Drew Bree's Dividend Paycheck For Retirement: Income Stocks A Pro Could Love

Includes: CLX, CPB, GIS, INTC, JNJ, SYY, T, WM
by: Drummond Osborn

As the ink dries on a possible $100 million contract for Drew Brees, I felt duty bound to suggest ways Mr. Brees might create his post-career income stream. Though I am certain he'll be inundated with offers to own a restaurant, buy speculative real estate and invest in football futures (think cattle farms for leather), I've decided to take a traditional dividend growth route.

While the theme of this portfolio may be a bit hokey, each of the companies mentioned are solid dividend growth stocks, with yields above 3%, track records for rising dividends, and dividend growth rates pushing or exceeding 10%. As a collection of stocks, based on historic dividend pay cycles, a check would hypothetically land in the mailbox every month, though there will be no deliveries on Sundays. (My apologies to any actual product sponsorships - past, future or declined - to which Mr. Brees might be affiliated).



Approx. Yld.

Dividend Pay Month

5-yr Div. Growth

Campbell Soup



Jan, April, July, Nov





Jan, April, July, Nov





Feb, May, Aug, Oct





Feb, May, Aug, Oct


General Mills



Feb, May, Aug, Oct





March, June, Sept, Dec


Johnson & Johnson



March, June, Sept, Dec


Waste Management



March, June, Sept, Dec


Data Source: Morningstar.com as of 7/14/12

Football season is made for a post-game hot bowl of soup. Campbell Soup (CPB) not only serves up its namesake soup, but spices up chips with its Pace Mexican Salsa, and sweetens platters with Pepperidge Farm crackers and cookies. Strong free-cash flow should prove to support its current dividend as should its reasonable pay-out ratio below 50%.

Sysco (SYY) is THE name in food distribution, and doesn't every retired sports star own at least one restaurant, at some point? Though slow consumer spending may drag on the company's near term bottom line, its 42 year history of increasing dividends demonstrates the company's dedication to shareholders. Slowing earnings have the stock price down over the past 12 months, but its price is more than 10% off its 52-week low of last October.

AT&T (T) stock's price has risen almost as high has Mr. Brees' star power, and at a current price over $35 is a bit rich (also similar to Mr. Brees). Its current 4.95% dividend yield is nice but a yield above 5% would be even better and quite achievable if the stock drifts to a buy range below $29.

Clorox (CLX) is an eye-rolling pick to bleach out those Sunday afternoon grass stains. Its dividend payout ratio has drifted a bit higher over the past few years and may dampen dividend growth in the next hand full of years. Trading at over $73, the stock needs a 10-20% pullback to be considered. Maybe between now and the end of Drew's 6-year contract there will be a buying opportunity.

General Mills (GIS) is one of the largest US producers of breakfast cereals (did Drew ever make the front of the Wheaties box?) and other well known packaged consumer foods. The stock's yield of approximately 3.4% is well supported by a pay-out ratio below 50%. It's commitment to dividend growth is seen in a steadily increasing dividend, inclusive of its recent 8.1% 2012 dividend increase. Trading near $39, this maker of Nature Valley granola bars, could make a nice half-time consideration.

Johnson & Johnson (JNJ) clearly has strong brand recognition for retail shoppers, but aging sport stars may conceal a less visible side of JNJ - orthopedic implants. Nearly 40% of sales for JNJ come from its medical devices and diagnostics group. The stock has recently risen near its 52-week high, and needs a pullback before a buy should be considered. Now from the classic consumer staple of JNJ to the world of modern technology, Drew's quick tweet of his new contract shows this grid iron star knows his technO's, as well as his X's and O's.

Quality dividends above 3% are a challenge in the technology sector, but Intel (INTC) has managed to build a solid dividend track record, having raised its dividend 9 times since 2004. It may not be a go-go tech name, but steady earnings growth and double-digit dividend growth, make the company a nice diversifier in the dividend growth realm crowded with consumer staples. The stock has gone unloved by many, but its price below $ 26 keeps its dividend above 3% and makes this mature tech name a nice consideration.

Last, someone needs to clean up after all those Super Bowl parties, and Waste Management's (WM) 4.4% yield goes a long way toward paying that bill. WM has had some downward stock price pressure during the last year, and is down over 8% year-to-date. The recent changes in its executive suite are seen as a positive for the company and should refocus the company going forward. The shares are nicely undervalued at this time, though some additional downside volatility may be seen as competition remains strong and margins continue to tighten. The company's strong cash position, however, should support a growing track record for dividend increases.

Unless Drew gets sacked by bad advice or his spending goes into double overtime, he should not have any retirement income worries. And while the names above aren't sufficient to fill out a full portfolio roster, anyone looking to build a starting team, with a few bench sitters to watch, should consider additional scouting of the names. If nothing else, think of this list of names as a theme portfolio for great tail-gating conversation.

Disclaimer: Drummond Osborn, CFP® is a fulltime investment manager and a part-time Big Ten football. The hypothetical portfolio is offered for information and entertainment, only, and should not be considered as a recommendation to purchase any of the afore mentioned names. Individuals should consider their own situation, conduct detailed research and fully understand the associated risks before investing. For his own portfolio, and some client accounts Mr. Osborn is long: CPB, SYY, T, GIS, JNJ, INTC & WM.

Disclosure: I am long CPB, SYY, INTC, JNJ, T, WM, GIS.

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