Top Dividend Stocks From The Neuberger Berman Equity Income Fund

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Includes: CTL, EXC, JNJ, LNT, MCHP, PM, SE, UPS
by: Dividend Dog

The Neuberger Berman Equity Income Fund is a celebrated dividend-yielding mutual fund. It is rated very highly: it earned fives (the highest score) for total return and consistent return from Lipper and four stars from Morningstar. Depending on whether investments are made through NBHCX or NBHAX, investors receive dividend yields between 2.78% and 2.13%.

Unfortunately, there is a catch. Owners of NBHCX and NBHAX pay between 1.16% and 1.91% in fund expenses, respectively. Do investors need to pay such high fees for a renowned portfolio?

No. Instead of outsourcing portfolio construction by purchasing shares of NBHCX and NBHAX, investors can boost their returns by purchasing the fund's dividend-paying stock holdings directly. Buying directly sidesteps the fund's recurring annual expenses by paying trading costs and broker fees only once. This fund replication strategy allows retail investors to benefit from portfolio manager research and stock selection at no cost.

Consider the following eight holdings summarized below:

CenturyLink, Inc. (NYSE:CTL) recently traded at $37.4 per share. At this price level, the stock has a 7.8% dividend yield. CTL shareholders have seen a 0.5% change in share price over the past year. Shares of this large-cap stock trade at a price-to-book ratio of 1.1, a price-to-earnings multiple of 21.0, and a price-to-sales multiple of 1.9 (trailing twelve months).

Exelon Corporation (NYSE:EXC) recently traded at $39.72 per share. At this price level, the stock has a 5.3% dividend yield. For 10 out of the past 10 fiscal years, a share of EXC paid a total of $15.20 in dividends.

EXC shareholders have seen a -8.4% change in share price over the past year. Shares of this large-cap stock trade at a price-to-book ratio of 1.8, a price-to-earnings multiple of 10.6, and a price-to-sales multiple of 1.4 (trailing twelve months). Over the past decade shareholders saw an 18.9% average annual return on equity.

Johnson & Johnson (NYSE:JNJ) recently traded at $65.64 per share. At this price level, the stock has a 3.5% dividend yield. For 10 out of the past 10 fiscal years, a share of JNJ paid a total of $13.73 in dividends.

JNJ shareholders have seen a 0.1% change in share price over the past year. Shares of this large-cap stock trade at a price-to-book ratio of 2.9, a price-to-earnings multiple of 18.9, and a price-to-sales multiple of 2.8 (trailing twelve months). Over the past decade shareholders saw a 27.8% average annual return on equity.

Alliant Energy Corporation (NYSE:LNT) recently traded at $42.97 per share. At this price level, the stock has a 4.2% dividend yield. LNT shareholders have seen a -1.6% change in share price over the past year. Shares of this mid-cap stock trade at a price-to-book ratio of 1.5, a price-to-earnings multiple of 16.3, and a price-to-sales multiple of 1.3 (trailing twelve months).

Microchip Technology Inc. (NASDAQ:MCHP) recently traded at $38.42 per share. At this price level, the stock has a 3.6% dividend yield. For 9 out of the past 10 fiscal years, a share of MCHP paid a total of $7.19 in dividends. Of these dividend payments, a total of $6.26 was paid in the last five years.

MCHP shareholders have seen a 4.9% change in share price over the past year. At current prices, shares of this mid-cap stock trade at a price-to-book ratio of 3.9, a price-to-earnings multiple of 18.7, and a price-to-sales multiple of 5.0 (trailing twelve months). Over the past decade shareholders saw a 16.3% average annual return on equity.

Philip Morris International, Inc. (NYSE:PM) recently traded at $76.62 per share. At this price level, the stock has a 4.0% dividend yield. For 3 out of the past 10 fiscal years, a share of PM paid a total of $6.22 in dividends.

PM shareholders have seen a -2.4% change in share price over the past year. Shares of this large-cap stock trade at a price-to-book ratio of 62.8, a price-to-earnings multiple of 16.2, and a price-to-sales multiple of 1.8 (trailing twelve months).

Spectra Energy Corp. (NYSE:SE) recently traded at $30.56 per share. At this price level, the stock has a 3.7% dividend yield. For 4 out of the past 10 fiscal years, a share of SE paid a total of $3.84 in dividends.

SE shareholders have sustained a -0.6% change in share price over the past year. At today's prices, shares of this large-cap stock trade at a price-to-book ratio of 2.4, a price-to-earnings multiple of 16.5, and a price-to-sales multiple of 3.8 (trailing twelve months).

United Parcel Service, Inc. (NYSE:UPS) recently traded at $76.7 per share. At this price level, the stock has a 2.7% dividend yield. For 10 out of the past 10 fiscal years, a share of UPS paid a total of $13.56 in dividends.

UPS shareholders have seen a 4.8% change in share price over the past year. At current price levels, shares of this large-cap stock trade at a price-to-book ratio of 9.5, a price-to-earnings multiple of 18.6, and a price-to-sales multiple of 1.4 (trailing twelve months). Over the past decade shareholders saw a 24.9% average annual return on equity.

In total these dividend-paying stocks account for 16% of the Neuberger Berman Equity Income Fund:

Ticker

Company

Fund Weight

Div Yield

CTL

CenturyLink, Inc.

1.71%

7.8%

EXC

Exelon Corporation

2.1%

5.3%

JNJ

Johnson & Johnson

1.44%

3.5%

LNT

Alliant Energy Corporation

1.48%

4.2%

MCHP

Microchip Technology Inc.

1.6%

3.6%

PM

Philip Morris International, Inc.

2.19%

4.0%

SE

Spectra Energy Corp.

1.7%

3.7%

UPS

United Parcel Service, Inc.

1.6%

2.7%

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Most of these holdings are excellent picks based on their track records. In particular, EXC, JNJ, MCHP and UPS all have long histories of dividend payments and a decade of positive equity returns. These stocks are formidable picks because they have amazing track records and have passed the Neuberger Berman Equity Income Fund's due diligence process.


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

Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.