The 20 Highest of the High-Yield Dividend Aristocrats

In my previous post I highlighted a sample list of the 20 highest yielding dividend aristocrats. Being fascinated with companies which have consistently increased their dividends for over 25 years, I wanted to examine a similar list, using the High-Yield Dividend Aristocrats this time. You could open it in google spreadsheets from here.

This stock list is just for illustrative purposes only, however, and not a recommendation to buy or sell. Its performance could be better or worse than the S&P 500 benchmark.


The list, dominated by financial companies, yields a whopping 6.37% as of June 14,2008. On the cautionary note, some of the companies in this list seem likely to cut their payments. With the exception of certain income trusts, I would not consider entering a long-term position in a company whose dividend payout ratio is significantly over 50%.

 

On the contrary side, in a study performed by Jeremy Siegel, he found that better total return performance was directly correlated with higher dividend yields. The highest yielding 100 stocks in the S&P 500, produced an annualized return of 14.27% versus an annualized return of 11.18% for the S&P 500 Index, which resulted in three times the wealth accumulation of the index. (1957-2002, S&P 500). So far this year certain higher yielding stocks in the S&P 500 have underperformed the market.

How do you think this list would perform untill the end of 2008?

Disclosure: I own GE, GCI, CINF, WL.

Comments

[Vox Rationalis:]

Be very, very careful with this list. Here be some monsters.

2008 Jun 18 03:51 PM

[Dividend Gr...:]

Actually my timing for posting this couldn't have been better - FITB just cut their dividends today.
I am still wondering whether BAC will cut or not. Most investors are told to buy when everyone else is selling. The $1mln question is to buy financials or not to buy them.
In early 2000 Phillip Morris ( Altria) was yielding higher than average yields at a time when the tobacco industry was under tremendous scruitiny. Fast forward 8 years from that point and MO has performed pretty well. I haven't bought any financials yet ( other than the ones which I have disclosed), and the reason for that is because the payout ratios are pretty high for me.
I wonder if 8 years from now I would be kicking myself for not purchasing all of the 20 stocks listed above or not..

2008 Jun 18 03:58 PM

[ValueHunter:]

I've been looking at BAC for a while now, but can't seem to pull the trigger. The problem with banks is that they are a black box, I have no idea what is inside. Another problem, is that I see a Democratic congress and President curtailing a chunk of their revenue streams, namely, usurious interest rates and fees.

2008 Jun 18 04:15 PM

[1worldcurrency:]

Some of the banks on that list have will never pay a dividend after the current quarter.

2008 Jun 18 05:36 PM

[vaisfordogl...:]

I'm sure BBT will perform because it has already indicated it plans to INCREASE its dividend. It has a share buyback program but there are no current purchases because they suspend buying in the last month of a quarter. They are very conservative and have adopted the rationale that it would be like insider trading once they know how the quarter is shaping up. Also, the market doesn't understand that the tax ruling in its case (which has caused current writeoffs for other banks) will not affect it any further. As it was its own legal case, it had already accrued the potential liability and has already paid all of the taxes. This is an incredible bargain and yield while waiting for the sector to recover.

2008 Jun 18 08:34 PM

[Publicliter...:]

I think BAC has too much pride to cut their dividend. The credit spreads are really coming into a more normal range. If BAC can really make $4/share in the next 12 months, I think they will be able to afford their dividend with breathing room.

2008 Jun 19 12:21 AM

[Vox Rationalis:]

Don't forget to consider Countrywide as an entry for BAC. It's running about 90% of the deal's value, which I don't think is enough of a spread to cover the risk involved, though there has been no indication of BAC backing away. If you're interested in BAC and want to play arbitrageur, consider CFC if the spread widens.

2008 Jun 19 01:32 AM

[carlivar:]

FITB is now paying a 6.5% yield. My bet is that gets smaller later this year too.

2008 Jun 19 09:44 AM

[Stewie:]

Just how is FITB cutting their dividend good timing on your part, especially considering you baghold their largest shareholder (CINF).

"Most investors are told to buy when everyone else is selling." Thanks but I prefer to buy when everyone is buying.

2008 Jun 19 01:58 PM