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? No way! Because that's what carefully chosen dividend-paying stocks can offer.
Build 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.
Sonoco Products (NYSE:SON), for example, is up 72% since June 2004, and it's currently rewarding investors with a 2.4% yield. Then there's Enterprise Products Partners (NYSE:EPD), which has returned 77% since June 2004 on top of a current 5.5% yield. And while both stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.
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. That means whether you're a Buffett-esque value investor or a chart-watching technical trader, you are welcome to strut your stuff. 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:
|
Company |
Yield |
|---|---|
|
Advance America, Cash Advance Centers (NYSE:AEA) |
3.0% |
|
Copano Energy (NASDAQ:CPNO) |
4.1% |
|
China Petroleum & Chemical (NYSE:SNP) |
2.2% |
|
Central Vermont Public Service Company (NYSE:CV) |
3.0% |
|
Petroleo Brasileiro (NYSE:PBR) |
2.9% |
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: Advance America.
As Inside Value subscribers know, lead advisor Philip Durell chooses stocks that he sees as selling below their real, or intrinsic, value -- much the same way that everyone's favorite Omaha native, Warren Buffett, picks his stocks. So the fact that Philip selected Advance America to highlight for his subscribers and the stock offers a 3% dividend made me raise my eyebrows a bit.
At first blush, Advance America is the type of business that many might skip over. The company makes payday cash advances, which usually means short-term loans to lower-income individuals at high interest rates. Some may object to the idea of payday lending, and others have been made skittish by the potential for the government to meddle in the business. In fact, actions by the Federal Deposit Insurance Corp. (FDIC) and a 50% price drop were two of the reasons Philip selected the stock.
The above concerns aside, though, the company has continued to grow revenue, adding 25% in 2006, and it has also been improving pre-tax margins. And while the stock is up 41% since bottoming out in June of 2005, CAPS players still see additional upside. rhythmaning shares:
Advance America provides a glimpse to my investing style -- to buy outcast stocks with potential. When I first bought the stock back in November 2005, the company was plagued with the threat of legislations that would "supposedly" slowly mark the end of payday lending across the US. Fast forward two and [a] half years, and we see that however many legislations there are, payday lending remains an attractive niche -- and banks do not want to take on the risk presented in this space. I remain bullish on Advance America, and see a value of $20 for this solid company.
You can check out more of what others have to say about Advance America, 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.
And looping back around to conclude my (very) 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 CAPS coverage:
Make seven picks on CAPS by April 24 and we'll send you a free copy of The Motley Fool Five-Star Report. Inside, you'll discover how to use CAPS as a research tool, and you will receive a recommended five-star CAPS pick poised to beat the market for the next decade or more -- one that you can easily translate into profits for your real-world portfolio. Click here to get started now!
Yankees fan and Fool contributor Matt Koppenheffer hopes the Yanks can continue (regain?) their legendary excellence, and has his fingers crossed that the Cowboys will never get back to the top again. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is a true investing dynasty.
