Good Fortune article on why Dividend Paying Stocks are worth paying attention to…
T. Rowe Price’s Tom Huber says the category makes more sense than ever and explains what he’s buying.
Some highlights:
“One that’s moved into the top five is PepsiCo (PEP). We have a valuation bias, so when we notice a company of Pepsi’s quality that seems to be struggling, we’ll do the work. It has underperformed relative to its peers, in part because of losing some market share domestically to Coca-Cola. I think it is now making the right decisions to increase marketing and ad spend. If you look out a few years and assume a reasonable multiple, you can make 15% to 20% without taking on undue risk.”
“United Technologies (UTX) [which makes everything from air conditioners to elevators to helicopters] is well positioned in the industrial world and is a good way to play global GDP growth. It does about 20% of its business in emerging markets. That’s important now, and it’s only going to become more important. We think it could earn close to $6.80 in 2013. It trades around 11 times that number, and it could get a higher multiple in an environment where people feel better about the global economy.”