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Linn Energy, LLC Message Board

  • norrishappy norrishappy Apr 13, 2013 12:50 PM Flag

    Dividend Stocks: Where to Find the Best Performers By MARK HULBERT WSJ

    Very well done piece and I would recommend it for individual investors.

    Another variant of the traditional focus on absolute yield can be found in the S&P High Yield Dividend Aristocrats index. It contains the 50 highest-yielding stocks among the S&P 1500 Composite index that also have a long history of dividend increases. The index's two largest components are Pitney Bowes PBI -0.59% (the mail and document-services company, with a 9.9% yield) and biotech company AbbVie ABBV -0.25% (yielding 3.7%).

    Though the performance of the S&P High Yield Dividend Aristocrats index in recent years has been better than that of the Dogs of the Dow strategy, it still lags behind that of Investment Quality Trends. Over the past five years ended March 31, the SPDR S&P Dividend SDY -0.18% ETF, which is benchmarked to the index, has produced an annual dividend-adjusted return of 9.2%—nearly two percentage points a year lower than the portfolio of Mr. Wright's 10 most attractive dividend stocks.

    Note carefully that this Wright portfolio currently holds none of the stocks that are at the top of the holdings list for either the Dogs of the Dow or the S&P Dividend Aristocrats. In addition to CVS Caremark, the following nine stocks are in Mr. Wright's portfolio: Air Products & Chemicals APD -0.36% (yielding 3.3%), Archer Daniels Midland ADM -1.03% (2.3%), Coca-Cola KO -0.24% (2.7%), ConocoPhillips COP -1.33% (4.5%), Occidental Petroleum OXY -0.96% (3.1%), PepsiCo PEP +0.04% (2.7%), Reliance Steel & Aluminum RS -1.60% (1.8%), Texas Instruments TXN +0.45% (3.1%) and Walgreen WAG +0.21% (2.3%).

    The average yield of all 10 stocks is 2.7%, versus 2.1% for the S&P 500 as a whole. And, even better, if Mr. Wright is right: These 10 have the potential to outperform the S&P 500 on a price-appreciation basis as well.

    I like his picks very much. The defensive drug, food and telecom are not absurdly but richly valued. KO and PEP are up there to. Good Fortune all.

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