stability — and has resulted in an S&P Quality Ranking of A+, an exclusive rating reserved for only the most reliable and low-risk stocks reviewed by Standard & Poor’s.
But don’t think growth is out of the question. General Mills is building a big international presence that’s paying off. Fiscal third-quarter net sales for General Mills, reported in March, showed that international sales grew 51% year-over-year — 43% of that growth coming from a shrewd 2011 Yoplait acquisition.
In short, the dividend and balance sheet are both bulletproof. So why worry about short-term macro fears with a stock like this?
For those concerned about buying a top, it’s also worth noting that GIS stock has rolled back recently about 5% from its 52-week high in January. That might not sound like much, but the 52-week range for GIS is a very tight band of $34.64 to $41.06 — so buy the minor dip if you can, because this stock is pretty much crash-proof.
Oh, and long-term performance hasn’t exactly been sleepy, either. GIS has a five-year return of 32% vs. about 3% for the Dow Jones Industrial Average. Not bad.
Yes, rising input costs for packaged foods companies is a concern. But long-term investors should see this as an opportunity to build a position in a crash-proof dividend stock in the sector like General Mills.

3 Crash-Proof Dividend Stocks to Buy in 2012 DuPont

E.I. du Pont de Nemours and Company (NYSE:DD) — or just plain old DuPont to most of us — is only the top chemicals producer in the world. It’s not a sexy business, making polymers and adhesive and the like, but it’s certainly a profitable one. It’s also worth noting that DuPont has taken great strides to move beyond nylon — with R&D centers all over the world working on genetic research, biofuels and electronics.
Like General Mills, Dupont offers a 3.1% yield, and its dividend payout ratio is about 45% based on fiscal 2011 earnings. DuPont also has paid dividends for over a century, dating back to 1904. Quite an income play, without a doubt.
On the earnings and sales side, the numbers are growing strongly. Take a look at these figures since the recession and financial crisis:
  • Fiscal 2009: $26.1 billion in revenue, $1.92 in earnings per share.
  • Fiscal 2010: $31.5 billion in revenue (+20%), $3.28 in EPS (+70%)
  • Fiscal 2011: $38.7 billion in revenue (+22%), $3.68 in EPS (+12%)
  • Fiscal 2012 Forecasts: $41.4 billion in revenue (+6%), $4.25 in EPS (+15%)
Some of that growth has come on acquisitions, such as the 2011 integration of Denmark food, chemical and biofuel company Danisco. That deal added more than $2 billion in revenue to DuPont. But organic growth also is very much part of the DuPont success story, with consistent improvement in the bottom line as shown above. The company is riding nine straight quarters of year-over-year revenue growth and four straight quarters of EPS growth as it prepares to report earnings Thursday, April 19.
DuPont is up 15% year-to-date in 2012, and seems to be heating up. However, shares remain almost 10% off their 2011 peak. What’s more, DuPont has a forward P/E of under 11 based on fiscal 2013 earnings — and a current P/E of just 14.
Admittedly, long-term performance isn’t much to scream about. The stock has a five-year return of 6% vs. 3% for the Dow — outperforming, but not by much. More troublesome is a 10-year return of just 12% vs. 26% for the benchmark Dow Jones Industrial Average.
However, there is reason to think that the past several years have been an important turning point for DuPont, as it has refocused through divestitures, acquisitions and product development. And if the last few years of big growth can’t be replicated in the years ahead? Well, then investors still can be content with DuPont’s industry dominance and nice dividend — making it an attractive low-risk investment with limited downside.

3 Crash-Proof Dividend Stocks to Buy in 2012 Johnson & Johnson

Many investors might not see any pharma stock as “low-risk” right now, even with a plump dividend yield. However, Johnson & Johnson (NYSE:JNJ) is not your typical pharmaceutical company because of its very strong consumer health business. Band-Aid bandages, Tylenol medications, Neutrogena skin care and Acuvue contact lens products are just a few of the items J&J sells at the grocery store instead of behind the pharmacy counter.
On the dividend front, you’ll be hard pressed to find a company with a better track record of distributions. The company has paid dividends since 1944, but more importantly has raised its dividend annually for 49 years in a row! In the past 10 years, the company has boosted distributions by a 12.4% annual rate. Think about that — as companies from Citigroup (NYSE:C) to General Electric (NYSE:GE) to Ford (NYSE:F) have shadows of their pre-recession dividends, Johnson & Johnson has been upping the ante at more than 12% per year on average.
And don’t think those increases have been from a measly sum to a slightly bigger sum. The annual payout is $2.28 a year with a headline yield of 3.5%. It has a slightly higher dividend payout ratio than these other two picks, of around 64%, but it also is one of the only four blue-chip stocks to get a AAA debt rating from Standard & Poor’s.
But enough about the dividend: Let’s talk about the prospect for growth and stability. The trouble with Johnson & Johnson lately has been serious concerns about product quality — including more than 50 drug and device recalls since 2010 thanks in part to problems at manufacturing facilities. This has been a major distraction and a hit to the company’s reputation.
However, even amid those costly recalls and the tarnish on the J&J brand, the company has managed to post four consecutive quarters of year-over-year revenue growth. And while profits took a hit in fiscal 2011, the company is projecting earnings growth of more than 45% in fiscal 2012!
More interesting to me is the 2011 buyout of Swiss-American medical device maker Synthes for a massive $21.3 billion. Before the deal was announced, JNJ stock was hanging out at around $59 a share. After the deal was announced, the stock spiked 10% in a matter of days.
But continued recall woes have been a distraction, and Wall Street has been focused on changes in the corner office as longtime leader William Weldon will hand the reins over to a former Army Ranger. JNJ is now about 7% off its 52-high attained last summer, and is in the red year-to-date in 2012.
Calling JNJ a turnaround play is a bit of an overstatement, since this company never was at risk of going anywhere. But it’s safe to say that now is a good buying opportunity as the company looks to refocus and win back Wall Street.
And if it doesn’t? Well, the bad news is baked in and the Synthes acquisition is going to naturally inflate numbers in the next few quarters. Look for proof of that when JNJ reports on Tuesday, April 17.

8 Best Consumer Stocks To Invest that Return Right Now

Consumer stocks are doing OK in 2012 as the broader market has rallied and spending has seemed strong. But the risk of rising gasoline prices, food inflation and other higher input costs could be squeezing margins for many consumer products companies. What’s more, you can bet that if gas hits $5 that many Americans will start cutting back on discretionary spending. That means some consumer stocks may be in trouble.
I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. And this week, eight consumer stocks look ready to sell.
Each one of these stocks gets a “D” or “F” according to my research, meaning it is a “sell” or “strong sell.”
8 Best Consumer Stocks To Invest that Return Right Now Walgreen (NYSE:WAG) operates a drugstore chain in the United States. In the last year, WAG stock has dropped 20%, compared to a 3% gain by the Dow Jones in the same time. Walgreen stock gets a “D” grade for sales growth and a “D” grade for earnings momentum.
8 Best Consumer Stocks To Invest that Return Right Now Archer Daniels Midland (NYSE:ADM) works with agricultural commodities and products. Since last April, Archer Daniels stock has dipped 13%. ADM stock gets a “D” grade for operating margin growth, an “F” grade for earnings momentum, an “F” grade for earnings growth, an “F” grade for its ability to exceed the consensus earnings estimates on Wall Street, and an “F” grade for the magnitude in which earnings projections have increased over the past months.
8 Best Consumer Stocks To Invest that Return Right Now Avon (NYSE:AVP) manufactures and markets beauty and related products. In the last 12 months. Avon stock is down 19%. AVP stock gets a “D” grade for sales growth, a “D” grade for operating margin growth, an “F” grade for earnings momentum, an “F” grade for earnings growth, an “F” grade for its ability to exceed the consensus earnings estimates on Wall Street, an “F” grade for the magnitude in which earnings projections have increased over the past months, and a “D” grade for cash flow.
8 Best Consumer Stocks To Invest that Return Right Now General Motors (NYSE:GM) is one of the largest American automotive company and has experienced a stock loss of 22% in the last year. GM stock gets a “D” grade for sales growth, an “F” grade for earnings momentum, and a “D” grade for its ability to exceed the consensus earnings estimates on Wall Street.
8 Best Consumer Stocks To Invest that Return Right Now Carnival (NYSE:CCL) is a major cruise company based in Miami. In the last year, CCL stock is down 17%. Carnival stock gets a “D” grade for operating margin growth, an “F” grade for earnings growth, a “D” grade for earnings momentum, an “F” grade for the magnitude in which earnings projections have increased over the past months, and a “D” grade for cash flow.
8 Best Consumer Stocks To Invest that Return Right Now Panasonic (NYSE:PC) offers diversified financial services to a variety of customers and has experienced a stock loss of 26% in the last year. C stock gets an “F” grade for sales growth, a “D” grade for earnings growth, an “F” grade for its ability to exceed the consensus earnings estimates on Wall Street, and a “D” grade for the magnitude in which earnings projections have increased over the past months.
8 Best Consumer Stocks To Invest that Return Right Now Sony (NYSE:SNE) is a major Japanese electronics company. SNE stock is down 38% since last April. Sony stock gets a “D” grade for sales growth, an “F” grade for operating margin growth, an “F” grade for earnings momentum, an “F” grade for earnings growth, an “F” grade for the magnitude in which earnings projections have increased over the past months, an “F” grade for cash flow, and an “F” grade for return on equity.
8 Best Consumer Stocks To Invest that Return Right Now Grupo Televisa (NYSE:TV) is a Mexican media company that rounds out the list. TV stock has dipped 11% since this time last year. TV stock gets an “F” grade for sales growth, a “D” grade for earnings growth, a “D” grade for earnings momentum and a “D” grade for cash flow.

Top 7 Energy Stocks to Buy Right Now

Energy stocks are doing well right now as crude oil continues to move higher. It’s not a great thing for motorists or American consumers to see gasoline or energy costs eating in to their budgets, but if you can’t beat ‘em … join ‘em! Buying energy stocks could be your best hedge against rising fuel costs.
I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. And this week, I identify seven energy stocks to buy.
Here they are, in alphabetical order. Each one of these stocks gets an “A” or “B” according to my research, meaning it is a “strong buy” or “buy.”
Top 7 Energy Stocks to Buy Right Now China Petroleum & Chemical (NYSE:SNP) – commonly referred to as Sinopec — is an energy and chemical company that operates in China, as its name suggests. In the last year, SNP stock has gained 1%. Sinopec stock gets an “A” grade for cash flow, and a “B” grade for return on equity.
Top 7 Energy Stocks to Buy Right Now Ecopetrol (NYSE:EC) is involved with the exploration, production, refining, transportation, storage, distribution and selling of hydrocarbons. Ecopetrol stock has gained 54% in the last 12 months. EC stock gets a “B” grade for sales growth, a “B” grade for operating margin growth, an “A” grade for earnings momentum, an “A” grade for the magnitude in which earnings projections have increased over the past months, and an “A” grade for return on equity.
Top 7 Energy Stocks to Buy Right Now Enbridge (NYSEL:ENB) transports and distributes energy across North America, and has watched its stock value jump 25% since this time last year. Enbridge stock gets an “A” grade for sales growth, a “B” grade for the magnitude in which earnings projections have increased over the past months, and a “B” grade for return on equity.

Top 7 Energy Stocks to Buy Right Now Enterprise Products Partners (NYSE:EPD) works with consumers of natural gas, natural gas liquids, crude oil, refined products and certain petrochemicals. Since last April, Enterprise stock has gained 15%, compared to smaller gain by the broader markets. EPD stock gets a “B” grade for sales growth, an “A” grade for operating margin growth, a “B” grade for earnings momentum, an “A” grade for earnings growth, an “A” grade for its ability to exceed the consensus earnings estimates on Wall Street, an “A” grade for the magnitude in which earnings projections have increased over the past months, and a “B” grade for return on equity.
Top 7 Energy Stocks to Buy Right Now Kinder Morgan Energy (NYSE:KMP) is involved with approximately 29,000 miles of pipelines and 180 pipeline terminals. KMP stock is up 10% in the last year. KMP stock gets a “B” grade for earnings growth, an “A” grade for earnings momentum, and a “B” grade for the magnitude in which earnings projections have increased over the past months.
Top 7 Energy Stocks to Buy Right Now Kinder Morgan (NYSE:KMI) owns 11% of the limited partner interests of the Kinder Morgan Energy Partners but is a wholly different stock. This is also a buy. In the last 12 months, KMI stock is up 31%. KMI stock gets an “A” grade for return on equity.
Top 7 Energy Stocks to Buy Right Now TransCanada (NYSE:TRP) works with natural gas pipelines, oil pipelines and energy. TransCanada rounds out the list with a 3% gain in the past year. TRP stock gets a “B” grade for operating margin growth, and a “B” grade for earnings growth.

3 Best Stocks to Invest for May in 2012

Are you familiar with the “coffee-can portfolio”?
In short, it was a simple way to invest for the long term developed by Bob Kirby, the late chairman of the Capital Group. Investors would buy the stocks of excellent companies, putting the stock certificates of those companies in a coffee can, never to be touched again — eliminating transaction costs and taxes.
In other words, it was buy-and-hold taken to the extreme.
Well, Morningstar took that concept in June 2005 and created its own coffee-can portfolio of 10 stocks chosen based on the discount to estimated fair value. As of April 5, 2012 the coffee-can portfolio was up 39% versus 33% for the 3 Best Stocks to Invest for May in 2012 SPDR S&P 500 (NYSE:SPY). While it’s not a huge difference, it’s enough to demonstrate that buy-and-hold investing, when done properly, still is a good idea.
However, a few of the coffee-can stocks seem a little stale. Of the original 10 stocks, three seem questionable: 3 Best Stocks to Invest for May in 2012 Federated Investors (NYSE:FII), 3 Best Stocks to Invest for May in 2012 Fifth Third Bancorp (NASDAQ:FITB) and IAC/Interactive (NASDAQ:IACI). I suggest replacing them with three new stocks, creating a modified version of Morningstar’s coffee-can portfolio. And from time to time, we’ll keep up on both the modified portfolio’s performance and the original, using April 9 as the start date.
Let the games begin.
3 Best Stocks to Invest for May in 2012 Franklin Resources
Barron’s published a favorable article March 31 extolling the virtues of Franklin Resources‘ (NYSE:BEN) asset diversity. With a good mix of equity (40%), fixed income (44%) and hybrid investments (15%) comprising the $670 billion in assets under management, clients are given asset allocation flexibility very few managers can match.
This flexibility has enabled it to attract clients from outside the U.S. About one-third of the $670 billion is held elsewhere, providing its business with geographic diversification as well.
With one of the strongest global retail-distribution networks anywhere, Goldman Sachs analyst Marc Irizarry believes BEN deserves more of a premium. Most importantly, its funds have a long-term track record second to none, finishing first in Barron’s most recent ranking of fund families. Considered smart allocators of capital, it paid a special dividend of $2 per share last December. While exchange-traded funds present a potential threat, it’s as solid an asset manager as there is, and long-term investors will be rewarded.
Morningstar currently gives Franklin Resources a fair value estimate of $145 — a 16% premium to its April 9 share price of $124.81. Its fair value estimate for Federated Investors, on the other hand, is $19 — a 15% discount to its April 9 stock price of $22.42.

U.S. Bancorp

3 Best Stocks to Invest for May in 2012 Berkshire Hathaway (NYSE:BRK.B, BRK.A) owns 78 million shares (4.1% of the outstanding) in U.S. Bancorp (NYSE:USB), the fifth-largest commercial bank in the U.S. It’s not Buffett’s biggest financial services investment — that distinction goes to Wells Fargo (NYSE:WFC) — but it does make a list of 14 stocks that Berkshire Hathaway owns with market values greater than $1 billion. That says a lot about the quality of U.S. Bancorp, in my opinion.
Buffett first acquired 23.3 million shares of the Minneapolis bank in the fourth quarter of 2006, adding 44.3 million shares the very next year and then small amounts thereafter. The fact that its book value investment at the end of 2011 was $300 million more than the market value tells me Buffett believes its intrinsic value is much higher than the average purchase price of $30.77 a share.

Liberty Interactive

Up until November, Liberty Media was comprised of three tracking stocks: Liberty Capital, Liberty Starz and Liberty Interactive. Liberty Capital and Liberty Starz were combined into 3 Best Stocks to Invest for May in 2012 Liberty Media (NASDAQ:LMCA) and it, along with Liberty Interactive (NASDAQ:LINTA), operate as two separate public companies, backed by their own assets. As a result, the tracking stocks no longer exist.
However, it seems Liberty founder John Malone couldn’t stay away from them, announcing in February that it would split Liberty Interactive into two tracking stocks; one for its interests in QVC and HSN Inc. (NASDAQ:HSNI) and the other, Liberty Ventures, for its interests in 3 Best Stocks to Invest for May in 2012 Expedia (NASDAQ:EXPE), 3 Best Stocks to Invest for May in 2012 Time Warner (NYSE:TWX) and Time Warner Cable (NYSE:TWC).
At first, you have to question the wisdom of doing this after making such a big deal about getting rid of tracking stocks in the first place. However, if you consider that QVC represents a significant portion of Liberty Interactive’s revenues and profits, the separation should help investors value both pieces of the puzzle. In the end, I think QVCs international expansion will continue to drive Liberty Interactive upward, with Liberty Ventures providing some extra juice.