Editors' note: Contrary to reporting in an earlier version of this article, Western Refining suspended its dividend in July 2008, thus making it a less-than-ideal dividend stock. The Fool regrets the error.
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.
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.
Invesco, for example, has returned 120% since October 2004, and it currently is rewarding investors with a 1.7% yield. Or consider Total
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 115,000-plus members of our CAPS community:
|
Company |
Yield |
CAPS Rating (out of 5) |
|---|---|---|
|
Ingersoll-Rand |
2.2% |
***** |
|
Verizon |
5.7% |
**** |
|
Intel |
3.0% |
**** |
|
Vodafone |
8.4% |
**** |
Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and CAPS as of Sept. 24.
Any one of these quality companies would add some dividend excellence to your portfolio, but let's take a closer look at why CAPS members think Ingersoll-Rand is the best pick of the bunch.
Weighing in on CAPS
More than 750 CAPS members have logged their opinion on Ingersoll-Rand, with a full 744 of them giving the stock a thumbs-up. Among this bullish group is CAPS All-Star sberberick, who recently shared his opinion on the stock:
Last 4 years have been good, [and the company has] been raising [its] dividend and just completed a nice stock buy back. Revenue and EPS is up nicely the last 4 years. Looks like [Ingersoll-Rand] is on track and Trane buy will help in the long run. They do have a lot of exposure to housing and construction but seem to be getting along just fine. Company is still making a nice profit. Seems to be good entry point.
And he may well have hit the nail on the head. Ingersoll focuses on three areas -- climate-control technologies, industrial technologies, and security technologies -- and while the company has certainly felt the impact of the U.S. and global economic slowdown, it's well diversified and able to absorb the blow. As the company stated in its most recent 10-Q filing: "Our geographic and industry diversity, as well as the diversity of our product sales and services, has helped limit the impact of any one industry, or the economy of any single country, on the consolidated operating results."
Meanwhile, the results leading up to the current period have certainly been encouraging. A combination of organic growth and acquisitions -- including the recent buyout of Trane -- have helped the company increase operating income 56% between 2003 and the past 12 months. Over the same time period, IR has doubled its dividend per share.
And if the vote of confidence from sberberick and the other 700-plus CAPS members isn't enough for you, everyone's favorite superinvestor, Warren Buffett, owns a $183 million stake in the company through Berkshire Hathaway
Get into the action
You can check out who else has been bullish on these stocks, 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 in our table while you're there.
Dividend stocks could help you transform your portfolio from the flash-in-the-pan Florida Marlins into 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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