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Defensive investors like high dividend yielding stocks and consider them as reliable options that can provide consistent returns year after year. Historically high dividend stocks outperformed the rest of the market despite being less volatile and risky than the rest of the market. Younger investors who aren't targeting 7%-plus dividend yields can especially invest in dividend stocks that are increasing earnings at higher rates. These stocks can potentially boost their dividend payments significantly as their earnings keep going up.

Below we compiled a list of high dividend U.S. financial stocks with consistent growth. All companies have at least a $2 billion market cap, dividend yield higher than 4% and EPS growth rate above 10% per year over the past five years. The market data is sourced from Finviz.



Dividend Yield

EPS growth


Arthur J Gallagher & Co.




Ares Capital Corporation




Chimera Investment Corporation




Hudson City Bancorp, Inc.




HCP, Inc.




Kayne Anderson MLP Investment Company




Mid-America Apartment Communities Inc.




MFA Financial, Inc.




Annaly Capital Management, Inc.




NYSE Euronext, Inc.



NYSE Euronext has the highest EPS growth rate over the past five years among all the stocks listed above. Its EPS grew at 44.18% on the average during the past five years and it has a dividend yield of 4.35%. NYSE Euronext is a global operator of financial markets and provider of trading technologies. For the third quarter of 2011, the company reported net income of $200 million, up from $128 million for the same quarter of 2010. NYX has a market cap of $7B and a P/E ratio of 11.25. At the end of the third quarter, there were 30 hedge funds with NYX positions. For example, Cliff Asness' AQR Capital Management had $45 million invested in NYX. Curtis Macnguyen's Ivory Capital also reported to own $40 million worth of NYX shares at the end of September. Since then, the stock returned 19.97% so far, versus 17.24% for SPY in the same period.

Annaly Capital Management Inc also has a high dividend yield and high EPS growth rate. Its dividend yield is 13.56% and its EPS grew at 23.04% per year in the past five years. Annaly owns, manages, and finances a portfolio of real estate related investments. It has a market cap of $16.3B and a low P/E ratio of 8.76. As of September 30, 2011, there are 27 hedge funds disclosed to own NLY in their 13F portfolios. Bill Miller is the most bullish hedge fund manager about NLY. His Legg Mason Capital Management had $117 million invested in NLY at the end of the third quarter. NLY returned 4.60% since the end of September, underperforming the market by about 13 percentage points. But it seems that NLY is trading at a discount. It has a low forward P/E ratio of only 7.34.

Another large-cap high dividend financial stock with consistent growth is HCP Inc . It has a market cap of $17B and a P/E ratio of 27.4. During the past five years, HCP's EPS grew at 12.47% on the average per year. HCP has a dividend yield of 4.77%. HCP is also a real estate investment trust. It has been increasing its dividend payouts by 26 consecutive years. Recently the company announced to increase its quarterly dividend from $0.465 to $0.48 per share, which will be paid to its shareholders in late February. As of September 30, 2011, D E Shaw had the largest position in HCP. The fund reported to own $34 million worth of HCP shares at the end of the third quarter. HCP returned 21.05% so far since then, outperforming the market by nearly 4 percentage points.

Other high dividend yielding financial stocks with consistent growth include Arthur J Gallagher & Co , Ares Capital Corporation, Chimera Investment Corporation, Hudson City Bancorp Inc, Kayne Anderson MLP Investment Company, Mid-America Apartment Communities Inc and MFA Financial Inc. According to our past study, high dividend stocks returned an average of 13.04% annually between 1927 and 2009, beating the overall market by 1.36% on the average per year. We think investors should focus on high dividend stocks, especially those with consistent growth rates.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 10 High Yield Dividend Financial Stocks With Consistent Growth