Top 20 Stocks

Below is a list of companies that are currently on my Top 20 Stocks Watchlist.  These are the companies I believe every serious dividend investor should at least consider if not actually own in their income portfolio.  That said, let me offer a word of caution that I have learned: simply because it is a good company does not necessarily mean it is the best time to invest in said particular company.  Entering at the right time, therefore, is sometimes equally as important as selecting the right location.

Currently, I can only monitor several handfuls of companies while maintaining a healthy balance in life; and therefore I have decided to limit the list to my Top 20.  Many of these companies fall directly in line with my Vision Statement, and should therefore be considered 'core holdings' in one's dividend income portfolio, while a few other more 'exciting' ideas should be limited strictly to a smaller supplemental role.

Finally, this list does not contain any stocks I already own; hence the 'watchlist.'  To see a complete list of my current holdings, click here.

         Top 20 Dividend Stocks Watchlist

Rank      Symbol           Company       Yield (as of 10 NOV)
   1       MCD           McDonald's       3.10%
   2       KO           Coca Cola       2.82%
   3       INTC           Intel Corporation       3.47%
   4       KMB           Kimberly Clark       3.97%
   5       CL           Colgate Palmolive       2.63%
   6       GD              General Dynamics              2.88%
   7       AFL           Aflac       3.02%
   8       AEP            American Electric Power        4.80%
   9       COP           ConocoPhillips           3.70%
  10       CLX           Clorox       3.61%
  11       NUE           Nucor Corp       3.74%
  12       HNZ           H.J Heinz       3.62%
  13       KMP           Kinder Morgan Partners       6.25%
  14       GPC           Genuine Parts Company       3.19%
  15       MDT           Medtronic Inc.       2.83%
  16       NLY          Annaly Capital       14.82%
  17       MMP          Magellan Midstream Partners       5.07%
  18       SYY          Sysco Corporation        3.73%
  19       LOW          Lowe's Companies       2.49%
  20       UPS          United Parcel Service       2.91%

Average Yield - 3.9%


What are your thoughts?...On the list as a whole, or on any of the individual companies mentioned?

I look forward to your comments.  Thanks for reading,

DivPartisan

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As mentioned here, this list will be updated once a quarter, or as appropriate.  Disclaimer

18 comments:

  1. I have Colgate and UPS too, you have a few there that warrant some further
    Investigation and some I don't know at all.

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  2. Lowe's (LOW) is really low in dividend yield, if you'll pardon the unintentional pun. What makes this a good bet for dividend investing? Dividend growth takes a loooong time when starting below 2%.

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  3. I do hold several on the list, as I do (too) with your holdings list. Heinz (HNZ) is one I've been looking at closely. Annaly (NLY) scares me! (when too good to be true...) You want a real guess? World Wrestling (WWE) is paying 10%), and while the stock hasn't done very well the past 8 months, dividends have been solid since 2004, frequent large increases. Not sure what's going on there. Probably worth some due diligence.

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  4. Robber Baron,

    I am a little leary of NLY as well, but want to give it a try I think. As for WWE, I will start looking into that. That is crazy, and first i've heard of it.

    For Lowe's, first - nice pun. I like it for a few reasons: it's been growing its dividend for 48 years, with a recent 15% 5yr growth rate. I think their last div increase was around 20%, right? Debt to total capital - near 20%; FCF payout - near 30%. So, all that indicates it should be a stable dividend play. With the housing market, and consumer spending improving, I think it should perform decently. Finally it's part of BRK.A's portfolio, so something must be going right. Your thoughts?

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  5. Great list.

    I am looking strongly at T and KMB right now. I'm a little hesitant right now with T, as I am unable to fairly evaluate how much they overpaid for T-Mobile to take over the U.S. market. Shareholder equity dilution is also a concern. I do like the high entry yield and they aren't going anywhere.

    A lot of those are strong, safe bets. Not sure about the mortgage plays, though. Too much risk for me!

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  6. DivMantra,

    If I didn't have a lot in Consumer Goods, KMB would be my next buy.

    Gotta live a little with those REITs! Keep you on your toes.. :) Keep in touch..

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  7. I actually currently own both the mortgages - NLY and ANH... even with the collapsing housing market and worst-than-expected housing data.. it is still performing as seen in historical data.. I think with the housing market that can only go up and not much further down..

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  8. Bayarea,

    I put a buy in for ANH. What do you think? :)

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  9. Can someone point to to a valuation model that would indicate when good dividend stocks are at a price point that makes sense for purchase?

    Some are flying pretty high at present and probably could be gotten at a more attractive price at some point.

    Thanks for any help.

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  10. Anonymous,

    I agree with you that many are priced pretty high right now (just wrote about that in my article today actually)...But, to answer your question, I use Morningstar and DividendsValue as a starting point to valuate any potential purchases. If you ever would like to discuss specific ideas, just send me an email, and I'd be happy to talk it over with you.

    Wish I could be more help,

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  11. Buy NLY if u must own a mortgage REIT, they have a great management team from all reports, and are easily the best company in that sector, and they have a history of making the right moves when the going gets tough...I own NLY and ANH...the biggest problem is if the FED raises, these stocks are going to tank, at least thats the conventional wisdom...I think a small stake in either company isnt a bad investment in todays market, if u have other stronger, more stable investments to balance them out, just my two cents

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  12. Eagledavey,

    Thanks for the note. I went with ANH this month and will talk about it in depth in my Portfolio Update post around 1 May. I agree though that watching what happens with interest rates is going to be important. I might hold out and ride out the price swings though. We'll see. Keep in touch,

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  13. Beware of KMP and MMP. They are not stocks, they are publicly traded partnerships (PTP), and the money you get is not a dividend, it's a distribution largely of your own money (which is a reduction in basis). You have to wait for a K-1 from the partnership at year-end, and it's a tax pain, as any losses get deferred while any profits (unless offset by previous losses) are taxed currently--and at ordinary income rates to boot.

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  14. If you want something steady-reliable-dull, I recommend KMB. It just kind of keeps on going. I own some, and have positions in MCD, T, and NLY, too. I recommend all four, with the caveat that if you have ANH, don't go into NLY considering your aversion to risk.

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  15. Don't look at WWE now.

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  16. This comment has been removed by a blog administrator.

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  17. I own ANH and like KMP. I also own the mortgage reit AGNC. I have a lot of solid companies in my dividend portfolio so I have taken on some small risk with mortgage reits. I will probably reduce my exposure to reits sometime next year.

    Great list...

    Income Pirate

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  18. I'd like to hear your thoughts on GD vs. RTN. I prefer Raytheon at the moment. Higher dividend, seem to be growing it faster. Thanks

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