4 Dividend Stocks to Make You Rich

This is an intimidating time to be an investor. The market seems to unpredictably jump or fall without warning. However, in times like these, it is still possible for investors to persevere, and even grow their wealth.

One of the easiest ways to find strong companies is to look for those that consistently pay high dividend yields, and then to reinvest those dividends. If you can find dividend payers that are also growing their earnings year over year, it's easy to just sit back and watch your portfolio grow. In fact, research has shown that, historically, dividend-paying stocks return about 5% more annually than stocks that do not pay a dividend.

To help you in your quest to get rich over time, I've identified four stocks to look at further. First, I wanted to find large-cap stocks, as they are typically less volatile and let you sleep easier at night. In addition, I screened for companies that had a strong but sustainable annual dividend yield, at least 4%; and to ensure that these companies are still growing, at least 5% growth in EPS over the last three years. The companies I chose also have four- and five-star CAPS ratings, which means they're favorites of The Motley Fool's 170,000-member CAPS community.

Company

Annual Dividend Yield

EPS Growth Rate

CAPS Rating
(out of 5)

Bristol-Myers Squibb (NYSE: BMY  )

4.7

21.82

****

Exelon Corp.

(NYSE: EXC  )

4.6

5.18

*****

Kimberly-Clark

(NYSE: KMB  )

4.0

5.26

*****

Merck & Co, Inc.

(NYSE: MRK  )

4.1

41.0

****

Any one of these would be a strong addition to a dividend portfolio. We have two health-care giants, Bristol-Myers Squibb and Merck. Bristol-Myers Squibb recently purchased biotech company Zymogenetics, which will add the drug Recothrom to Bristol's portfolio, in addition to facilitating the partnership between the two companies over hepatitis C treatments. Bristol competitor Merck  has a promising shingles vaccine in the pipeline.  Big Pharma companies like these offer consistent dividend payouts while promising strong growth potential. That makes them perfect for dividend-style investing.

Kimberly-Clark is a consumer products manufacturer that you know for iconic brands like Kleenex tissue and Huggies diapers. At around 14% off its 52-week low and a P/E of 14.2, now would be a great time to add this blue chip to your portfolio.

However, the biggest standout from the list is Exelon. Already the country's largest nuclear energy producer, it recently announced a move to buy John Deere Renewables, which will allow Exelon to triple its wind energy production capacity. Exelon's emphasis on sustainable energy sources should make it more appealing to long-term thinkers than a company that relies mostly on carbon-based fuels, which are an integral, but hopefully declining, part of the global energy mix.

Investors can rely on Exelon's dividend payout, as it is supported by $2.8 billion in free cash flow that the company generated in 2009.  A P/E ratio of 11.19 makes it look like a decent bargain right now, too. Despite its $28 billion market cap, Exelon looks like it still has room to grow. Your portfolio could grow with it!

Molly Simoneau owns no shares of companies mentioned in this article. Exelon is a Motley Fool Inside Value choice. Kimberly-Clark is a Motley Fool Income Investor recommendation. The Fool owns shares of Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 26, 2010, at 12:10 PM, FlyingRiki wrote:

    Where do you get 14% off 52 week highs? I must be reading a different KMB......

  • Report this Comment On October 26, 2010, at 1:25 PM, OutperformOrDie wrote:

    KMB's 52 week high is 67.24. The stock currently trades for 62.67. I also don't see how this is 14% off a 52 week high...

    Also, Molly, the title of your article, in my opinion, is a bit suggestive and pretentious with "make you rich." It sounds too absolute which, anyone who has been investing for anytime at all, knows there is no guarantee any investment will "make you rich." How about "4 Dividend Stocks with Great Yields and Attractive EPS metrics"? This seems more appropriate.

  • Report this Comment On October 26, 2010, at 3:18 PM, TMFPhillyDot wrote:

    @FlyingRiki,

    I think it is supposed to say off the 52 week low's. It should be fixed in the article shortly.

    Best,

    Jordan (TMFPhillyDot)

  • Report this Comment On October 26, 2010, at 3:25 PM, XMFOperaRocks wrote:

    Outperformordie,

    I'm sorry if you felt that the headline was misleading. One of the Motley Fool's slogans is "Get rich slowly." This type of DRP investing is one way of doing just that! Obviously there are never any guarantees, but my concept is that carefully investing in companies with high dividend yeilds and decent growth potential, with reinvested dividends, could, in the long term, make you rich.

    Fool on!

    Molly (TMFOperarocks)

  • Report this Comment On October 26, 2010, at 4:46 PM, midnightmoney wrote:

    What are opera rocks?

  • Report this Comment On October 26, 2010, at 5:41 PM, PeyDaFool wrote:

    Alex Trebek: The category is opera.

    Contestant: I'll take opera for 1000.

    Alex Trebek: If you really like opera, what do you say?

    Contestant: What are opera rocks.

    Alex Trebek: I'm sorry, the correct answer is: What is opera rocks.

    Contestant: D'oh!

  • Report this Comment On October 26, 2010, at 6:17 PM, midnightmoney wrote:

    and here I was, convinced they could bar all but the beefiest of baritones! Opera rocks: the inexhaustible if homely forbear of the modern day earplug:)

  • Report this Comment On October 26, 2010, at 6:42 PM, midnightmoney wrote:

    Sorry, wasn't trying to be mean there. We have a basically brand new opera house here in Krakow (it's bright red and everybody complains about it because it doesn't suit the surrounding communist architecture). My girlfriend and I actually go a couple of times a year--when we can actually get tickets and the time to line up. Bottom line here is I appreciated Molly's article, the information about excelon especially. So thank you.

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