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

Dividend Stocks Will Be Winners for a Whole Decade

Find Potential Payers

Figuring out which companies may pay dividends is a daunting task for any investor. Think about Apple (AAPL), which has a massive cash hoard yet does not reward its shareholders with a dividend.

Still, Wells Fargo says as third opportunity for investors on the hunt for yield emerges with lower-than-average payout ratios and high free cash flow growth. The case is made stronger by the massive amount of cash on balance sheets (around $2 trillion) and a slowing but stable growth environment.

Adams says that this combination points to three sectors of the market, all of which are rated "overweight" by Wells Fargo's equity strategy team. They are consumer discretionary, technology and health care, all of which have below average but increasing payout ratios.

Adams notes that both consumer discretionary and technology companies have recorded among the fastest growth in free cash flow among sector over the last three years. Meanwhile, both health care and technology have the largest amount of cash sitting on balance sheets, Adams notes.

It hasn't been easy for health care investors this year. After ending 2011 as one of the best performing of the S&P 500's 10 sectors, health care is up only 3% this year, well below the rise of the overall market. Technology and consumer discretionary, meanwhile, have outperformed the broader market this year after lagging last year.

So how to the other sectors measure up for Wells Fargo? Industrials, consumer staples and utilities are rated "marketweight," while energy, materials, financials and telecom are rated "underweight."

-- Written by Robert Holmes in Boston.

>To contact the writer of this article, click here: Robert Holmes.

Readers Also Like:

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
4 of 4

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
LLY $73.74 0.00%
MRK $49.16 0.00%
PBI $16.66 0.00%
T $36.65 0.00%
WYNN $58.45 0.00%


Chart of I:DJI
DOW 16,014.38 -12.67 -0.08%
S&P 500 1,852.21 -1.23 -0.07%
NASDAQ 4,268.7630 -14.99 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs