NEW YORK (TheStreet) -- Focusing on dividend-paying stocks is an easy way to enhance your portfolio's performance. If you're already researching companies that are a good fit for your diversification program, chances are you're already making choices between dividend payers and non-payers.
Most companies send payments once per quarter, and every time you receive a payment your total risk is reduced. After a while, if you pick the right ones, you will receive an increase in payment. Hold the stock long enough and each year you could receive 20% or more of your purchase price. That's on top of whatever appreciation there may be also.
If you're after price appreciation, dividend stocks are probably still your best bet. As a general rule, all things being equal, dividend stocks outperform non-payers on average. They're more fun, too, because each payment received is like a gift. Maybe not as caring as a close friend's gift, but I look forward to each payment declaration and payment. If you're not already, I'm sure you will, too.
I've done a lot of the work for you and found three solid stocks that are a combination of strong chart performers and pay a sizable yield, for a winning combination. Take a look and see if they make sense to achieve your investing objectives.
Background: U.S. Bancorp, with $321 billion in assets, is the parent company of U.S. Bank, the fifth-largest commercial bank in the United States. The company operates 3,086 banking offices and 5,086 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services to consumers and businesses.
When the financial crisis was in full swing, U.S. Bancorp didn't turn into a zombie bank needing a bailout from the feds. It's comforting to know the bank isn't making crazy loans with total disregard for risk, even if the "everyone else" is.
Earnings Payout Percentage: 30%
The payout percentage is the amount of profits paid out in the form of dividends. In theory, the higher the percentage the more a dividend is at risk of a cut or elimination. Several factors are at play especially including future earnings estimates. I'm comfortable with a bank, especially U.S. Bancorp, paying 30% and consider it low enough to make the company a candidate for a dividend increase.
The last increase was the March 2012 payment which increased from the previous quarter's amount of 12.5 cents per share to 19.5 cents per share for a yield of 2.3%
The last reported short interest is paltry and without reason to consider it a meaningful influence at only 1.5% of the average trading float.