The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s have one crucial element in common: consistent excellence in their organizations and performance. That's a rare accomplishment, but if you think it could never occur in your portfolio, think again. Carefully chosen dividend-paying stocks could be your key to superstar returns.
Build the next investing dynasty
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 is our Motley Fool Income Investor service's mission.
Snap-on (NYSE: SNA), for example, has returned more than 86% since October 2004, and it currently is rewarding investors with a 2.4% yield. Or consider AllianceBernstein (NYSE: AB), which has returned 98% since August 2004, atop a current 7.7% yield. While these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get information about them.
Identify new talent
With the help of Motley Fool CAPS, we'll search for the best dividend-paying stocks around. Here are several dividend picks that have also earned high ratings from the 83,000-plus members of our CAPS community:
|
Company
|
Yield
|
CAPS Rating
(5 max)
|
|
ArcelorMittal (NYSE: MT)
|
1.8%
|
*****
|
|
Automatic Data Processing (NYSE: ADP)
|
2.9%
|
****
|
|
Allstate (NYSE: ALL)
|
3.3%
|
****
|
|
Seagate Technology (NYSE: STX)
|
1.7%
|
****
|
|
Marsh & McLennan Companies (NYSE: MMC)
|
3.1%
|
***
|
Source: Capital IQ, Yahoo!Finance, and CAPS as of Feb. 21.
Stake your claim
It's funny, but not all that long ago hard drives were considered the cutting edge of technology, and companies were tripping over themselves to get into the hard-drive business. Like all hot technologies, many of those chasing hard-drive riches went out of business or were bought out. Today, it's generally considered a pretty sleepy business with companies such as Seagate and Western Digital dominating the playing field.
Although hard drives don't generate the hype that they used to, there is still plenty of demand for them. As in many other businesses, global expansion has been a big demand driver.
Innovation in the industry hasn't stopped either -- hard-drive manufacturers continue to find ways to fit larger amounts of storage into increasingly smaller packages, allowing computers to continue to get smaller, lighter, and thinner. Smaller hard drives have also made possible portable consumer electronics with high storage capacity -- think Apple's iPod.
Despite this, investors at large don't seem to care much for the hard-drive players, and Seagate trades today at a forward P/E of less than nine. On CAPS, All-Star tommycarstensen recently gave the stock the nod and highlighted a number of its positive attributes:
Net profit margin is double digit. ... Profit margins and ROE are both growing. Cash flow is solid. [Seagate] is trading below its usual multiples. Dividend yield is great considering the low payout ratio of 14%. ... The 3.5" HDD might be dead, but I have faith that [Seagate] is ready with the product replacement.
You can check out who else has been bullish on Seagate, as well as chime in with your own thoughts by heading over to CAPS. You can check out a few of the other top-rated dividend payers listed above while you're there.
Dividend stocks could help you transform your portfolio from the flash-in-the-pan Florida Marlins to the dependable New York Yankees. And if you hate the Yankees, it's probably because they're so darn good, so darn often.
More CAPS Foolishness:
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