This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Blue-Chip Dividend Stocks: Buy Like SVAAX

Stocks in this article: SVAAX

To diversify his portfolio while including the best combination of growth and yield, Peris aims to hold a mix of stocks with different yields. At the high end of the spectrum are stocks that yield 6% to 8% and typically increase the dividend at an annual rate of 2% to 4%. The high-yielding holdings include many telecoms, such as AT&T (T) and Verizon (VZ). At the lower end are stocks that yield 3% to 5% and increase the dividend at a rate of 5% or more. Low-yielding holdings include Procter & Gamble (PG) and Coca-Cola (KO). By holding the diverse collection, Peris aims to maintain a portfolio that yields 5% and has a dividend growth rate of about 5%.

The fund has big stakes in consumer staples and health care. But there are no holdings at all in technology, industrials and basic materials. Many stocks in those sectors pay little or no dividends.

In some instances, the stocks do pay dividends, but the businesses are highly cyclical. Peris worries that such companies could fare poorly in recessions. "Materials and technology companies can be too cyclical and volatile to meet our needs," he says.

To ensure reliable performance, he looks for companies with strong balance sheets and long track records for raising dividends. If Peris spots a stock that seems a bit more appealing than a current holding, he won't necessarily trade. While many portfolio managers trade rapidly to take advantage of temporary price moves, the Federated manager aims to hold strong stocks for years.

Peris only owns companies that are dedicated to using much of their cash for dividends. In his book, he rails against managements that keep cash for empire building instead of paying investors. Peris especially shuns companies that spend heavily on acquisitions or buying back shares. Such strategies often backfire.

He lost interest in Pfizer (PFE) in 2009 when the company cut its dividend to pay for an acquisition.

"Very few large acquisitions succeed," he says. "Big deals produce fees for Wall Street investment bankers, but the mergers don't result in much dividend income for Main Street investors."

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs