The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s had 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 our Motley Fool Income Investor service's mission.
AGL Resources, for example, has beaten the S&P 500 by 30% since March 2004, and is currently rewarding investors with a 6% yield. Or consider Posco
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 120,000-plus members of our CAPS community:
|
Company |
Yield |
CAPS Rating (max 5) |
|---|---|---|
|
ExxonMobil |
2.1% |
**** |
|
Verizon |
5.7% |
**** |
|
Pfizer |
8% |
**** |
|
Toronto-Dominion Bank |
7% |
**** |
|
McDonald's |
3.5% |
**** |
Source: Capital IQ, a division of Standard & Poor's, Yahoo! Finance, and CAPS as of Dec. 4.
Any one of these quality companies would add some dividend excellence to your portfolio, but let's take a closer look at why CAPS members think that McDonald's is worth a hard look.
colonelnelson weighs in
McDonald's name has been bandied about recently as among a group of "recession proof" stocks. Can this be true? Well, the third-quarter results seem to speak for themselves. Despite the tough time that consumers have been having, sales were up about 6%, while earnings per share from continuing operations jumped nearly 27%. The proof will be in the pudding as to whether Mickey D's can keep it up, but there's no shortage of believers on CAPS.
One of CAPS' McDonald's bulls is colonelnelson, who doesn't believe that McDonald's is truly recession proof, but does like the prospects for the stock:
[McDonald's] may not be recession-proof, but it is surely recession resistant. Those that cannot afford to eat out at nicer places are trading down to the dollar menu. [McDonald's] is also, amazingly, managing to capture the tradedown from [Starbucks
(NASDAQ:SBUX) ] to [McDonald's] coffee. Astonishing.Now you can pick up this American monster while it is yielding a near 4% dividend that looks solid as a rock. While the market falls, [McDonald's] should hold relatively steady and provide some of those highly desired green points.
If not onward and upward, at least... stable. OUTPERFORM.
Going forward, McDonald's shouldn't have to do anything out of the ordinary to keep ahead of the game. Though it does have about $10 billion in debt, it has its interest payments very well covered by its operating income. On the operating side, the company won't have to resort to any crazy marketing tactics to attract visitors, since the brand is already synonymous around the world with fast food.
In short, I'm on the same page as colonelnelson -- though few companies are able to fully avoid tough times, McDonald's should benefit from consumers trading down even as they lose some customers who don't want to eat out at all any more. And though the stock may not seem cheap compared to some of the other beaten down stocks out there, the peace of mind that its business offers, along with the 3.5% dividend payout, make it well worth consideration.
Get into the action
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 above while you're there.
Dividend stocks could help you 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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