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 service.
Southern Company (NYSE:SO), for example, has returned 27% since November 2003, and it currently is rewarding investors with a 5.3% yield. Or consider H.J. Heinz, which has returned 21% since August 2004, atop a current 4.2% yield. While these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.
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 115,000-plus members of our CAPS community:
|
Company |
Yield | |
|---|---|---|
|
US Bancorp (NYSE:USB) |
5.9% |
**** |
|
Philip Morris International (NYSE:PM) |
5.5% |
***** |
|
Nucor (NYSE:NUE) |
4.6% |
***** |
|
Sherwin-Williams (NYSE:SHW) |
2.7% |
**** |
|
Royal Bank of Canada (NYSE:RY) |
5.5% |
**** |
Source: Capital IQ a division of Standard & Poor's, Yahoo! Finance, and CAPS, as of Oct. 9.
Any one of these quality companies would add dividend excellence to your portfolio, but let's dig into why CAPS members think that US Bancorp is worth a hard look.
No geese here
More than 1,600 CAPS members have logged their opinion on US Bancorp, with more than 1,500 of them giving the stock a thumbs-up. Among this bullish group is CAPS member CAPSnGAIN:
Provided the bailout pkg doesn't stop the natural market delevering process, USB should in my opinion gain business and grow even stronger.
Did anyone notice that these banks that have Buffett as a shareholder seem to have sidestepped the biggest messes in CDS, sub-prime, etc.? It takes a lot of guts to be an executive that holds their company to disciplined practices, when most of their competitors were goosing earnings with more risky business operations!
Not everyone has such a high opinion. Just days after CAPSnGAIN weighed in, OptionsWild came in with a bearish take on the stock, suggesting that USB would face much the same fate as the other U.S. banks -- namely big losses on their loan portfolios In fact, OptionsWild concluded that the stock is worth $20 -- about 30% below today's share price.
Though there's no doubt whatsoever that the banking and finance sector is in utter disarray, I tend to agree with CAPSnGAIN on this one. As he rightly noted, USB -- as opposed to UBS -- avoided much of the shenanigans that landed the rest of the sector in the financial equivalent of Guantanamo Bay. Sure, the bank isn't very exciting. It doesn't have the proprietary trading operations of Goldman Sachs (NYSE:GS) or the bond trading desks that the bank formerly known as Lehman had. But unexciting is exactly what is needed right now, especially in the realm of financials.
My expectation is that USB is going to face some of the same headwinds that many of the other banks are facing, but to a much lesser degree. As long as it continues to be looked on as a bastion of safety, it will likely also find new deposits flocking to it, which is great because that is the best and cheapest source of bank financing. And as for that dividend, it'd be just silly to say that any bank dividend is 100% safe in this environment, but USB's looks to be about as safe as it gets.
Get into the action
You can check out who else has been bullish and bearish 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 more of the 5,400 stocks that the CAPS community has rated.
Dividend stocks could help you transform your portfolio from the flash-in-the-pan Florida Marlins to the dependable New York Yankees. And if you hate the Yankees, it's probably because they're so darn good, so darn often.
More CAPS Foolishness:
In the coming weeks, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. The service, which just launched, will rely heavily on proprietary CAPS "community intelligence" data to establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
