8 HIGH QUALITY DIVIDEND STOCKS
As markets normalize and investors begin to wade back into the water, traditional forms of investing will come back into the mainstream. Among the strategies to re-emerge will be growth and income oriented investment strategies. Unfortunately, income investors are now confronted with difficult choices. The U.S. treasury market appears increasingly risky as the government runs up massive debts, prints money and subsequent inflationary pressures increase. In addition, corporate bonds have experienced an unprecedented 6 month rally and are no longer as attractive as they were earlier this year when we were confronted with a once in a lifetime buying opportunity. In the equity markets we are confronted with a similar situation. Markets are coming off a massive rally and at current valuations are likely to return average or sub-par returns several years into the future.
As investors search for income I believe dividend paying stocks will play a more and more important role in investor’s portfolios. In addition, portfolio managers are likely to begin diversifying out of higher risk corporate bonds and high beta assets in favor of lower volatility higher yielding assets. One of the obvious beneficiaries of such a theme is high quality dividend paying stocks. I’ve compiled a list of 8 examples below for readers to ponder and research. The goal was to create a list of very high quality high yielding, global names. The criteria were fairly straight forward: high ROE, low debt levels, high current ratio, strong free cash flows, and of course, a respectable dividend yield. The results are below. Thoughts, opinions and additions to the list are encouraged.
How about MCD or WMT?
TPC Reply:
December 15th, 2009 at 9:14 AM
It’s amazing how WMT and MCD were the two strongest stocks throughout the crisis.
I second MCD and WMT. I’d also add PEP, PG, HNZ, ABT, JNJ, and INTC.
What about PM, MO, or VZ? All high yield dividends, strong cash flows and market leaders.
Did someone actually get paid to write that article? I have a much more comprehensive list including BVF, TNH, LO, PMBIF, ATLIF and many many others that paid higher dividends with little debt. I own PMBIF and ATLIF.
TPC Reply:
December 15th, 2009 at 2:19 PM
I find it humorous that someone could come here touting their two favorite pink sheet stocks and one company that is a few years removed from a massive accounting scandal and expect anyone to take them seriously. Do your own due diligence. Comments like these add little value to the site.
Scott Reply:
December 15th, 2009 at 2:54 PM
C’mon TPC, those aren’t pink sheet stocks, they are Toronto-listed stocks. He only gave the pink sheet tickers for the benefit of US buyers. Any pink sheet ticker that ends in “F” usually indicates that it’s a foreign listed stock, not a tiny little unknown company. So both of you guys cut the crap and stop degrading the other. Peter, if you’re gonna share this list, then share WHY you like them. I’m interested in hearing the WHYs, not the ticker symbols.
TPC Reply:
December 15th, 2009 at 3:07 PM
Good catch Scott. I guess I am not up to snuff with my Canadian pipeline companies. If we’re buying these trusts or CANROY’s it’s worth looking at the ETF for diversification (ENY). Some of these companies have unusual tax laws and if anyone remembers a few years back when they got slaughtered at the hint of Canadian tax changes they know the risks all too well.
When I wrote the article I was thinking more along the lines of pure equity plays, not REIT’s or CANROYs or other income oriented funds/stocks/unit trusts, but I stand corrected on the comments towards Peter.
Thanks Scott.
We have been very pleased with CVX over the last 10 years. Good dividends, very nice stock splits, etc.
Right Scott, I have my reasons. Biovail, Terra and Lorillard all have lots of cash, no debt and high yields. You are correct about Pembina Pipeline and Atlantic Energy being Canadian Stocks. Actually Pembina Pipeline is a Canadian Income Fund paying 10% monthly. Atlantic just recently converted from an income fund to a corporation. It also pays 10+%.
Due diligence? I live on the dividends I receive. I don’t have the luxury of choosing investments that pay mediocre dividends. There are many other companies that are better choices than the ones TPC listed. He states the reasons he picked the ones he did. Simple enough, go to the WSJ website and filter out either what you want or what you don’t want and voila!! An article. I’m not impressed either with his article or his response.
TPC Reply:
December 15th, 2009 at 3:54 PM
This isn’t a stock picking contest Peter. I am not looking for validation from readers. I was simply trying to provide an investment theme and perhaps a few options. Do with it what you want (even if that is nothing), but disparaging it because you think a few energy trusts are the end all adds nothing valuable to the site.
Everything on this site is provided free of charge and free of bias. If you’re looking to pick a fight with someone I am sure you can find it elsewhere. If you’re looking for stock picks I believe there are 10 minutes left of Cramer….Thanks for your picks either way. Hopefully someone will find them helpful.
SS Reply:
December 15th, 2009 at 3:59 PM
Sounds like a new reader TPC. Let it go.
I think you are missing the boat on a big dividend stock from the largest virtual bank, NLY. This past year has shown both a large increase in capital gains as well as dividends. As long as the Fed keeps interest rates at 0%, NLY will continue to make excellent gains and continue to raise its dividend. Now the Fed won’t keep interest rates down forever, but for the near future its yield is too high to miss.
TPC Reply:
December 15th, 2009 at 8:52 PM
Good one Michael.
B Reply:
December 16th, 2009 at 2:12 AM
I’m glad someone else mentioned NLY. I read about this one earlier this year but didn’t act out of general loathing for US Financials. Finally bought it this fall after researching it a bit and their business model and expect some good growth still as the Fed is forced to keep rates down. Not a typical financial by any means! Once they raise them, though, look out. Little risk in this one at all other than USD risk for foreign buyers like me. Get out before next summer I think.
HTS is another good pick along similar lines with a lower PE from what I recall.
I have owned pbmif since 05. it has risen about 38% and paid that high dividend canadian trusts are great and even if they convert to corp the div will be about the same
How abour O realty (O) ……an excellent REIT, according to analysts, or Line Energy( Line) ….excellent current dividend, but stability and price of stock needs to be watched closely…
Hello,
What a great post/article.
I agree 100% with “The U.S. treasury market appears increasingly risky as the government runs up massive debts, prints money and subsequent inflationary pressures increase.”
Cheers,
Kirk
How about NLY and MFS
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