In my previous posts, I tried to determine which stock from each of nine different sectors of the Russell 3000 companies is the most attractive for dividend-seeking investors.
In this article, I created a diversified portfolio, which includes the most attractive stock for dividend investors from each sector. Diversification helps investors to reduce risks. In my opinion, long-term investing in this portfolio will reward the investor a satisfying income with a good chance of capital gain.
I consider that besides healthy dividend yield, low payout ratio and consistent dividend growth are the most crucial factors for dividend-seeking investors. In addition, since dividend investors try to avoid too much risk, The Sharpe ratio, which measures the ratio of reward to risk, is also extremely important.
My nine best diversified stocks for dividend investors from the nine different sectors are shown in the table below. All the data for this article were taken from Portfolio123 and finviz.com on June 20, before the market open.
The table below presents the dividend yield, the payout ratio, the annual rate of dividend growth over the past five years and the Sharpe ratio for the nine companies.
The table below presents the trailing P/E, the forward P/E, the average annual earnings growth estimates for the next 5 years and the price-to-sales ratio for the nine companies.
Chevron Corp. (NYSE:CVX)
Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide.
Baxter International Inc. (NYSE:BAX)
Baxter International Inc., through its subsidiaries, develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions.
AFLAC Inc. (NYSE:AFL)
Aflac Incorporated, through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance products.
Xerox Corp. (NYSE:XRX)
Xerox Corporation provides business process and document management services worldwide.
Schweitzer-Mauduit Intl. Inc. (NYSE:SWM)
Schweitzer-Mauduit International, Inc. manufactures and sells paper and reconstituted tobacco products to the tobacco industry; and specialized paper products for use in various applications.
TAL International Group Inc. (NYSE:TAL)
TAL International Group, Inc. engages in leasing intermodal containers and chassis worldwide.
Cracker Barrel Old Country Store Inc. (NASDAQ:CBRL)
Cracker Barrel Old Country Store, Inc. develops and operates the Cracker Barrel Old Country Store restaurant and retail concept in the United States.
Cal Maine Foods Inc. (NASDAQ:CALM)
Cal-Maine Foods, Inc. engages in producing, grading, packaging, marketing, and distributing shell eggs.
CMS Energy Corp. (NYSE:CMS)
CMS Energy Corporation, through its subsidiaries, operates as an energy company primarily in Michigan.
As diversification helps investors to reduce risks, I decided to build a portfolio of nine companies from nine different sectors. This portfolio's size is not too big to control and it gives quite a good diversification.
Each one of the nine companies in this portfolio is in my opinion, the best choice among the Russell 3000 companies in each sector for dividend-seeking investors, due to its high yield, high rate of raising dividend payment, low payout ratio and high Sharpe ratio.
The average forward dividend yield of this portfolio is quite high at 3.32%. The average annual dividend growth for the past five years was very high at 25.24%. Companies that regularly increase dividends are generally more stable. Increasing dividends is the assurance that dividend income retains its purchasing power over time.
The reason I consider these nine companies as my best stocks for dividend investors from the nine different sectors can be found in my previous articles, each article is devoted to one different sector.
In my opinion, long-term investing in this portfolio will reward the investor a nice income with a good chance of capital gain.