Korzenik also likes "the low end of consumer discretionary. "We like Yum! Brands (YUM - Get Report) a lot, for their domestic and international exposure," he says, and also Lorillard (LO - Get Report), which also features an attractive dividend yield of 5.41%, based on a quarterly payout of $1.55 a share, and Friday's closing price of $114.57.
Shares of Yum! Brands returned 21% year-to-date through Friday's close at $69.90. Based on a quarterly payout of 33.5 cents, the shares have a dividend yield of 1.92%. The company's shares trade for 19 times the consensus 2013 EPS estimate of $3.74.
YUM operates KFC, Pizza Hut and Taco Bell. For its fiscal third-quarter ended Sept. 8, the company reported net income of $471 million, or a dollar a share, increasing from $383 million, or 80 cents a share, from the fiscal third quarter of 2011. Revenue was up 9% year-over-year, to $3.569 billion, in the fiscal third quarter.
YUM said that for its China division, same-store sales grew 6% year-over-year, while operating profit -- excluding the effect of foreign exchange -- rose 24% to $374 million.Lorillard's stock returned 4% year-to-date, through Friday's close at $114.57. The stock was down 23% of a year-to-date intraday high of $141.07 on July 16. The cigarette manufacturer -- which includes Newport, Kent and True among its brands -- last week reported third-quarter earnings of $283 million, or $2.16 a share, increasing from $267 million, or $1.94 a share, during the third quarter of 2011. Net sales grew 2% year-over-year, to $1.661 billion in the third quarter. Lorillard CEO Murray Kessler said the company "continued to execute against its strategic plan as it began to invest in advertising, distribution and merchandising on blu eCigs, the leading e-cigarette brand acquired earlier this year," and that "the Company expects to continue to deliver a double digit total shareholder return, as measured by EPS and the dividend yield, while it makes these strategic investments." Lorillard's shares trade for 13 times the consensus 2013 EPS estimate of $9.10. Grimes & Co. securities analyst Benjamin Wallace says that he "would rather be focused on asset managers than bank that are facing these risks," and that "our process is looking bottom up art business with high returns on capital. Asset managers pop up, where there banks don't."