Investing in dividend stocks is a proven strategy to beat the market and generate passive income. In fact, a study by Ned Davis Research found that dividend-paying stocks outperformed their stingier counterparts 10% vs. 4% annually from 1972 to 2006. The compounding effect of reinvesting dividends can increase the amount of cash generation at an exponential rate. I know when I get cash deposited into my brokerage account, passive income is real and it is very good.
With interest rates so low, investments that offer yield are in strong demand. This document has evaluated the stock universe to identify the best dividend stocks for 2010. What makes a great dividend stock? It is not the yield. As yield is important it is not the most critical decision. You first want to be sure the dividends are stable and there is an opportunity for growth. And some capital appreciation is like cake on the top.
Here is a list of dividend stocks that are rated as strong buys by our proprietary stock ranking system for 2010. The Fundamental Grade is calculated from a weighted blend of eight fundamental variables: Operating Margin Growth, Sales Growth, Earnings Growth, Earnings Momentum, Earnings Surprises, Analyst Earnings Revisions, Cash Flow and Return on Equity. The Quantitative Grade is a proprietary quantitative measure. This quantitative measure is the most powerful variable in the stock-rating formula. It indicates the current level of buying pressure.
American Capital Agency Corp. (NASDAQ:AGNC) $28.42 with 19.8% dividend yield - operates as a real estate investment trust. It invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government sponsored entity.
Dynex Capital, Inc., (NYSE:DX) $8.84 with 10.4% yield - operates as a mortgage real estate investment trust (REIT). The company primarily invests in securitized residential and commercial mortgage loans and non-agency mortgage-backed securities, as well as through a joint venture in commercial mortgage-backed securities.
Enersis S.A., (ENI) $21.87 with 2.13% yield - engages in electric power generation, transmission, and distribution in Argentina, Brazil, Chile, Colombia, and Peru. It generates electricity using water, coal, oil or natural gas, and wind resources. The company also transports natural gas to refineries, generators, distribution companies, and industrial and mining clients; develops real estate; provides consulting and engineering services in various specialties; and engages in tunnel operation.
Hickory Tech Corporation (HTCO) $9.13 with 5.7% yield - operates as a diversified communications company in the United States. The company operates in two segments: Telecom Sector and Enventis Sector. The Telecom Sector provides local exchange wireline telephone, long distance, DSL, and digital TV services. It also offers data processing and related services for its affiliated incumbent local exchange carriers, competitive local exchange carriers, local exchange telephone companies, interexchange network carriers, wireless companies, and cable TV providers.
Altria Group, Inc., (NYSE:MO) $20.37 with 6.747% yield - engages in the manufacture and sale of cigarettes and other tobacco products in the United States and internationally. The company also manufactures machine-made large cigars and pipe tobacco; and maintains a portfolio of leveraged and direct finance leases principally in transportation, including aircraft, as well as power generation and manufacturing equipment and facilities.
Portugal Telecom, SGPS, S.A., (NYSE:PT) $12.40 with 4.74% yield - provides telecommunications services primarily in Portugal, Brazil, and certain countries in Africa. The company offers wireline services, which include fixed line telephone services for residential and nonresidential customers; leased lines; unbundled local loop access and wholesale line rental; interconnection; Internet access through dial-up and broadband asymmetric digital subscriber line (ADSL); data and business solutions; portal; and e-commerce services.
New York Mortgage Trust, Inc., (NASDAQ:NYMT) $6.99 with 14.3% yield - operates as a real estate investment trust in the United States. It invests primarily in real estate-related assets, including residential adjustable rate mortgage-backed securities issued by a government-sponsored enterprise of the United States; prime credit quality residential adjustable-rate mortgage loans; and non-agency mortgage-backed securities.
Disclosure: no positions