22 Dividend Stocks with Good Fundamentals 41 comments
-
Font Size:
-
Print
- TweetThis
If you believe that we've already seen the bottom of the market and it has nowhere to go but up (or sideways at the worst), then you might be thinking that now would be a good time to start lining your larder with some high dividend-paying stocks. Why would you want to do this? For the following reasons:
1. Dividends account for most of the wealth accumulated in the stock market. And don't believe that dividend stocks are for income generation only—au contraire mon ami! In fact, if you're a young person just beginning to save for retirement (which you should be doing!), adding some high-quality dividend-paying stocks to your portfolio is one of the wisest things you can do. Especially if you elect to re-invest your dividends into buying shares of your stock. This is a form of compounding, one of the most powerful methods of generating long-term wealth.
2. Buying dividend-paying stocks at depressed prices boosts your dividend yield because of the low cost basis.
3. Buying dividend stocks at depressed prices also gives you the added benefit of price appreciation.
To find stocks that have high dividends and with good fundamentals, I ran a stock screen on the MSN Money Central Stock Screener (which is free to all and with whom I have no affiliation) according to the following criteria:
* Average daily volume greater than 100,000 shares. This ensures liquidity and a narrower bid/ask spread.
* Last price greater than $2. In bullish environments, this criterion could be raised, but I chose this value since many issues are so undervalued.
* Current dividend yield = As high as possible
* Stock Scouter rating greater than or equal to 7. This is an attempt to capture the higher quality issues.
I screened the top 50 stocks according to the bullish strength in their charts. (I know this is subjective but judging from Monday's action, this group is up on average over 3.5% as of this writing.) The following twenty-two stocks are my top picks. The stocks highlighted in rose are those that broke out Monday.
The table is divided into three groups: the top seventeen stocks are drawn from the energy, financial, real-estate, and utility sectors—exactly where you'd expect to find the high-dividend payers. The next three are from other sectors that are trending up. The last two are currently in a holding pattern after an initial run up. [Click on the chart to enlarge.]
So, how should you play these?
I know you've heard that stocks that pay a high dividend should be avoided because there's usually a reason for the high payments. But in many of these cases, I think that the reason is just that they've been way oversold. Some of these stocks are as much as 75% off their highs. However, that doesn't mean you should neglect your due diligence!
I grouped the table according to sector because it's important to diversify your holdings. You don't want your nest eggs to all come from the same basket as doing so increases the risk to your portfolio. Remember, it's not only profits that count, but also the amount of risk that goes into getting that return.
If you don't like my picks, try modifying the screening parameters to reflect your investment taste, but don't waste too much time. I think that now is THE time to begin stocking up on dividend-paying stocks. Go get 'em!
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 41 comments:
Also, I find dividends can be redflags that require some significant investigation if the dividend is above 6%.
Try to add dividend increasers in your next picks.
For instance, GE's dividend will no longer be $1.24/year ($0.31/qtr) --for, as you surely must have heard-- a few months ago it was famously slashed for 2H 2009 to an annualized $0.44/yr ($0.11/qtr). (In time, with a likely economic recovery and some solution to GE's finance segment, that dividend may come roaring back, but for now, as you can see from the math, its div has been cut by 2/3rds.)
So do some careful reading before you invest in any of these-- yahoo.finance and other sites often don't show the up to date dividend info on these firms.
Mex: Decreasing yields DOES NOT zap compounding over time. Decreasing DIVIDENDS zap compounding. Decreasing YIELDS can (and often do) come from price appreciation, which has nothing to do with how much the dividend actually is. As long as the dividend itself is increasing, the compounding continues.
Dividend investors must educate themselves on the difference between "yield on cost" (the yield to you, based on the original price you paid and which goes up each time the dividend payout is increased) and "current yield" (which applies to new buyers and varies with both the price and dividend payout).
As a dividend investor, you don't care what the current yield becomes after you've bought the stock. Your yield was determined at the time you bought it. If the company increases its dividend payout over time, your personal yield goes up in lock-step, because the divisor (Yield = Dividend / Price) is always your price, not the current price.
On May 05 07:43 AM AlNieder wrote:
> ATN is ~50% owned by ATLS, which announced ~ 2 weeks ago that it
> will buy (exchange) all shares of ATN for 1.16 shares of ATLS. The
> intent is to delete the high paying dividend of ATN and use that
> money to fund more wells in the Marcellus shale. Despite the dividend
> cut, it it appears overall to be a good deal for investors.
On May 05 11:22 AM dividendgrowthinvestor wrote:
> Love your philosophy about dividends.however as aperson who has achieved
> financial independence SOLELY through dividend investing I do not
> approve of the MAJORITY of the stocks you have recommended.I have
> chosen other ones.
AND IT HAS YIELDED ME MILLIONS !
1 MUST PAY MINIMUM 5%
2 MUST PROVIDE SERVICE/PRODUCT NEEDED LONG TERM
3 MUST HAVE PAID DIVIDENDS FOR 5 YEARS OR MORE
4 MUST HAVE RAISED DIVIDENDS 4 OUT 5 YEARS
5 MUST HAVE MGMT COMMITTED TO PAY DIVS
ENERGY, HEALTH CARE, MEDICAL REITS ARE SOME
OF THE CONSISTENT PERFORMERS.
On May 05 08:49 AM johmw wrote:
> Buy and Hold, I don't think so! I have seen to many charts presented
> at investment seminars showing that over decades it nets you nothing
> in return. Just look at some of the financial, manufacturing and
> automotive stocks as compared to a year ago. Many of the blue chip
> stocks are trading at 10% of there price. With that in mind even
> using your dividends to buy more would have gotten you nothing. I
> will keep day trading and watch others loose their money when the
> tide turns as many think it will!
On May 06 02:01 AM Finance Fanatic wrote:
> High dividend stocks are risky at this point, because of the huge
> slash that has been given to many company's earnings. If a company
> has a high yielding dividend with a diminishing stock price, most
> likely that dividend will be cut, shedding more demand for the stock.
I have found the work by DividendsForLife and DividendGrowthInvestor to be VERY educational.
By the way, authors of DVL and DGI, many thanks for your insights on dividend stock investing. Much appreciated
Disclosure: Retired at 45, and have found the secret to making a small fortune in this recesso-depresso-rama, which IS (drum roll please): start with a big fortune, and put it under money management that is not so interested in technicals analysis. And while I *am* currently holding an assortment of ETFs in this market up-leg, I am most definitely interested in building a list of dividend candidate companies for accumulation during what might be another martket down-leg.
-- Sincerely,
Daniel
On May 06 04:16 PM RetiredAt45 wrote:
> Hey OldGuy67, do you want to reveal your dividend portfolio to the
> dividend-interested among us?
>
> I have found the work by DividendsForLife and DividendGrowthInvestor
> to be VERY educational.
>
> By the way, authors of DVL and DGI, many thanks for your insights
> on dividend stock investing. Much appreciated
>
> Disclosure: Retired at 45, and have found the secret to making a
> small fortune in this recesso-depresso-rama, which IS (drum roll
> please): start with a big fortune, and put it under money management
> that is not so interested in technicals analysis. And while I *am*
> currently holding an assortment of ETFs in this market up-leg, I
> am most definitely interested in building a list of dividend candidate
> companies for accumulation during what might be another martket down-leg.
>
> -- Sincerely,
> Daniel
a few I am holding in my discretionary portfolio names and yields of VZ at 6.1%, BP at 7.49% COP at 4.38%, Nat at 14.45% ( after being cut in half) , CAT at 4.26% KMP at 8.93%,, ETE at 7.94%. , MKC at 3.19%, HNZ at 4.71%
CPB at 3.79%. I know I am heavy energy but these are carriers and have no anchor to anything but moving product. I have one real speculator here in RGM at 102.98%. yes you saw it right .. crazy yielder but at a buck plus 70 that is how much I have to loose.
go dividends!
On May 06 11:09 PM Pessimistic Optimist wrote:
> I too believe in dividends after homework is completed.. but it really
> never stops.
> a few I am holding in my discretionary portfolio names and yields
> of VZ at 6.1%, BP at 7.49% COP at 4.38%, Nat at 14.45% ( after being
> cut in half) , CAT at 4.26% KMP at 8.93%,, ETE at 7.94%. , MKC at
> 3.19%, HNZ at 4.71%
> CPB at 3.79%. I know I am heavy energy but these are carriers and
> have no anchor to anything but moving product. I have one real speculator
> here in RGM at 102.98%. yes you saw it right .. crazy yielder but
> at a buck plus 70 that is how much I have to loose.
> go dividends!
I also was buying EEP, TPP, EPD, TCLP, and KMP.
Forget the price 1.5 years ago. I was buying these 10-15 years ago. EPD has returned 420% for the last 10 years. S&P is negative over the same time frame. The fall drop in MLPs was overdone and was directly the result of Lehman forced sales and Hedge forced sales. This is opportunity. Too bad many bears are blinded in their exuberence to understand that this is/was a once in a lifetime opportunity.
On May 07 10:01 AM Dean M wrote:
> I wouldn't play these at all now. It seems as though they haven't
> participated much in the current rally but have sunk with the plummeting
> markets over the past 1.5 years. Ie all downside, little upside in
> a market that always seems to provide another shoe to drop.
hts....nly...hfs....nymt.
found hts in barrons nov '08 by fleming meeks in mktwatch section.
WKMA
On May 07 11:17 AM Smackdown wrote:
> Dean, the MLP picks in the list have all outperformed by a huge margin.
> ETP, NS, PAA. Look at their track records. DEP and DPM (started
> buying in fall and not when it was high) have also done incredible
> on YTD basis and since the fall lows. I backed up the truck and
> margined and added all of these in Nov/Dec. I am up about 150%
> from the market lows. 60% YTD. I am up about 15% annualized
> for the last two years, fully invested in the market, no shorts.
> And I get enough cash flow I could retire. Not exactly all downside
> with little upside. No?
>
> I also was buying EEP, TPP, EPD, TCLP, and KMP.
>
> Forget the price 1.5 years ago. I was buying these 10-15 years ago.
> EPD has returned 420% for the last 10 years. S&P is negative
> over the same time frame. The fall drop in MLPs was overdone
> and was directly the result of Lehman forced sales and Hedge forced
> sales. This is opportunity. Too bad many bears are blinded
> in their exuberence to understand that this is/was a once in a lifetime
> opportunity.
On May 07 05:17 PM Living4Dividends wrote:
> Some MLPs have high debt/equity ratios. When interest rates rise
> - watch out !
THANKS
On May 05 01:12 PM hwood007 wrote:
> I have 12 different stocks in a DRIP fund, where I invest $100 each
> month to each stock. I first research looking for good companies
> to replace any that I may have sold. I also look at the fees charged
> by the agent banks, anything over 0% is not considered. Then I look
> at the size of the dividend and also the payout raito of the dividend.
> I do not just pick the 12 highest dividends I can find. I would not
> buy any of those on her list at this time, but that is just me..
* Finance Fan...:
* Comments (8)
* • StockTalk (1)
* Follow
* • Website: www.crashmarketstocks.com
High dividend stocks are risky at this point, because of the huge slash that has been given to many company's earnings. If a company has a high yielding dividend with a diminishing stock price, most likely that dividend will be cut, shedding more demand for the stock.
my reply to this is yes, if your looking only at the dividend , that can add u to added risk that the dividend could be cut. but there are ways to reduce this risk. you look for companies first, that have consistently paid out over at least a 10 year period. next you want companies with products or services in high demand (even in weak economies) with growing profit margins. after that, your looking for companies with a moat so strong they can ask higher prices (this goes to increasing profit margins). next, look for companies with management that is aligned with stock holders,who will be looking to raise or at least maintain dividend payouts. last,but not least, be looking for companies with plenty of insider ownership. if they have a large stake in the company(i.e. lots of stock) you can bet their going to be doing everything they can to keep that company growing to grow the value of the stock.
so due diligence ,is key . don't buy for high dividends only.