Monday, October 3, 2011

Best Dividend Stocks of 2011, Q3 Update

Dividend stocks offer the best of both worlds – capital gains along with a recurring quarterly cash income stream. The positive about dividned stocks is most evident during turbulent market conditions, when investors suffer from volatility and lower stock prices. Most of the quality dividend stocks have hardly moved during the turmoil that started several months ago, caused by fears about a double dip, unemployment and defaults by sovereign countries. The cash dividend serves as an added bonus, as it provides a cushion against further declines in the stock price.

Back at the end of 2010, I was asked to selected the best stocks for 2011, as part of an ongoing competition between several investment site publishers. You can read the reasons behind my four selections in this article. The four stocks I selected included:

Philip Morris International Inc. (PM), through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. The company raised its dividends by 20.30% this year. Yield: 3.70%. Check my analysis of the stock.

Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company raised its dividends by 5.60% this year. Johnson & Johnson has raised distributions for 49 consecutive years. Yield: 3.50%. Check my analysis of the stock.

The Procter & Gamble Company (PG) provides consumer packaged goods in the United States and internationally. The company operates in three global business units: Beauty and Grooming, Health and Well-Being, and Household Care. The company raised its dividends by 9% this year. Procter & Gamble has raised dividends for 55 years in a row. Yield: 3.40%. Check my analysis of the stock.

PepsiCo, Inc (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe, and PepsiCo Asia, Middle East and Africa. The company raised its dividends by 7.30% this year. PepsiCo has raised dividends for 39 consecutive years. Yield: 3.20%. Check my analysis of the stock.

Overall, my dividend stock picks not only outperformed the growth stock selections, but are also outperforming the S&P 500 year to date. The year-to-date results are listed below:

Dividend Growth Investor +3.39%

At the same time, S&P 500 index delivered a negative total return of 8.70% so far in 2011. It is reassuring to see quality dividend stocks maintain their value and sending investors cash through dividends, despite the market volatility.

Full Disclosure: Long PM, JNJ, PG, PEP

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