Quiz time, sports fans: What did the New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s have in common? (And exactly how can this help you with your portfolio?)
It wasn't just that they had some of the best individual players of the time -- Yogi Berra, Michael Jordan, and Emmitt Smith, respectively -- although that certainly helped. And it wasn't just that they were able to bring home world championship trophies on a regular basis. It was simply that their organizations and performances were consistently excellent.
Consistent excellence is rare anywhere, but imagine seeing it in your portfolio. Impossible? No way! Because that's what carefully chosen dividend-paying stocks can offer.
Build the next investing dynasty
Finding these long-haul outperformers can help you build your fortune, as studies from investing gurus such as Jeremy Siegel have shown time and time again. Finding them for you is precisely what we do at our Motley Fool Income Investor service.
AllianceBernstein, for example, is up 190% since September 2004, and it currently is rewarding investors with a 4% yield. Then there's Constellation Energy, which has returned 136% since July 2004 on top of a current 2% yield. And while both stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.
Identify new talent
With that last thought in mind, I'd like to introduce you to our new community-intelligence database, Motley Fool CAPS. There, savvy investors help one another identify stocks that can create consistent and substantial growth for any type of investor. That means that whether you're a Buffett-esque value investor or a chart-watching technical trader, you are welcome to strut your stuff. And, just as in professional sports, the cream inevitably rises to (and stays at) the top.
So what are the best dividend-paying stocks around, according to CAPS? Here are a few dividend picks with five-star ratings:
|
Company |
Yield |
|---|---|
|
Partner Communications |
5.7% |
|
Preformed Line Products |
2.1% |
|
Southern Copper |
8.8% |
|
Terra Nitrogen |
6.4% |
|
Calumet Specialty Products Partners |
4.8% |
Stake your claim
I encourage you to join CAPS to learn more about why investors are so bullish on these companies, and perhaps to add your own thoughts to the system. I'll get you started with some thoughts about one company here that may be worth checking out: Southern Copper.
"If you can't beat 'em, join 'em." This could have been the slogan du jour (or du decennie?) recently, as commodities, and notably metals, have been hot, hot, hot. Whether you actually look at the charts for some of the commodities over the past five years, or you just Google phrases like "commodities boom" or "commodities bubble," it's easy to see that there's a lot of excitement. And you better believe that commodity superfan Jim Rogers is happier than an Elvis impersonator in a sequin store.
How to reasonably get exposure to some of these markets can be a key question, though. Last week, my Foolish colleague David Lee Smith suggested that eager investors avoid stealing air conditioners to get their copper fix (as some people are doing in Florida), and instead take a look at some of the big copper producers. David primarily looked at Freeport-McMoRan
Right now, there seems to be the expectation that the good times won't continue forever for Southern Copper. Aside from the fat dividend on the stock, it's also trading at less than 10 times expected earnings for 2007. The Fools on CAPS, though, see this as an opportunity and have voted 967-36 in favor of Southern Copper outperforming the S&P 500. Rollininclover, a CAPS All-Star, sums up his thoughts on the opportunity:
I own a few shares in this stock. It has spectacular margins, a low P/E (though price-to-book value is a bit high), and brilliant return on equity and return on assets. The dividend is excellent. A strong company with mines in Peru, Mexico, and Chile leaves it open to the usual worries about operating in a foreign country, and South America could be about to go hard left. That is the biggest risk to owning stocks that operate in that region today, but I am willing to accept that risk at the present time.
You can check out more of what others have to say about Southern Copper, as well as chime in with your own thoughts, by heading over to CAPS. You may also want to check out a few of the other top-rated dividend payers above while you're there.
And looping back around to conclude my (very) extended sports metaphor, allow me to suggest that dividend stocks will help you turn your portfolio into the dependable New York Yankees, rather than the flash-in-the-pan Florida Marlins. And if you hate the Yankees, it's probably because they're so darn good, so darn often.
More CAPS Coverage:
Make seven picks on CAPS by April 24 and we'll send you a free copy of The Motley Fool Five Star Report. Inside, you'll discover how to use CAPS as a research tool, and you will receive a recommended five-star CAPS pick poised to beat the market for the next decade or more -- one that you can easily translate into profits for your real-world portfolio. Click here to get started now!
Yankees fan and Fool contributor Matt Koppenheffer hopes the Yanks can continue (regain?) their legendary excellence, and has his fingers crossed that the Cowboys will never get back to the top again. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is a true investing dynasty.
