NEW YORK (TheStreet) -- After a brief parting from my charts to watch Green Bay's glorious victory and dominance over the Vikings in title-town, I reviewed many more dividend paying stocks.
Even with dividend tax rates going up and even if growth and earnings come under pressure as a result of consumers spending less, your portfolio is going to be very happy to at least have regular dividend income arriving while we all collectively sit on our hands and wait this economic downturn out.
In the first half of 2013, we have federal tax-and-spending battles to look forward to. In the second half, we have fears of the Affordable Care Act taxes and regulations starting in 2014.
With the one-two punch we can see coming our way, should we just write the whole year off and go on vacation? Not at all. Now is the time to get serious about finding ways to make money in this environment. Even if, you can't bank on a bull market, you can position your portfolio for an attractive yield.
If we pull out of the recession and the market moves higher, these stocks stand to profit and go along for the ride too.
STX Dividend Yield data by YCharts
Seagate Technology STX
Background: Seagate Technology makes hard-disk drives for enterprise storage, client compute and client non-compute market applications worldwide.
52-Week Range: $18.14 to $35.71
Price to Book: 3.5
Earnings Payout Percentage: 13%
TheStreet's Kate Stalter writes about Seagate in Rules of the Game: The Roaring Gainers of 2012, Part II.
For under $80 each delivered to my door, I just received a few 750 GB Seagate hybrid drives. Part SSD (solid state drive) and part spinning disk, Seagate produces a very compelling product. Seagate's many compelling consumer and enterprise products are the reason why I have written many times about why you want to be long this storage leader.
Seagate currently pays $1.52 per share in dividends for a yield of 4.8%. Last month Seagate raised their dividend once again from 32 cents a share to 38 cents.
In the last month, the stock performed well with a 7.3% increase. After dipping below $25 a share in late November, the shares have aggressively moved higher, with two gaps higher along the way. The speed the shares have appreciated gives me pause because I don't like to chase prices.
Look for a dip below $31 as an aggressive entry point, and closer to $30 for the conservative play. Selling $30 strike price February Put options for about $1.30 is another entry method.
If your options are exercised and the shares are put to you, your cost basis is only $28.70 a share. That's an effective yield of 5.3% from future dividends, and if Seagate remains above $30 and the options expire worthless, your gain is about 4.3% for six weeks.
For a company analysts are mostly rating a hold, the stock really appreciated, gaining 76% in the last year, and the average analyst target price for Seagate is $29.59. Expect analyst target price upgrades soon at the rate the stock is trending. An analyst upgrade will often become self-fulfilling from the greater stock awareness and gained enthusiasm.
The short interest is markedly elevated and should be treated as a red flag that short sellers expect the price to fall. The current float short is 14.1%. It's increasingly becoming unprofitable for the shorts to hold their positions. While I don't normally like to bet against the shorts, I believe they have it wrong this time.
STX Payout Ratio TTM data by YCharts
USB Dividend Yield data by YCharts
US Bancorp USB
Background: US Bancorp is a financial services holding company. They operate full-service branch offices and ATMs and provide financial services products to consumers, businesses and institutions. US Bancorp is the parent company of Firstar Bank and U.S. Bank.
52-Week Range: $27.30 to $35.46
Price to Book: 1.8
Earnings Payout Percentage: 25%
US Bancorp is a big bank, but just small enough to stay off the main radar compared to the other larger banks. That's too bad for investors who may have passed up this dividend jewel. While USBancorp fell considerably along with the rest of the financial industry in 2009, on a relative basis, USBancorp held up better than almost everyone else.
US Bancorp is where I do some of my personal banking. It's also home to Travis Kraker, an investment adviser who is one of the best I know of. Many investment advisors are closer to a salesperson than advising, Kraker is the exception.
US Bancorp raised their dividend in March last year, 2011 and 2010. Will the Board authorize another increase this coming March? I didn't see an announcement, but the payout percentage certainly allows for another one if they desire it.
The bank currently pays 78 cents per share in dividends for a yield of 2.4%. Shares are modestly higher from a month ago, and the average analyst target price for US Bancorp is $36.81.
Short sellers are next to impossible to find. Short interest is so low I only include it to demonstrate the smart money is not betting against this company -- 2% of the float is short based on the last reported numbers.
USB Payout Ratio TTM data by YCharts
JNJ Dividend Yield data by YCharts
Background: Johnson & Johnson works with partners in health care all over the world. It is the world's sixth-largest consumer health company and the world's largest and most diverse medical devices and diagnostics company.
52-Week Range: $61.71 to $72.74
Price to Book: 3.4
Earnings Payout Percentage: 77%
J&J is an old school dividend stock with an up-trending stock price attitude. A yield of 3.4% is attractive enough to keep J&J always on my watchlist, but I have written about the company many times because of the stock performance.
J&J is a great one to buy on dips, or to write put options to gain entry. Based on technical analysis of the weekly price chart, last week was a break-out week in price. That means this week we will look for a retracement, and if it happens, we will have a relatively low risk entry point.
The March $70 strike put option can be sold for about $1, resulting in a cost basis of $69 per share. If you look at the daily price chart, the dips in price generally have found price support near $69 per share.
If the shares don't fall below the exercise price, the return is about 1.4% over two and half months' time. Shares have traded slightly lower in the last month of trading. Shares are near even at 1.8% less than a month ago.
Analysts as a whole like this company. Currently, J&J has 14 buy recommendations out of 26 analysts covering the company, along with 11 holds and one sell rating. The stock appreciated 9.4% in the last year, and the average analyst target price for J&J is $75.82.
JNJ Payout Ratio TTM data by YCharts
T Dividend Yield data by YCharts
Background: AT&T is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the U.S. and around the world. Among their offerings are the world's most advanced IP-based business communications services, the nation's fastest 3G network and the best wireless coverage worldwide, and the nation's leading high speed Internet access and voice services.
52-Week Range: $29.02 to $38.58
Price to Book: 2
Earnings Payout Percentage: 70%
Ma Bell hasn't always been one of my favorite stocks. For wireless providers, Sprint S has been the stock I was most bullish toward. Sprint has doubled in price since I began writing about it.
AT&T has struggled with customer service for a long time, and depended on its massive size to carry it through the day. To be fair, some of my customer service opinion with AT&T is a result of my own experiences, but it only colors it, not controls it.
Having an exclusive contract with Apple AAPL didn't do AT&T any favors in the long run. It only allowed the "it's my way or the highway" mentality to flourish longer than it should have.
AT&T is making the right moves, and the results can be seen in the earnings reports for the past three quarters. A year ago, they missed by a penny, but each quarter since then they beat by about 5% each time.
Also at about 5% is the yield of the dividend that continues to increase on a regular basis. The shares have move higher 16% over the last 52 weeks. Analysts are calling for a price target of $36.52.
The last reported short interest is paltry and without reason to consider it a meaningful influence at only 1.1% of the average trading float.
T Payout Ratio TTM data by YCharts
At the time of publication, the author held no positions in any of the stocks mentioned.
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