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

5 Dividend Champs to Buy for 2013

BALTIMORE ( Stockpickr) -- Ask an income investor what the most important metric is when investing for income, and the answer is bound to be yield. Yield, the percentage of a stock's share price paid out in dividend income, is a critical number, no doubt: It tells you how much you're going to get paid. But the best dividend stocks aren't always the names with the biggest yields.

In fact, some of the best dividend payers aren't high-yield stocks at all -- they're companies that pay out 1% or 2% a year in dividend income. Don't follow? Allow me to explain.

>>5 Huge Stocks to Trade for Gains

A wise portfolio manager once told me years ago that you should never chase yield; a stock, after all, can far more in a single day than it yields in an entire year. And often, excessively high yields are a warning sign, inicating that a stock's share price has been falling and that its payout is unsustainable.

So instead of chasing yield, we're chasing the dividend champs today.

To fall into the group, a stock has to meet a couple of criteria. First, it's got to pay a growing dividend that's beat inflation over the last few years. Second, its share price has to have managed to keep its head above water over that same time period. While those criteria are pretty loose, only a handful of stocks made the cut.

>>5 Stocks Under $10 Set to Soar

I've said before that we're in a toxic environment for investors. Interest rates are smashed as close to zero as they can get, while the Fed keeps its foot floored on the inflation accelerator pedal. With so many investors willing to take a penalty to jump into the safety of "risk free" assets such as treasuries, these dividend winners offer a much more attractive alternative.

They don't just beat treasuries right now. Dividend payers historically beat all other stocks as well.

Over the last 36 years, dividend stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.
1 of 5

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

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
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
CHH $51.08 0.83%
DRI $63.61 2.18%
HAR $76.60 -0.21%
GRMN $43.01 0.89%
TJX $77.80 2.61%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs