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5 Dynamic Dividend Stocks

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 does this help you with your portfolio?)

It wasn't only that they had some of the best players of the time -- Yogi Berra, Michael Jordan, Emmitt Smith -- 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 that their organizations and performances were consistently excellent.

Consistent excellence is rare anywhere, but imagine seeing it in your portfolio. No way? Way! 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.

Posco (NYSE: PKX  ) , for example, is up 253% since April 2005, and it is rewarding investors with a 1.3% yield. Then there's Tupperware, which has returned 66% since October 2005 on top of a current 2.6% yield. And while those 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 call onstage our community intelligence database, Motley Fool CAPS. These savvy investors help one another identify stocks that can create consistent and substantial growth for any type of investor. 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 high CAPS ratings:



CapitalSource (NYSE:CSE)


Companhia de Bebida Das Americas


Nordic American Tanker Shipping (NYSE:NAT)


GOL Linhas Areas Inteligentes (NYSE:GOL)


Plum Creek Timber (NYSE:PCL)


Source: Capital IQ, Yahoo! Finance, and CAPS as of Nov. 2.

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 a company here that is worth checking out: Income Investor pick CapitalSource.

Caught in the crossfire?
We all know about the problems in the mortgage, credit, and housing markets. While homebuilders were the focus for a while, financial players have been catching the brunt of it lately, as the likes of Citigroup (NYSE: C  ) and fellow Income Investor pick Washington Mutual (NYSE: WM  ) have been facing tough questions about the future.

At the same time, some companies in these sectors have been pulled down by association -- even though they may not be exposed to the same level of risk. Many CAPS players, including jawilde, say that CapitalSource may be one of those stocks. Jawilde gave CapitalSource a thumbs-up and said:

Uncertainty creates fear and fear creates buying opportunities. The market 'fears' that companies with loans from [CapitalSource] will not be able to repay and, since the credit markets are 'frozen,' that [CapitalSource] will not be able to obtain additional financing. I'm betting the fear is irrational and [CapitalSource] will be a winner.

Other CAPS players point out that the residential mortgage exposure CapitalSource holds is far less risky than the subprime loans causing all the media hubbub. They also note that the stock's current low P/E multiple and impressive dividend offer some extra margin of safety on the stock.

You can see who has been bullish on CapitalSource, and chime in with your own ideas by heading over to CAPS. Check out a few more top-rated dividend payers while you're there.

And to conclude my (very) extended sports metaphor, allow me to suggest that dividend stocks will help you transform 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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12/31/1969 7:00 PM
CSE.DL2 $0.00 Down +0.00 +0.00%
CapitalSource CAPS Rating: *****
C $49.58 Up +0.01 +0.02%
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GOL $26.76 Up +1.11 +4.33%
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NAT $9.55 Down -0.20 -2.05%
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PCL.DL $0.00 Down +0.00 +0.00%
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PKX $53.73 Up +0.31 +0.58%
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Washington Mutual,… CAPS Rating: No stars