NEW YORK ( TheStreet) -- Mother's Day is just around the corner, and once again I find myself spending hours searching for a gift for my wife that she will think is wonderful.
A few days ago she casually reminded me of the coming holiday, adding, "And for me a card will be great; don't spend any money." We all know, however, that that's wife speak for, "I can't wait to see what I get this year."
This year, I decided to combine my gift search with my interest in stock-picking and narrowed down the list to products made by companies that pay dividends.
This yielded some well-known companies that provide the following products or services that I know my wife would love: a cruise, jewelry, an iPad/e-book reader, a purse or flowers.I wanted to see how many shares of each I would have to buy in order to collect enough dividends to pay for the gift before the next Mother's Day. Following is the list of companies I came up with: Royal Carribbean Cruises (RCL) offers vacations that my wife and I love. We have taken two Royal Carribbean cruises in the past. The whole industry took a nosedive after Carnival Corp.'s (CCL) Mediterranean accident, and it likely will take at least a year for it to recover. With sales down but cruise lines paying extra attention to safety in the wake of the Costa Concordia disaster, now is a great time to go on a cruise. Mom will feel like a queen with a deluxe suite for seven nights. The standard rate for two is $1,900. Royal Caribbean pays a dividend of 40 cents a share, so I would need to buy 4,750 shares at $26.80 a share to make the Royal Caribbean cruise a "free" Mother's Day gift.
Signet Jewelers Ltd. (SIG) is better known as Kay Jewelers where I live. I get to hear the commercial jingle "Every kiss begins with Kay" a little more often than I'd like to. For Mother's Day, Kay Jewelers has a sale on its 10K Rose Gold & Sterling Silver Diamond Mom Necklace, which is currently priced at $149.99. Over the next year, Signet will pay an annual dividend of 48 cents per share. I would need to buy 313 shares at $46.47 per share to pay for the necklace. With a forward price-to-earnings ratio of only 10, the stock likely offers a much better value compared to the jewelry.
Apple (AAPL) has more than one item that would put a smile on Mom's face. Because my wife would love an e-book reader, I'm looking at the iPad, which in addition to being an e-book reader, does a lot of other cool things. Now that Apple has announced it will pay a dividend, investors can use those dividends to pay for their cool Apple tech toys. A black 16GB iPad 2 costs about $400 at apple.com. Apple expects to pay an annual dividend of $10.60 a share over the coming year. I will need to buy 38 shares at $568.24 per share to pay for a new iPad. I am bullish with Apple at this price. I am especially bullish writing covered calls or selling puts. The forward P/E is 10.5, and Apple is debt-free. Apple has more than $100 per share in cash and is well-positioned to take advantage of the merging of home, auto, and on-the-go digital content.
Coach (COH) designs and produces the most recognizable luxury handbags in the world. I took a look at the Coach Web site, and it makes it easy to buy a gift. On the home page are links for various Mother's Day gifts sorted by price. I found a Madison leather fashion swingpack with choice of colors for $158. After Coach's earnings report, I became bullish on the stock. Coach is executing well in Asia, which is not easy to do with the knock-off competition it faces there. Coach pays an annual dividend of 90 cents a share. I would have to buy 176 shares at $70.80 per share to pay for a new Coach swingpack bag with dividends.
United Online (UNTD) is the parent company of FTD.com, the online florist and gift seller. I found one dozen mixed-color roses for $29.99. They don't include a vase, but after 15 years of marriage, we don't require another vase. United expects to pay a dividend of 40 cents over the next year. I would need to buy 75 shares at $4.11 per share to pay for a dozen mixed-color roses. The yield on United Online is approaching 10%, and the payout ratio is 73%. Because United has lost one-third of its market value over the last year, I might be better off just buying the flowers than trying to cover their cost by owning the stock and receiving the dividend. At the time of publication, Weinstein had no positions in stocks mentioned.
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