Last week, I received a simple question about a stock that had a 3% growth rate on its 3% dividend yield. I was asked if many stocks filled that criteria. So I did some research and found quite a few, and so I decided to take things one step further. How many stocks if any would you expect to have a 4% dividend yield, a 4% dividend growth over both one year and five years? The answer? Eight. Not bad, right?
I would certainly expect a stock that pays a 4% dividend and is able to increase it by 4% every year would be a solid addition to a passive income portfolio.
You have probably never heard about at least half of these names and actually three of them are electricity providers. One of the names is also part of my four 2011 stock picks.
Here are the eight names:
Dominion Resources Inc/VA (D): Company that evolves in the electric-integrated sector
Entergy Corp (ETR): Company that evolves in the electric-integrated sector
Kimberly-Clark Corp (KMB): Company that evolves in the consumer products-misc sector
Lockheed Martin Corp (LMT): Company that evolves in the aerospace/defense sector
Microchip Technology Inc (MCHP): Company that evolves in the electronic compo-semicon sector
Reynolds American Inc (RAI) : Company that evolves in the tobacco sector
Southern Co (SO): Company that evolves in the electric-integrated sector
Ventas Inc (VTR): Company that evolves in the REITS-health care sector
Dividend 5 year growth
Ticker Name Price Dividend Yield Return MTD Payout Ratio Dividend 1Y growth D Dominion Resources Inc/VA 42.72 4.61 2.87 80.67 4.57 6.43 ETR Entergy Corp 70.83 4.69 -0.58 46.86 8 8.45 KMB Kimberly-Clark Corp 63.04 4.19 2.94 53.01 10 7.96 LMT Lockheed Martin Corp 69.91 4.29 2.75 30.03 12.82 20.25 MCHP Microchip Technology Inc 34.21 4.03 2.78 115 26.38 30.68 RAI Reynolds American Inc 32.62 6.01 7.03 104.99 6.67 11.87 SO Southern Co 38.23 4.76 1.35 83.32 4.04 4.09 VTR Ventas Inc 52.48 4.08 3.48 161.44 4.39 8.25
Dividend 5 year growth
Many of these stocks certainly look very attractive and while I would probably exclude the three names that have a payout ratio over 100%, the five other names on the surface look like solid dividend payers. You can take a look at the charts for each of them here:
Click to enlarge charts
Disclosure: No positions on these names.