Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)  

Over the past few years, the financial market has been hit by one crisis after another. In 2011, the European debt crisis heavily hit the economy in the second quarter. To stimulate the economy, central banks all over the world have been using expansionary monetary policies. The Fed, for example, has committed to an ultra-low interest rate policy for another two years. We are concerned that these policies will ultimately lead to higher inflation rates. That’s why we don’t think long-term Treasury bonds aren’t good investment alternatives anymore and we have been recommending high dividend stocks for more than a year. Since the beginning of this year, the S&P 500 ETF (NYSEARCA:SPY) returned 1.35%. SPDR S&P Dividend ETF (NYSEARCA:SDY) beat the market by more than 5 percentage points, returning 6.76%.

Below we compiled a list of high dividend US stocks. All companies have at least $10 billion in market cap and at least 4% dividend yield. They are ranked by their returns in 2011. The market data is sourced from Finviz.

Ticker

Company

Dividend Yield

YTD Return

LO

Lorillard, Inc.

4.56%

46.31%

WPZ

Williams Partners L.P.

4.95%

36.63%

PGN

Progress Energy Inc.

4.43%

35.72%

RAI

Reynolds American Inc.

5.37%

35.48%

DUK

Duke Energy Corporation

4.55%

30.12%

PFE

Pfizer Inc.

4.04%

29.58%

MO

Altria Group Inc.

5.52%

27.94%

SO

Southern Company

4.06%

27.61%

FE

FirstEnergy Corp.

4.91%

27.50%

LLY

Eli Lilly & Co.

4.69%

25.75%

KMP

Kinder Morgan Energy Partners LP

5.59%

25.69%

OKS

ONEOK Partners, L.P.

4.16%

24.27%

PAA

Plains All American Pipeline, L.P.

5.51%

22.20%

AEP

American Electric Power Co., Inc.

4.51%

21.71%

LMT

Lockheed Martin Corporation

4.92%

21.34%

HCN

Health Care REIT Inc.

5.24%

21.17%

HCP

HCP, Inc.

4.61%

19.27%

PPL

PPL Corporation

4.70%

19.06%

VZ

Verizon Communications Inc.

5.00%

17.83%

EPD

Enterprise Products Partners LP

5.38%

15.74%

TIP

iShares Barclays TIPS Bond

4.11%

13.14%

EXC

Exelon Corporation

4.81%

10.25%

VTR

Ventas, Inc.

4.15%

9.93%

MRK

Merck & Co. Inc.

4.45%

9.71%

ETR

Entergy Corporation

4.51%

9.17%

LQD

iShares iBoxx $ Invest Grade Corp Bond

4.41%

9.14%

T

AT&T, Inc.

5.86%

8.29%

PEG

Public Service Enterprise Group Inc.

4.17%

7.68%

NLY

Annaly Capital Management, Inc.

13.93%

5.07%

PAYX

Paychex, Inc.

4.26%

1.28%

WM

Waste Management, Inc.

4.14%

-7.31%

PCG

PG&E Corp.

4.36%

-9.95%

CTL

CenturyLink, Inc.

7.80%

-13.34%

TRI

Thomson Reuters Corporation

4.69%

-26.43%

SCCO

Southern Copper Corp.

8.03%

-32.59%

Historically, high-dividend stocks provided better returns than the market. The average return of the 35 stocks listed above so far in 2011 is 15%, outperforming the market by more than 13 percentage points. Only six stocks- PAYX, WM, PCG, CTL, TRI and SCCO- underperformed the market this year. The other 29 stocks outperformed the market and 22 of them generated double-digit returns.

Lorillard Inc (NYSE:LO) is the best performing high-dividend stock in 2011. Since the beginning of this year, it returned 46.31% so far. The stock has a dividend yield of 4.56%. It has a market cap of $15.4B and a P/E ratio of 15.35. Jim Simons’ Renaissance Technologies is bullish about LO. As of September 30, his Renaissance Technologies invested $324 million in this stock. Jean-Marie Eveillard’s First Eagle Investment Management also had $258 million invested in LO.

Williams Partners LP (NYSE:WPZ) also generated high return so far this year. The natural gas company’s stock has a year-to-date return of 36.63% and a dividend yield of 4.95%. It has a market cap of $17.5B and a P/E ratio of 17.87. Jean-Marie Eveillard is in favor of WPZ as well. At the end of September, his First Eagle Investment Management reported to own $74 million worth of WPZ stocks.

One of the mega-cap high dividend stocks that have decent performance this year is Pfizer Inc (NYSE:PFE). The stock has a dividend yield of 4.04% and returned 29.58% so far in 2011. It has a market cap of $167B and a P/E ratio of 17.14. PFE is quite popular among hedge funds. There are more than 70 hedge funds with PFE positions in their portfolios at the end of September. Among these hedge funds, Ken Fisher’s Fisher Asset Management has the largest PFE position. As of September 30, Fisher disclosed owning $389 million of PFE stocks.

Other large-cap dividend stocks that generated double-digit returns in 2011 include Verizon Communications Inc (NYSE:VZ), Altria Group Inc (NYSE:MO), Eli Lilly & Co (NYSE:LLY), Enterprise Products Partners LP (NYSE:EPD), and Southern Company (NYSE:SO). We think a portfolio of these 35 dividend stocks is diversified enough for investors. The high- dividend yields of these stocks enable them to deliver better returns than long-term treasury bonds. Moreover, most of them can provide decent capital gains in addition to their fat dividends.

Source: Best Performing High-Dividend Stocks In 2011