by Chuck Carlson, editor DRIP Investor
One great thing about investing in dividend reinvestment plans is that
you can turn a little into a lot. Indeed, the modest minimums for most
plans allow virtually any investor to build a diversified portfolio of
quality stocks regardless of the size of his or her pocketbook.
following are reviews of three quality stocks offering solid long-term
potential. They allow any investor to make even their initial purchase
of stock directly from the company.
Best of all, the initial minimum for each of the stocks is just $100,
making it easy for any investor to build a "mini" three-stock portfolio
with just $300. CVS Caremark
is the largest integrated pharmacy healthcare provider in the United
States. The company operates more than 7,300 CVS/pharmacy stores.
75% of the U.S. population lives within three miles of a CVS pharmacy.
The ?rm ?lls or manages more than one billion prescriptions annually.
is also one of the country's largest pharmacy bene?ts managers (PBMs)
serving more than 60 million plan members. The ?rm also tops the market
for retail-based medical centers via its roughly 600 MinuteClinic
The firm is coming off a strong ?rst quarter.
Revenues rose nearly 20% to a record $30.8 billion. Pharmacy services
were up 32%. Per-share earnings rose 14% to $0.65 per share, $0.02 above
the consensus estimate.
It has raised its earnings guidance for full year 2012 to $3.23 to $3.33
per share. The stock trades at 14 times the low-end guidance, a
reasonable valuation given the ?rm's growth of late.
been bene?ting at the expense of its chief competitor, Walgreen, which
has been hurt by its failure to renew a deal with large pharmacy bene?ts
manager Express Scripts.
Should Walgreen and Express Scripts
eventually cut a deal, it could impact CVS. Still, has remained
resilient during the recent market downturn and its growth prospects are
) is a global technology leader in electrical components, systems, and services for power quality, distribution, and control.
put up solid numbers in the first quarter. Per-share profits jumped 10%
to $0.92, beating the consensus estimate by $0.02 per share. The
company set ?rst-quarter records in sales, segment operating profit
margins, and earnings per share.
The company expects a record
year for 2012 overall, with revenue growing more than 7% and operating
earnings per share up 14%. The company recently raised its per-share
earnings guidance $0.10 to between $4.30 and $4.70 for 2012.
stock offers a good value at just 10 times the low-end estimate of
$4.30 per share. Enhancing appeal is the yield of 3.6%. Quest Diagnostics
is the world's leading provider of diagnostic testing, information, and
services ranging from routine blood tests to complex, gene-based, and
The ?rm has special expertise in the cancer,
cardiovascular disease, infectious disease, and neurology areas. The
company serves half of the physicians and hospitals in the U.S.
health-care-related stocks have had their ups and downs, Quest
represents a consistent play in the group. The ?rm has beaten analysts'
earnings estimates in each of the last three quarters.
demonstrated con?dence in its future by boosting its dividend 70% to a
quarterly rate of $0.17 per share. Even at the higher dividend rate the
company's payout ratio (the percentage of pro? ts paid out in dividends)
is just 15%, leaving plenty of room for future dividend hikes.