4 Super-Safe Defensive Dividend Stocks Now Valued at Massive Premiums

Church & Dwight

Church & Dwight Co. Inc. (NYSE: CHD) is another company that should be recession-proof because of its sector of consumer products. At $89.51 per share and with a $11.7 billion market cap, the stock is less than 1% under a consensus analyst target of $90.00 and just over 1% less than a 52-week high of $90.73. It is valued at 25.5 times expected $3.50 EPS for 2016 and at 23.6 times expected 2017 EPS of $3.78.

The here dividend is almost embarrassingly low at 1.50% — the lowest of the large consumer products companies. This is a great company with brands like Arm & Hammer, Nair, OxiClean, XTRA, Aim, Arrid and Trojan, but paying that much for a great defensive company may just be too much.


Closing most recently at $67.22, Colgate-Palmolive Co. (NYSE: CL) has a consensus target price of $68.97. Its 52-week range is $50.84 to $71.56, and it has a $60 billion market cap. What stands out here is that Colgate-Palmolive is valued at 24.4 times expected 2016 EPS of $2.75 and 22.3 times the expected 2017 EPS of $3.01.

Another issue here hard to stomach is that the dividend yield is only 2.26%. That compares to 3.2% for Procter & Gamble and 2.8% from Kimberly-Clark.

TECO Energy

This member of the S&P 500 Utilities Index is an operator in regulated electric and gas utilities. TECO Energy Inc. (NYSE: TE) having a $6.5 billion market cap might not sound like much, but its value is for Tampa Electric and Peoples Gas Systems, as well as an acquisition of Emera in New Mexico. If natural gas is dirt cheap and expected to be that way perhaps forever, then TECO has a great growth in earnings to see.

The problem is the cost of this safety. Its $27.43 share price is valued at 23 times the $1.19 EPS target for 2016 and 21.5 times the $1.27 target for 2017. The stock is two cents shy of a 52-week high and is trading above the consensus analyst price target of $26.51. Its 3.35% dividend yield is also the 11th lowest of the 30 S&P 500 utility stocks.

As of February 18, 2015, the S&P 500 performance so far in 2016 was down year to date by 5.7%. The total returns for each of these four defensive stocks are as follows:

  • American Water was up 10.7% since the end of 2015.
  • Church & Dwight was up almost 5.9% since the end of 2015.
  • Colgate-Palmolive shares were up 1.5% since the end of 2015.
  • TECO was up 3.67% since the end of 2015.