Good dividend paying stocks are everybody's friend
By Dian Vujovich
Everybody is talking dividends these days. I’ve been talking about them for decades.
Once upon a time dividend paying stocks were thought of as appropriate investments for widows and orphans. My thinking has always been if an investment is good enough for anyone in either of those camps, it’s definitely sure good enough for me—and most other investors whether they have a conservative or aggressive bent.
If you’ve haven’t owned a dividend paying stock before, one of the biggest rushes I’ve gotten from them is the thrill of having a dividend check arrive in the mail or show up in my trading account. It sort of feels like getting free money. Since I like money—particularly when I don’t have to break my back working too hard for it—I like dividend paying stocks. Plus, not only are there are a slew of them to select from many have recently raised their dividends.
According to a recent TheStreet.com story: “During the first quarter of 2011, 510 companies increased their dividends, up 27.8% from 399 companies in the year-ago quarter. In fact, of the 7,000 listed companies that divulge dividend information, only 30 lowered their dividend payment during the first quarter of 2011 vs. 48 in first-quarter 2010.”
That same piece mentioned a few companies that have raised their dividend payouts between 15% and 67%. They included Oracle (ORCL_), Newmont Mining (NEM_), Dow Chemical Company (DOW_) and Airgas (ARG_).
Yes, there are risks involved like stock price fluctuations and a change in dividend paying policy to name only a few. But, there are dozens of blue-chip companies that have a long history of paying dividends to their shareholders and never missing a payment. That said, if you’re interested in them, you’ll still have to do your homework.
As for ideas, SeekingAlpha.com recently published a story naming the highest-yielding dividend paying stocks that hedge funds owned as of the end of March. The five most popular then were Eli Lilly (LLY) followed by Verizon (VZ), AT&T (T), Altria Group (MO) and Annaly Capital Management (NLY). The first four had dividend yields in the 5 % area; Annaly’s was nearly 14 %.
Authors of the SeekingAlpha.com story think high yielding dividend paying stocks could perform much better than 10-year Treasuries over the next decade. Whether that happens or not, I’m still a believer in them. As are many mutual fund and hedge fund portfolio managers, widows and orphans and, of course, me.
(Sources for SeekingAlpha’s “30 dividend monsters that hedge funds love the most” at http://tinyurl.com/3fc7w63 .
TheStreet.com, “9 companies with raised dividends upside analysts” at
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