Looking for some income in your portfolio? Even growth-oriented investors can appreciate dividend stocks and the payouts they provide, even if that cash is ultimately earmarked for the purchase of growth stocks.
With bonds still paying next to nothing despite the Federal Reserve’s plans to start ratcheting up interest rates, dividend stocks are the only viable way to drive cash flow at a level that at least keeps pace with inflation.
It’s not a look that should be taken lazily, mind you. Sometimes a dividend yield is high simply because a stock has fallen in anticipation that its dividend will soon be cut.
On the other hand, sometimes a yield is strong because the market proverbially threw the baby out with the bathwater. Even the names that have fallen due to fears of a reduced dividend, however, can sometimes make for worthy speculations.
The situation doesn’t become clear until a particular company is scrutinized. Whatever the case, to help investors get their search for income started, here’s a closer look at the 18 large caps with single-digit P/E multiples and dividend yields over 4 percent.
These are the results...
Despite all of the volatility we've seen in the market this year, from the global sell-off in January and February to the drop in the markets following the Brexit vote, the S&P 500 is up mid to high single digits.
While not all stocks have recovered – plenty of healthcare and financial services stocks are still trading lower than they were at the start of the year – many have rallied.
Several sectors that have traditionally been associated with yield and/or safety – like utilities and consumer defensive – have been bid up in the process.
Searching for yield in this type of environment can be fraught with risks, from price risk to the risk that a firm cannot meet its dividend commitment, which weighs on investors' minds.
It's definitely not easy to find real bargains and higher yielding stocks with low or calculable risks. Attached I've listed my screening results of stocks with a solid risk/reward ratio.
Each of the stocks pay a solid dividend, have shown a great past performance and offering operational upside potential.
These are the stocks...
Dividends and safety are an excellent combination for long-term investors, and safe stocks with high dividends are the best kind of all. Unfortunately, many high-paying stocks are volatile and risky -- the exact opposite of what long-term investors want.
To help you sort through all of your options, four of our contributors would like to tell you about dividend-paying dividend stocks that will let you sleep soundly at night.
My main criteria are the beta ratio. The financial market ratio compares the stock volatility with the broader market. Is the stock more volatile or risky, the ratio exceeds the magic number one.
Attached you will find a couple of stocks with the longest dividend growth history and lowest beta ratios on the market, a value below 0.50. Each of the presented stocks are had half of the market volatility.
These are the highest yielding results in detail...
Dividend Aristocrats are a group of 50 stocks in the S&P 500 Index that have increased their dividend payments for at least 25 consecutive years, a sign of impressive profitability, financial strength, and management's confidence in the business.
The Dividend Aristocrats index is thought to be composed of well known businesses long past their respective growth phases.
One of the top 10 fastest growing Dividend Aristocrats combines both growth and value. AFLAC (AFL) has a 10 year per share growth rate of 8.53%, and a P/E ratio less than 10.
It is rare to find businesses trading for cheap with a long history of dividend increases and strong growth.
It is particularly impressive to see businesses that are ‘in decline’ such as Coca-Cola (KO) and Pepsi (PEP) on the list.
Looking at each of the 50 dividend aristocrats on the list today here are the top 10 dividend stocks that could be the most successful companies over the next decade and beyond. All I've done is to select those stocks with the highest expected earnings growth for the next half decade.
The 20 Dividend Aristocrats with the highest expected 10 year earnings per share growth rates are below. Each of the twenty stocks should grow EPS by more than 10 percent.
These are the results...
The S&P 500 currently trades at 25 times earnings, its highest multiple in seven years.
Meanwhile, low interest rates are causing income investors to buy more dividend yielding stocks instead of bonds -- which has inflated the multiples on many dividend stalwarts to historically high levels.
Johnson & Johnson and General Mills, for example, respectively trade at 23 and 24 times earnings, but their yields are near multi-year lows.
It might seem hard to find any cheap dividend stocks in this frothy market.
However, income investors should note that "mature tech" stocks like Apple (NASDAQ: AAPL), Cisco (NASDAQ: CSCO), and IBM (NYSE: IBM) still offer decent dividends with multiples under 15.
Attached you will find a couple of stocks from the Dividend Aristocrats List with cheap forward P/E's.
Each of the stocks has risen dividends over more than 25 consecutive years and beeing part of the Standard & Poor's Dividend Aristocrats list. In addition, the forward P/E is below 15 which represents an earnings yield of 6.6 percent.
These are the results...
