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.
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.
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