Top 5 Dividend Paying Stocks

by: New Low Observer

Below are the top 5 dividend paying stocks that have had a history of increasing their dividends. The complete list of 18 companies can be found here.

This week's list contains some of the biggest blue-chip institutions out there. Topping this our list, for the second time, is the giant food supplier, ConAgra (NYSE:CAG). The New Low team has issued an Investment Observation on ConAgra that we feel is worth reading.

December 3, 2010 Watch List

Symbol Name Price % Yr Low P/E EPS (ttm) Dividend Yield Payout Ratio
CAG ConAgra 22.08 5.04% 14.06 1.57 0.92 4.17% 59%
TFX Teleflex Inc. 50.53 5.45% 12.48 4.05 1.36 2.69% 34%
CLX Clorox Co. 62.49 5.99% 13.41 4.66 2.20 3.52% 47%
ABT Abbott Labs 47.37 6.23% 15.63 3.03 1.76 3.72% 58%
KMB Kimberly-Clark 62.01 6.45% 14.03 4.42 2.64 4.26% 60%

Top Five Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from December 4, 2009 and have check their performance one year later. The top five companies on that list can be seen in the table below.

Name Symbol 2009 Price 2010 Price % change
Aqua America WTR 16.81 21.58 28.38%
WGL Holdings WGL 31.86 35.98 12.93%
UGI Corp. UGI 23.59 31.98 35.57%
Northern Trust NTRS 48.69 52.82 8.48%
California Water CWT 37.67 37.39 -0.74%
Average 16.92%
Dow Industrials DJI 10,388.90 11,382.09 9.56%
S&P 500 SPX 1,105.98 1,224.71 10.74%

Once again, our top five have beaten both the Dow Jones Industrial Average and the S&P 500. Of particular interest to us is the performance of Northern Trust (NASDAQ:NTRS). If after a year of holding stock, the shares of NTRS have risen 8.5%. In our recent investment observation (September 1, 2010) and sell recommendation (Dec 3, 2010) of Northern Trust, we managed a gain of 10.9% in a much shorter time frame.

As mentioned with every sell recommendation, our goal is to maximize the annual yield of each trade so if we can obtain a 10% gain in less than a year (the approximate historical annual market return) then we are satisfied. Those who wish to hold for the "long-term" may also benefit from our method of buying quality dividend paying stocks near a new low, Aqua America (NYSE:WTR), WGL Holding (NYSE:WGL), and UGI (NYSE:UGI) are perfect examples.

Disclosure: Author is long CAG

Disclaimer: On our current list, we excluded companies that have no earnings. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.