9 Dow Dividend Stocks Get an A+ Buy-Rating

NEW YORK (TheStreet) -- There's about 6,000 U.S.-listed stocks trading on the major exchanges on any given day. Of those, TheStreet Ratings has rated 5,774 and only 121 issues -- about 2% -- have received an "A+," our highest rating.

Nine of these exceptional companies are well-known Dow dividend stocks:

American Express
Coca-Cola
Disney
DuPont
Home Depot
International Business Machines
Kraft Foods
Merck
Pfizer

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends.

Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

We consider each of these stocks to be strong buys. It's also worth noting that these nine stocks, when held collectively, have a higher dividend yield than the 10-year U.S. Treasury note.

As always, stock ratings should not be treated as gospel -- rather, use them as a starting point for your own research. A detailed analysis of each stock's rating appears on the following pages:

American Express

American Express

Dividend Yield: 1.35%

American Express' gross profit margin for the second quarter of its fiscal year 2012 has increased when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not.

During the same period, stockholders' equity ("net worth") has increased by 5.83% from the same quarter last year.

This stock's P/E ratio indicates a premium compared to an average of 11.89 for the Consumer Finance industry and a discount compared to the S&P 500 average of 16.49. For additional comparison, its price-to-book ratio of 3.49 indicates a premium versus the S&P 500 average of 2.28 and a premium versus the industry average of 2.50. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, American Express proves to trade at a premium to investment alternatives within the industry.

Coca-Cola

Coca-Cola

Dividend Yield: 2.68%

Coca-Cola's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. Coca-Cola has weak liquidity. Currently, the Quick Ratio is 0.84 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 8.17% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

The current P/E ratio indicates a discount compared to an average of 21.97 for the Beverages industry and a premium compared to the S&P 500 average of 16.49. For additional comparison, its price-to-book ratio of 5.35 indicates a significant premium versus the S&P 500 average of 2.28 and a discount versus the industry average of 5.75. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, Coca-Cola proves to trade at a discount to investment alternatives within the industry.

Disney

Disney

Dividend Yield: 1.15%

Disney's gross profit margin for the third quarter of its fiscal year 2012 has increased when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not. Disney has weak liquidity. Currently, the Quick Ratio is 0.93 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 2.72% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

The current P/E ratio indicates a significant discount compared to an average of 34.57 for the Media industry and a value on par with the S&P 500 average of 16.49. To use another comparison, its price-to-book ratio of 2.38 indicates valuation on par with the S&P 500 average of 2.28 and a significant discount versus the industry average of 3.90. The current price-to-sales ratio is well above the S&P 500 average, but below the industry average. Upon assessment of these and other key valuation criteria, Disney proves to trade at a discount to investment alternatives within the industry.

DuPont

DuPont

Dividend Yield: 3.29%

DuPont's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. DuPont has average liquidity. Currently, the Quick Ratio is 1.05 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 12.32% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future.

This stock's P/E ratio indicates a discount compared to an average of 20.12 for the Chemicals industry and a discount compared to the S&P 500 average of 16.49. Conducting a second comparison, its price-to-book ratio of 4.51 indicates a significant premium versus the S&P 500 average of 2.28 and a premium versus the industry average of 3.95. The price-to-sales ratio is below the S&P 500 average and is well below the industry average, indicating a discount. The valuation analysis reveals that, DuPont seems to be trading at a discount to investment alternatives within the industry.

Home Depot

Home Depot

Dividend Yield: 1.95%

Home Depot's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. Home Depot has very weak liquidity. Currently, the Quick Ratio is 0.38 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 3.28% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

Home Depot's P/E ratio indicates a premium compared to an average of 20.53 for the Specialty Retail industry and a premium compared to the S&P 500 average of 16.49. For additional comparison, its price-to-book ratio of 4.98 indicates a significant premium versus the S&P 500 average of 2.28 and a discount versus the industry average of 4.99. The price-to-sales ratio is below both the S&P 500 average and the industry average, indicating a discount. The valuation analysis reveals that, Home Depot appears to be valued on par with the investment alternatives within the industry.

IBM

International Business Machines

Dividend Yield: 1.64%

IBM's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased, representing an increase to the bottom line. IBM has weak liquidity. Currently, the Quick Ratio is 0.98 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 11.48% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

The current P/E ratio indicates a significant discount compared to an average of 25.56 for the IT Services industry and a value on par with the S&P 500 average of 16.49. For additional comparison, its price-to-book ratio of 11.52 indicates a significant premium versus the S&P 500 average of 2.28 and a significant premium versus the industry average of 7.96. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. The valuation analysis reveals that, IBM seems to be trading at a discount to investment alternatives within the industry.

Kraft Foods

Kraft Foods

Dividend Yield: 2.91%

Kraft's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased, representing an increase to the bottom line. Kraft has weak liquidity. Currently, the Quick Ratio is 0.70 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 7.32% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

The current P/E ratio indicates a discount compared to an average of 23.19 for the Food Products industry and a premium compared to the S&P 500 average of 16.49. To use another comparison, its price-to-book ratio of 1.97 indicates a discount versus the S&P 500 average of 2.28 and a significant discount versus the industry average of 3.67. The current price-to-sales ratio is similar to the S&P 500 average, but it is below the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, Kraft proves to trade at a discount to investment alternatives within the industry.

Merck

Merck

Dividend Yield: 3.85%

Merck's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. Merck has strong liquidity. Currently, the Quick Ratio is 1.51 which shows the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has remained unchanged from the same quarter last year. The key liquidity measurements indicate that the company is unlikely to face financial difficulties in the near future.

The current P/E ratio indicates a discount compared to an average of 21.78 for the Pharmaceuticals industry and a premium compared to the S&P 500 average of 16.49. To use another comparison, its price-to-book ratio of 2.46 indicates valuation on par with the S&P 500 average of 2.28 and a significant discount versus the industry average of 5.54. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, Merck proves to trade at a discount to investment alternatives within the industry.

Pfizer

Pfizer

Dividend Yield: 3.70%

Pfizer's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased, representing an increase to the bottom line. Pfizer has average liquidity. Currently, the Quick Ratio is 1.21 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 10.09% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future.

The current P/E ratio indicates a discount compared to an average of 21.78 for the Pharmaceuticals industry and a premium compared to the S&P 500 average of 16.49. To use another comparison, its price-to-book ratio of 2.28 indicates valuation on par with the S&P 500 average of 2.28 and a significant discount versus the industry average of 5.54. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, Pfizer proves to trade at a discount to investment alternatives within the industry.

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