10 Dividend-Paying, High Quality Stocks - Seeking Alpha

10 Dividend-Paying, High Quality Stocks - Seeking Alpha

There are many reasons to invest in dividend-paying stocks. One of reasons is that dividends form the largest portion of the total return on an investment. This is especially true when stocks are held for the long-term. The following chart shows that

the contribution to total return for each of the components of equity returns for the period 1802 to 2002. The total annualized return for the period of 7.9% consisted of a 5% return from dividends, a 1.4% return from inflation, a 0.6% return from rising valuation levels, and a 0.8% return from real growth in dividends.

Click charts to enlarge:

Which sectors have the highest dividend yields?

Source: Alphen Angle, PSG Alphen Asset Manangement

Ten dividend-paying high quality stocks to consider are listed below:

1. Company: Westpac Banking Corp (WBK)
Current Dividend Yield: 6.07%
Sector: Banking
Country: Australia

2. Company: Royal Bank Of Canada (RY)
Current Dividend Yield: 3.48%
Sector: Banking
Country: Canada

3. Company: National Grid PLC (NGG)
Current Dividend Yield: 4.41%
Sector: Electric Utilities
Country: U.K.

4. Company: Nextera Energy Inc (NEE)
Current Dividend Yield: 4.02%
Sector: Electric Utilities
Country: U.S.A.

5. Company: Telecom Italia SpA (TI)
Current Dividend Yield: 4.06
Sector: Telecom
Country: Italy

6. Company: Banco Santander Chile (SAN)
Current Dividend Yield: Banking
Sector: 3.25%
Country: Chile

7. Company: Telefonica SA (TEF)
Current Dividend Yield: 7.17%
Sector: Telecom
Country:Spain

8. Company: RWE AG (RWEOY.PK)
Current Dividend Yield: 6.89%
Sector: Electric Utilities
Country: Germany

9. Company: CPFL Energia SA (CPL)
Current Dividend Yield: 7.28%
Sector: Electric Utilities
Country: Brazil

10. Company: Gdf Suez SA (GDFZY.PK)
Current Dividend Yield: 5.53%
Sector: Gas Utilities
Country: France

Note: Dividend yield noted is as of market close Feb 25, 2011

Disclosure: Long NEE, RY, GDFZY

T. Rowe Price Group Inc. (TROW) Dividend Stock Analysis | Dividends Value

T. Rowe Price Group Inc. (TROW) Dividend Stock Analysis | Dividends Value

T. Rowe Price Group Inc. (TROW) Dividend Stock Analysis

This article originally appeared on The DIV-Net February 21, 2011.

Linked here is a detailed quantitative analysis of T. Rowe Price Group Inc. (TROW). Below are some highlights from the above linked analysis:

Company Description: T. Rowe Price Group Inc. operates one of the largest no-load mutual fund complexes in the United States.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

TROW is trading at a premium to all four valuations above. The stock is trading at a 59.0% premium to its calculated fair value of $44.63. TROW did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

TROW earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. TROW earned a Star for having an acceptable score in at least two of the four Key Metrics measured. Rolling 4-yr Div. > 15% means that dividends grew on average in excess of 15% for each consecutive 4 year period over the last 10 years (2001-2004, 2002-2005, 2003-2006, etc.) I consider this a key metric since dividends will double every 5 years if they grow by 15%. The company has paid a cash dividend to shareholders every year since 1986 and has increased its dividend payments for 24 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

TROW earned a Star in this section for its NPV MMA Diff. of the $1,592. This amount is in excess of the $1,100 target I look for in a stock that has increased dividends as long as TROW has. If TROW grows its dividend at 15.0% per year, it will take 7 years to equal a MMA yielding an estimated 20-year average rate of 3.9%.

Memberships and Peers: TROW is a member of the S&P 500 and a member of the Broad Dividend Achievers™ Index. The company’s peer group includes: Federated Investors(FII) with a 3.5% yield, Eaton Vance (EV) with a 2.1% yield and BlackRock Inc. (BLK) with a 1.9% yield.

Conclusion: TROW did not earn any Stars in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks TROW as a 4 Star-Buy.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $80.81 before TROW’s NPV MMA Differential decreased to the $1,100 minimum that I look for in a stock with 24 years of consecutive dividend increases. At that price the stock would yield 1.53%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,100 NPV MMA Differential, the calculated rate is 13.8%. This dividend growth rate is below the 15.0% used in this analysis, thus providing a margin of safety. TROW has a risk rating of 1.75 which classifies it as a medium risk stock.

TROW is well-positioned as an asset manager with a strong market share and a well-respected brand. It consistently produces net client inflows based on the relative performance of its funds with over 70% of its funds in the top half of their categories on a five-year performance basis. Since its August 30, 2010 low of $43.78, TROW has seen a significant run-up in its price. This has resulted in a depressed yield of 1.75%. The stock’s current valuation is 59% above my calculated fair value of $44.63. For now, I will pass on TROW. For additional information, including the stock’s dividend history, please refer to itsdata page.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock youshould do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I held no position in TROW (0.0% of my Income Portfolio). See a list of all my income holdings here.

Wikio

The 2010 Dividend Aristocrats | Dividends Value

The 2010 Dividend Aristocrats | Dividends Value

The 2010 Dividend Aristocrats

The S&P 500 Dividend Aristocrats is the most prestigious list of dividend stocks. The Dividend Aristocrats index is designed to measure the performance of S&P 500 constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. This index is a member of the S&P Dividend Aristocrats index series.

Dividend Aristocrats constituents exhibit the following characteristics:

• Underlying Indices – S&P 500
• Weighting – Equally weighted; Constituents re-weighted quarterly
• Reconstitution – Reviewed annually in December

Among others, Dividend Aristocrats include these highly recognizable names, with years of consecutive dividend increases shown:

• Clorox Co (CLX) – 32 years
• Coca-Cola Co (KO) – 47 years – [Analysis]
• Exxon (XOM) – 27 years
• Johnson & Johnson (JNJ) – 47 years – [Analysis]
• McDonald’s Corp (MCD) – 33 years – [Analysis]
• Procter & Gamble (PG) – 53 years – [Analysis]
• Wal-Mart Stores (WMT) -35 years – [Analysis]

Members may be deleted during the December rebalance if calendar-year dividends did not increase from the previous year, or intra-year if the stock is removed from the underlying S&P 500.

On December 4th, S&P announced changes to the Dividend Aristocrats Index. Standard & Poor’s will perform the annual reconstitution of the S&P 500 Dividend Aristocrats Index after the close of trading on Friday, December 18, 2009.

The following stocks will be added to the Dividend Aristocrats:

• Brown-Forman Corporation (BF.B)
• Cintas Corp. (CTAS)

The following stocks will be dropped from the Dividend Aristocrats:

• Avery Dennison Corporation (AVY)
• BB&T Corp. (BBT)
• Gannett Co., Inc. (GCI)
• General Electric Co. (GE)
• Johnson Controls Inc. (JCI)
• Legg Mason Inc. (LM)
• M&T Bank Corp. (MTB)
• Pfizer Inc. (PFE)
• State Street Corp. (STT)
• US Bancorp (USB)

As the number of drops vs. adds indicates, the last two years were difficult for dividend stocks, but that is not necessarily a bad thing. During good times it is easy for companies to increase dividends, and many companies were added to the index. It is during times of adversity that we learn who the real aristocrats are

10 Best U.S. Dividend Stocks | Dividends Value

10 Best U.S. Dividend Stocks | Dividends Value

10 Best U.S. Dividend Stocks

In everything we do, we always want to be the best or be associated with the best. You never hear fans yelling, ‘We’re number 2, we’re number 2′, while holding two fingers in the air. The same is true when selectingdividend stocks.

This is an article that I started to write several times, but would always stop after getting mired in the details. My natural tendency is make every question an analytical exercise and solve it by modeling and crunching numbers.

This time, I will show some restraint and take a little different approach by relying more on my subjective instincts. To that end, here are my selections for the 10 best U.S. dividend stocks:

10. Automatic Data Processing Inc. (ADP) – Analysis
ADP is one of the world’s largest independent computing services companies, provides a broad range of data processing services. The last slot was the most difficult to fill, due to the number of worthy companies. I considered all the Honorable Mentioned companies listed below and it came down to ADP and GPC. ADP gt the nod due its historic low debt levels and dividend payout.

9. Wal-Mart Stores (WMT) – Analysis
WMT Inc. is the largest retailer in North America. Great management, business plan and execution. It would have ranked higher, but WMT’s dividend yield tends to be lower end of my acceptable range.

8. The Coca-Cola Company (KO) – Analysis
KO is the world’s largest soft drink company. The Coca-Cola name is the world’s most recognizable trademark. For those who see no value in intangibles, try selling carbonated sugar water under another name.

7. McDonald’s Corporation (MCD) – Analysis
MCD is the largest fast-food restaurant company in the world. This company has grown its dividends at an incredible rate. Unfortunately, that is likely to slow, but MCD’s international presence will benefit to its shareholders in the future.

6. Abbott Laboratories (ABT) – Analysis
Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a diversified line of healthcare products. Not the biggest or most well known drug company, but the one that arguably has one of the better track records.

5. Emerson Electric Co. (EMR) – Analysis
EMR primarily makes backup power equipment for telecom and Internet providers and users, climate control components, and electric motors. Industrials are not supposed to do well in recessions. Someone forgot to tell EMR. It has endured some bumps in the road, but has held up quite well.

4. SYSCO Corporation (SYY) – Analysis
SYY through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily for foodservice industry in the United States and Canada. This is a company that continues to perform in the face of expert predictions that it won’t.

3. 3M Co. (MMM) – Analysis
MMM is a diversified technology company with a presence in various businesses. This is a company I really like. Problem is so do a lot of other people and institutions. It is a stock you have to watch for the right entry point. I bought in March when the stock was trading in the high 40′s, it is now trading in the low 70′s.

2. The Procter & Gamble Company (PG) – Analysis
PG is focused on providing branded consumer goods products. The Company markets its products in more than 180 countries. Good management capable of adjusting when necessary. Currently working to adjust to new market dynamics of the economic downturn.

1. Johnson & Johnson (JNJ) – Analysis
JNJ engages in the manufacture and sale of various products in the health care field worldwide. This was an easy selection for my top spot. Though not perfect the company has a history of making good decisions and executing on them.

The following companies earned an Honorable Mention:

• Genuine Parts Co. (GPC) – Analysis
• United Technologies Corp. (UTX) – Analysis
• Nucor Corporation (NUE) – Analysis
• PepsiCo, Inc. (PEP) – Analysis

That’s my 10 best U.S. dividend stocks. These are based on what stocks I believe will perform well as income investments over-time. Most are not good buys today, but are ones that I am always watching. Obviously, there is a great deal of subjectivity in a list like this. I would love to see your 10 best dividend stocks (doesn’t have to be U.S.)

Full Disclosure: Long ABT, WMT, KO, MCD, ADP, EMR, SYY, MMM, PG, JNJ, GPC, UTX, NUE, PEP. See a list of all my income holdings here.

Get Ready for This Food Fight (GIS, K, MKC, SJM, SYY)

Get Ready for This Food Fight (GIS, K, MKC, SJM, SYY)

Get Ready for This Food Fight

By Russ Krull | More Articles
February 22, 2011 | Comments (0)

BGSB&G Foods, I

CAPS Rating4/5 Stars

$14.37 $0.48 (3.46%)

+ Watch BGS

on My Watchlist

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

• Click Here Now

Higher food commodity prices are starting to squeeze margins of many food producers. Two food-related companies that should be able to use dominant market share to help push price increases through to customers are Sysco(NYSE: SYY) and McCormick (NYSE: MKC). Let's put 'em in a blender and mix it up.

Companies like General Mills (NYSE: GIS), J.M. Smucker(NYSE: SJM), and Kellogg (NYSE: K) are known for delivering steady performance regardless of the economy. But margins for these stocks, along with those of Sysco and McCormick, have recently gotten squeezed by higher prices.

Strong competition can make it tough to hike prices in order to rebuild margins. That's where Sysco and McCormick shine; unlike most food companies, they have no strong competitors. Sysco's investor fact sheet states that it's the "only major public foodservice distribution company in the U.S." For McCormick, how many can name the next largest spice producer?

Sysco has a five-star (out of five) rating in Motley Fool CAPS, while McCormick has four. The table below compares some other key performance and value measures.

Measure	Sysco	McCormick
Dividend yield	3.7%	2.5%
Payout ratio	39%	38%
Forward P/E	13.9	15.0
Est. EPS growth (next 5 years)	10%	9.6%
Annual dividend growth rate (past 5 years)	10.3%	10.2%

Source: Yahoo! Finance and author's calculation.

Sysco lands some hits with dividend yield and valuation, but there are a few other things to consider.

• Sysco's fleet of 8,800 trucks means it's exposed to fuel cost inflation as well as food costs.
• Sysco's business is focused on the U.S. and Canada, while McCormick generates 28% of its revenue from outside the Americas.
• In the most recent quarter, McCormick managed to increase earnings compared to the year-ago quarter, even though gross margins compressed slightly. Sysco saw both lower gross margins and lower earnings per share compared to a year ago.

In a close call, McCormick gets the decision in this food fight. Both stocks are solid choices for investors looking for growing dividend income. Sysco does look better in some categories, but a more diverse geographic revenue stream, along with better recent performance, give McCormick the edge in this showdown. I own shares of Sysco, and I plan on making the swap once the Fool's disclosure policy waiting period ends.

You can follow any of the stocks mentioned using our free watchlist service, My Watchlist.

• Add McCormick to My Watchlist.
• Add Sysco to My Watchlist