This Day On The Street
Continue to site
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

Blue-Chip Dividend Stocks: Buy Like 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $118.03 0.00%
FB $105.41 0.00%
GOOG $748.15 0.00%
TSLA $229.64 0.00%
YHOO $33.16 0.00%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs