5 Dividend Divas From My Portfolio

by: J.D. Welch

When I took control of my portfolio from my (former) high-priced broker, I decided that, based on a lot of research I'd done on sites like Seeking Alpha, I would concentrate on acquiring and holding the best, most stable dividend paying companies that I could wrangle up. To his credit, my broker had found a few international stocks that had impressively high yields, but he had also kind of forgotten about me in the year and a half since I signed him up to manage my money, and as a result there was a lot of red ink in my positions when I finally got online to check on how things were going. Fortunately the net effect of my neglect was a modest increase in the value of my portfolio, but there was a lot of junk that needed to be sold off, which generated a little pile of cash for me to reinvest. I took his advice on a few other international stocks that he was pushing, but decided that I'd also take a shot at making my own picks, and as it turns out, my picks from back then are ahead of his by a goodly margin.

Fast forward seven months and, after a bit more selling and buying, I've gotten the average of all of my dividend paying stocks up to a 4.86 percent overall yield. Four of the 29 stocks in my portfolio either generate no dividends or have a paltry yield (by which I mean less than 1 percent), but the rest generate anywhere from the lowly 1.8 percent that both Ford (NYSE:F) and Apple (NASDAQ:AAPL) represent, to the lofty heights of Annaly Capital Management (NYSE:NLY), currently yielding 13.6 percent. In between those ends of my spectrum, on the domestic side, shine five stocks that I'm going to refer to as "Dividend Divas."

To qualify as a Dividend Diva, these stocks had to meet the following criteria:

  1. Sport a current yield of at least 2.9 percent,
  2. Keep a payout ratio of no more than 70%, and
  3. Have a good track record of dividend increases over the last 5 years.

Mine aren't the only stocks in the vast array of available possibilities that could fit these criteria, but they're the ones on my dance card. Without further ado, here are the five Divas:

Dividend Divas

5 Year Dividend Growth

Current Price

Current Yield

Payout Ratio

Days Held

Price Change



Abbott Laboratories








Exelon Corp








Kimberly-Clark Corp








McDonald's Corp








United Parcel Service, Inc.














Click to enlarge

(Figures from Google Finance, Seeking Alpha or calculated by the author.)

When I took control of my portfolio and was trying to decide which stocks to pick for myself, one of the choices I had to make was between Abbot Laboratories and Johnson & Johnson (NYSE:JNJ). I grew up in New Jersey not far from New Brunswick, where JNJ's headquarters are located, so I was familiar with the company (aside from its arsenal of consumer products). But the company was having some problems with product recalls, and a quick call to an old high school buddy who has been working there for over 10 years revealed that the stock price really didn't fluctuate that much. JNJ's yield was better than ABT's, but I also wanted a stock that had better growth potential than JNJ, so I went with ABT, and I'm glad I did. I still want to add JNJ to my portfolio eventually, but for now I can live with ABT's yield and recent growth.

Exelon is the most recent acquisition of the Divas, and was a later addition as the result of freeing up some additional capital by taking profits on one of the few stocks that my broker had originally chosen that had done particularly well. I deliberated between EXC, Duke Energy Company (NYSE:DUK) and The Southern Company (NYSE:SO), but in the end went with Exelon as a result of its better showing in My Mad Method of picking stocks, which I describe in two articles found here and here. EXC hasn't had a great showing of late, but I still like it and just recently added to my position in it.

Kimberly-Clark was in another showdown with peers Proctor & Gamble (NYSE:PG) and Clorox (NYSE:CLX), similar to the one ABT came out on top of with JNJ. CLX has done slightly better than PG in the time since I made these initial purchases, but KMB has done significantly better than both of them, so once again My Mad Method has come through for me.

McDonald's was kind of a no-brainer for me. I ended up working for the Golden Arches back in high school, and learned a lot in that environment. MCD has a great recipe for success, solid management, and I like that the company owns most of the land and buildings that its franchisees lease from it, giving it a solid grounding in real estate which, despite recent events, I believe is one of those things, like the stock market, that just always goes up in value over enough time.

One of my nephews has worked his entire career, over 15 years at UPS, and I grew up with my Mom using Brown for all her shipping needs. With the ever increasing use of online retailers like Amazon.com (NASDAQ:AMZN) to meet their shopping needs, more and more folks are getting packages delivered to their homes via UPS than ever before, and that trend just looks like it's going to keep growing. After an initial rocky start, UPS has performed pretty well so far in 2012, so no complaints there.

All of these Dividend Divas have solid yields, room to grow their dividends with their relatively low payout ratios, and have had decent-to-great growth over the last five years. I'm very happy I've invited them to join my party, and look forward to many more years of reaping income from them.

Disclosure: I am long ABT, EXC, KMB, MCD, UPS.

Disclaimer: I am not a professional investment advisor or financial analyst; I’m just a guy who likes to crunch numbers and can make an Excel spreadsheet do pretty much whatever I want it to do. This article is in no way an endorsement of any of the stocks discussed in it, and as always, you need to do your own research and due diligence before you decide to trade any securities or other products.