In recessions past, economies have taken a V-shaped path toward recovery, where the GDP bounces back at a rate of somewhere between 6% and 14% growth. But this time around, the economy lacks the spring in its step of comebacks past, as we tread water at a projected 3% GDP growth rate in 2011.
With unemployment expected to remain sluggish indefinitely, MFS investment officer and portfolio manager Erik Weisman predicts a "paradigm shift," bringing dramatic fluctuations from inflation to deflation, and even a possible return to the gold standard. And as a result, the stock market will continue toward becoming entirely unlinked from the GDP.
Which means that it may be more difficult than ever to know what to expect from one day to the next on the Street. So more and more, investors may want to start thinking long-term when it comes to their portfolios, sitting on their holdings, and letting time smooth out the volatility.
In this mercurial moment, high paying dividend paying stocks may become increasingly attractive to those that are willing to wait.
For one, there's compound interest, where interest itself keeps earning interest -- the gift that keeps on giving. And high dividend payers with a proven performance history at least offer some hope of stability in transitory times. So investors with a long-term view may want to keep the annual Dividend Champions on their radar.
Every year, the DRiP Investing Resource Center compiles a list of the companies that have managed to pay and raise their dividends for 25 consecutive years. Considering all the wild swings the market has seen this past two and a half decades, it's quite an impressive track record, and speaks to the promise of things to come.
Then again, the past can't always predict the future. Many of 2008's "too big to fail" banks raised dividends just months before they collapsed. So while the Dividend Champions offer a good starting point, you'll still have to do your own analysis.
For our own list, we screened the Dividend Champions for the stocks that have been snapped up by insiders over the last two years. The way we see it, company management is likely to know a lot more about the state of their company than we do. So when they start buying up shares, we tend to pay attention. (Click here to access free, interactive tools to analyze these ideas.)
Here's our list of five dividend champions being snapped up by insider executives.
|
Company |
Dividend Yield |
Average Insider Activity Over the Last 2 Years |
|---|---|---|
|
Cincinnati Financial |
4.96% |
Insiders purchased an average of 34,871 shares per year |
|
Coca-Cola |
2.78% |
Insiders purchased an average of 566,059 shares per year |
|
Medtronic |
2.39% |
Insiders purchased an average of 37,884 shares per year |
|
SJW |
2.73% |
Insiders purchased an average of 14,263 shares per year |
|
AT&T |
6.04% |
Insiders purchased an average of 10,099 shares per year |
Insider data sourced from Fidelity. The list has been sorted alphabetically.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
