Seeking Stocks With Cheap, Safe Dividend Streams 20 comments
-
Font Size:
-
Print
- TweetThis
I currently hold shares in the large U.S. institution Bank of America (BAC). When I bought BAC, my rationale was that as long as the company does not cut its dividend I would be a happy camper holding the shares: BAC was yielding around 6% and has a legendary history of swiftly growing their dividend ever year.
While the share price drifts with the ups and downs of investor sentiment, I am still paid 6% of my investment annually; on time every quarter. 6% is certainly nothing to sneeze at, but this dividend does come with some risk, as we all know the U.S. financial system is in peril currently.
So with the markets in free fall, and dividend yields increasing everywhere you look, as a dividend growth investor it really begs the question...Where can I find the cheapest, safest dividend stream out there in the equity market? In simple terms, how can I take advantage of market weakness by purchasing vehicles that have the utmost certainty of paying me high, and preferably ever-increasing dividends for the long term?
Obviously, finding these companies is not an easy task. One must analyze much about the company including cash flow, debt levels, future outlook, competitive position, and potential threats. It is difficult to determine whether a dividend is at risk or not, or might be at risk in the near future. So which companies might fit the bill? Which stocks offer the highest, safest yields, exluding trusts, REITS, and LPs? I'm asking you!
The higher the yield, the cheaper the dividend stream Perhaps these firms might be worth a look, these are three of my candidates for 'cheapest, safest dividend stream'
Pfizer (PFE) - U.S. pharma. company yields 5.4% and has always been a swift dividend raiser, including very recently. Although the company has little growth, they have a great balance sheet.
U.S. Bancorp (USB) - U.S. banks are obviously in a bad spot right now but USB just recently raised their dividend by 6% to now yield 6.1%. Warren Buffet also likes USB.
Rothmans (ROC) - This Canadian tobacco company yields 5.6%, and I hear their product is quite addictive. They also just raised their dividend by 16%.
Who are your candidates?
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
TraderMark
-
2
Don Dion
-
3
Cliff Wachtel
-
4
Mike Havrilla
-
5
James Quinn
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 20 comments:
BAC? Not exactly a pretty stock in a pretty sector. Guess what Countrywide's dividend will be next year.
It's an illusion. Be careful.
You look young enough, why are you looking for yield? This is the time of your life to invest in the best and fastest growing companies of our generation. Those others will not make you rich ...
Ignore the naysayers.
BAC and others listed here are excellent companies with a long history of raising dividends. It's great to embrace the declines and continue to buy more of your favorite dividend payers at cheaper prices instead of worrying about the market all the time.
that's a bit like the pot calling the kettle black, isn't it? if anyone's dividends are in danger, it's Citi's. USB, on the other hand, is a conservative bank, and I have every expectation that they will be growing their dividends even in this market.
"On my orginal investment the dividend yields 18%."
I'm a young investor. companies that consistently grow dividends have a place in anyone's portfolio. when you reinvest the dividends, your future stream of dividends grows even further. your yield on cost rises. besides, companies that pay dividends and grow them constantly are probably growing themselves. USB, I admit, probably isn't growing that fast. however, Bank of America and Pfizer will grow. Pfizer's had a hard last few years, but their pipeline is strong.
for faster growing companies that pay decent dividends, I like:
Compass Minerals (CMP), which produces salt and sulphate of potash. They are the lowest cost US producer of the former, which gives them an advantage over everyone else, and we will always need salt. They also are a major producer of the latter, which is a specialty fertilizer for plants that may be damaged by potassium chloride. They've managed to consistently hike prices on the latter.
Enterprise General Partners (EPE), which is kind of a MLP closed end fund. it controls the general partner interest in Teppco, and has a stake in Energy Transfer Equity. both are good gas MLPs.
Realty Income (O) pays dividends monthly, and buys and leases retail properties. it's a more slow and steady pick, but it yields nearly 7% today and has been paying a rising dividend for nearly 40 years.
Johnson and Johnson (JNJ) doesn't have as hefty a payout as Pfizer, but this company has had double digit sales growth most of the time for decades. they're diversified between medical devices, pharma, and consumer medical goods, and can be expected to weather most economic downturns. I also expect their dividends to grow nicely.
Check out my holdings on my blog at themoneygardener.
I am actually Canadian, and in Canada one benefit of dividend paying stocks vs. these other vehicles is that dividends are taxed more favourably.
themoneygardener.blogs.../
The problem is, WFC share count has increased by over 26MM over the past year. That's almost a percent increase in the share count. So those share buybacks have been going into the pockets of somebody else.
So much for the advantage of a stock buyback. The company is probably buying back the options granted to executives.
I've never had anybody take my dividend away from me.
Does anybody ever actually check this stuff?