My Three, Very Conservative, Dividend Stocks for 2018

These are not growth stocks but will be steady, very conservative, dividend payers! Quotes: ED, RDS-B, DUK

"The search for yield will remain insatiable"

The search for yield will remain insatiable: Investment strategist

Excerpt:

“The search for yield will remain insatiable,” said Luschini. The growing appetite will allow “investors to step back into some of high dividend paying sectors.” He also thinks investors “can find some pretty plump dividend yields in areas like defensive sectors.” Areas Luschini suggest includes utilities (XLU), telecommunications (IYZ) and consumer staples (XLP).

Comment: See also The Quest for Yield

Dividend Investing for Retirement Income

Dividend Stocks Beat Bonds for Retirement Income 

Excerpt:

Your goal isn’t only to save enough, but also to buy assets that match your future liability—which is your need for retirement income. Traditionally, bonds have been viewed as a pension plan’s surest bet. But with bond yields so low, here is why stocks could prove to be the better choice—even if share prices plunge. ... Mr. Farrell’s suggestion: Buy stocks instead. He isn’t focused on price appreciation, which is always iffy. Instead, he suggests purchasing stocks for their dividends. “If you put together a portfolio of good blue chips, you might start with a yield of 3%,” he says. “You have to train your brain to ignore the price movement. You want to focus on the income production and the growth of that income.” Over the past 50 years, the S&P 500’s dividends have grown an average 5.7% a year, somewhat ahead of the average 4.1% inflation rate. If we continue to see that sort of 1.6 percentage-point gap, retirees who have a big enough portfolio to live solely off dividends would potentially be in great shape, because they would be collecting a stream of income that is rising faster than inflation.

Comment: My strategy is just this! An example is Glaxo Smith Kline (GSK). Our portfolio has a 3% dividend yield overall. I am counting on it growing with inflation AND producing a 3% yield. See also Top Dividend Stocks for 2015

Top Dividend Stocks for 2015

Bank of America's 10 Top S&P 500 Stocks to Buy for 2015

10 Best Dividend Stocks to Own in 10 Sectors in 2015 and Beyond

The 10 Top Rated Dividend Stocks for 2015
The list:

• General Motors Company (GM): Comment: Not a GM fan (although I have 2 GM cars). Skeptical. 3.8% yield.
• Wal-Mart Stores (WMT): Comment: Retail powerhouse. 2.3% yield
• Exxon Mobil (XOM): Comment: 3.1% yield
• Unum Group (UNM): Comment: 2% yield. I know almost nothing about this company.
• Pfizer Inc. (PFE): Comment: 3.3% yield
• General Electric (GE): Comment: 3.5% yield
• Intel Corporation (INTC): Comment: 2.5% yield
• Alcoa (AA): Comment: Not profitable in the last quarter. Not on my buy radar
• Verizon Communications (VZ): Comment: 4.8% yield
• NextEra Energy (NEE): Comment: 2.9% yield. Acquisition of Hawaii Electric just announced.
• McDonald's (MCD): Comment: 3.8% yield.
• Aflac (AFL): Comment: 2.6% yield. Got to love the Duck
• Abbott Laboratories (ABT): Comment: 2% yield. High P/E ratio
• W.W. Grainger (GWW): Comment: 1.8% yield. High stock price of $ 244. Ivan in my AFB class works here.
• ADP (ADP): Comment: 2.3% yield. Highish P/E
• Sherwin-Williams (SHW) : Comment: .9% yield. High price of $ 245.
• AT&T (T) : Comment: 5.7% dividend yield. Mom's stock.
• Consolidated Edison (ED): Comment: 4% yield. "the only utility stock in the Dividend Aristocrats Index. The company provides electricity to 3.3 million New Yorkers and gas to another 1.1 million customers. Consolidated Edison has increased its dividend payments for 40 consecutive years"
• Grupo Aeroportuario Sureste (ASR): Comment: 2.7% yield. "Grupo Aeroportuario del Sureste, S.A.B. de C.V. holds concessions to operate, maintain, and develop airports in the southeast region of Mexico."
• Kinder Morgan Energy -LP (KMP): Comment: 4.5% yield
• UIL Holdings Corp (UIL): Comment: 4.1% yield. "UIL Holdings Corporation, through its subsidiaries, operates in the regulated utility businesses. The company operates in the Electric Distribution, Electric Transmission, and Gas Distribution segments."
• Southern Co (SO): Comment: 4.4% yield
• Entergy Corp (ETR): Comment: 4% yield
• Hospitality Properties Trust (HPT): Comment: 6.3% yield: "Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels."
• Reynolds American Inc (RAI): Comment: 4.1% yield: "Reynolds American Inc., through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. The company operates through RJR Tobacco, American Snuff, and Santa Fe segments." (I do not invest in tobacco stocks!)
• Safety Insurance Group Inc (SAFT): Comment: 4.7% yield: "Safety Insurance Group, Inc. provides private passenger automobile insurance products primarily in Massachusetts and New Hampshire."
• LTC Properties Inc (LTC): Comment: 4.8% yield. "LTC Properties, Inc. operates as a health care real estate investment trust (REIT) in the United States."
• Spectra Energy Partners LP (SEP): Comment: 4.4% yield. " Spectra Energy Partners, LP operates as an investment arm of Spectra Energy Corp."

The Quest for Yield

Dividend-Paying Stocks Draw Investors: Utilities and REITs Gain More Than Major Indexes as Search for Yield Continues

Excerpt:

Large investors are snapping up stocks that provide steady income, an endorsement of companies' health but also a sign of apprehension over the U.S. market's five-year bull run. Many stocks that pay out dividends and other types of distributions, such as utilities and real-estate investment trusts, have risen more than major indexes since the start of the year. The rally in these shares has helped power the Dow Jones Industrial Average, which is composed of 30 companies that all pay dividends, to new records. On Thursday, the Dow breached 17000 for the first time ever following a stronger-than-expected reading on the U.S. jobs market. The Dow eased 44.05 points, or 0.3%, to 17024.21 on Monday after being closed Friday for the Independence Day holiday. Year to date through Thursday, the Dow has returned 4.2% to investors when dividends are included in the calculation. The figure for the broader S&P 500 is 8.5%. The 10-year U.S. Treasury note has returned 4.112%, according to Barclays. Investors say they are confident that corporate balance sheets, which took a hit during the financial crisis, are robust enough to sustain dividends in coming months. But they are uncertain whether the outlook for growth is strong enough to support another broad bump up in share prices. At the same time, bond yields have remained stubbornly low and the Federal Reserve has signaled that it is in no rush to raise interest rates, boosting the lure of stocks that offer payouts.

More:

The DJIA sports a dividend yield of 2.29%. That compares with 1.98% for the S&P 500 and a yield of 2.617% on the 10-year Treasury note. Stocks are yielding more now than they did in past market peaks. The S&P 500's dividend yield was 1.83% in October 2007 and 1.05% amid the tech-stock bubble in August 2000, according to S&P Dow Jones Indices. Companies, flush from cash hoarded in the years after the financial crisis, have been well-positioned to reward shareholders in the form of dividends. Last year, S&P 500 companies paid a record $34.99 a share in dividends, up 12% from 2012 and 32% from 2011, according to S&P Dow Jones Indices. In the 12 months that ended June 30, that figure had risen to $37.38. Among stocks in the S&P 500, 423 pay dividends, the most since August 1998, when 424 firms offered payouts.

Comments: The problem is low interest rates. Image source

The Crowded 3% Club

The 3% club is getting crowded: Dividend investors beware

Excerpt:

There is now an extraordinary crowding of big U.S. stocks around the 3% dividend yield level, a threshold that seems to exert a gravitational pull as investors bereft of easy sources of income bid up equities until they yield just a bit more than the 10-year Treasury note. (A stock's yield, calculated as the annual dividend payment divided by price, falls as shares climb.)

But too many investors may implicitly be betting that these bond-like stocks will act like stocks in a low-rate bull market, and like bonds in an equity downturn. It won’t likely work out that way. If the stock market remains strong, these are unlikely to be the areas that continue to thrive. If it hits the skids, such stocks will not offer much of a buffer.

Of the 422 stocks in the Standard & Poor’s 500 that pay any dividend at all, 58 of them now have yields within a narrow band between 3.3% and 2.7%. This roster spans virtually all industry sectors, with the expected over-representation of consumer-staples names but plenty of energy, real estate investment trust, industrial and healthcare entries as well.

Widened out a bit, almost a quarter of dividend-paying stocks in the index yield between 3.5% and 2.5%, including more than half of the members of the Dow Jones Industrial Average. Looking at a handful of stocks yielding almost exactly 3% shows how disparate their business trends and other valuation measures look. ....

Tobacco, personal-care products, utilities and REITs are all among the most richly priced. Rising-rate beneficiaries, in contrast, such as communications equipment, consumer- finance and autos appear inexpensive.

The investing site Magic Diligence, which uses the “Magic Formula” value-investing ideas popularized by hedge-fund pioneer Joel Greenblatt, this week offered interesting views showing that steady-seeming names such as Kraft Foods Group (KRFT) and Kellogg Co. (K) do not truly qualify as value stocks at all, in part because of their aggressive treatment of pension obligations.

Comment: My take is that the market is near the top. Must be cautious about investing.

Dividend ETFs

Dividend-yielding stocks are paying off now

Excerpt:

Dividend stocks have been attracting investors for several years because of low yields on fixed-income instruments. Now their appeal is broadening as investors assume defensive postures, accelerating dividend-paying vehicles into outperformance. Dividend payouts provide a downside price cushion, the theory goes, though of course the threat of dividend cuts could exacerbate any decline. But a repeat of that debacle is unlikely, at least this year. Another characteristic of dividend stocks is that they tend to belong to more mature, more established companies that are big enough to weather temporary turbulence. This latest round of investor concern about the pace and strength of global economic recovery has taken growth and small stocks out of favor.

Comment: Of the above, I like PEY. Holdings

Golden Age of Dividend Investing?

We Are in the ‘Golden Age of Dividends,’ Says Hersh Cohen

Excerpt:

Are we in "the golden age of dividends"?

Hersh Cohen, who has been investing professionally for 45 years, should know - and he says it is indeed the best of times for income-seeking investors, thanks to low dividend taxes and the proven commitment of great American companies to share their cash with shareholders through higher payouts.

Cohen, co-chief investment officer of Legg Mason Inc.’s (LM) ClearBridge Investments and co-manager of ClearBridge Equity Income (SOPAX), says in the attached video: “I’ve never seen anything like the last five months” in terms of the frequency of generous dividend hikes. “Dividends have exploded to the upside.”

Comment: Image source is hybrid. Here with this special effect. Our only non-dividend paying stock is BRK-B which I bought for my wife as a birthday present.

Ford Doubles Dividend - Yield = 2.9%

Ford Doubles Dividend

Excerpt:

Ford (NYSE: F ) announced today that it will increase its quarterly dividend to $0.10 per share, double what it paid out in each quarter of 2012. At the automaker's current share price of $13.80, this news moves the company's annual dividend yield to approximately 3%.

Comment: My only auto stock ( and I don't have much of it!).

Dividend Investing - the Sweet Spot

At Long Last, Could the Dividend Revolution Be Here?
Excerpt:

Dividends are showering down on investors like sugarplums. In 2012, companies in the Standard & Poor's 500-stock index will pay out regular cash dividends of $281 billion, predicts S&P Dow Jones Indices. That is 17% higher than 2011 and 13% above the previous record in 2008—without even counting all the dividends that companies might have paid in January but have shifted into 2012 to give their shareholders a tax break.

This could be just the beginning of a long-term change in the way companies treat cash and their outside shareholders. If it continues, investors will end up vastly better off than they are now.

Until recently, dividends have been in a long decline, replaced in popularity by share repurchases in which companies use excess cash to buy back their own stock. These "buybacks" reduce the number of shares outstanding, proportionately raising the earnings of the remaining shares. Unfortunately, too many companies buy their shares back when the price is inflated and shun buybacks when the stock is cheap—turning a strategy that can make the firm more valuable into one that fritters away shareholders' wealth.

Comment: On stock buy-backs

Excerpt:

... there are two basic reasons for buybacks. First, the company may not have anything better to do with its cash and they view this as having a better potential return than an investment in its own shares. In other words, the board of directors simply thinks a stock is too cheap. The second reason is to increase earnings per share. Fewer shares mean EPS reports look more impressive than they really are.

Image source: The Sweet Spot of Dividend Investing

The green area in the middle is the sweet spot: Initial dividend yields of between about 3% and 9%, combined with dividend growth rates of about 4% to 17%. Those are generally sustainable numbers, and it is where we will find most of the best dividend stocks for long-term investing.

Wells Fargo named a Top 25 Dividend Giant

Why Wells Fargo is a Top 25 Dividend Giant
Excerpt:

Wells Fargo & Co. (NYSE: WFC) has been named as a Top 25 ”Dividend Giant” by ETF Channel, with a whopping $2.1B worth of stock held by ETFs, and above-average ”DividendRank” statistics including a strong 2.56% yield, according to the most recent Dividend Channel ”DividendRank” report. The report noted a strong quarterly dividend history at Wells Fargo & Co., and favorable long-term multi-year growth rates in key fundamental data points.

Comment: I generally look for dividends above 3%. But reliability counts.

Stocks Are the Only Asset Class to Own

Stocks Are the Only Asset Class to Own: Josh Brown
Excerpt:

Equities are attracting investors again after November’s sell-off for one simple reason: "There aren’t any alternatives to stocks," says Josh Brown, vice president of investments at Fusion Analytics and author of the popular “The Reformed Broker."

“Stocks are able to go up on neutral, good and negative earnings because of QE,” Brown notes and he recommends that investors buy shares of companies like Johnson & Johnson (JNJ), one of many blue chips that have bond-like qualities. JNJ’s dividend yield is currently 3.4% versus just 1.83% on the 10-year Treasury.

Comment: Image source. On the St. Paul and Duluth Railroad.

On Dividend Stocks and upcoming tax increases

Whittling Down the Worries Over Likely Dividend Tax Increase
Excerpt:

"I think dividend stocks are not as expensive as some are making them out to be," says Jeremy Schwartz, the Director of Research at WisdomTree, in the attached video. "What is important to do, is to always come back to what the underlying value is for these companies," particularly within the four key dividend paying sectors, including the Staples, Health Care, Utilities and Telecom.

He admits that a lot people are not only afraid of facing higher taxes on their dividends, but they are also worried that the broader markets could get caught up in any retreat. However, he says there are a lot of mitigating factors that will lessen the impact and keep declines in check. "

Not everyone is going to face the [tax] increase," Schwartz says, citing research that shows only half of dividends went to households making more than $250,000 a year, and then a large portion of these people have their yield plays in tax-insensitive or tax-advantaged accounts, such as an IRA or some other form of pension fund.

Comment: My direction is still dividend stocks. Recently bought more KO

Dividend targets

10 Undervalued Dividend-Paying Stocks With Momentum
Excerpt:

1. Seagate Technology (NASDAQ:STX)
2. JPMorgan Chase (NYSE:JPM)
3. Northrup Grumman (NYSE:NOC)
4. General Dynamics (NYSE:GD)
5. Raytheon Co. (NYSE:RTN)
6. PPL Corporation (NYSE:PPL)
7. Lockheed Martin (NYSE:LMT)
8. ConocoPhillips (NYSE:COP)
9. Eaton Corp. (NYSE:ETN)
10. Intel (NASDAQ:INTC)

Comment: My # 2 son works for # 1 on this list.

Dividend investing and the 'Fiscal Cliff'

‘Fiscal cliff’ tax hike won’t kill dividend income

Excerpts:

Unless Congress acts before year-end, dividends received from Jan. 1 onward will be taxed as ordinary income, instead of the current maximum 15% tax. And ordinary-income tax rates are scheduled to return to pre-2003 levels, with a maximum of 39.6% — plus a new 3.8% tax to help cover the Affordable Care Act, for a total of 43.4%. So dividend taxes would nearly triple for some taxpayers. ...

f the era of low dividend taxes ends, dividend stocks should hold their appeal for several reasons.

For starters, what beats stock dividends in today’s yield-hungry climate? Treasury bonds? Bank certificates of deposit?

No way, said Howard Silverblatt, senior index analyst at S&P/Dow Jones Indices LLC, a McGraw-Hill Cos. unit. “Where are you going to put that money?” he asked. “Competitively, I don’t see what’s going to take dividends’ place. On a risk-reward basis, these are still attractive rates.”

The S&P 500 Index yielded 2.25% at the end of August, more than half a percentage point above the 10-year Treasury note. If next year the income from dividends and Treasurys is taxed equally, stocks still keep their edge and offer potential for share-price appreciation.

“Income is very low and hard to come by,” said Daniel Peris, co-manager of Federated Strategic Value Dividend (SVAAX) , which focuses on companies with dividend-growth potential. “A dividend-focused strategy, even on a higher-tax basis, still compares favorably to the alternatives.”

Comment: Fiscal cliff defined (Google it ... there are a lot of articles):

The United States fiscal cliff refers to a predicted significant reduction in the budget deficit and corresponding slowing of the economy if specific laws are allowed to automatically expire or go into effect at the end of 2012.These include tax increases due to the expiration of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the spending reductions ("sequestrations") under the Budget Control Act of 2011.

Final comments: I expect that congress will act after the November elections. Image is Wiley Coyote

Non-Dividend stocks like trading baseball cards

The Top 10 Dividend Quotes

Excerpt:

“I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” –Mark Cuban

Comment: Wally Post was a member of the National League Cincinnati Reds in 1961.

"Earned Any Dividends Lately?"

Dividend Stocks Become the Heroes

Excerpts:

Urging investors toward dividend-paying shares has been an easy sell. This year, the 100 stocks in the Standard & Poor's 500-stock index with the highest dividend yields are up an average of 3.7% before dividend payouts, according to Birinyi Associates. The 100 lowest-yielding stocks are down an average of 10%.

...

Investors hungry for stock-price gains have been barreling into dividend-paying shares, long regarded as "widow-and-orphan stocks" because of their steady but stodgy performance. Some analysts say such stocks are the most "crowded" trade around these days. Investors have been dazzled by dividend yields of more than 4% on many utilities, household-goods manufacturers and telecommunications companies. That is twice as much as recent paltry yields on 10-year Treasurys.

Dividend-stock fans say the unusually strong performance is likely to last as long as volatility driven by Europe's debt crisis and the global economic fits and starts continues to grip financial markets. Stocks that pay steady dividends tend to fall less than others when times are tough.

Comment: We only buy stocks where we know something about the company. We ask ourselves these questions:

• What does this company do? What do they produce (product or service)?
  
• Do we have any experience with the company?
  
• Who are their competitors?
  
• Are they currently paying a dividend? Are they able to afford that dividend (the payout ratio)? Are they likely to continue to earn enough to pay a dividend?
  

Many of the stocks we buy are not exactly exciting: We have stock in Kimberly-Clark. We buy their products: Kleenex and Scott's. We reason that their products are superior (who buys check tissues?!) And it pays a dividend. Other examples are McDonalds, P&G, Heinz. Companies that we have a bad opinion of .... we don't buy (example ... airlines). Every stock except one in our portfolio pays a dividend. The average dividend rate is currently 3.4%

Dividend Stocks: the best place to invest

Fed killing bonds? Buy dividend stocks

Excerpts:

Now is a great time to buy blue chip companies with steady payouts. Forget about Treasury bonds, the dollar, gold or other so-called safe haven bets. Dividends are the place to be.

Ford (F, Fortune 500) just reinstated its quarterly payout after five years without one. The yield will be a respectable 1.8% -- not much lower than the yield on the benchmark 10-year Treasury.

Earlier this year, tech giant Cisco Systems (CSCO, Fortune 500) finally decided to put some of its "caysh" to work and started paying a dividend. It yields 1.3%.

And companies that are dividend stalwarts, such as Dow components Walt Disney (DIS, Fortune 500), General Electric (GE, Fortune 500) and Pfizer (PFE, Fortune 500), have all recently said they are boosting their dividends.

...

So why on Earth would anyone looking for safety in income buy a bond when they could a blue chip company with an even higher yield instead?

"There's a lot of risk in longer-term bonds. Treasuries will only do well if the world comes to an end," said Rex Macey, chief investment officer with Wilmington Trust in Atlanta. "You can't buy a 10-year with the yield at 2% and expect a real return. Quality dividend stocks are bargains compared to Treasuries."

Comment: Of the above mentioned stocks we have F, CSCO (in IRA), GE, and PFE (in IRA). I almost sold F this year. Decided to keep it (we only have 100 shares).

Invest in the S&P High Yield Dividend Aristocrats

SPDR S&P Dividend ETF (SDY)

S&P High Yield Dividend Aristocrats

The S&P High Yield Dividend Aristocrats index is designed to measure the performance of the 60 highest dividend yielding S&P Composite 1500 constituents which have followed a managed dividends policy of consistently increasing dividends every year for at least 25 years.

Comment: 60 stocks in one basket. From link above click "Download All Holdings CSV". Screen shot of partial. Investors can buy 10 shares for about $ 500. See Yahoo Finance Link

Time to Panic? Look a Dividend Yields!

Time to Panic? Just the Opposite

Excerpt:

Another strategy is to focus on dividends—getting paid to wait for the market to recover. The downdraft has caused a lot of robust yields, especially when compared with the 2.44% yield on 10-year Treasurys.

Pfizer, which trades at 8 times forward earnings, is paying a 4.5% dividend yield. Merck, also trading at 8 times forward earnings, boasts a 4.7% dividend yield. Verizon, trading at 15 times forward earnings, is yielding 5.5% and AT&T, trading at 12 times forward earnings, is yielding 5.9%.

Comment: Consider Kimberly Clark.