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5 Dividend Stocks With Rising Yields for 2012

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3M (MMM - Get Report)

Company Profile: 3M, a component of the Dow Jones Industrial Average, is a large, diversified manufacturing company. 3M's portfolio of household brands includes Post-It, Scotch Brite and Scotchgard, among others.

Current Share Price: $77.64 (Nov. 29)

Dividend Yield: 2.8%

Platte's Take: 3M may be another obvious dividend name for investors because of the stock's inclusion in the Dow, but Platte argues that investors may be looking at the stock for the wrong reasons.

While a 2.8% yield is considerably better than the 10-year U.S. Treasury, Platte says 3M is doubly attractive because of its low forward price-to-earnings ratio of 12.3, a discount to the broader market. 3M shares have disappointed this year, falling 10%. By comparison, the S&P 500 is down only 5%. But that has created a buying opportunity investors rarely get.

"There are not many times have you had the opportunity to purchase 3M at the prices it is selling it," Platte says. "Again, the dividend yield is pretty attractive and you have tremendous exposure to international business. They're in 65 countries. If you're looking for some domestic company with international exposure, this is a name to own."

As of Sept. 30, 3M was the ninth largest position in the fund, accounting for 3% of the portfolio's net assets.

The Cato Corp. (CATO - Get Report)

Company Profile: The Cato Corp. is a specialty retailer of women's fashion clothing and accessories. The company operates 1,300 stores in 31 states.

Current Share Price: $23.51 (Nov. 29)

Dividend Yield: 3.8%

Platte's Take: Unlike Platte's other picks, with have market capitalizations above $1 billion, Cato is a much smaller company at only $693 million.

"It is probably one of the smallest in our portfolio," Platte says. "But they have no debt and a large portion of the stock price in cash. This stock tends to be more volatile, so it bounces around a lot. Because they don't sell high-end fashion, they've had some negative same-store sales. But it's a good business formula that will continue to do well. They do increase the dividend regularly."

Cato shares are down 14% this year and 19% over the past 12 months. However, the stock did hit a 52-week high of $30.77 in July and, earlier this month, the company said net income rose in the third quarter from a year ago even as same-store sales fell 3%.

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>>To see these stocks in action, visit the 5 Dividend Stocks With Rising Yields for 2012 portfolio on Stockpickr.

-- Written by Robert Holmes in Boston.

>To contact the writer of this article, click here: Robert Holmes.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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CATO $33.63 0.00%
LOW $65.84 0.00%
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