The Daily Dividend: High Yields in Defensive Stocks (MO, AWK, KO, KMB, KFT)

Defensive stocks are supposed to offer you some safety in times of uncertainty.  High-yield stock dividends are also supposed to offer you a safer harbor in choppy markets as well.  In today’s installment of “The Daily Dividend,” we wanted to take a look at some of the highest yields available for investors in defensive shares and how these have held up in the sell-off of the last week.  Our five top defensive stocks holding up in the sell-off with the highest yields are Altria Group, Inc. (NYSE: MO), American Water Works Company, Inc. (NYSE: AWK), The Coca-Cola Company (NYSE: KO), Kimberly-Clark Corporation (NYSE: KMB), and Kraft Foods Inc. (NYSE: KFT).

Altria Group, Inc. (NYSE: MO) is one of the chronic dividend raising companies which has manged to return more and more to investors despite selling products that kill.  The company pays more than 6% dividend yield and its were only about 6% from the 52-week highs and the stock is up about 28% from its yearly low. During the recent selling its shares were roughly at $25.00 last Friday and the stock is now back above $24.50.  Tobacco just remains that elusive defensive sector.

American Water Works Company, Inc. (NYSE: AWK) is perhaps the biggest defensive stock of them all with its local water utility monopolies. It also serves more than 16 million customers and its only Japanese exposure is the few Japanese businessmen that live within its service areas (a minute figure).  The company also keeps raising its dividend and has ample coverage to keep boosting payments through time.  It has been an amazing performer with shares up almost 40% from its yearly low.  Shares are down only 4.4% from its 52-week high and the stock is down less then 2% during the whole Japan mess.  Its yield is now 3.2% and that payment will continue to rise through time.

The Coca-Cola Company (NYSE: KO) has done better than we would have expected considering the fight against sugar.  Maybe its move away from just sugar drinks is the catalyst.  Shares are still up 25% from its 52-week lows and the stock is only about 5% off its 52-week high.  Shares were right above $64.50 last Friday and now the stock is down only about 3% from then at $62.70.  The dividend yield is also about 2.9%, shy of Pepsi but with better performance against its 52-week highs and lows.

Kimberly-Clark Corporation (NYSE: KMB) is perhaps one of the greatest value stocks out there in consumer products with an aim of great returns for its shareholders. Shares were at $64.60 last Friday and shares are back up to $63.85 today.  Only about a 1% drop, nice.  Shares are also less than 5% from the 52-week high of $67.24 with a sub-market price to earnings ratio.  Its yield of 4.30% won’t hurt anyone’s feelings.

Kraft Foods Inc. (NYSE: KFT) was surprising to see on the list today considering how it has been thought of as dead money for so long.  The food giant was up last Friday around $31.70 and shares are about $30.90 today.  The stock is down about 5% from its 52-week high of $32.67 and its shares are down only 2.5% in the whole Japan mess.  Food is still a good dividend provider as well as Kraft sports a 3.7% dividend yield.

If you drink it, eat it, smoke it, or have to use it on your body every day, chances are that it is a defensive stock as long as it isn’t luxury.  Drug companies and most utilities used to be defensive stocks as well, but drugs have a secular headwind against them and utilities have seen their share hammered this week due to nuclear exposure.  More safety and higher dividends… What’s not to like?

JON C. OGG