Quiz time, sports fans: What did the New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s have in common? (And exactly how can this help you with your portfolio?)
It wasn't just that they had some of the best individual players of the time -- Yogi Berra, Michael Jordan, and Emmitt Smith, respectively -- although that certainly helped. And it wasn't just that they were able to bring home world championship trophies on a regular basis. It was simply that their organizations and performances were consistently excellent.
Consistent excellence is rare anywhere, but imagine seeing it in your portfolio. Impossible? Not at all. Because that's what carefully chosen dividend-paying stocks can offer.
Be the next investing dynasty
Finding 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 for you is precisely what we do at our Motley Fool Income Investor service.
France Telecom (NYSE:FTE), for example, is up nearly 25% since February 2006 and currently rewards shareholders with a 4.5% yield. Then there's Bank of America (NYSE:BAC), which has returned more than 20% since April on top of a 4.31% yield. And while both stocks happen to be Income Investor recommendations, you didn't have to be a subscriber to learn about them.
Identify new talent
With that last thought in mind, I'd like to introduce you to our new community-intelligence database, Motley Fool CAPS. There, savvy investors help one another identify stocks that can create consistent and substantial growth for any type of investor. In fact, thousands of strategies, plays, and hunches are allowed to vie for supremacy. And, just as in professional sports, the cream inevitably rises to (and stays at) the top.
So what are the best dividend-paying stocks around, according to CAPS? Here are a few dividend picks with five-star ratings, the highest possible in CAPS.
|
Company |
Yield |
|---|---|
|
Mesabi Trust (NYSE:MSB) |
4.9% |
|
Meridian Bioscience (NASDAQ:VIVO) |
2.2% |
|
Deswell Industries (NASDAQ:DSWL) |
5.8% |
|
New Ireland Fund (NYSE:IRL)* |
5.6% |
|
Entertainment Properties Trust (NYSE:EPR) |
4.4% |
*New Ireland Fund is a closed-end fund.
Stake your claim
I encourage you to join CAPS to learn more about why investors are so bullish on these companies, and perhaps to add your own thoughts to the system. I'll get you started with some thoughts about one company here that may be worth checking out: Meridian Bioscience, a manufacturer of diagnostic testing kits for conditions -- such as gastrointestinal, viral, urinary, and respiratory infections -- in which speed and accuracy are critical. Though the 2.2% dividend may seem low, Meridian is still a sub-$1 billion company, and it has doubled its dividend in the past two years.
The diagnostic testing market is a rapidly growing and very exciting segment of the overall health care market, and as these tests continue to increase in speed and accuracy, they are becoming a crucial cog in the health-care machine. Diagnostic testing is allowing doctors to make more accurate diagnoses and make sure patients are put on the right course of treatment from the get-go. Not only does this lead to better patient outcomes, but it is also shaving costs in the increasingly price-sensitive medical field.
The field has been lucrative for Meridian, which has grown revenue and net income at compounded annual rates of 17% and 41%, respectively, over the past two years. In addition to paying dividends, the company has also been working off the little bit of debt that it does have on its balance sheet. The fiscal first quarter that Meridian just released showed net income up 40% year over year, a suggestion that its fast growth is not nearly done. Meridian has a smokin' five stars in CAPS, with just one underperform rating to its 71 outperforms -- so why not mosey on over to CAPS and let the other 21,000 players know that dividend payers can be sexy, too?
And to conclude my extended sports metaphor, allow me to suggest that dividend stocks will help you turn your portfolio into the dependable New York Yankees, rather than the flash-in-the-pan Florida Marlins. And if you hate the Yankees, it's probably because they're so darn good, so darn often.
More interesting income Foolishness:
Yankees fan and Fool contributor Matt Koppenheffer hopes the Yanks can continue (or is that regain?) their legendary excellence, and he has his fingers crossed that the Cowboys never will get back to the top again. He owns shares of Bank of America but of no other company mentioned. The Fool's disclosure policy is always on the winning team.
