Federal Reserve Chairman Ben Bernanke plans to keep interest rates at zero percent for at least the next two years in order to help stimulate the economy and keep a lid on conventional savings yields.
The past few weeks have brought extraordinary daily volatility and huge stock declines some in excess of 35%. The period between July 22nd and August 8th has been among the worst ever on Wall Street. In just eleven trading days, the S&P 500 fell by 17%, as shown in chart below.
Click here to view the full sized PDF.
Source: Securities Research Company (www.srcstockcharts.com)
Calls for a double-dip or another great recession abound.
Following such an historic market selloff and overall global economic environment, what kind of investments are you attracted to? Do you see many significant opportunities?
Not all stocks fell off a cliff in late July and early August. In fact, the companies that manufacture and sell food/beverages, tobacco, prescription drugs and household products held up well. Among them are some of the best dividend-paying companies on the planet.
The top stocks over the last two years have been large-cap, dividend-paying securities with major international operations. With little prospects for growth in the domestic economy and declining expectations for growth in the global economy, including leading indicator Germany, corporate dividends are highly attractive. High dividend-paying stocks should outperform as institutional investors crave positive steady returns.
I screened Securities Research Company’s database of stocks to identify the businesses that keep bringing in cash and paying it out in dividends. These high quality, cash-rich companies have management that has shown commitment to taking care of shareholders. Here are the results for companies with a minimum dividend yield of 2.5%, a minimum 10 year dividend growth rate of 10% and a 10 year positive price growth rate:
Source: Securities Research Company (www.srcstockcharts.com)
Below is the resulting ChartScreen list of over 30 screened companies sorted by dividend yield. The data includes dividend yield, 10 year dividend growth, 10 year price growth and market cap in $millions.
| NAME | TICKER | DY | DG10 | PG10 | MKT CAP ($M) |
|---|---|---|---|---|---|
| CENTURYTLINK INC | CTL | 8.19 | 30.7 | 0.1 | 21776 |
| ENTERGY CORPORATION | ETR | 5.14 | 10.2 | 5.3 | 11502 |
| PPL CORPORATION | PPL | 4.92 | 10.2 | 2.8 | 16437 |
| ROYAL DUTCH SHELL PLC | RDSA | 4.37 | 10.1 | 1.4 | 118215 |
| NUCOR CORP | NUE | 4.06 | 23.9 | 11.4 | 11287 |
| LOCKHEED MARTIN CORP | LMT | 4.05 | 21.2 | 6.4 | 25724 |
| CONOCOPHILLIPS | COP | 3.89 | 14.5 | 9 | 95808 |
| M & T BANK CORPORATION | MTB | 3.64 | 10.8 | 0.6 | 9641 |
| CLOROX CO DEL | CLX | 3.5 | 10.1 | 6.3 | 9151 |
| JOHNSON & JOHNSON | JNJ | 3.46 | 12.2 | 2.3 | 180532 |
| PROCTER & GAMBLE CO | PG | 3.33 | 11.6 | 5.5 | 176103 |
| WISCONSIN ENERGY CORPORATION | WEC | 3.3 | 10 | 10.1 | 7358 |
| EATON CORP | ETN | 3.23 | 11.9 | 8.9 | 14365 |
| AFLAC INC | AFL | 3.22 | 19.6 | 3.1 | 17441 |
| PEPSICO INC | PEP | 3.21 | 13.5 | 3.2 | 101415 |
| HASBRO INC | HAS | 3.18 | 25.9 | 8.1 | 5133 |
| NORTHEAST UTILITIES | NU | 3.17 | 10.6 | 5.9 | 6131 |
| ONEOK INCORPORATED | OKE | 3.16 | 12.9 | 15.9 | 7596 |
| ILLINOIS TOOL WKS INC | ITW | 3.1 | 13 | 4 | 23227 |
| PUBLIC STORAGE | PSA | 3.1 | 15.8 | 14 | 20894 |
| GENERAL DYNAMICS CORP | GD | 2.98 | 12.9 | 4.8 | 23440 |
| MOLSON COORS BREWING CO | TAP | 2.96 | 12.1 | 6.5 | 8095 |
| ENSCO INC | ESV | 2.94 | 30.2 | 10.1 | 10958 |
| AIR PRODUCTS & CHEMICALS INC | APD | 2.86 | 11.8 | 6.7 | 17217 |
| HARRIS CORP DEL | HRS | 2.83 | 25.9 | 10.5 | 5041 |
| WAL MART STORES INC | WMT | 2.74 | 18 | 1 | 184706 |
| LOWES COS INC | LOW | 2.73 | 28.8 | 1 | 26679 |
| SMUCKER J M CO | SJM | 2.71 | 10.6 | 9.7 | 8206 |
| COCA COLA CO | KO | 2.7 | 10.1 | 3.7 | 159630 |
| MCDONALDS CORP | MCD | 2.69 | 27.5 | 11.7 | 94202 |
| UNITED TECHNOLOGIES CORP | UTX | 2.6 | 15.6 | 8 | 67610 |
| NORFOLK SOUTHERN CORP | NSC | 2.59 | 20.9 | 13.6 | 23475 |
| COLGATE PALMOLIVE CO | CL | 2.58 | 13.9 | 5.2 | 43888 |
| WALGREEN CO | WAG | 2.54 | 17.5 | 0.3 | 32462 |
Consider McDonald (MCD), Aflac (AFL), Wal-Mart (WMT) and Pepsico (PEP).
All four of these stocks over the last fifty (50) years have been through 7 recessions, an historical housing boom & bust, world changing terrorist attacks, the worst American financial disaster, $150/barrel Oil, $1900/oz Gold and many global challenges. All four companies have managed a better than 2.5% dividend yield, while achieving a better than 18% dividend growth over the last 10 years.
Aflac, as shown below, has been paying a dividend (red line w/open circles) since 1973 and has raised that dividend every year for 35 years in a row. Its current dividend yield of 3.2% has grown 19.6% per year for the last 10 years (see Growth Performance Measurement table). Over the last year Aflac has continued to grow its earnings by 15% in line with its 25 year performance but its price has not yet kept pace.
Click here to view the full sized PDF.
Source: Securities Research Company (www.srcstockcharts.com)
The chart for Pepsico shows a history of dividend payments since 1961. It pays a dividend of 3.2% while growing it an average of 13.5% over the last 10 years. In addition, PEP has also managed to increase its price by an average of 3% over the last 10 years.
Click here to view the full sized PDF.
Source: Securities Research Company (www.srcstockcharts.com)
The opportunity to buy industry leaders for significantly less than 15 times earnings is here. The companies that pay safe secure dividends and have years of experience managing their businesses will help insulate you from whatever happens next in the market.
Panic and speculation creates attractive opportunities for income investors to buy these stocks at bargain prices. Now is a great time to consider these “dividend androids”.
