Large cap companies are always in the news for their earnings but what many “do-it-yourself” investors don’t know is that many of these companies also pay dividends. In fact, they sometimes pay decent dividends, making them perfect additions for hedging a portfolio. Here is a list of companies with large market caps that pay over 2.5% dividend yields while keeping their payout ratios relatively low. These companies aren’t in the radars of dividend investors but investors of these companies are likely to have strong dividend yields in the long-term.
Colgate-Palmolive Co. (CL) is a personal products company with a $43.63 billion market cap. It is priced at 18.14 times its earnings. CL pays a 2.57% dividend yield and has a 44.15% payout ratio. The company has a beta of 0.43 and caries an analyst recommendation of 2.8 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $89.79 a share. Jean-Marie Eveillard’s First Eagle Investment Management had $240.53 million in CL at the end of September after increasing its stake in the company by +1% during the third quarter. Paul Ruddock and Steve Heinz’s Lansdowne Partners and Jim Simons’ Renaissance Technologies were also fans.
General Mills, Inc. (GIS) is a processed and packaged goods company with a $26.25 billion market cap. It is priced at 17.33 times its earnings. GIS pays a 3.00% dividend yield and has a 48.80% payout ratio. The company has a beta of 0.19 and caries an analyst recommendation of 2.3 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $40.10 a share. Ken Griffin’s Citadel Investment Group upped its stake in GIS by +670% during the third quarter, for a position in the company worth $78.01 million at the end of September. Ric Dillon’s Diamond Hill Capital also had a significant position in GIS. It was valued at $137.17 million at the end of the third quarter.
Kraft Foods, Inc. (KFT) is a major diversified foods company with a $66.68 billion market cap. It is priced at 20.62 times its earnings. KFT pays a 3.07% dividend yield and has a 63.21% payout ratio. The company has a beta of 0.55 and caries an analyst recommendation of 1.80 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $37.53 a share. Warren Buffett’s Berkshire Hathaway had $3.01 billion in KFT at the end of the third quarter. Bill Ackman’s Pershing Square also had a significant position in KFT at the end of September, valued at $845.66 million.
Kimberly-Clark Corporation (KMB) is a personal products company with a $28.69 billion market cap. It is priced at 17.41 times its earnings. KMB pays a 3.85% dividend yield and has a 65.34% payout ratio. The company has a beta of 0.34 and caries an analyst recommendation of 2.5 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $72.61 a share. Ric Dillon’s Diamond Hill Capital had $63.22 million in KMB at the end of the third quarter, while Cliff Asness’ AQR Capital Management had $52.96 million in the company at the end of September.
The Coca-Cola Company (KO) is a beverage company with a $157.56 billion market cap. It is priced at 12.78 times its earnings. KO pays a 2.71% dividend yield and has a 33.32% payout ratio. The company has a beta of 0.55 and caries an analyst recommendation of 1.7 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $68.89 a share. Warren Buffett’s Berkshire Hathaway had 22.85% of its portfolio in KO at the end of the third quarter, in a holding worth $13.51 billion at the end of September. Paul Ruddock’s Lansdowne Partners was also a fan. It had $644.85 million in KO at the end of the third quarter.
Pepsico, Inc. (PEP) is a beverage company with a $103.53 billion market cap. It is priced at 16.60 times its earnings. PEP pays a 3.11% dividend yield and has a 49.27% payout ratio. The company has a beta of 0.52 and caries an analyst recommendation of 2.3 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $65.38 a share. Boykin Curry’s Eagle Capital Management had $338.13 million at the end of September after upping its stake in the company by +4% in the third quarter. Ric Dillon’s Diamond Hill Capital was also a fan.
Procter & Gamble Co. (PG) is a personal products company with a $183.02 billion market cap. It is priced at 16.88 times its earnings. PG pays a 3.16% dividend yield and has a 48.59% payout ratio. The company has a beta of 0.45 and carries an analyst recommendation of 1.8 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $66.37 a share. Warren Buffett’s Berkshire Hathaway had $4.85 billion in PG at the end of the third quarter, while Ken Fisher’s Fisher Asset Management had $265.89 million invested in the company at the end of September.
Philip Morris International, Inc. (PM) is a cigarettes company with a $135.85 billion market cap. It is priced at 16.53 times its earnings. PM pays a 3.94% dividend yield and has a 56.93% payout ratio. The company has a beta of 0.86 and carries an analyst recommendation of 2.1 on a scale from 1.0, meaning “Strong Buy,” to 5.0, meaning “Sell.” It recently traded at $77.05 a share. Tom Russo’s Garner Russo & Gardner had $512.03 million in PM at the end of September after increasing its position in the company by +1% during the third quarter. Jim Simons’ Renaissance Technologies was also bullish on PM during the third quarter, upping its stake in the company by +73% and bringing its total position to $392.18 million at the end of September.
Disclosure: I am long PM.
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