With the end of 2019 just around the corner, it's time for investors to take stock of their stock holdings. With the S&P 500 up nicely this year, chances are that your positions are looking quite good. However, it's important to always look at relative returns -- that is, performance versus the market at large and peer investments -- instead of simply absolute returns.
For example, if a stock is up 10% or so, you may not want to pop the champagne, considering that the broader S&P index is up about 23% this year to more than double that figure.
Dividend investors often fall into this trap of thinking their stocks are good simply because they held steady and offered a decent stream of income. But right now, there are a host of stocks offering generous yields north of 3% that also have outperformed the stock market nicely in 2019.
If you're looking at your portfolio and see some laggards that have disappointed, consider these five dividend stocks to buy in December:
-- Carlyle Group (ticker: CG)
-- Leggett & Platt (LEG)
-- Taiwan Semiconductor Manufacturing (TSM)
-- Wyndham Destinations (WYND)
-- PNC Financial Services Group (PNC)
Carlyle Group (CG)
Though a publicly traded stock, Carlyle Group is one of the biggest private equity investment firms, with a long history of expertise and incredibly deep pockets that allow it to make big-time deals and drive big-time returns for clients.
As of Sept. 30, CG boasted some $220 billion in assets under management. Recent projects include supplying financing for the massive Terminal One project at JFK International Airport in New York and the roughly $1 billion buyout of insurance broker Hilb Group.
There has been a lot of discussion in recent years about how private financing deals and pre-IPO investments increasingly generate big returns off public markets. In fact, a recent McKinsey report found private equity portfolios have grown twice as fast as stocks since 2002. Not all investors have the connections or big bank account to tap into a private equity fund directly, but buying shares of Carlyle is a way around that -- and a way to guarantee a steady stream of income for investors from those outsized returns.
Leggett & Platt (LEG)
Far from a household name, Leggett & Platt is a manufacturer of wires used in consumer goods like bedsprings or for industrial applications such as metalizing, where vaporized metal creates that shiny surface on the inside of your potato chip bag. It's not a business that most people would be excited to discuss at a dinner party, but that's not the point.
Like many dividend stocks, LEG is a great investment because it dominates in its specialty business and can provide reliable returns. Leggett & Platt has increased its dividend at least once annually in each of the last 48 years. That consistency along with a recent uptrend in share prices makes it one of the very best dividend payers.
Taiwan Semiconductor Manufacturing Co. (TSM)
Though based in Taiwan, TSM is one of the largest suppliers of semiconductors and has relationships with tech companies and consumer goods manufacturers across the globe. Though it lacks the in-house research and develop cutting-edge chips like Intel Corp. ( INTC) and other flashier semiconductor stocks, what TSM lacks in patented designs it more than makes up for with scale.
TSM supplies all manner of firms, including TV and display manufacturers, automakers and lighting companies. After all, in this high-tech age even your toaster might have a computer chip in it.
A diversified business across geographies and industries smooths out any potential volatility that you can see in chipmakers tied to one device or hardware manufacturer. That leads to consistent and generous dividends that investor can rely on.
Wyndham Destinations (WYND)
Not to be confused with sister company Wyndham Hotels, Wyndham Destinations is the arm of this travel and lodging giant that operates rentals on or around key tourist spots around the world. WYND covers 110 countries and more than 4,300 destinations.
These include posh resorts like Club Wyndham Brasil, fun beach locales like those offered through the Margaritaville Vacation Club and rustic destinations in areas like the Smoky Mountains.
This focus on true destinations instead of roadside stops that serve gummy eggs at the continental breakfast buffet is a key differentiator of WYND versus other hotel stocks that pay dividends. Higher quality means higher margins -- supporting a dividend back to shareholders, in addition to a stock price that continues to outperform thanks to strong consumer spending trends and high occupancy rates.
PNC Financial Services Group (PNC)
Though technically a regional bank, PNC is no mom-and-pop operation subsisting on small business loans and residential mortgages. In fact, the firm is still technically the largest regional player by market capitalization and boasts almost 2,400 branches -- though the pending merger between SunTrust Banks ( STI) and BB&T Corp. ( BBT) will leapfrog that duo ahead if and when the deal comes through.
In fact, it's that deal that is helping create an even bigger tailwind for PNC. It's a well-run and highly profitable outfit, but hints of consolidation among smaller operators could mean a proposal is in the works for PNC. Whether it's the suitor or the one being courted, the bottom line is that getting bigger means this financial stock will be even more secure -- and an even better bet for income investors down the road.
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