Diary of a Dividend Diva: LO, EL, CSCO, MCD

 | Nov 26, 2012 | 9:00 AM EST  | Comments
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Stock quotes in this article:

lo

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el

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csco

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mcd

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lmt

Although the fiscal cliff is likely to get "solved," the probability of tax increases is a near-certainty, so investors are bracing for the dividend tax rate to return to same level as that of "ordinary income." Most smart management teams are aware of this, and are assisting shareholders in their tax-planning by accelerating dividend payments into 2012, rather than waiting until 2013. (Keep in mind that, although you may accrue a dividend this year by owning the stock over the ex-dividend date, the tax liability actually accrues on the date the check is deposited in your account.)

Many companies are also returning cash now via large special dividends, which we discussed recently. The resulting flow of dividends is nirvana for us dividend-capture traders. I am gorging on dividends this quarter to an even greater extent than I gorged myself on turkey last Thursday!

With that in mind, here is a quite extensive table of dividends that are forthcoming in merely the next two weeks. As always, I screen these for only those large enough to matter if you are capturing the dividend, and I've filtered them for sufficient market capitalization and liquidity so as to be easily bought and sold.

Gorging on Dividends
Source: FactSet, Using First Call Estimates

Some of the highlights include: Any tobacco is always good for this strategy. Lorillard (LO) will go ex- on Nov. 28 with a fat 1.26% payout. In addition, Estee Lauder (EL) is attractive, with a 1.21% payout. This stock has some momentum going into the holiday season, as well. Cisco (CSCO), which goes ex- on Nov. 27, looks OK: The 0.74% is reasonably good, and the company recently reported standout results as one of the few tech names with solid growth.

Many consumer staple names are safe to play. Among these are McDonald's (MCD) or Kellogg (K), which are due to pay 0.88% and 0.80%, respectively, on Nov. 29. Conversely, don't get pulled into Lockheed-Martin (LMT) despite the 1.25% "siren song" -- the fiscal cliff will not be kind to defense, names and it could be tough to recover your cost basis.

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