Investing

4 Buy-Rated Giants Pay a Dividend of at Least 3%

Chevron shareholders sent the company a strong message late last month that they expect larger emissions cuts, not just in its use of carbon-emitting fuels, but in the carbon emitted from burning its oil and gas products as well. These cuts are usually referred to as Scope 3 and have been adopted (sometimes following strong shareholder and regulatory persuasion) by some European energy giants.

Coca-Cola

The largest of the four is Coca-Cola Co. (NYSE: KO), with a market cap of around $238.5 billion. It is also a Dividend Aristocrat and pays a dividend yield of 3%. The analysts’ mean recommendation for the stock is 1.6, making it a solid buying choice. The company’s total return for the past 12 months is 18.75%.

Coca-Cola’s forward P/E ratio is 23.75, slightly higher than the sector average of around 21.8. That indicates that the stock may be somewhat overvalued. Is that a threat to the company’s dividend payments? Not soon, for sure.

Warren Buffett’s Berkshire Hathaway owns 400 million shares of Coca-Cola stock (about 9.3% of shares outstanding) and is the company’s largest shareholder. Buffett first bought Coke stock in 1988 and has never sold a single share.

Novartis

Switzerland-based drugmaker Novartis A.G. (NYSE: NVS) is the only one of these four stocks that is not included on the S&P 500, and one of two that is not listed among the 65 Dividend Aristocrats. The company’s market cap is around $223.2 billion, and Novartis pays a dividend yield of 3.42%. Analysts’ mean recommendation on the stock is 1.7, another solid buying selection. The company’s total return for the past 12 months is 8.00%.

The company’s forward P/E ratio is 14.1, compared with a sector average of around 27 and an industry average of 19.6. At a price of around $92.70 and with a mean target price of about $105.10, the upside potential on the stock is about 14.4%. Novartis’s share price has increased by less than 1% so far this year, and at one point in mid-March, shares traded down by almost 10%.

Last week Novartis sued the U.S. Department of Health and Human Services, seeking to end the department’s imposition of a penalty related to a drug-pricing program. There are not huge sums involved, but the company’s actions indicate a willingness to contest even small monetary penalties.

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