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 time and time 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.
AGL Resources (NYSE: AGL ) , for example, has beaten the S&P 500 by 39 points since March 2004, and it currently is rewarding investors with a 5.2% yield. Or consider ONEOK (NYSE: OKE ) , which has topped the S&P by 36 points since November 2005, atop a current 5.2% 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 135,000-plus members of our CAPS community:
|
Company
|
Yield
|
CAPS Rating (out of 5)
|
|
Garmin (Nasdaq: GRMN )
|
3.4%
|
****
|
|
ConocoPhillips (NYSE: COP )
|
4.3%
|
*****
|
|
Valero (NYSE: VLO )
|
3.5%
|
****
|
|
Deere (NYSE: DE )
|
2.7%
|
****
|
|
Kraft (NYSE: KFT )
|
4.7%
|
****
|
Sources: Capital IQ, a division of Standard & Poor's, Yahoo! Finance, and CAPS as of June 18.
All yields listed are trailing and may not reflect recent corporate actions.
If you like what you see, but 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 ConocoPhillips.
Does my dividend have a glass jaw?
The last thing we want in a dividend-paying company is the risk that the company will fall off a cliff and have to pull back its dividend. This usually ends up being a double whammy, because not only do you lose your dividend payout, but many of the dividend-loving investors who own the stock will run for the hills, causing the stock price to fall.
With that in mind, there are three places that I immediately tune into when kicking the tires of a dividend payer -- dividend history, financial statements, and business stability.
ConocoPhillips doesn't have a perfect dividend history, but it's still pretty darn good. Over the past two decades, the company has consistently paid a dividend, and while it hasn't boosted the dividend every year, it has done so enough of the years that the payout has quadrupled between 1989 and today.
A quick look at Conoco's financials might make you recoil in terror -- the company reported a $20 billion loss for the past 12 months. And though its cash flow was a decidedly healthier $18 billion, it wasn't enough to cover the company's capital spending program, let alone dividends. However, this year seems to have been a bit of an anomaly, as most years the company produces enough cash to cover its capital spending, dividend, and then some. Conoco also has a very reasonable balance sheet and it has its interest payments well covered.
As for business stability, while the prices for oil have been gut-wrenchingly volatile over the past few years, there seems little doubt that oil will continue to be the fuel of choice around the world for years to come.
What the bulls say
As the massive goodwill writedown on its exploration and production segment and the impairment of its LUKOIL investment show, Conoco has faced some major hurdles lately. The CAPS community has stayed positive on the stock, though, and it currently has a perfect five-star rating.
To get a better idea why CAPS members have been so positive, let's take a look at what Haslett69 had to say when recently giving the stock a thumbs-up:
Current price is justifiably suppressed but the company has the capability to overcome those issues. [ConocoPhillips] will benefit from previous acquisitions and partnerships over the next several years. Look at the fundamentals - they are in a good position for future growth and profits as oil, gas and coal are not being replaced anytime soon!
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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