This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

5 'Dividend Opportunity' Stocks for 2012

NEW YORK ( TheStreet) -- In general, stocks paying healthy dividends outperformed in 2011, so it stands to reason that it's too late to join the party now, right?

Not so, according to Oppenheimer & Co., which says that skepticism about the continued pursuit of dividend strategies is misplaced.

"Conventional wisdom would suggest that the focus on dividends has become a crowded trade given all the attention this strategy has garnered lately," wrote Brian Belski, the firm's chief investment strategist, in market commentary released earlier this month. "As it turns out, the data suggest the opposite. Income-oriented U.S. equity funds have exhibited net outflows for much of the past year and these funds have represented an increasingly smaller portion of total U.S. equity funds based on net assets over the past few years."

Belski also said the idea that dividend payers are most relevant in weak or volatile markets doesn't hold up to scrutiny.

"According to our work, this is simply not the case," Belski said. "In fact, dividend strategies have consistently outperformed the overall market and have typically maintained the outperformance in 'strong' market environments."

FactSet Research recently offered up some data for the past 10 years that backs up this point.

"Stocks with a dividend yield in the first and second quintiles of the S&P 500 dividend paying-universe outperformed the S&P 500 by 322% and 96% respectively on a cumulative basis," the firm said. "The remaining three quintiles underperformed the index."

Deutsche Bank makes the point that dividend growth is more compelling than a gaudy yield when it comes to overall stock returns.

"High dividend yield stocks with no growth are essentially bonds and have weaker returns," the firm said on Jan. 17. "Historically, there is strong correlation (71%) between growth in the dividend payout ratio and the multiple, which helps explain why dividend growers outperform -- they get a bump in P/E and higher future dividends."

1 of 7

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SYM TRADE IT LAST %CHG
HCBK $10.24 0.00%
MDT $76.61 0.00%
MMM $162.59 0.00%
SPY $205.21 -0.03%
UTX $116.04 0.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

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