The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s have one crucial element in common: consistent excellence in their organizations and performance. That's a rare accomplishment, but if you think it could never occur in your portfolio, think again. Carefully chosen dividend-paying stocks could be your key to superstar returns.
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. Finding them is the mission of our Motley Fool Income Investor.
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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 110,000-plus members of our CAPS community:
|
Company |
Yield |
CAPS Rating (5 max) |
|---|---|---|
|
Alcoa |
2% |
**** |
|
BP |
5% |
***** |
|
Verizon |
4.9% |
**** |
|
Companhia Siderurgica Nacional |
5.2% |
**** |
|
Sotheby's |
2.5% |
**** |
Source: Capital IQ, Yahoo! Finance, and CAPS.
Any one of these quality companies would add some dividend excellence to your portfolio, but I thought I'd kick off further research with a closer look at Motley Fool Hidden Gems pick Sotheby's.
Sotheby's going once ... going twice ...
In the world of high-end auction houses there are two names -- Sotheby's and Christie's -- and everything else is just noise. If you're an investor looking to own a piece of one of these legendary companies, your choices are even more limited since Christie's is privately owned by French billionaire Francois Pinault's Artemis Group.
Given the incredibly strong position that Sotheby's has in its industry and the growing global wealth that could help drive high-priced auctions, it may seem strange that shares of this iconic auction house can currently be bought for less than nine times trailing earnings per share. However, investors seem to be concerned that the auction houses could be looking at a cyclical downturn as both auction sales and margins stand to take a hit if current economic conditions start pinching the big-money buyers that drive the business.
Of course, if history is any guide at all, investing in Sotheby's when the auction cycle swings downward is a darn good bet. Investors that hopped in at the nadir of Sotheby's decline during the 2003 downturn would be up more than 200% today. The only thing to be wary of is the fact that the company does not have the best dividend record out there. At the end of 1999 it stopped paying a dividend and only resumed in the third quarter of 2006. So if you're looking for a rock-solid dividend payer through thick and thin, Sotheby's may not be it.
Sotheby's isn't quite at five-star status on CAPS, but there are 530 investors who think it will best the S&P index, versus just 27 who think it will lag behind. CAPS All-Star sandvig is one of those bullish investors and gave this pitch for the stock back in November:
Ars longa, vita brevis-Art is long, but life is short. There are not many businesses that have a moat like Sotheby's. If there is an economic downturn, it may affect their business, but I am not sure what drives one to buy or sell a Van Gogh. "Honey, I got a raise. Let's go bid on that $49 million painting that would look nice in the living room." Sotheby's customers are filthy stinking rich. They can ride out the tough times and so can Sotheby's. Over the long haul, they will outperform the market.
Get into the auction
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 listed above.
Dividend stocks could help transform your portfolio from the flash-in-the-pan Florida Marlins into the dependable New York Yankees. And if you hate the Yankees, it's probably because they're so darn good, so darn often.
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