For value investors seeking bargains, record S&P 500 prices thin out the pool of potential value buys in a hurry. Fortunately, the price you pay today only needs to make sense in the future, not the past. For example, you could have bought shares of Apple (AAPL) for less than $430 just a few days ago; however, if you buy now and Apple climbs above $600 a year later, will you distress that you could have saved $10 if you only pulled the trigger three days earlier? I don't think so.
In 6 Climbing High-Yield Dividend-Paying Stocks a few months ago, I explained that stocks should be grouped into two categories.
Category one is dividend payers, and category two is every other stock. I came to this conclusion rather quickly when I found that, on average, dividend paying stocks perform better than non-dividend paying stocks. Immediately after knowing that category one is the premium selection group, why bother with anything else when there are thousands of companies to select from? There is no reason short of a desire to increase the research required.Since we can't review all the companies in a meaningful way anyway, we need to reduce our selection down quickly. I continue to narrow the selection by eliminating companies with "earnings fatigue," or falling earnings that could reduce the ability of a company to continue paying their dividend. Ideally, I want to focus on companies that have a history of increasing disbursements. Nothing says "I love you" quite like reading a company's announcement that they are raising the dividend. Investors receive a bigger check, and as an added bonus, the announcements are often followed by a sharp pop in share price. It's almost like a two-for-one.
At least once a week I find the dividend payers I like best for longer term holds. My primary objective is to obtain yield, with capital appreciation as a secondary goal. Take a look and see if these stocks fit comfortably in your portfolio.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV