Dividends and income distributions are only as reliable as the companies offering them. When one invests in a company that is bound to volatility, the safety of the yield often becomes a question worth pondering. With the ultimate goal in investing being the pursuit of participation in a company's earning capacity, establishing a safe and high-yielding dividend portfolio can make for the greatest illustration of proper long-term investment.
This endeavor is only further fortified by companies that are able to consistently grow their yields over time. The following five companies offer a diversified look into one such portfolio set-up that can best suit income investors.
| Company Name | Market Cap. | Forward Yield % | Payout Ratio | Industry |
|---|---|---|---|---|
| AT&T, Inc (T) | $209.4 B | 4.9% | 254% | Domestic Telecom |
| AmeriGas Partners LP (APU) | $3.7 B | 8.0% | 274% | Propane Gas Distribution |
| Lockheed Martin Corp. (LMT) | $27.1 B | 4.8% | 42% | Defense & Aerospace |
| Health Care REIT, Inc (HCN) | $12.1 B | 5.2% | 235% | REIT |
| Mercury General Corp (MCY) | $2.3 B | 5.7% | 64% | Insurance Provider |
AT&T
The addition of AT&T in this portfolio makes for the inclusion of one of the largest and most stable public telecommunications companies in the world. As a domestic provider, the company has very large barriers to entry and is restricted to a few large competitors. Telecom providers are known to be stable investments due to the heavy reliance of the consumer market. This effect has only been amplified by the introduction of the internet and ever increasing connectivity across society.
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AmeriGas Partners
The addition of AmeriGas Partners in this portfolio makes for the inclusion of a stable retail and wholesale distributor of propane gas. While much debate rages over whether natural gas or propane is the way to go, the fact remains that propane burns with more energy. Both products' prices have been coming down as natural gas is a very large input cost in the production of propane.
Over the years, AmeriGas has consistently grown revenues and, as a result, has shown this in its trending distribution history. While its payout ratio may seem a bit high, the company's history and recent insider purchases may suggest there is little to fear in terms of consistency with this high-yielding distributor.
Lockheed Martin
The addition of aerospace and defense contractor Lockheed Martin offers the diversifying characteristic of a large industrial company backed with stable revenues. While government spending has often been put into question, the company has continually been able to excel over the competition to pad its backlog of projects. This was only further confirmed by the recent win of another deal worth up to $1.91 Billion announced on Friday. Lockheed's dividend growth has been more than exceptional in recent years, and while it's realistic to believe this will wane over time, the overall trend upward appears well in line.
Health Care REIT
The addition of Health Care REIT, Inc offers exposure to the real estate market and the high yield traditionally offered through real estate investment trusts. Backed by a diversified spectrum of healthcare-related investments, the company's portfolio is largely seen to be more stable in the light of the consistency of clientele. This is only further fortified by a perceived aging population that is sure to provide ample demand for services for years to come.
Mercury General
The addition of Mercury General in the portfolio provides exposure to a large stable insurance provider whose markets expand across multiple states. The company was founded in 1960 and has since come to specialize in automobile insurance. The company also covers homeowners, commercial property, fire, and a variety of other insurance related products. With an exceptional 5.7% dividend and an affordable 64% payout ratio, the company provides a more-than-ample yield for most income investors. It's strong dividend growth supports that the company business remains strong.
Disclosure:
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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