We investors sure do make things difficult for ourselves. In the pursuit of market-crushing results we either get caught up in a wild guessing game as we try to time the market or seek out lottery-ticket investments sure to make us millionaires overnight -- or at least in the span of a couple of months. We jump onto momentum plays just as they peak and then lock in our losses a week before the stock rebounds. We spend the majority of earnings season clutching bottles of antacids as we pray that our stocks lived up to analysts' estimates. It's enough to make us wonder whether perhaps we wouldn't be better off keeping our money in a collection of coffee cans buried under the shed.
It's a shame, because it doesn't have to be this way. History has shown time and time again that an easy way to boost your returns is to pack your portfolio with high-quality dividends. They won't make you a millionaire overnight, but if you sign up for an automatic reinvestment plan and give them time, all those tiny checks can grow into seriously large returns.
Take two and call me in 30 years
One stock I want to look at is Johnson & Johnson
Now let's say you bought shares of J&J 30 years ago and did nothing else. Here's how you would have fared with and without reinvesting your dividends.
30-Year Return With Dividend Reinvestment
Return on Shares Without Dividend Reinvestment
Source: Yahoo! Finance.
That's not too shabby considering that it required absolutely no work after the initial purchase. And the truth is, Johnson & Johnson is still a great investment. It pays a generous 3.5% dividend yield, and thanks to a series of recalls over the past year and a half, the stock is trading at an attractive price.
Another reason I like investing in high-quality dividends is that you can find them fairly easily. Lots of companies you know well pay hefty yields and should continue to do so in the future. I have four such stocks on my watchlist.
Philip Morris International
Lastly, even in a lousy housing market, the residential remodeling index continues to rise, which has pushed up Home Depot's
Although I don't believe there are any true "set and forget" stocks, these five companies come as close as you can expect, which is why I consider them all candidates for my portfolio. If I decide to pull the trigger on any of them, I'll be sure to let you know. In the meantime, if you'd like more investing ideas, then you should check out the special report "Secure Your Future With 11 Rock-Solid Dividend Stocks." It's absolutely free, so download it today.
The Motley Fool owns shares of Johnson & Johnson, Intel, Philip Morris International, and PepsiCo, and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson, PepsiCo, Home Depot, Intel, and Philip Morris International, as well as creating diagonal call positions on PepsiCo and Johnson & Johnson and a bull call spread position in Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Fool contributor Patrick Martin shares of Philip Morris International. You can follow him on Twitter, where he goes by @TMFpcmart03. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.