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.
France Telecom (NYSE: FTE ) , for example, is up 48% since February 2006, and it is currently rewarding investors with a yield of approximately 4.2%. Then there's AllianceBernstein (NYSE: AB ) , which has returned about 157% since September 2004 on top of a current 5.1% 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 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 four- and five-star ratings.
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Company
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Yield
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Umpqua
Holdings (Nasdaq: UMPQ )
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3.6%
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Edison
International (NYSE: EIX )
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2.1%
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Companhia Paranaense de Energia (NYSE: ELP )
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1.9%
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Martin Midstream Partners (Nasdaq: MMLP )
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7.2%
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Genuine Parts
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2.9%
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Source: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and CAPS as of Oct. 4.
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: Umpqua Holdings.
Refer to yourself as "the World's Greatest Bank" may be brash, but that's exactly what Umpqua does. Though certainly not the world's largest bank -- it's nearly 200 times smaller than Citigroup (NYSE: C ) -- Umpqua says it sees the phrase as its commitment to its customers to live up to that title.
Heard that kind of talk before? So have I, but Umpqua has taken a novel approach toward actually living up to its promise. The company has set up some interesting concept stores, such as the "Neighborhood Store," which is designed to be a comfortable place for customers to do their banking and (hopefully) sign up for additional Umpqua products. The bank also uses measures such as mystery shoppers and its own "return on quality" evaluation program to make sure it's offering top-notch service.
The bank's focus on quality has also shown up in its financials, where we see that both revenue and assets have nearly tripled -- and net income has almost quadrupled -- in the four years ended in 2006.
Though the company's shares have fallen by almost 30% over the past year, the CEO recently sent a letter to shareholders reassuring them that the bank is in good shape and that it has "no exposure to the subprime market." ShadowTMDG, a CAPS player who recently gave the stock a thumbs-up, agrees with the good outlook and said: "[The] stock is sitting near [its] 52 week low and nothing on the balance sheet gives justification for this. ... Umpqua should come out of this current slump ahead of others in its sector."
You can check out who has been bullish on Umpqua, as well as chime in with your own thoughts, by heading over to CAPS. While you're there, you may also want to check out a few of the other top-rated dividend payers that I've mentioned here.
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.
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