The 20 Highest Yielding Dividend Aristocrats

In today’s low interest rate environment, retirees are having a hard time finding tax efficient income opportunities, worthy of their money, which would help them enjoy their post-working years. A great idea for income seeking investors is investing in stocks that pay good yields and have consistent dividend payments.

With inflation averaging around 3% - 4% per year, your investment in dividend paying stocks would provide you with a source for income that keeps its purchasing power over time, which unlike fixed income securities can also provide you with capital gains. Unlike bond payments which are fixed, stock dividends could be raised and thus provide stockholders with a nice raise for owning the right companies.

A good starting point for income investors is the S&P Dividend Aristocrats list, which features companies that have increased their annual dividend payments every year for more than 25 consecutive years. I have selected the 20 highest yielding stocks in the index, along with their tickers, P/E ratios, dividend yields and dividend payout ratios.

The portfolio consisting of the 20 highest yielding stocks in the Dividend Aristocrats index currently yields 5.31% ( As of May 23, 2008). This is far better than most bonds and most stocks. This portfolio is just for illustrative purposes only, however. Its performance could be better or worse than the S&P 500 benchmark.

Full Disclosure: I own GCI, CINF, GE, KMB and CLX.

 

Comments

[jswede]

FITB, RF, CMA, KEY, BBT etc are at-or-near "survival mode" operation currently... so yes, they look attractive on a valuation basis vs last quarter... but it's not like they're already thru their rough times... to count on those dividends going fwd is dubious

[Moby Waller]

Yeah I see several of those financials breaking their 25 yr streaks of raising dividends

[MajorG]

Please tell me you did more research than that?? Now that I read your bio it says you're going for your CPA and have been investing "for several years". Please do your clients a favor and stick to tax returns.

[MajorG]

I hope you did more research than that?? I just read your bio and it says you are going for your CPA and have been investing "for several years". Please do your clients a favor and stick to doing tax returns.

[Itsonlymoney]

Come on MajorG. It is just a list for crying out loud. Lists by their very nature are just a place to start and he called it a "good starting point". He told you where he put his money. Why don't you apologize for your uncalled for words.

[jswede]

and right on cue: KEY cuts their dividend by 50% this morning...

and that won't be the last of your list to cut severely in the very near future...

[buyitcheap]

dividends are only good until the tax cuts expire in 2010 - a foregone conclusion regardless of who becomes president. Were I you, I'd be advising clients to move Dividend stocks back to the IRA, and replace the income generators with LPs and MLPs.

[dontcallmeamarter]

Check out CZN and WWE if you like big dividends

[Stewie]

This is the worst article I have ever read. Your list is comprised mostly of battered stocks whose high dividends were only achieved through huge share price declines. I also love this comment "which unlike fixed income securities can also provide you with capital gains", fixed income changes in price and can provide capital gains as well. You have no clue what you are doing.

[Stewie]

I really hope one of the regular contributors takes the time to write a researched rebuttal to this "Masterpiece of Stupidity".......

[MajorG]

I won't apologize for anything. Articles that poor should not be allowed space on this site - or any site for that matter. A third grader could have written that.

[blah-blah]

It's just a list and like any list it's full of some bad picks

There are plenty of good ones on it though(and some not on it).
It's not an opinion piece nor does it try to be. I'm not sure what the uproar is. There's plenty of worst crap to comment on.

[Dividend Growth Investor]

I want to ask all the critics above: Which part of "This portfolio is just for illustrative purposes only, however" didn't you understand?

It's really easy to criticise and to put words in one's mouth especially when you are anonymous.

I challenge you ( Stewie and MajorG) to publish any article using your real name on the internet or in a newspaper. Something constructive and brilliant.

By the way Stewie, try telling your clients that you are going to invest in bonds for the capital gains, and they will look at you as if you are coming from the woords.

Oh yeah MajorG, i didn't know that CPA's ONLY check tax returns? In addition to challenging you to write an article on Seeking Alpha I also challenge you in finding a third grader who will write any article on stock investing on his/her own.

I do realize that this list is not a comprehensive list. It wasn't intended to be. It's just a starting point.
Investing is not a black and white process. What has worked in the past might not work in the future. What might work for me, might not work for everybody else. But if you pick enough bits and pieces, then you can construct a pretty good picture and then make your own decision.

If you have read any of my previous articles, you'd have seen that I don't like purchasing stocks with DPR which is too much above 50%.

[bruin532]

The dividenddetective.com is a good sight for research.

[Russia is very improved]

Wow, an article with a title about 20 dividend yield stocks, discusses some stocks and provides a list of the 20. How is this a controversy. Yet another said state of US based education.

[Stewie]

"By the way Stewie, try telling your clients that you are going to invest in bonds for the capital gains, and they will look at you as if you are coming from the woords." Hey Pal, every fixed income fund, portfolio, or trust is total return managed and its performance is quantified on a total return basis just like an equity fund. If you look at the stocks at the top of your list, they are all banks and everyone of them has suffered a huge capital loss in their fixed income portfolio. What do you think ABS's and MBS's are ? Do think fixed income just sits there and never trades or changes price ? The fixed income markets are as dynamic as, and in fact dwarf the equity markets in both size and scope. Professionals place huge bets and make huge capital gains or suffer huge capital loses in the Treasury Market every day. To be honest you have no clue what you are talking about.

[Stewie]

How did KEY and FITB work out for you Dodromir.......Got anymore big advice for us.

[mariposa]

Points out how pitiful S&P dividends are

[Oscar BullFrog]

iff you know teh back-story behind GEs last quarter (caught in the
undertow with "BarleyStern-nuts... you would recognize that tech analysis is not the be-all-end-all. right now, adn for the next couple weeks, GE is a *screaming buy* - especially below $30!! [[WTF?!?!]]

i went long at ~$32 and bought too much - (my bad cramer; i apologize) and i will be buying LOTS more RSN if i can extract some profits from other issues. what i hadn;t considered (that creamer does) is that the lower shelf of GE stock would fall again.

[Dividend Growth Investor]

Stewie,

I know what I am talking about. Good luck in your investments. I hope that you are better at investing than reading or spelling.

PS. I check my disclosure.

[Dividend Growth Investor]

Actually you are partially correct that bonds/fixed income could provide you with capital gains. The size of the bond market versus the stock market is irrelevant. However, longer-term passive bond investors ( people holding till maturity) do not really get much in capital gains.

[Black cat]

Mr. Stoyanov,

Many people have written unkind and erroneous comments regarding this article. Ignore them. You are on the right track, looking at securities that are unpopular and have demonstrated quality by posting a long record of pro-shareholder behavior (rising dividends). The best bargains come at the moment of maximum pessimism - when the foolish mob screams that you are mistaken. KEY lowered their dividend, so we delete that name from the list; the ones that don't cut are great bargains and their stocks will recover. Your list is a good place for intelligent investors to start looking for value.

Black cat

[Stewie]

"KEY lowered their dividend, so we delete that name from the list; the ones that don't cut are great bargains and their stocks will recover. Your list is a good place for intelligent investors to start Blooking for value."

Says the Black cat as it enters the slaughterhouse and is never seen again.

"However, longer-term passive bond investors ( people holding till maturity) do not really get much in capital gains." Duh, I think it's safe to say if you hold a bond to maturity you don't get any capital gain or loss. You are advising people on income producing securities and yet you have no concept of why the equities on your list are paying high dividends, nor do you have even a rudimentary understanding of the bond market.

Black cat, Value investing involves fishing out opportunities where the street has underestimated earnings and growth, not buying a beaten down company. The banks at the top of this list are all likely to cut their dividends and lose further share price. That's what makes this list an amateur production.

[bill d]

As MAJORG & STEWIE's 3rd grade reacher - I am now recommending them for promotion to the 4th grade. YAY!!

[jackooo]

What a bunch of cry babies... geezz. Just read the article and shut up, plz.
Nothing wrong with dividend.

[notsosmart]

no connection-check out fro as nobody has figured out a way to pave over the ocean.

[Stewie]

"Nothing wrong with dividend." No one said there is anything at all wrong with dividend stocks. Look at this way the stock at the top of his list of "Aristocrats"... (FITB) is down 20% since he posted this, and KEY is far worse. If he doesn't fell guilty about misleading amateur investors I have no use for him at all.

[jackooo]

If he doesn't fell guilty about misleading amateur investors I have no use for him at all.

Sorry. I did not know this site was for amateur investors.

[distinguished fellow]

I think the 'disclaimer' written as " this portfolio is for illustrative purposes only" should be in the first or second sentence of an article such as this, and it would be even better to include the definition of DivPayoutRatio being used as well as the 'position' that the author doesn't 'like' stocks with a DPR that's >50%. (Some of us are nearly beginners trying to get better.)

[len811]

They are not all financials. I note PFE and ED. Do you think drugs and utilities will be cutting dividends?

[truthinvesting]

.My investing record has been as follows 1999:-38.25 2000:+92% 2001 +110.4 % 2002 -9.4% 2003 69.6% 2004 15.55 2005 29.3% 2006 28.4 2007 am up 25% 2008 barely over 3%

Buying Altria KFT and Phillip Morris at these levels will provide great dividend income and staed long term appreciation. MULTIBillionaires Buffett and Peltz paid 33 for KFT last year.

[Dividend Growth Investor]

Stewie,

It seems to me like you are still overanalysing what I have said and putting words in my mouth without fully understanding what I am talking about. I don't think I have mislead any investors in anything. I simply showed a list of stocks. What you are asking me to do, is put 1000 disclaimers covering 1000's of possible scenarios for a post that has less than 500 words. I think that at the end of the day, you need to have a little bit of common sense when interpreting information that you read.

Example - I never mentioned that I owned KEY or FITB. I also never specifically recommended buying any of the stocks in the list.
Yet I was asked how this worked out for me ( pretty well actually). I did give Stewie partial credit for finding out that TRADING bonds could give someone capital gains/losses. Yet he still didn't understand that I am referring to long-term investing, as opposed to short-term trading. etc..

In your rebuttal on capital gains on bonds, you mentioned ABS and MBS. I am not going however to falsely assume that you own them, simply because you mentioned them. Or should I?
How have those investments performed for you Stewie? I hope you haven't lost any money on them.

By the way Stewie, I am willing to reimburse you for the losses that you have suffered in the stocks in the list above from the profits that I earned from publishing this article. Please send me scanned copies with your actual trading transactions history in the abovementioned stocks from June 12, 2008. If they are also legally verified, I would be even happier. My e-mail is dividendgrowthinvestor at gmail dot com.

This is the last message that I am going to write on this particular message board. Unfortunately It is not cost effective for me to answer to every single confrontation. I realize that different people are going to have different opinions on everything. If you have 10 investors, you will definitely have more than 10 likely investment predictions. That's what makes the market tick on daily basis.

Good Luck to everyone!

D.S.

PS I always found ihttp://investopedia.com helpful in finding what different abreviations such as DPR ( Dividend Payout Ratio) mean.

[Stewie]

Ummmmmmm.........I don't think publicly posting a "make whole" offer is a real good idea. Although I wasn't foolish enough to buy either of those stocks I'll bet someone did. You may be getting more e-mails than you can handle.

"By the way Stewie, I am willing to reimburse you for the losses that you have suffered in the stocks in the list above from the profits that I earned from publishing this article. Please send me scanned copies with your actual trading transactions history in the abovementioned stocks from June 12, 2008. If they are also legally verified, I would be even happier. My e-mail is dividendgrowthinvestor at gmail dot com."

[Iownstockin KMB]

Yes, it is illegal to offer to reimburse someone for their losses.