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Is it not better to receive dividends and growth, as opposed to just dividends? There are a lot of stocks, closed-end funds, partnerships, etc. that are currently offering very attractive dividend yields, but what about growth?

Let's begin by looking at some of the yields that are available right now:

Stocks Yield

AT&T (T) 6.1%

Verizon (VZ) 5.6%

Pfizer (PFE) 4.3%

Merck (MRK) 4.7%

Altria Group (MO) 6.2%

Southern Copper (SCCO) 8.0%

Terra Nitrogen (TNH) 7.9%

Partnerships

Alliance Resource Ptrs. (ARLP) 5.2%

B P Prudhoe Bay (BPT) 9.6%

Enterprise Products (EPD) 5.9%

Kinder Morgan (KMP) 6.6%

Permian Basin Trust (PBT) 6.5%

Oneok Partners (OKS) 5.4%

REITs

Annaly Mortgage (NLY) 14.5%

Capstead Mortgage (CMO) 14.8%

Health Care REIT Inc. (HCN) 5.6%

Natl. Health Investor (NHI) 5.5%

Realty Income (O) 5.0%

Utilities

C P F L Energia (CPL) 6.4%

Telus (TU) 4.5%

Telecom Sao Paulo (TSU) 6.7%

I could list a lot more, but this is a fairly good cross section.

I have been a professional money manager for the last 18 years. I have heard the argument, numerous times, that you can't go wrong buying good blue-chip stocks that pay a good dividend, I could not disagree more.

Let's look at some current examples:


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Data from Best Stocks Now Smart Phone app

Despite an attractive yield of over 6%, AT&T has been a lousy investment over the long haul. Even with the dividend, the stock has barely delivered a positive total return for investors over the last 10 years.

In addition to the almost flat total return over the last 10 years, AT&T did not hold up very well during the 2008 bear market. The stock was down 28.1% that year.


(Click to enlarge)

Data from Best Stocks Now Smart Phone app

Verizon has not done much better than AT&T. The total return over the last 10 years is just barely ahead of the market despite a good dividend yield. The total return has beaten the market over the last one, three and five years, however.

The stock also held up a little better than AT&T in 2008, but it was still down 18.1%, even counting the dividend. This stock still does not deliver the income and growth that t I am looking for, however.

Now let's take a look at some big drug stocks that offer attractive dividend yields right now:


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Data from Best Stocks Now Smart Phone app

Despite a very attractive current dividend yield of 4.3%, Pfizer has been a lousy investment over the long haul. I know that investing is all about the future, but why would you think that all of sudden Pfizer is going to suddenly start delivering the alpha that we all so desperately seek?

Even with a good dividend, Pfizer has delivered a total return that is NEGATIVE over the last five and 10 years! Sorry, but I want some growth with my income.


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Data from Best Stocks Now Smart Phone app

Merck also offers a tempting dividend of 4.7%. Merck has been a terrible investment over the last one, three, five and 10 years! Also note that Merck was down a gut-wrenching 45.3% in 2008!

Now let's look at some DIVIDEND plus GROWTH plays -- the best of both worlds!


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Data from Best Stocks Now Smart Phone app

Alliance Resource Partners is a coal MLP that currently offers a 5.2% dividend yield. The stock has also delivered some astonishing growth, along with that dividend, for a phenomenal total return to investors over the last one, three, five and 10 years!

How about a 27.2% per year average total return over the last 10 years? I know, it's an MLP and it requires a partnership tax return, but would you rather invest in AT&T?

Alliance Resource Partners is also one of the 53 stocks that I featured in my book, "Best Stocks Now." Since inception on February 15, 2011, those 53 stock are ahead of the market by 11.1%.


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Data from Best Stocks Now Smart Phone app

How about a stinky fertilizer stock that currently offers a dividend yield of 7.9%? It is one of the largest holdings at my professional money management firm, Gunderson Capital Management. I have heard all of the arguments against this stock, but how can you argue with results?

My large investment in this stock has more than doubled since purchase and I continue to own it. How about a total return of 54% average per year over the last 10 years? This return makes it one of the greatest stocks of the decade. Again, I like a little growth along with my dividends.

It has been my experience that investors have a tendency to try to justify lousy stocks like Pfizer and talk down really good ones like Terra Nitrogen.


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Data from Best Stocks Now Smart Phone app

How about a more sanitary Healthcare REIT? The stock currently has a dividend yield of 5.6%. The stock has delivered a total return of 15.4% on average over the last 10 years. Also note that the stock was up 0.2% in the year 2008!

Once again, it is also nice to have a little safety along with those dividends and growth.


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Data from Best Stocks Now Smart

Let's next look at an Oil & Gas pipeline stock that has delivered more than crude and natural gas over the years. An investment in Kinder Morgan has delivered a total return of 14% average per year over the last 10 years, while the market has delivered just 1.2%. Also note how well the stock held up in 2008 against the overall market.

I could use many more examples of stocks that have delivered dividends and growth over the last one, three, five and 10 years. The Growth and Income model portfolio in my newsletter has far outperformed the market and it is currently yielding about 6% overall.

Why are folks continuing to accept paltry CD returns, and/or a less than 2.0% yield on the 10 year Treasury? In this current market, it is real easy to build a nice, diversified dividend and growth portfolio. There are many stocks like the ones listed above to choose from.

Lastly, why do investors continue to feel safe buying big, well-known, widely-held stocks that offer big dividends yields? In reality, many of these stocks have been lousy investments for a long, long time.

I want the best of both worlds! I want some growth with my dividends!

Source: Dividends Plus Growth Equals 'The Best of Both Worlds'