6 Top Dividend Stocks to Buy for July


The Best of the Dow

box of money In my "Top Stocks for June" post I noted , "The bulls remain in very shaky control. The intermediate- and long-term trends for stocks are still up, but the 50-day moving averages of the major indices are under attack, and a close under them could result in another wave of selling." On June 3, the DJIA and the S&P 500 broke their intermediate trend line, and the 50-day moving average and stocks plunged to the major support beginning at the S&P 500′s 1,260 line.

And it was noted that Eurozone debt issues and the downgrade of Greece's sovereign debt, along with new problems in Italy, could result in more strength in the dollar and "that puts pressure on U.S. stock markets." As for the Eurozone issues - there has been little accomplished with European politicians seemingly incapable of cracking down on their liberal programs. Thus the dollar has continued to gain ground, putting additional pressure on U.S. stocks and commodities. But at the time of this report, the major support zone of the S&P 500 at 1,250 to 1,260 has held, and the index is just a few points above it. For investors seeking quality issues, this could be the best buying opportunity since the March low.

Crises provide opportunity as long as investors take a more cautious approach and buy solid stocks with excellent management teams that have a record of dealing successfully with difficult economic situations. Thus, this month I will recommend high-quality, well-known international companies selected from the list of 30 Dow Jones Industrial Average stocks that have fallen to support zones and are priced to provide excellent long-term potential appreciation. Each selection has a strong history of dividend payments. Finally, each selection has a history of recent insider buying - a strong indicator that the stock is valued highly by those who know it best - the corporate officers and directors of the company.

Top Dividend Stock #1 - AT&T (NYSE:T)

A major provider of telecommunications services to consumers and businesses in the United States and internationally, this household name fell from a high of almost $43 in 2007 to under $21 at the bear-market low. This blue chip took almost two years to consolidate following its fall, but in July it broke from resistance at $26.50 beginning a series of bullish stairsteps that recently took AT&T (NYSE: T ) to just under $32.

The stock shows a solid and regular pattern of steady buying, has positive momentum, and if it can break from its recent descending triangle could, within six months, easily challenge its old high at $43. S&P has AT&T rated as a "Strong Buy 5-Stars," its highest rating. The annual dividend is $1.72 providing a yield of 5.59%.

NYSE:T chart

Trade of the Day Chart Key

Top Dividend Stock #2 - Chevron (NYSE:CVX)

This major international energy company primarily engages in exploration, refining, transportation and storage of crude oil and natural gas. Chevron (NYSE: CVX ) ran to a high at over $110 before double topping and falling to its major support zone at $95 to $97. That zone is also supported by the 200-day moving average, which adds strength to the zone. Note that despite heavy selling due to a decline in the price of crude, the stock has not broken down, and the stochastic appears to be beginning to arch up - a preliminary positive. Some energy analysts say that the U.S. government's recent decision to release reserves from the Strategic Petroleum Reserve (SPR) will have the opposite impact than desired, creating a shortage of crude in the reserve that must be replaced at ultimately higher prices. Insiders have been strong buyers of the stock in the last 3 months.

Buy CVX stock through $95 with a six-month target of $110 and a 12-month target of $125. S&P has the stock rated as a "Strong Buy 5-Stars." The annual dividend is $3.12 providing a yield of 3.15%.

NYSE:CVX chart

Trade of the Day Chart Key

Top Dividend Stock #3 - DuPont (NYSE:DD)

DuPont (NYSE: DD ) offers a broad range of products for agricultural and the food industries, building and general industrial and transportation sectors of the economy. The stock is in a broad and powerful bull market supported by a major breakout on the long-term charts when it hit a new high at $57 in late April. The recent market decline resulted in profit-taking on DD, which drove it to its major support line at $49 where is reversed up on heavy volume. The reversal popped the stock through a short-term resistance line (red dash) confirming the reversal.

DD is a "cornerstone" stock for many institutional buyers, and fundamental analysts from several sources indicate a 12-month target of $60-plus. Technically, if the stock is successful in holding above the major support, look for it to break above this year's high with a possible run to the mid-$60s. The annual dividend is $1.64 providing a yield of 3.17%. Insiders have been very strong buyers, especially in the last three months.

NYSE:DD chart

Trade of the Day Chart Key

Top Dividend Stock #4 - JPMorgan Chase (NYSE:JPM)

This leading global financial company operates in more than 50 countries. Its strong balance sheet and competitive position place the stock on the buy list of almost all of the major banking analysts despite the pullback in the banking sector - it is the premier big bank on their list. Technically JPMorgan Chase (NYSE: JPM ) retreated to its major support zone at $39 to $41 after making a high at over $48 in February.

The stock's stochastic is telling us that it is oversold, and the stock had a reversal day late last month that could provide a short-term trade to $43. Fundamental analysts have an average target of $58 within 12 months, but technically we'd be pleased with a move back to its high of $47-plus by the end of this year. The annual dividend is $1.00 providing a yield of 2.51%.

NYSE:JPM chart

Trade of the Day Chart Key

Top Dividend Stock #5 - Wal-Mart (NYSE:WMT)

Wal-Mart (NYSE: WMT ), the largest retailer in North America, has been in a bull market since March 2008 when it broke through resistance at $50 and ran to over $62 by the end of the year. But since then, WMT stock has traded in a recovery pattern with a low of just under $48 (last year) and a strong support zone at $50 to $51.

Like our other picks for this month, WMT is the premier name in its sector with most fundamental analysts placing it on the top of their "most desired" list of retail stocks. Technically try to buy it closer to its support at below $51 for a trade to $54. Longer term (12 months), it is likely that the stock will break from the current sideways trend and run to my target at $66. WMT pays an annual dividend of $1.46 providing a yield of 2.79%.

NYSE:WMT chart

Trade of the Day Chart Key

Top Dividend Stock #6 - Disney (NYSE:DIS)

This "household name" entertainment company is a diversified global giant with resorts, theme parks, film and TV broadcasting, etc. Like our other Dow stocks, Disney (NYSE: DIS ) is on the buy list of most fundamental analysts. They target DIS stock at $45 to $50 within 12 months. Technically DIS broke down from a double top at $44 in May, but the target was very shallow at just $38 - the upper range of a support zone from $37 to $38.

The stock is a strong buy at this level but may be sluggish for the next quarter as it trades within the range of $37 to $41. But traders will want to take advantage of this seemingly predictable range as it bounces back and forth before resuming its uptrend with a break above $41. Insiders have been very strong buyers in the last three months.  Disney pays a dividend of $0.40 providing a yield of 1.0%.

NYSE:DIS chart

Trade of the Day Chart Key

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: SPR

Sam Collins

Sam Collins

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