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.
Invesco (NYSE: IVZ ) , for example, has returned 142% since the end of October 2004, and it's currently rewarding investors with a 1.2% yield. Then there's H.J. Heinz (NYSE: HNZ ) , which has returned 33% since August 2004 on top of a current 3.3% yield. And while Heinz happens to be an Income Investor recommendation, 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 high CAPS ratings:
|
Company
|
Yield
|
CAPS Rating (Out of 5)
|
|
International Bancshares (:IBOC)
|
3.1%
|
****
|
|
Flowers Foods (NYSE:FLO)
|
2.2%
|
*****
|
|
Jackson Hewitt Tax Service (NYSE:JTX)
|
2.2%
|
****
|
|
Cascade Bancorp (NASDAQ:CACB)
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2.2%
|
****
|
|
Capital Trust (NYSE:CT)
|
10.4%
|
***
|
Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and CAPS as of Nov. 15.
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: Safety Insurance Group.
Death and taxes -- guaranteed
As pessimistic as that may sound, it's actually good news for tax preparation service providers like Jackson Hewitt. Though I personally would love to see a vastly simplified U.S. tax system, I just don't think it will happen in my lifetime. Year after year, as more pages are added to the tax code and the legitimate write-offs that we're entitled to become even more complex, more and more people will turn to tax preparation services.
Jackson Hewitt has had a rocky year, though, principally because of some nasty shenanigans going on with one of its franchisees. The shares dropped below $30 for a good part of the year, as investors fretted that the poor conduct might turn out to extend beyond the one franchisee. As things have cleared up, the stock has recovered a good bit, but that doesn't necessarily mean there's no opportunity left.
Players on CAPS have rated Jackson Hewitt four stars out of a possible five, and the consensus seems to be that the stock will continue to trend upward as we get further away from the legal issues. And don't forget that 2.2% dividend in the meantime!
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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