10 Dividend Champions For The Next 10 Years (Part 2)

Includes: ABT, INTC, MDLZ, PM, S, T, VZ
by: Bill Maurer

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As investors search for income these days, fixed income does not seem to provide as much as some would like. Dividend paying stocks appear to be in tremendous demand, and that is the subject of my focus today. I am focusing on ten names that I would own in a dividend or value oriented portfolio for the next ten years.

In this article, I will cover the second set of five. In my first part of this two part series, I stated that my criteria was simple. The stocks must have increased or maintained their dividend over the past four years. Also, since I am focusing on the next 10 years, each must have a current yield above the current 10-year U.S. Treasury. As a side note, I do not favor any of the five in the first part over the five in this second part. I did try to break the ten up a little, so that there would be a nice balance in each article. For instance, there are two healthcare names in the group of ten, so one went to each article. There were two big cap tech names, so one in each. You get the picture. Let's look at this group. As a reminder, the average price value is the average unadjusted daily closing price for that year.

Intel (NASDAQ:INTC): Intel has one of the highest dividend yields of any technology name, and has nicely increased its dividend in recent years.

Intel 2008 2009 2010 2011
Dividends Paid $0.55 $0.56 $0.63 $0.78
Average Price $19.96 $17.10 $20.77 $22.05
Average Yield 2.74% 3.27% 3.03% 3.55%
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Intel is currently paying 84 cents a share annually in dividends, which gives it a yield of approximately 3.1% based on Thursday morning trading. The yield was higher during the later part of 2011, when the stock was in the lower $20s and high teens. For a while, the name was yielding over 4%. Intel has raised the dividend nicely in the past two years, and I expect another raise this year, perhaps another two pennies a quarter. When Intel raised their dividend in 2011, they did so for the August payout. This name is also a value favorite because of their large share buyback program. In the fourth quarter alone, Intel bought back more than $4 billion in shares, and spent more than $14 billion in 2011 to buy back it shares. The impressive dividend and continued buybacks will help keep this name a value favorite.

Abbott Labs (NYSE:ABT): The large cap healthcare name has a rich history of dividend payouts, and with the current annual payout of $2.04, the stock yields more than 3.6% currently.

Abbott Laboratories 2008 2009 2010 2011
Dividends Paid $1.41 $1.56 $1.72 $1.88
Average Price $55.16 $48.43 $50.73 $51.07
Average Yield 2.55% 3.22% 3.39% 3.68%
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Abbott's dividend has increased more than its stock price in recent years, which has sent its yield up by a full percentage point. The stock, like many others in this market, is close to a 52 week high, so if you plan on entering it, you may want to wait for a pullback. A good entry point might be $54.40, at which point the name would yield 3.75%. This name has a history of increasing its dividend for the April payout, and Abbott just announced its 40th straight year of dividend increases. The increase was from $0.48 to $0.51 per quarter, giving you the above mentioned $2.04 annual payout.

Verizon (NYSE:VZ): Verizon is a nice way to play the success of Apple (NASDAQ:AAPL), and is my favorite among the three big phone carriers (when comparing to Sprint (NYSE:S) and AT&T (NYSE:T) currently). Verizon is doing much better than Sprint, and isn't spending billions on failed mergers like AT&T. Oh, and it also pays a very nice dividend.

Verizon 2008 2009 2010 2011
Dividends Paid $1.75 $1.86 $1.91 $1.96
Average Price $34.90 $30.46 $30.41 $36.64
Average Yield 5.01% 6.09% 6.29% 5.36%
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Paying out $2 a year currently, Verizon yields approximately 5.2% as of Thursday morning. They aren't above 6% as they have been in recent years, but that's due to the nice rise in the stock price. I don't think investors are complaining about it only yielding 5.2% currently, given the rise from $30 to $38 in recent years. Verizon's recent history suggests it will raise the dividend for the October payout, so we still have half a year or so until that point. At more than 5%, Verizon is the highest yielding name on my 10 name dividend champions list.

Philip Morris (NYSE:PM): If you've been a follower of my writing on this site, you'll know that Philip Morris is one of my favorite value names. The company is offering a very nice dividend and the stock has been a great performer in recent years.

Philip Morris 2008* 2009 2010 2011
Dividends Paid $1.54 $2.24 $2.44 $2.82
Average Price $48.79 $43.55 $51.96 $67.07
Average Yield 3.16% 5.14% 4.70% 4.20%
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The current yearly payout of $3.08 gives you a nice yield of 3.7%, and that has been much higher recently. The stock has been rising swiftly since January lows below $73, gaining more than $10 since then. That has pushed the yield down, but it's a great gain for a value stock. The company does also offer some growth, and is in a great position internationally. In fact, they've been able to raise prices in certain countries, and they reported a great fourth quarter recently. The company also expects to buy back about $6 billion of its shares this year, and when you add that to a $3 plus dividend, you can see why this name is a favorite of mine. Like I mentioned with Abbott, the name is at new highs, so wait for a pullback. The name recently seems to only be going up, but I'm sure at some point an analyst will downgrade it. That's what happened in January, sending the name from $79 to $73 and providing an excellent entry point for the name.

The final name I'll cover on my list is Kraft (KFT). Some may argue that this isn't the greatest stock, but people have to eat. The company hasn't increased its dividend since 2008, but is still paying out a nice amount.

Kraft 2008 2009 2010 2011
Dividends Paid $1.12 $1.16 $1.16 $1.16
Average Price $30.33 $26.02 $29.98 $33.80
Average Yield 3.69% 4.46% 3.87% 3.43%
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The company does plan to split part of its business later this year, so we'll need to see what impact that has on the company. However, it has consistently paid more than 3% in recent years, and is expected to keep doing so. The company has plenty of financial flexibility, and like I said, people have to eat. The name is a favorite among analysts too, with most seeing it as a buy or strong buy. This company will certainly pay you more than U.S. Treasuries will.

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