Barron's Picks Top 10 Dividend Stocks

NEW YORK - Barron's highlighted ten companies that it sees as good bets for investments with big dividends that look safe for the long term, including Banco Santander (SBP) at the top of its list and Verizon Communications (VZ).

Barron's Nov 23 edition cited Banco Santander's relative financial strength in a troubled industry as well as its geographic diversity and a 10-year return rate of 9.2 percent, annualized through Oct 30 2009.

It said its No. 2 pick Chevron (CVX) offers a dollar hedge, exposure to oil and gas and a 8.8 percent 10-year return on the same basis as the first company on the list.

The paper's No. 3 is chip market leader Intel Corp (INTC), which recently raised its dividend. Barron's said "there is probably more of that to come" but noted that its 10-year return rate was a negative 5.6 percent.

Next on the list is Johnson & Johnson (JNJ), which Barron's describes as "perhaps the quintessential dividend stock." It said that the maker of Tylenol and Band Aid has been trading at 13 times consensus 2010 earnings estimates, which is below its historical average of 17 and the overall market.

Barron's also picked McDonald's (MCD) citing analyst expectations for overseas expansion, particularly in higher-growth markets like China, that will help support its dividend.

It picked Nestle, the world's largest food processor, citing its product diversity and geographic reach in developed and emerging markets. Barron's also pointed to the company's $100 billion in annual sales and its ability to keep gaining market share in many of its markets.

It said that the international exposure of drug maker Novartis (NVS) would help diversify a retirement fund beyond the dollar and noted that the stock is cheap compared with its own historical price to earnings ratio of 18.

Barron's picked PepsiCo (PEP) over Coca-Cola (KO), citing more sales growth and expansion into fast growing markets like Russia and China.

It said it would be difficult to find a country where Procter & Gamble (PG) doesn't make or sell one of its laundry, beauty, food or healthcare products and noted that it continues to gain share in lucrative growth markets.

The paper noted that Verizon has the highest dividend yield in its list at 6.2 percent because many investors worry about its ability to replace revenue from its continued loss of home phone lines.

But it noted that Verizon Wireless, its venture with Vodafone Group Plc, continues to add customers at a good pace and could potentially win an agreement to sell Apple Inc's (AAPL) iPhone once the exclusive U.S. iPhone rights expire for its biggest rival AT&T Inc (T).

Source: Reuters

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