It's always smart to seek solid dividend-paying stocks for your portfolio, as they tend to be reliable performers, and their payouts can bolster a portfolio during market downturns. When I decided to look into the top dividend stocks 2014 has had to offer, I found a bunch that not only had performed well year to date but that also still offered significant payouts.
Intel stock has surged 33% year to date, and this top dividend stock of 2014 recently yielded 3%. The semiconductor giant has suffered in recent years as PC sales taper off and Intel struggles to catch up in the mobile market. Intel is gaining ground now and has some promising initiatives in place, such as aiming to supply chips for $50 smartphones in emerging markets.
Those interested in the top dividend stocks of 2014 should note that Intel's shareholders have been rewarded not only via dividends but also through aggressive share buybacks. The company has reduced its share count by roughly a fifth over the past decade, boosting earnings per share.
The company's last quarterly report was strong, topping revenue and earnings estimates and reflecting some growth in PC sales. Intel's mobile division posted a significant loss, but data centers and the Internet of Things posted year-over-year growth of 19% and 24%, respectively. While the mobile performance is disappointing, it's partly due to hefty investments in chip development that could pay off handsomely in the future. Meanwhile, Intel's cash flow remains prodigious, topping $9 billion annually. Given Intel's deep pockets and dominant position, it's hard to bet against it.
ConocoPhillips stock has gained 16.5% year to date, and this top dividend stock of 2014 recently yielded 3.2%. It has made smart moves in recent years, capitalizing on the boom in domestic oil and gas by shedding some foreign assets (in locations such as Nigeria, Kazakhstan, and Algeria) in order to invest more heavily in U.S. operations.
This member of the top dividend stocks of 2014 has investors excited because of its plans to deliver double-digit shareholder returns in coming years. That will be done by volume growth in the neighborhood of 3% to 5% annually, in addition to cost-cutting, profit-margin expansion, and, of course, its dividend.
ConocoPhillips' second-quarter results were solid, featuring adjusted earnings rising 14% year over year and production in the Eagle Ford and Bakken shale regions surging 38%. Those regions offer the highest margins, and ConocoPhillips is focusing its investments on its higher-margin operations. It's also exploring for more finds in shale and deepwater regions around the world. With the company likely to grow its free cash flow via these plans, it stands a solid chance of remaining among the top dividend stocks of 2014 by year-end.
Lorillard stock has popped 22% year to date, and this member of the top dividend stocks of 2014 recently yielded 3.8%. You may not be very familiar with it, but Lorillard is the country's third-largest tobacco company, and in these days of burgeoning e-cigarette sales, it's the owner of the blu eCig business, which recently boasted market share of 41% (although that's down from its peak share of 50%). Perhaps most important at the moment, though, is that Lorillard is being acquired by Reynolds American (NYSE: RAI ) in a $27 billion deal.
Since Reynolds has its own e-cig brand, Vuse, blu eCig is being sold to Imperial Tobacco Group. That may seem to have been a wise move, as Lorillard's last quarter featured electronic device sales plunging 35% due to price decreases and growing competition. But the deal is worth questioning, too, as Lorillard, known for its strength in menthol smokes (think Newport menthol cigarettes), is giving up a major growth engine in its e-cigs and is placing a lot of hope in Reynolds' Vuse. To some, it looks like Imperial Tobacco is the big winner in the merger. (To be clear, a key driver of the deal is that the two combined companies can compete more effectively against Marlboro's Altria Group.)
Lorillard's last quarter also featured a drop in cigarette volume but also a 1% uptick in revenue thanks to price hikes. The new combined company may deliver solid growth in the future, but the tobacco industry faces many headwinds in the U.S., such as regulations, rising taxes, and a decrease in smokers.
Of these three top dividend stocks that 2014 has had to offer, Intel and ConocoPhillips seem the most promising.