5 Dynamic Dividend Stocks

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 the mission of our Motley Fool Income Investor service.

Partner Communications (Nasdaq: PTNR  ) , for example, has beaten the S&P 500 by 50% since May 2007, and it is currently rewarding investors with a 7.4% yield. Or consider ONEOK (NYSE: OKE  ) , which has topped the S&P by 40% since November 2005, atop a current 4.9% yield. While these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.

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 120,000-plus members of our CAPS community:

Company

Yield

CAPS Rating (out of 5)

Garmin (Nasdaq: GRMN  )

3.4%

****

Coca-Cola (NYSE: KO  )

3.5%

****

Procter & Gamble (NYSE: PG  )

2.6%

*****

Abbott Laboratories (NYSE: ABT  )

2.7%

****

Deere (NYSE: DE  )

3.1%

****

Source: Capital IQ, a division of Standard & Poor's; Yahoo! Finance; and CAPS as of Oct. 30.

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 Coca-Cola is worth a hard look.

TheATrain weighs in
I always knew that Coca-Cola was a highly entrenched international brand, but it wasn’t until I was on a Thai fishing boat in the middle of Phang Nga Bay being served Coke in the old-school glass bottles that it really sunk in. Simply put, Coca-Cola is the cola, if not the soda, no matter where you go. CAPS member TheATrain had a similar take when he gave the stock a thumbs-up earlier this month:

Coke has a great brand immediately recognizable around the world. Its business should hold up in a difficult economic environment better than most, and pays a dividend.

And TheATrain is far from the only fan of Coca-Cola on CAPS. Though this Inside Value pick is short of a perfect five-star rating, of the 4,000-plus CAPS members that have weighed in on the stock, more than 3,800 have rated it an outperformer.

With many stocks trading at single-digit earnings multiples right now, Coke may appear comparatively expensive at 17 times trailing earnings per share. However, going back over the past decade, you would have been hard-pressed to find Coke's stock ever trading for less than 20 times trailing earnings.

And, of course, while you're paying a premium multiple for the stock, you're getting shares of a premium company. Even as consumers start to hide spending money under their mattresses, they are still apparently shelling out for Coke products. Earlier this month, the company announced its third-quarter results, which showed revenue and earnings per share up 9% and 14%, respectively, from last year.

Coke also continued to pump out cash, gushing $5.7 billion in operating cash flow for the first nine months of the year. That's enough to not only continue to pay out, and grow, its dividend, but also to continue to buy back shares.

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 above 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.

More CAPS Foolishness:

Garmin is a Motley Fool Global Gains and a Stock Advisor recommendation. Partner Communications and ONEOK are Motley Fool Income Investor picks. Coca-Cola is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Yankees fan and Fool contributor Matt Koppenheffer does not want to talk about the Yankees ... at all. He does not own shares of any of the companies mentioned. The Fool’s disclosure policy is a true investing dynasty.


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