The Dynamic Dividend

13 Dividend Stocks Safely Yielding At Least 4%

Investors hunting for solid dividend yields should be having a field day in today’s market, as there are plenty of fantastic options. Recent volatility has pushed the yields of many rock-solid companies — despite their substantial earnings power and cash-rich balance sheets — to attractive levels.

Below is a list of 13 such companies, all with big yields and ample dividend coverage. Each of these companies can currently be purchased with a yield of at least 4%, despite their payouts representing less than 40% of next year’s consensus earnings estimates. As an added backstop, each company also has enough cash on hand to pay its dividend for more than two years.

Avon Products (AVP) yields 4.33% and squeaks onto this list with a 39.8% forward payout ratio. The beauty products company holds $2.44 per share in cash, which is enough to cover its dividend for a little over 10 quarters. Avon raised its dividend for the 22nd straight year back in February.

BP (BP) features a 4.62% yield, while its payout barely represents 24% of next year’s consensus earnings estimate. That’s one of the tiniest disparities between yield and forward payout ratio you’ll ever see on a large cap stock. The oil and gas giant holds enough cash ($6.39 per share) to power its payout — which it brought back from a spill-inspired hiatus earlier this year — for the next 15 quarters.

Commercial Metals Company (CMC) carries a 4.52% dividend yield despite a paltry 30% forward payout ratio. The steel and metal company has more than $2 per share in cash, which is enough to cover its dividend for the next 17 quarters.

ConocoPhillips (COP) pays 4.02% with a forward payout ratio that sits just under 30%. When the integrated energy company splits up next year, its dividend will be divided between the two entities. So will the nearly $6 per share that currently sits on the company’s balance sheet, which is enough to power its current dividend for more than two years.

Friedman Industries (FRD) features a 5.67% dividend yield, despite the steel and pipe micro-cap returning just 36% of future earnings to shareholders. To be fair, analyst coverage on this micro-cap is scarce, but Friedman’s cash of $1.08 per share (enough to fund its dividend for a little over two years) provides a nice margin of safety should the estimates prove too aggressive. Friedman pushed its dividend to a new all-time high back in May.

H&R Block (HRB) pays 4.45% with a forward payout ratio of 34%. The tax service provider has enough cash on its balance sheet ($3.31 per share) to power its dividend for 22 quarters.

Intel (INTC) features a 4.30% dividend yield, while its dividend rate is only 34% of the consensus 2012 earnings estimate — despite a pair of big dividend hikes in the last ten months. The semiconductor giant also has enough cash on hand ($2.20 per share) to cover its payout for the next ten quarters.

KLA-Tencor (KLAC) currently yields 4.09% while its dividend rate represents just under 33% of Wall Street’s consensus 2012 earnings estimate. The supplier for the semiconductor and related microelectronics industries has a huge cash hoard ($12.21 per share) capable of powering its payout into 2020 — even after its huge 40% dividend hike in July.

Lockheed Martin (LMT) features a 4.21% dividend yield and a forward payout ratio of just 34%. The global security company has cash in excess of $3.5 billion, which is enough to cover its current payout for more than three years. Lockheed is expected to hike its dividend for the ninth consecutive year later this month.

Merck (MRK) currently pays 4.71%, and just makes this list with a forward payout ratio of 39.6%. The health care giant has enough cash on hand ($4.52 per share) to power its dividend for nearly three years.

Pfizer (PFE) currently features a 4.29% yield, while its dividend represents a little under 35% of the 2012 consensus earnings estimate. The biopharmaceutical company holds enough cash ($3.28 per share) to pay its dividend for the next four years.

Raytheon (RTN) carries a 4.22% dividend yield despite a forward payout ratio of just 31%. The defense technology company, which raised its dividend for the seventh consecutive year back in March, currently has enough cash (nearly $6 per share) to cover its dividend for more than three years.

SUPERVALU (SVU) yields 4.58% with a forward payout ratio of just 28%. Less than two years after making the tough decision to slash its dividend in half — ending decades of annual dividend growth in order to preserve capital — the operator of grocery chains has enough cash to pay its dividend for nine quarters.