The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s had 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.
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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.
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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 96,000-plus members of our CAPS community:
|
Company |
Yield |
|
|---|---|---|
|
General Electric |
3.4% |
**** |
|
Koninklijke Philips Electronics |
2.2% |
**** |
|
Prudential Financial |
1.4% |
**** |
|
Norfolk
Southern |
2.0% |
***** |
|
Kimberly-Clark |
3.6% |
**** |
Any one of these quality companies would add some dividend excellence to your portfolio, but I thought I'd kick off further research with a closer look at Kimberly-Clark.
Dependable dividends
As we know, not all dividend payers and dividend payouts are created equal. For that reason, it's important to make sure that the dividend you're expecting isn't about to take an extended vacation with the dodo bird. To figure this out, I like to look at the prospects for the company's business, the company's history of paying dividends, and the sustainability of the current dividend.
When it comes to operating a sustainable business, Kimberly-Clark passes with flying colors. The company calls itself a "global health and hygiene company," which in plain English means that it sells a variety of consumer staples like baby diapers, toilet paper, tissues, and surgical gowns. The company has a number of highly recognizable brand names such as Huggies and Kleenex. As CAPS player muddymxputs it, "You'll never stop buying products from this company." In addition, the company is and has been solidly profitable, and though it carries a good bit of debt, it has a balance sheet that's in pretty good shape.
We've also got a winner when it comes to our two dividend tests. Kimberly-Clark produced more than enough cash in 2007 to pay for its capital expenditures and fund its dividend payout, so we don't have to worry that it is writing checks that we can't cash.
The company is also as serious about its dividends as The Colonel is about his fried chicken. In its annual report, it proudly notes that quarterly dividends have been continually paid since 1935. The company also notes in its investor fact sheet that it has increased the dividend an average of 12% per year since 2004, and has a goal of boosting it by high-single-digit or low-double-digit percentages going forward.
Need more? CAPS All-Star hazelnut283 has been bullish on Kimberly-Clark since mid-2007 and noted:
I'm starting to invest in this company because of [Kimberly-Clark's international scope]. I have been to Mexico, South Korea, and Australia and in any given convenience store you will find Kleenex tissues and Kotex products. To me, it is incredible that the brand reaches so far, especially since in 2 of those countries English is not the predominant language. I say that if KMB continues to expand its brand globally and keep up its reputation for quality products, it only has room to improve.
You can check out who else has been bullish on Kimberly-Clark, 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.
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.
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