5 Dow Dividend Stocks Boosted by Asia

BOSTON (TheStreet) -- Dow stocks, which some investors argue offer the best risk-reward proposition of any asset class, have led equity markets this year. The following five Dow stocks, all of which pay dividends, derive the greatest share of revenue from the Asia-Pacific region, of the Dow 30. With China pacing the world as an economic thoroughbred, these companies are likely to continue to increase sales and profits at a faster pace than their multi-national peers. Below is a closer look at the fundamentals of these Asia-focused firms.

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5. DuPont ( DD) is a diversified chemicals company, selling performance coatings, polymers and specialty chemicals. Its stock has advanced 47% in the past 12 months, outperforming the Dow. During fiscal 2010, DuPont derived 22% of its sales from the Asia Pacific region. It generated 36% of sales in the U.S., 25% in Europe and 15% in Canada and Latin America. DuPont's sales have grown 18% in the past year as net income and earnings per share rose 73%.

Fourth-quarter net income dropped 15% to $376 million and earnings per share fell 17% to 40 cents, hurt by a higher share count. Revenue increased 12%. The gross margin contracted from 31% to 26% and the operating margin fell from 7.7% to 4.4%. Asia Pacific sales jumped 26% during the fourth quarter and Latin America revenue rose 18%, outpacing other segments. DuPont's stock sells for 13-times forward earnings, a 25% chemicals peer discount.

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4. IBM ( IBM) sells information-technology products and consulting services. Its stock has risen 12% in 2011 and 28% in the past 12 months, handily beating the Dow. During fiscal 2010, IBM generated 23% of total sales from the Asia Pacific region. Roughly 42% of sales came from the Americas and 32% came from Europe, the Middle East and Africa. Sales, net income and earnings per share gained 4.3%, 10% and 16%, respectively, during the past 12 months.

Fourth-quarter net income stretched 9.2% to $5.3 billion and earnings per share climbed 16% to $4.18, boosted by a smaller float. The gross margin remained steady at 54% and the operating margin inched up from 23% to 24%. IBM held $12 billion of cash and $29 billion of debt at the quarter's conclusion, for a quick ratio of 1 and a debt-to-equity ratio of 1.2. Asia Pacific quarterly revenue extended 14% to $6.6 billion, outpacing all other regions.

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3. Caterpillar ( CAT) makes construction, mining and agricultural equipment. Its stock has appreciated 21% already in 2011 and is up 77% over 12 months, ranking atop the Dow for performance. During fiscal 2010, Caterpillar derived just 32% of sales from the U.S. and 68% of sales from foreign markets. Roughly 24% of its sales came from the Asia Pacific region, 23% came from Europe, Africa and the Middle East and 14% came from the Latin America region.

Fourth-quarter profit more than quadrupled to $968 million, or $1.47 a share, as revenue surged 62% to nearly $13 billion. The gross margin narrowed from 35% to 32%, but the operating margin widened from 10% to 14%. Cat held $3.7 billion of cash and $28 billion of debt at quarter's end, for a quick ratio of 0.9 and a debt-to-equity ratio of 2.6. Cat's Asia Pacific sales rocketed 67% in fiscal 2010, with roughly half of volume growth coming from the China market.

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2. 3M ( MMM) is an industrial conglomerate, with industrial, transportation, health care and consumer segments. Its stock has risen 8.3% in 2011 and nearly 12% over the past year. During fiscal 2010, 3M generated just 35% of its net sales from the U.S. Around 31% of sales came from the Asia Pacific region, 23% came from the Europe, Middle East and Africa region and 11% were generated in Canada and Latin America. Net sales rose 15% for the year.

3M's fourth-quarter net income declined marginally to $928 million and earnings per share dropped 1.5% to $1.28. Revenue expanded 9.6% to $6.7 billion. The gross margin narrowed from 53% to 51% and the operating margin contracted from 22% to 19%. 3M carried $4.5 billion of cash and $5.5 billion of debt at quarter's end, for a quick ratio of 1.3 and a debt-to-equity ratio of 0.4. Quarterly organic volume soared an impressive 18% in the Asia Pacific region.

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1. Intel ( INTC) is the world's largest semiconductor company, designing chips for computers and hand-held devices. Its stock has fallen 12% over a 12-month span and is down 6.2% in 2011. During fiscal 2010, more than 67% of Intel's sales came from the Asia Pacific region, with 33% from Taiwan, 16% from China, 10% from Japan and 7.5% from other Asia Pacific areas. In contrast, just 20% of sales were generated from the Americas, which includes the U.S.

Intel's fourth-quarter net income expanded 39% to $3.2 billion and earnings per share climbed 47% to 59 cents, bolstered by a decrease in shares outstanding. Revenue increased 8.4%, past $11 billion. Intel's gross margin declined from 76% to 75% while its operating margin remained steady at 35%, a cyclical high. Intel has $22 billion of cash and $2.1 billion of debt, for $20 billion of net liquidity. Quarterly Asia Pacific sales grew 9.2%, lagging Americas growth.

-- Written by Jake Lynch in Boston.

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