First off, thanks for all the feedback on the dividend piece we posted last week, "The Hunt for Yield: Four Strong Dividend Stocks." While the piece was popular with our viewers, generating an ample number of responses, some users took exception. Perhaps our headline should have been more specific.
Lyman Hammond wrote to say that "Procter & Gamble's (PG) stock has barely increased in the past ten years ... while shares of Buckeye Partners (BPL) have doubled and its dividend is 6.1%." He asks rhetorically, "Which stock would you buy?"
Fair point, Lyman. I love the MLP's (Master Limited Partnerships) like Buckeye, but investors, or unit holders to be more precise, need to be aware of the tax nuances to avoid being surprised.
Patrick Wu sent in a list of higher yielding names in response to what he called "Matt McCormick's rather unremarkable dividend yielding companies."
While it is true that AT&T (T), Eli Lilly (LLY) and Altria (MO) do currently have higher dividend yields, in fairness, McCormick's picks were predicated on total return, consistency and track record -- not yield alone. According to P&G, the company has paid a dividend "for 120 consecutive years since its incorporation in 1890 and has increased its dividend for 54 consecutive years at an annual compound average rate of approximately 9.5%."
I think my favorite note of all came from Al Fisher, who liked the piece but offers this:
"Seniors less concerned growth can enjoy the immediate 6%-9% dividends you get from preferred stocks e.g., 7%'s on JPM-I, GAT and WNA (good to 2022) and 9% HAVNP. And a known return of principal when the stocks are called.
"Oddly enough, the longer the low interest rate environment persists, the more investors discover these stocks and bid them up so that you can get growth to go w/your constant dividend."
Because preferred stocks generally don't trade much, Al says he particularly likes "the unique & giddy pleasure of being the only person in the World who bought the stock that day.'' And we agree Al -- Breakout is all about feeling giddy!
Two closing thoughts on the dividend subject: If you are not just looking for the highest yield but are also looking for long track records, there are currently 42 stocks on the S&P Dividend Aristocrats list that have raised their payouts every year for at least 25 years. Ecolab (ECL), Hormel (HRL) and ironically McCormick (MKC) are the newest aristocrats to join stalwarts like Procter & Gamble and McDonald's (MCD).
And finally, thanks for the feedback! Keep the great ideas coming!
All the best,