Many dividend investors ignore stocks which have low current yields. It is interesting to note however that many low yielding stocks frequently are able to raise dividend payments faster while growing the business, which translates into higher stock prices over time. The rising stock price offsets the effect of the increasing dividend payments, leaving the current yield low. The yield on cost for original investors however could get to a very respectable level after a series of consistent dividend increases.
Several of this week’s dividend increases show companies which are not yielding much today, but have the power to grow distributions over time to an above average yield on cost:
Bank of the Ozarks, Inc. (OZRK) operates as the bank holding company for Bank of the Ozarks that provides a range of retail and commercial banking services. The board of the directors of the bank announced a 7.10% increase in its quarterly dividend to 15 cents/share. The company is a member of the dividend achievers index, after raising distributions for 12 consecutive years. The stock yields 1.60%. An investment at the end of 1999, when the stock yielded 2%, would have generated a yield on cost of 12.31%.
The TJX Companies, Inc. (TJX) operates as an off-price retailer of apparel and home fashions in the United States and internationally. The company raised its quarterly dividend by 25% to 15 cents/share. This was the 14th consecutive annual dividend increase for this dividend achiever. The stock currently yields 1.30%. An investment at the end of 1999, when the stock yielded 0.70%, would have generated a yield on cost of 5.90%.
Tanger Factory Outlet Centers, Inc. (SKT) engages in acquiring, developing, owning, operating, and managing factory outlet shopping centers. The company increased its quarterly distributions by 1.30% to 38.75 cents/share. This was the seventeenth consecutive year of annual dividend increases for this dividend achiever. The stock yields 3.60%. An investment at the end of 1999 , when the stock yielded 11.60% , would have generated a yield on cost of 15%.
Monro Muffler Brake, Inc. (MNRO) provides automotive undercar repair and tire services in the United States. The company’s board of directors authorized a 28.60% dividend increase to 9 cents/share. This will be the fifth consecutive year of annual dividend increases for the company. The stock yields 1%. An investment at the end of 1999, when the stock did not pay a dividend, would have generated a yield on cost of 10.80%.
IDEX Corporation (IEX) engages in the manufacture and sale of an array of pumps, flow meters, other fluidics systems and components, and engineered products worldwide. The company raised its quarterly dividend by 25% to 15 cents/share. This is the first dividend increase since 2007. The stock yields 1.80%. An investment at the end of 1999, when the stock yielded 1.80%, would have generated a yield on cost of 4.40%.
Entergy Corporation (ETR) engages in electric power production and retail electric distribution operations. The company raised its quarterly dividends by 10.70% to 83 cents/share. This was the first dividend increase since 2007. The stock yields 4%. An investment at the end of 1999, when the stock yielded 4.70%, would have generated a yield on cost of 12.90%.
Full Disclosure: None
Relevant Articles:
- Why do I like Dividend Achievers
- Yield on Cost Matters
- Seven Dividend Stocks in the News
- Bank Shareholders: Forget About Dividend Increases
Monday, April 12, 2010
Friday, April 9, 2010
Hingham Institution for Savings (HIFS) Dividend Stock Analysis
Hingham Institution for Savings (HIFS) provides various financial services to individuals and small businesses in Massachusetts. The company currently has nine branches and several ATM locations in Boston and southeastern Massachusetts. In the second quarter of 2008, the Bank opened a new branch in Norwell which has, thus far, surpassed management’s expectations with respect to deposit growth. Back in March the bank raised its quarterly dividend by 4.50%.
The board of directors has raised annual dividends for sixteen years in a row. Since the year 2000 the company has paid a special dividend at the beginning of each year. The company is not a member of the dividend achievers index possibly because its stock doesn’t generate a daily volume of over $500,000. This makes me wonder how many other decent companies are excluded from the eyes of dividend growth investors, simply because their stocks are not attractive to day-traders.
Over the past decade this dividend growth stock has delivered an annual average total return of 10.90% to its shareholders.
The company has managed to deliver a 7% average annual increase in its EPS between 2000 and 2009. The company has grown to nine locations over the years. It currently plans on expanding its headquarters, in order to accommodate future growth. The Bank’s ratios also exceeded regulatory capital requirements in both 2009 and 2008, and was considered to be well-capitalized. The company makes its money on the spread between the rates on its real estate loans and the rates on its deposits and borrowings. The net interest margin has increased by 1% to 3.30% in 2009 due to lower rates on deposits and borrowings. Incidentally, the rates on the commercial and residential mortgage loans that the company has made have dropped by only 0.70%. A notable increase from 300 thousand to 1.3 million was the company’s FDIC insurance expense. The Bank’s primary competition for deposits is other banks and credit unions in the Bank’s market area as well as the internet and mutual funds. The Bank’s ability to attract and retain deposits depends upon satisfaction of depositors’ requirements with respect to insurance, product, rate and service. Since 2005 deposits have grown from $364.5 million to $631.1 million, while loans have increased from $488.1 million to $718.2 million.
Only 22% of the company’s stock is held by institutions. This means that investors would not be competing with mutual funds for this stock. When few institutional investors are following a stock, there is an opportunity to uncover a good company and purchase it at a bargain price.
The negative is that there is little information available about the company given its market cap of $70 million. The auditor is not one of the Big 4 CPA firms, which may or may not be a major risk. Another potential red flag is a related party transaction, where Hingham paid legal fees to a law firm owned by certain directors of the Bank.
The return on equity has steadily decreased over the past decade, from a high of 17% in 2002 to current levels at 13%.
The annual dividend payment has increased by an average of 8.60% annually since 2000, which is slightly higher than the growth in EPS.
A 9% growth in dividends translates into the dividend payment doubling every 8 years. If we look at historical data, going as far back as 1994, Hingham Institution for Savings has actually managed to double its dividend payment every seven years on average.
The dividend payout ratio remained below 50% for the majority of the past decade. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Hingham Institution for Savings (HIFS) is trading at a Price to Earnings multiple of 9, yields 3.10% and has a dividend payout that is lower than 50%. The stock is attractively valued, and I recently initiated a position in it.
Full Disclosure: Long HIFS
Relevant Articles:
- Seven Dividend Stocks in the News
- Financial Stocks for Dividend Investors
- Aflac (AFL) Dividend Stock Analysis
- Cincinnati Financial’s Dividend Surprise
The board of directors has raised annual dividends for sixteen years in a row. Since the year 2000 the company has paid a special dividend at the beginning of each year. The company is not a member of the dividend achievers index possibly because its stock doesn’t generate a daily volume of over $500,000. This makes me wonder how many other decent companies are excluded from the eyes of dividend growth investors, simply because their stocks are not attractive to day-traders.
Over the past decade this dividend growth stock has delivered an annual average total return of 10.90% to its shareholders.
The company has managed to deliver a 7% average annual increase in its EPS between 2000 and 2009. The company has grown to nine locations over the years. It currently plans on expanding its headquarters, in order to accommodate future growth. The Bank’s ratios also exceeded regulatory capital requirements in both 2009 and 2008, and was considered to be well-capitalized. The company makes its money on the spread between the rates on its real estate loans and the rates on its deposits and borrowings. The net interest margin has increased by 1% to 3.30% in 2009 due to lower rates on deposits and borrowings. Incidentally, the rates on the commercial and residential mortgage loans that the company has made have dropped by only 0.70%. A notable increase from 300 thousand to 1.3 million was the company’s FDIC insurance expense. The Bank’s primary competition for deposits is other banks and credit unions in the Bank’s market area as well as the internet and mutual funds. The Bank’s ability to attract and retain deposits depends upon satisfaction of depositors’ requirements with respect to insurance, product, rate and service. Since 2005 deposits have grown from $364.5 million to $631.1 million, while loans have increased from $488.1 million to $718.2 million.
Only 22% of the company’s stock is held by institutions. This means that investors would not be competing with mutual funds for this stock. When few institutional investors are following a stock, there is an opportunity to uncover a good company and purchase it at a bargain price.
The negative is that there is little information available about the company given its market cap of $70 million. The auditor is not one of the Big 4 CPA firms, which may or may not be a major risk. Another potential red flag is a related party transaction, where Hingham paid legal fees to a law firm owned by certain directors of the Bank.
The return on equity has steadily decreased over the past decade, from a high of 17% in 2002 to current levels at 13%.
The annual dividend payment has increased by an average of 8.60% annually since 2000, which is slightly higher than the growth in EPS.
A 9% growth in dividends translates into the dividend payment doubling every 8 years. If we look at historical data, going as far back as 1994, Hingham Institution for Savings has actually managed to double its dividend payment every seven years on average.
The dividend payout ratio remained below 50% for the majority of the past decade. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Hingham Institution for Savings (HIFS) is trading at a Price to Earnings multiple of 9, yields 3.10% and has a dividend payout that is lower than 50%. The stock is attractively valued, and I recently initiated a position in it.
Full Disclosure: Long HIFS
Relevant Articles:
- Seven Dividend Stocks in the News
- Financial Stocks for Dividend Investors
- Aflac (AFL) Dividend Stock Analysis
- Cincinnati Financial’s Dividend Surprise
Wednesday, April 7, 2010
Three Dividend Strategies to pick from
Most new investors typically tend to focus on the companies with the highest dividend yields. I am often being asked why I never write about companies such as Hatteras Financial (HTS) or American Agency (AGNC), each of which yields 16% and 19% respectively. While some of my holdings are higher yielding companies, I typically tend to invest in stocks with strong competitive advantages, which have achieved a balance between the need to finance their growth and the need to pay their shareholders.
After looking at my portfolio, I have been able to identify three types of dividend stocks.
The first type is high yield stocks with low to no dividend growth.
Realty Income (O) (analysis)
Enbridge Energy Partners (EEP)
Kinder Morgan Partner (KMP) (analysis)
Consolidated Edison (ED) (analysis)
It is important not to fall in the trap of excessive high yields, caused by the market’s perceptions that the dividend is in peril. Recent examples of this included some of the financial companies such as Bank of America (BAC). While current dividend income is important, these stocks would produce little in capital gains over time.
The second type is low yielding stocks with a high dividend growth rate.
Wal-Mart (WMT) (analysis)
Aflac (AFL) (analysis)
Colgate Palmolive (CL) (analysis)
Archer Daniels Midland (ADM) (analysis)
Family Dollar (FDO) (analysis)
One of the issues with this type of strategy is that it might take a longer time to achieve a decent yield on cost on your investment. It is difficult to achieve a double digit dividend growth rate forever. Once you achieve an adequate yield on cost on your investment, it might slow down dividend increases. The positive side of this strategy is that many of the best dividend growth stocks such as Wal-Mart (WMT) or McDonald’s (MCD) never really yielded more than 2%-3% when they first joined the Dividend Achievers index. The main positive of this strategy is the possibility of achieving strong capital gains.
The third type is represented by companies with an average yield and an average dividend growth. Some investors call this the sweet spot of dividend investing.
Johnson & Johnson (JNJ) (analysis)
Procter & Gamble (PG) (analysis)
Clorox (CLX) (analysis)
Pepsi Co (PEP) (analysis)
Automatic Data Processing (ADP) (analysis)
There is a common misconception that buying the stocks in the middle, would produce average returns. Actually finding stocks with average market yields, which also produce a good dividend growth could produce not only exceptional yield on cost faster, but also capital gains as well.
At the end of the day successful dividend investing is much more than finding the highest yielding stocks. It is more about finding the stocks with sustainable competitive advantages which allow them to enjoy strong earnings growth, which would be the foundation of sustainable dividend growth. A company like Procter & Gamble (PG) which yields almost 3% today butraises dividends at 10% annually would double your yield on cost in 7 years to 6%. A company like Con Edison (ED) would likely yield around 6% on cost in 7 years. The main difference would be capital gains – Procter & Gamble (PG) would likely still yield 3%, while Con Edison (ED) would likely yield 6%. Thus the investor in Procter & Gamble would have most likely doubled their money in less than a decade, while also enjoying a rising stream of dividend income.
Full Disclosure: Long all stocks mentioned in the article except HTS and AGNC
Relevant Articles:
- 2010’s Top Dividend Plays
- Six Dividend Stocks for current income
- Best Dividends Stocks for the Long Run
- Capital gains for dividend investors
- Dividend Growth beats Dividend Yield in the long run
After looking at my portfolio, I have been able to identify three types of dividend stocks.
The first type is high yield stocks with low to no dividend growth.
Realty Income (O) (analysis)
Enbridge Energy Partners (EEP)
Kinder Morgan Partner (KMP) (analysis)
Consolidated Edison (ED) (analysis)
It is important not to fall in the trap of excessive high yields, caused by the market’s perceptions that the dividend is in peril. Recent examples of this included some of the financial companies such as Bank of America (BAC). While current dividend income is important, these stocks would produce little in capital gains over time.
The second type is low yielding stocks with a high dividend growth rate.
Wal-Mart (WMT) (analysis)
Aflac (AFL) (analysis)
Colgate Palmolive (CL) (analysis)
Archer Daniels Midland (ADM) (analysis)
Family Dollar (FDO) (analysis)
One of the issues with this type of strategy is that it might take a longer time to achieve a decent yield on cost on your investment. It is difficult to achieve a double digit dividend growth rate forever. Once you achieve an adequate yield on cost on your investment, it might slow down dividend increases. The positive side of this strategy is that many of the best dividend growth stocks such as Wal-Mart (WMT) or McDonald’s (MCD) never really yielded more than 2%-3% when they first joined the Dividend Achievers index. The main positive of this strategy is the possibility of achieving strong capital gains.
The third type is represented by companies with an average yield and an average dividend growth. Some investors call this the sweet spot of dividend investing.
Johnson & Johnson (JNJ) (analysis)
Procter & Gamble (PG) (analysis)
Clorox (CLX) (analysis)
Pepsi Co (PEP) (analysis)
Automatic Data Processing (ADP) (analysis)
There is a common misconception that buying the stocks in the middle, would produce average returns. Actually finding stocks with average market yields, which also produce a good dividend growth could produce not only exceptional yield on cost faster, but also capital gains as well.
At the end of the day successful dividend investing is much more than finding the highest yielding stocks. It is more about finding the stocks with sustainable competitive advantages which allow them to enjoy strong earnings growth, which would be the foundation of sustainable dividend growth. A company like Procter & Gamble (PG) which yields almost 3% today butraises dividends at 10% annually would double your yield on cost in 7 years to 6%. A company like Con Edison (ED) would likely yield around 6% on cost in 7 years. The main difference would be capital gains – Procter & Gamble (PG) would likely still yield 3%, while Con Edison (ED) would likely yield 6%. Thus the investor in Procter & Gamble would have most likely doubled their money in less than a decade, while also enjoying a rising stream of dividend income.
Full Disclosure: Long all stocks mentioned in the article except HTS and AGNC
Relevant Articles:
- 2010’s Top Dividend Plays
- Six Dividend Stocks for current income
- Best Dividends Stocks for the Long Run
- Capital gains for dividend investors
- Dividend Growth beats Dividend Yield in the long run
Monday, April 5, 2010
PepsiCo, Inc. (PEP) Dividend Stock Analysis
PepsiCo, Inc. (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company is a member of the S&P Dividend Aristocrat index, after raising distributions for 38 years in a row. Most recentlyPepsiCo raised its quarterly dividend payment by 7% to $0.48/share. Dividend author Dave Van Knapp has included the company in his most recent book "The Top 40 Dividend Stocks for 2010".
The stock has returned a 7.60% average annual return over the past decade, fueled by the company’s strong growth in earnings.
Analysts are expecting EPS growth to $4.17 in FY 2010, which would be a 10.60% increase in comparison to FY2009 EPS of $3.77. The expectations for FY 2011 are for EPS to reach $4.65, which would be an 11.50% increase.
A 13.60% growth in dividends translates into the dividend payment doubling almost every five years. Since 1979 PepsiCo has actually managed to double its dividend payment every six years on average.
The dividend payout has remained below 50%, with the exception of a brief increase in 2008. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Full Disclosure: Long PEP
The stock has returned a 7.60% average annual return over the past decade, fueled by the company’s strong growth in earnings.
Since the year 2000, PepsiCo has managed to deliver a 9.90% average annual increase in earnings per share. The company has also managed to implement a share buyback where it purchased almost 1.7% of outstanding stock on average each year since 2001. After it acquired Pepsi Bottling Co. and PepsiAmericas the company's Board of Directors also authorized the repurchase of up to $15 billion of PepsiCo common stock through June 2013. At current prices this represents approximately 14.40% of the stock outstanding.
Analysts are expecting EPS growth to $4.17 in FY 2010, which would be a 10.60% increase in comparison to FY2009 EPS of $3.77. The expectations for FY 2011 are for EPS to reach $4.65, which would be an 11.50% increase.
Earnings growth could come from synergies associated with the acquisitions of its bottlers, streamlining of operations and cost cutting. The distribution networks of the bottlers acquired could be used to push some of PepsiCo’s non-beverage products such as snacks and other foods.
Earnings growth could also come from strategic acquisitions, as well as product innovations in health and wellness food and beverage section.
The return on equity has remained largely above 30%, with the exception of 2004, when it fell to as low as 22%.
Earnings growth could also come from strategic acquisitions, as well as product innovations in health and wellness food and beverage section.
The return on equity has remained largely above 30%, with the exception of 2004, when it fell to as low as 22%.
Annual dividend payments have increased by 13.60% on average since 2000, which is much higher than the growth in earnings per share.
A 13.60% growth in dividends translates into the dividend payment doubling almost every five years. Since 1979 PepsiCo has actually managed to double its dividend payment every six years on average.
The dividend payout has remained below 50%, with the exception of a brief increase in 2008. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
PepsiCo (PEP) is a reliable dividend stock, which is attractively priced at the moment despite its forward yield of 2.90% being a tad lower than my entry requirement of 3%. My ideal entry price for PepsiCo would be $64. Dividend Investors waiting for better prices should weigh in the risks of waiting for a better price, versus the risk of missing out completely on any upside action if the company doesn’t go below $64/share.
Full Disclosure: Long PEP
Relevant Articles:
Thursday, April 1, 2010
Top Dividend Stocks for 2010, 1Q update
Back in 2009 I was invited to participate in a stock picking competition, where I had to submit my top four stocks for 2010. The companies which I thought included high yielding companies from four sectors of the economy, which also were characterized with consistent cash flows and stable but rising dividend payments. The sectors covered include real estate, utilities, energy transportation and tobacco.
The companies which I selected for 2010 include:
Consolidated Edison (ED) provides electric, gas, and steam utility services in the United States. This dividend aristocrat has raised annual distributions for 36 years in a row. The last dividend increase was in January 2010. The company is a natural monopoly in its geographic area, and thus is able to generate strong and steady revenue streams. The stock spots a yield of 5.3%, which a good compensation if you seek current income for the next 5 - 10 years. The stock is unchanged year to date. Check my analysis of Consolidated Edison.
Kinder Morgan (KMP) owns and manages energy transportation and storage assets in North America. This dividend achiever has raised annual distributions for the past 13 years. The last dividend increase occurred in 2009 however. Master Limited Partnerships like Kinder Morgan (KMP) typically receive a fixed fee for moving a product over a certain distance through their pipelines. In addition to that there is little competition between pipeline companies for business, as they are almost monopoly like businesses. Thus, their revenues tend to be rather stable. Kinder Morgan is eyeing expansion, which would be accretive to distributable cash flows per unit for the near future. The stock currently yields 6.50% and is up 9.40% year to date. Check my analysis of Kinder Morgan.
Philip Morris International (PM) engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. The company has raised distributions each year since it was spun-off from Altria Group (MO) in 2008. While it does face declining demand in Western Europe, which accounted for a little less than 50% of its operating income, the company could benefit from growth in emerging markets such as China or India as well as from strategic acquisitions. Add in to that the strong shareholder focused culture of Altria Group, which has always tried to deliver strong and consistent dividend growth and buybacks, and you have a recipe for success. Tobacco usage is not going to stop just like that no matter how much taxes are being levied on the products. The stock currently yields 4.4%, and is up 9.40% year to date. Check my analysis of Philip Morris International.
Realty Income (O) engages in the acquisition and ownership of commercial retail real estate properties in the United States. This dividend achiever has raised distributions for sixteen consecutive years. The last dividend increase occurred in March 2010. Some investors are concerned that Realty Income has a high dividend payout ratio, which stops them from purchasing its shares. The truth is that real-estate investment trusts have to distribute all of their earnings to shareholders in order to avoid being taxed by the IRS. Thus, a more useful gauge for Realty Income’s dividend coverage is its Funds from Operations, which includes earnings per share and certain non cash items such as depreciation expense for example.Realty Income (O) currently yields 5.60%, and is up 19.90% year to date. Check my analysis of Realty Income.
The four stocks that I selected have delivered a total return of 9.60% year to date, which so far is better than the returns from the rest of the investors participating in the competition:
Dividend Growth Investor: 9.58%
WildInvestor: 9.30%
My Traders Journal: 5.78%
Where does all my money go: 5.45%
The Financial blogger: 2.87%
Zach Stocks: 2.55%
Four Pillars: -1.01%
Intelligent Speculator: -1.27%
Million Dollar Journey: -11.83%
While the four stocks are ideal for investors seeking current income, in order to reduce risk one has to hold a diversified portfolio of income stocks. At a minimum a diversified dividend portfolio should hold at least 30 securities representative from the ten sectors in the S&P 1500. In addition to that a well diversified income portfolio should also have at least a 25% allocation to fixed income.
Full Disclosure: Long ED, KMP, PM and O
Relevant Articles:
- Six Dividend Stocks for current income
- Four Percent Rule for Dividend Investing in Retirement
- Dividend Investors are getting paid for waiting
- 2010’s Top Dividend Plays
The companies which I selected for 2010 include:
Consolidated Edison (ED) provides electric, gas, and steam utility services in the United States. This dividend aristocrat has raised annual distributions for 36 years in a row. The last dividend increase was in January 2010. The company is a natural monopoly in its geographic area, and thus is able to generate strong and steady revenue streams. The stock spots a yield of 5.3%, which a good compensation if you seek current income for the next 5 - 10 years. The stock is unchanged year to date. Check my analysis of Consolidated Edison.
Kinder Morgan (KMP) owns and manages energy transportation and storage assets in North America. This dividend achiever has raised annual distributions for the past 13 years. The last dividend increase occurred in 2009 however. Master Limited Partnerships like Kinder Morgan (KMP) typically receive a fixed fee for moving a product over a certain distance through their pipelines. In addition to that there is little competition between pipeline companies for business, as they are almost monopoly like businesses. Thus, their revenues tend to be rather stable. Kinder Morgan is eyeing expansion, which would be accretive to distributable cash flows per unit for the near future. The stock currently yields 6.50% and is up 9.40% year to date. Check my analysis of Kinder Morgan.
Philip Morris International (PM) engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. The company has raised distributions each year since it was spun-off from Altria Group (MO) in 2008. While it does face declining demand in Western Europe, which accounted for a little less than 50% of its operating income, the company could benefit from growth in emerging markets such as China or India as well as from strategic acquisitions. Add in to that the strong shareholder focused culture of Altria Group, which has always tried to deliver strong and consistent dividend growth and buybacks, and you have a recipe for success. Tobacco usage is not going to stop just like that no matter how much taxes are being levied on the products. The stock currently yields 4.4%, and is up 9.40% year to date. Check my analysis of Philip Morris International.
Realty Income (O) engages in the acquisition and ownership of commercial retail real estate properties in the United States. This dividend achiever has raised distributions for sixteen consecutive years. The last dividend increase occurred in March 2010. Some investors are concerned that Realty Income has a high dividend payout ratio, which stops them from purchasing its shares. The truth is that real-estate investment trusts have to distribute all of their earnings to shareholders in order to avoid being taxed by the IRS. Thus, a more useful gauge for Realty Income’s dividend coverage is its Funds from Operations, which includes earnings per share and certain non cash items such as depreciation expense for example.Realty Income (O) currently yields 5.60%, and is up 19.90% year to date. Check my analysis of Realty Income.
The four stocks that I selected have delivered a total return of 9.60% year to date, which so far is better than the returns from the rest of the investors participating in the competition:
Dividend Growth Investor: 9.58%
WildInvestor: 9.30%
My Traders Journal: 5.78%
Where does all my money go: 5.45%
The Financial blogger: 2.87%
Zach Stocks: 2.55%
Four Pillars: -1.01%
Intelligent Speculator: -1.27%
Million Dollar Journey: -11.83%
While the four stocks are ideal for investors seeking current income, in order to reduce risk one has to hold a diversified portfolio of income stocks. At a minimum a diversified dividend portfolio should hold at least 30 securities representative from the ten sectors in the S&P 1500. In addition to that a well diversified income portfolio should also have at least a 25% allocation to fixed income.
Full Disclosure: Long ED, KMP, PM and O
Relevant Articles:
- Six Dividend Stocks for current income
- Four Percent Rule for Dividend Investing in Retirement
- Dividend Investors are getting paid for waiting
- 2010’s Top Dividend Plays
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