Analyst Sees High-Quality Dividends as Bright Spot for 2015

By Lee Jackson Published Dec 2, 8:30AM EST

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The stock market is up over 200% from the lows printed in March of 2009. Anybody with a fair amount of market knowledge knows that the double-digit gains of the past five and a half years can’t last forever. In a new report, the equity team at Jefferies are among those that think that next year, while still an up year, will only see a 5% increase. That may come as a shock for those accustomed to big yearly gains.

The Jefferies report highlights stocks that are considered quality companies based on metrics like sustainable growth rates and superior dividend yields. We screened the list for the top-yielding companies.

Chevron Corp. (NYSE: CVX) is a perfect story for investors looking to stay long the energy sector. With its large dividend, and a solid place in the sector when it comes to natural gas and liquefied natural gas, long-term investors willing to look past the current debacle in oil pricing may be able to make a once-in-a-lifetime buy on this industry behemoth.

Chevron investors are paid a very solid 3.87% dividend. The Thomson/First Call consensus price target for the stock is $32.02. Shares closed up nicely Monday at $111.73 as oil had a bounce back from multiyear lows.

ALSO READ: Deutsche Bank Lowers Price Targets on Top Oil Stocks to Buy

Emerson Electric Co. (NYSE: EMR) is a top stock to buy that analysts feel will be a beneficiary of an expected upturn in capital spending in 2015. The company boasts a solid balance sheet, with a tiny 0.5 debt-to-equity ratio. Plus the dividend is well covered and was recently increased. Emerson’s Process Management division was recently selected as the main automation contractor for the Shah Deniz Stage 2 development project in the Azerbaijan sector of the Caspian Sea, a $40 million contract.

Emerson investors receive a 2.97% dividend. The consensus price target is $69.96. Emerson closed Monday at $62.92 a share.

Lorillard Inc. (NYSE: LO) is a tobacco stock best known as the industry leader in menthol cigarettes with the Newport brand. In a deal that is still being assessed by federal regulators, Lorillard was purchased this past summer by Reynolds American, and it is expected to be right in the $27 billion range. Combining the two would give investors a strong company that can continue to post solid earnings growth, cover a big dividend and battle Altria for slumping U.S. market share.

Lorillard investors are currently paid a tidy 3.9% dividend. The consensus price target is $64, and shares closed Monday at $63.25. Ultimately investors are really buying the combined entity with Lorillard shareholders receiving $68.88 per share.

NutriSystem Inc. (NASDAQ: NTRI) is a stock that always tends to get a spike at the beginning of each new year, as many people make commitments to lose weight and turn to the company for the widely advertised packaged food offerings. NutriSystem posted strong third-quarter earnings and is reasonably priced when compared to many of the other stocks competing in the diet category.

NutriSystem investors are paid a solid 3.75% dividend. The consensus price target is $21.51. Shares closed the day on Monday at $18.62.

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Investors that lower their sights some for 2015 and shift out of high-beta momentum names for more solid growth names could be well rewarded. After a long market run, it makes sense that we could experience a year or more of single-digit gains.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.