Everybody is starting to get nervous, and that is probably a good sign. One Wall Street firm that we cover noted Wednesday that Google searches for “Stock Market Crash” are the highest since October 2008, and we know how that turned out. The bottom line is that while there could be more downside, the country is not in a recession, and buying stocks that are growing dividends makes good sense now. Toss in Wednesday’s big rally and the positive economic data Thursday, and things are looking brighter.
In a new report, the equity strategists from Deutsche Bank make the case that they generally prefer large dividend-paying stocks over small non-payers. They do point out it is important to consider sector earnings-per-share growth and overall valuations. The Deutsche Bank team ran a screen of the S&P 500 dividend-paying stocks that excluded financials, energy, utilities and telecoms. We screened for the stocks in the list rated Buy at Deutsche Bank and found four outstanding companies investors may consider now.
This large cap leader makes sense in all markets. Dow Chemical Co. (NYSE: DOW) is an integrated, market-driven company with an industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses that deliver a broad range of technology-based products and solutions to customers in approximately 180 countries and in high-growth sectors such as packaging, electronics, water, coatings and agriculture. Last year, Dow had annual sales of more than $58 billion and employed approximately 53,000 people worldwide.
With an improving domestic economy and emerging markets bottoming, the growth potential for a company like Dow Chemical with multiple revenues and product silos is outstanding. The stock got hit after second-quarter earnings and has dropped over 25% since then. At current levels, it is an outstanding buy.
Dow Chemical investors are paid an outstanding 4.2% dividend. The Deutsche Bank price target for the stock is $60. The Thomson/First Call consensus price target is $55.35. The stock closed Wednesday at $41.05.