9 Sectors, 9 Great Dividend Stock Picks for 2011

As you know already, I am currently looking to buy different stocks for my dividend portfolio. I just bought Scotiabank (TSE: BNS) and I am looking for other stocks in different sectors. I have made a list of some interesting stocks (some of which I hold already) and decided to give one stock per sector (most of them are American stocks but some are Canadian).

BASIC MATERIALS – Nucor (NYSE: NUE)

Nucor is definitely a great dividend achiever as it has been able to increase its distribution for 37 years in a row. Nucor manufactures and sells steel and steel products. Regardless if the Steelers lost, Nucor remains a winner with steel . Since the company’s business model is highly cyclical, we can only hope for the best in the upcoming years as we are slowly coming out of a recession. NUE is currently paying a 3.10% dividend yield.

COMMUNICATIONS - AT&T (NYSE : T)

I have previously mentioned that this stock was on my radar. They have a high dividend payout and the Smartphone industry is just booming right now. Since its dividend payout ratio is lower than Verizon (one of its biggest competitors), I would pick AT&T over the big V. AT&T currently has a dividend yield of 6.10%

CONSUMER, CYCLICAL Darden Restaurants (NYSE: DRI)

In the crazy busy world we live in today, there is nothing better than a good restaurant meal. DRI recently increased its dividend in 2010 which is a sign they are confident in their future. P/E ratio is at 15.52 with a fwd P/E ratio at 12.85. Red Lobster’s operators currently pay a 2.60% dividend yield.

CONSUMER, NON-CYCLICAL – JOHNSON & JOHNSON (NYSE : JNJ)

I think that JNJ now represents a great investing opportunity. Their quality control problem contributed to a price drop in JNJ down to $60 (it was over $64 back in January). JNJ is already producing a good dividend payout but you can also see its ticker get back to $64 in a few months once the quality control problems are solved (and the real cost related to it is known). JNJ’s dividend is now at 3.60%.

ENERGY – HUSKY ENERGY (TSE :HSE)

I could have selected Chevron (CVX) for which I made a stock analysis not so long ago (and that I have purchased) but I wanted to present a Canadian company. Husky is fairly active in the Canadian oil industry and I think that it could be a great addition to a dividend portfolio. On top of that, Husky could benefit from the rise in oil prices to offer growth. Husky is currently paying a 4.30% dividend yield.

FINANCIAL – NATIONAL BANK (TSE : NA)

I’m a big fan of Canadian banks. If you want to know why, I suggest you read why Canadian Banks are Solid. I chose National Bank for this article because it’s probably the bank that will produce the most growth in upcoming years. They are the smallest of the big 6 Canadian Banks and while they are pretty strong in their market (the province of Quebec), they are now expanding their activities. They are also about to install a new SAP software through their network which will produce a huge productivity gain. Dividend payout is now at 3.70%.

INDUSTRIALS – 3M (NYSE : MMM)

When you think dividend and technology, it’s hard to forget about 3M. This highly diversified company operates in 6 different fields: Industrial and Transportation; Health Care; Safety, Security and Protection Services; Consumer and Office; Display and Graphics; and Electro and Communications. For its diversification and continuously increasing dividend payout, we’ll keep an eye on 3M. MMM is currently paying 2.40%.

TECHNOLOGY – INTEL (NYSE : INTC)

I need a computer, you need a computer, the world needs computers. Intel is a strong and solid player in its (own) field. After increasing its dividend for 8 years in a row, I think we should draw some attention to this stock. Here again, it’s another stock that will follow the economic cycle. I think we are about to go on the well defined uptrend and this is why I think INTC is a good pick. Intel pays 3.30%.

UTILITIES – WISCONSIN ENERGY CORP (NYSE :WEC)

By looking at the graph of this stock, you can see that it doesn’t only pay good dividends, but it also has an interesting growth potential. The stock has been very bullish since February 2009 and still, the P/E ratio is around 15. For another great dividend payer, I have added WEC on my radar. Wisconsin is paying 3.60% dividend yield.

The average dividend yield of these 9 stocks is 3.63%. Therefore, you can build a pretty solid portfolio using different sectors for a good diversification.

If you have any other suggestions, I’m ready to hear about them!

Disclaimer : I hold positions in NA, CVX, HSE, BNS and JNJ

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