Editor's note: An earlier version of this article included a company which had recently suspended its dividend. While the screen used looks at trailing dividend yield, we felt that leaving the company in the table would be misleading. The Fool regrets any confusion this might have caused.
Ruth. Jordan. Montana. You don't have to be a sports fan to recognize those names, and there's a very good reason for that. All four of these athletes made magic happen whenever they competed. Even more importantly, when the chips were down, you could still count on these guys to deliver.
In times of economic turmoil, wouldn't it be great to have a performer like that in your portfolio? Well, high-quality dividend payers can be just the kind of day-in and day-out all-star you're looking for.
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. At the same time, they can provide a solid defense against crazy market conditions. Finding them is the mission of our Motley Fool Income Investor service.
Health Care REIT, for example, has beaten the S&P 500 by 56 points since September 2003, and it currently is rewarding investors with a 7.2% yield. Or consider StatoilHydro
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 125,000-plus members of our CAPS community:
|
Company |
Yield |
CAPS Rating (out of 5) |
|---|---|---|
|
Johnson & Johnson |
3.1% |
***** |
|
General Electric |
7.7% |
**** |
|
Texas Instruments |
2.9% |
**** |
|
Titanium Metals |
3.6% |
***** |
Sources: Capital IQ, a division of Standard & Poor's; Yahoo! Finance; and CAPS as of Jan. 8.
If you like what you see, but want more, you can run this screen for yourself with the handy CAPS screener. While these are not formal recommendations, they're a great place to kick off further research and potentially add some dividend excellence to your portfolio. In fact, I'll even kick you off with some thoughts on Titanium Metals.
Does my dividend have a glass jaw?
The last thing we want in a dividend-paying company is the risk that the company will fall off a cliff and have to pull back its dividend. This usually ends up being a double whammy, because not only do you lose your dividend payout, but many of the dividend-loving investors who own the stock will run for the hills, causing the stock price to fall as well.
True dividend lovers aren't likely to find themselves starry-eyed over Titanium Metals. It's not that it's not a good company -- we'll cover that in a minute -- but it has about as much experience paying common dividends as Michael Jordan has playing professional baseball. Timet has only paid a common dividend since 2007, and the company lacks the kind of historical free cash flow production that would make for a reliable dividend payer. Of course, that doesn't mean it couldn't continue to pump out free cash as it has the past couple years, but it does mean that investors need to be a bit more wary.
On the other hand, the stock may have more potential for capital gains than many steady dividend payers. Over the past year, it has plummeted 66% from its high as concerns over demand for titanium (thanks, Boeing
What the bulls say
Timet has long been a favorite on CAPS, garnering a perfect five-star rating pretty consistently over the past two years. Overall, nearly 97% of all CAPS members currently rating the stock call it an outperformer. Back in November, KokueiOTD gave Timet an outperform rating and added an ode to titanium:
Titanium is a very useful metal. It’s strong but light, lustrous and corrosion resistant (oh... shiny). It can be alloyed with a ton of other useful, commonplace metals (iron, aluminum, etc), to produce strong, lightweight alloys. The aircraft industry loves titanium, and with fuel prices being a concern and a long-term global trend of increasing demand for air travel, they will continue to buy new aircraft built using lots of titanium. Titanium is also in high demand for military uses, and many major industries utilize titanium (the automotive industry, industrial industries such as desalination plants, the dental industry, etc).
More recently, pllntooz came to the same conclusion, explaining:
Titanium is in demand. People aren't going to stop flying. Airlines won't make me money, but their suppliers just might :)
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 Bad News Bears to the Dream Team. And really, could you argue with having Michael Jordan, Magic Johnson, and Sir Charles Barkley helping your portfolio chalk up wins?
More CAPS Foolishness:
- 7 Highly Rated Stocks on Sale
- Great Call on BP! What's Next?
- 125,000 Investors Help You Beat the Market
On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool’s own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
