Ruth, Jordan, Montana. You don't have to be a sports fan to recognize those names, and there's a very good reason for that. All three of these athletes made magic happen whenever they competed. Even more importantly, when the chips were down, you could still count on these guys to deliver.
In times of economic turmoil, wouldn't it be great to have a performer like that in your portfolio? Well, high-quality dividend payers can be just that kind of day-in and day-out all-star that you're looking for.
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 over and over again. At the same time, they can provide a solid defense against crazy market conditions. Finding them is our Motley Fool Income Investor service's mission.
South Jersey Industries (NYSE: SJI ) , for example, has beaten the S&P 500 by 54 points since December 2006, and it is currently rewarding investors with a 3.3% yield. Or consider Enterprise Products Partners (NYSE: EPD ) , which has topped the S&P by 49 points since May 2004, atop a current 9.4% 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 125,000-plus members of our CAPS community:
|
Company
|
Yield
|
CAPS Rating (max 5)
|
|
Valero (NYSE: VLO )
|
2.4%
|
*****
|
|
Applied Materials (Nasdaq: AMAT )
|
2.5%
|
*****
|
|
Coca-Cola (NYSE: KO )
|
3.6%
|
****
|
|
United States Steel (NYSE: X )
|
3.9%
|
****
|
|
NYSE Euronext (NYSE: NYX )
|
5.8%
|
*****
|
Source: Capital IQ, a division of Standard & Poor's, Yahoo! Finance, and CAPS as of Jan. 22. Yields listed may not reflect recent corporate actions.
If you like what you see, but you want more, you can run this screen for yourself with CAPS' handy screener. While these are not formal recommendations, they're a great place to kick off further research and potentially add some dividend excellence to your portfolio. In fact, I'll even kick you off with some thoughts on Coca-Cola.
Does my dividend have a glass jaw?
Going back decades, Coke has been kicking profits back to its shareholders in the form of dividends. Not only that, but it's had a good track record over the last two decades of boosting the dividend payout -- the current annualized payout is more than five times higher than it was in 1991. In recent years, the company has been able to use cash flow from operations to fund its capital spending and dividend and still have a billion or two left over, so it hasn't exactly been cutting things close.
As a year of surprises has shown us, nothing should be taken as a given, but it would certainly seem that Coke's dividend is pretty well defended. And in today's market, that's certainly refreshing.
What the bulls say
Maybe the real question to tackle here is whether buying Coke's stock today is a no-brainer. This is the premier beverage company in the world, a company that produces gobs of cash and is a favorite of good ol' Warren Buffett. So, are there reasons not to be buying hand over fist?
Well, sure there are. First off, there is no such thing as a sure thing -- Coke or otherwise. On top of that, there's no shortage of folks who think that Coke's business is head and shoulders above the rest, so its stock hasn't fallen as much as the rest of the market, and it's still trading at a multiple above the beaten-down stocks of many other quality companies.
With that said, though, it's hard to find a stalwart as, well, stalwart-y as Coca-Cola to be the solid foundation of your portfolio. And although a rebound in the stock price may or may not be imminent, the 3.6% dividend that the company kicks back is a good reward for waiting.
Coke bull and CAPS All-Star CAuguste recently became one of the 4,161 CAPS members to rate Coke's stock an outperformer and said:
Solid, worldwide market -- still undervalued due to the crash. Excellent fundamentals, and a luxury many people can afford, even in down times.
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 Bad News Bears to the Dream Team. And really, could you argue with having Michael Jordan, Magic Johnson, and Sir Charles Barkley help your portfolio chalk up wins?
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