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Mary953 (59.67)

What is Your Favorite Dividend Paying Stock?

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January 24, 2009 – Comments (25)

The stock market has been bouncier lately than a Mexican jumping bean on hot pavement.  Those Fools who are willing to consider a buy-and-hold strategy still almost always couple it with a specific type of stock;  a well-managed, high-dividend, low-risk blue chip that may take a hit on share price but will still crank out those dividends.  The idea is that if you can afford to hold onto the stock until the share price rebounds, the dividends will provide you with some gain while you wait.  Do you know of a company (or two or three) that fit this profile?  Even if that company sometimes cuts dividends, well - that would be a nifty (nifty?) piece of information to go along with the company name. 

We have experts in a number of different areas in CAPS.  We should be able to come up with a reasonable list.  2008 IRA's can be funded as late as April 15, 2009 and there are some who just like the idea of owning shares of stock.  A couple of months ago, there were articles in TMF naming a number of companies that were  at "bargain basement" prices.  Do you think that they still are, if in fact they ever were?  Step up to the keyboard and make your opinions known.

25 Comments – Post Your Own

#1) On January 24, 2009 at 1:27 PM, Mary953 (59.67) wrote:

Since I only know of one stock that fits this profile, I am going to put it up here right off.  Proctor & Gamble runs a well-managed company with lots of products that have high market shares in their categories, whether the categories are detergent, coffee, razors, paper products, or other equally useful items.  All of their products are the inflation-proof daily necessity type products that will not go by the wayside even in recession/depression.  P&G stock may take a slight hit, but the dividend will keep on trudging along. If I were to recommend a stock to a friend as a buy and forget (assuming that the friend specified that it must be A Stock), my recommendation would be P&G.

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#2) On January 24, 2009 at 2:54 PM, kaskoosek (93.65) wrote:

2.9% yeild is very low

Aren't dividends taxes also. This does not satisfy me.

 

PM yeild = 5.2% which is almost double.

 

I do not care about the payout ratio anyway, so why should I accept being payed less.

 

 

 

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#3) On January 24, 2009 at 3:10 PM, devoish (99.07) wrote:

I'll offer up Pfizer (PFE) for your list. They have increased their div every year since at least 2003, and should do so again this year, although the payout ratio got higher in the most recent quarter.

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#4) On January 24, 2009 at 3:50 PM, Imperial1964 (97.94) wrote:

MO.

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#5) On January 24, 2009 at 3:52 PM, Mary953 (59.67) wrote:

Dividends are taxed.  They come in to the IRS and you on a 1099-DIV.  If you are looking for IRA ideas, you don't really have to consider that for the moment.

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#6) On January 24, 2009 at 3:55 PM, rd80 (98.73) wrote:

MCD - current dividend yield about 3.4%.  Has raised the payout every year since they first started paying a dividend in 1976.

JNJ - A lot of similar characteristics to PG.  Big plus in today's environment is net positive cash on the balance sheet.

Both are S&P 500 Dividend Aristocrats, a list of S&P500 companies that have raised their dividend every year for at least 25 years.  I bought a little of each of them last week.

PFE and PG are also in Dividend Aristocrats.  I suspect PM would also be there, except they haven't established their own track record since Altria split up.

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#7) On January 24, 2009 at 5:22 PM, columbia1 wrote:

Dow Chemical- is paying 11.68% (DOW)

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#8) On January 24, 2009 at 6:39 PM, AndreylikesMTL (97.81) wrote:

 Mechel MTL

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#9) On January 24, 2009 at 7:09 PM, kstarich (30.81) wrote:

I like Southern Copper PCU.

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#10) On January 24, 2009 at 7:12 PM, chk999 (99.98) wrote:

Diageo (DEO) they own a lot of premium liquor brands.

PE ratio is  11 something, divi is around 6% and payout ratio is around 57%. 

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#11) On January 24, 2009 at 7:30 PM, nuf2bdangrus (< 20) wrote:

Stay diversified.

 

PFF if you can get it under 20.  I actually started buying some around 24.  Diversified.  Yes, lots of financials in there.  Preferreds.  BAC, JPM, WFC, C.  I think they will pay.  But I have a VERY short leash on it.

 

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#12) On January 24, 2009 at 7:37 PM, StockSpreadsheet (74.67) wrote:

You might want to look at BPT, (which I own in RL and has been good to me), and MSB.  I also like JNJ.  Other possibilities are TNH, AB, PBT and SBR.  Some of these are trusts with high payout ratios and fluctuating dividends, but their current dividend yields are good.  Those would be my best dividend picks for right now.

Craig

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#13) On January 24, 2009 at 7:52 PM, anchak (99.86) wrote:

Ma'am...Instead of trying to make a pick...let me point to a discussion some of us stinkyfeeters are having on the MF boards

(a) LINK

(b) HERE

These are a little on the adventerous side

2 player profiles run by Todd here at the fool

HighYield and HighYield2

Safer side Plays:

Coincidence! coincidence - I honestly didnt read your first comment but looks like ou made my pick - P&G

The best thing from a Stock screener standpoint would be to look for Very Low Debt companies with decent yield - 4%+ ( S&P is yielding 3%+ now)

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#14) On January 24, 2009 at 8:27 PM, UltraContrarian (31.51) wrote:

A few I like:

Name (Ticker)                           Yield    P/TB    P/CF

AllianceBernstein (AB)                6.8      0.9        4.8

Crane (CR)                                 4.9      1.1        3.9

Consolidated Edison (ED)            5.8      1.2        5.0

Euroseas (ESEA)                       17.8     0.5        1.5

Freeport-McMoRan (FCX)             8.8      0.9        5.0

Harry Winston Diamond (HWD)     5.0     0.4        0.8

Medical Properties Trust (MPW)   15.5    0.5        8.4

MVC Capital (MVC)                      4.6    0.6         3.9

TransMontaigne Partners (TLP)    14.2    0.5         2.3

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#15) On January 25, 2009 at 1:58 AM, gman444 (29.13) wrote:

Let me take the other side of the P&G story--stock is nearly at 15 P/E, 1.33 PEG, so is not really cheap, and has nearly 40 Billion in debt.  To me, this is a lot of risk to take for a 2.8% yield (all numbers per Yahoo Finance).  I like HTGC as a long term hold for high dividend yield. 

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#16) On January 25, 2009 at 2:02 AM, gman444 (29.13) wrote:

Also, I can tell you that yields for MSB will fluctuate wildly from quarter to quarter--I would not expect this to stabilize until steel is in greater demand.

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#17) On January 25, 2009 at 2:32 PM, ajm101 (32.34) wrote:

What about the threat to PG from generics?  Their operating margins are %20 company wide.  KR or WMT are more like 3-6%.   The stores have an incentive to push generics, the consumers have a reason to consume them...

On the positive side, the payout ratio is only 40% and some big inputs (advertising, plastic) have fallen.  I just can't get excited about PG.

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#18) On January 25, 2009 at 3:54 PM, StockSpreadsheet (74.67) wrote:

ajm101,

You can't compare the P/Es of a consumer goods manufacturer with those of a retailer.  They are in different industries.  Most retailers have very slim margins, so if you compare KR, WMT, SWY, Sears Holdings, JC Penny, etc., you would see slim margins amongst almost all of them.

On the other hand, Microsoft's margins are usually up near the 80% or more range and some trusts, (like PBT and MSB), will have profit margins in the 90%+ range.

Therefore, you can't look at the margins of PG, compare them to WMT and then say that PG will face margin compression since their P/E is higher than WMTs.

Your comment about the generics threat is valid, however, the threat will be somewhat minimal.  After all, PG is not a drug company, where generic drugs can be sold for much less than the patented drugs.  PG sells things like toothpaste, shampoo, razors, detergents, baby wipes, etc..  People will buy name brands even in tough times if they feel that they get good value for their money.  After all, do you buy Crest toothpaste, (one of PG's brands), or do you buy some generic no-name toothpaste?  Do you buy Tide detergent and Duracell batteries or some no-name generic brands?

Thus PG could lose some business to generics, but it probably won't be much, and nowhere near the losses that generic drugs can do to a pharmaceutical company like PFE.  Therefore, I think that PG could be a good hold for long-term and that their sales and margins won't suffer too much in this recession.  I might agree with gman444 that it is not the cheapest play around, (which is why I did not list it in my list), but I think it is still a good buy-and-hold stock.

gman444,

I agree that the payouts on MSB could fluctuate wildly due to fluctuating steel demand.  The same is true of BPT and oil demand.  I stated in my pitch that some of the names I listed could have large payout fluctuations.  However, they have very good payouts now and I expect them to get larger when the economy improves and commodity prices increase.  I also agree that the payouts could decrease from here as the current payouts are based on their last quarter and prices for their commodities have fallen since then in most cases.  I do still think they will continue to pay out decent dividends, (as they did through the last recession in 2000 - 2002), and are good candidates for a buy-and-hold strategy for dividend seekers.

Just my two cents.

Craig 

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#19) On January 25, 2009 at 8:15 PM, ajm101 (32.34) wrote:

Spreadsheet - I didn't compare their multiples, and I only noted (not compared) their margins.  My point was that if a retailer can either sell a P&G product for a slim margin (closer to that 5% figure) or their store brand for a higher margin (a haircut to P&G's 20%, say say 10%) obviously they will promote their store brand as much as possible.   All that has to happen is that the consumer's utility of a known brand has to be low enough that the store brand still has a sufficiently better margin than reselling the P&G products after the necessary discount.

Also, consumer preference for brand names is not constant, and is probably (I have no idea, just speculating) moot when money is very tight, like in a severe recession .  People are starting to cut medical care, so of course they'll get the store brand batteries and toothpaste if it's a choice between that and nothing.

I just think the recession resistant nature of PG is possibly overvalued right now by investors looking for safety.

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#20) On January 26, 2009 at 12:07 AM, Mary953 (59.67) wrote:

P&G spends a ton of money on ad campaigns.  In fact, different brand names within the P&G family compete with each other as though they were from different companies altogether.  Advertising works.  The stock is pricey and dull, it will not be exciting to watch.  It just churns away, spitting out dividends year after year.  This is the one that I would recommend to the friend that wants a set and forget kind of stock.

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#21) On January 26, 2009 at 1:41 AM, BigFatBEAR (29.57) wrote:

I like COP and JNJ - both stand a decent chance at beating the market long-term, while steadily increasing div.

BWP is worth a look, with a 9% yield (but be warned - with higher yield comes more risk).

VTI is smart - all the diversified power of an index, and the dividend is likely to grow as well.

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#22) On January 26, 2009 at 2:30 PM, DaretothREdux (48.86) wrote:

devoish,

Pfizer (PFE) just cut their dividend in half...so I would cut them from my list.

DOW is still the one of the best run companies with a super high dividend over 10% and rising as the stock slowly falls. It's not a company that will go away either so probably a good bet on a dividend stock.

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#23) On January 29, 2009 at 10:23 PM, SideShowMel0329 (56.54) wrote:

Gotta go with DOW right now

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#24) On January 29, 2009 at 10:29 PM, Bays (30.87) wrote:

I really like Diamond Offshore (DO)

They pay a special dividend on top of their regular dividend.

They are yeilding around 12% right now.

If you go to yahoo finance.... go to historical prices and check "dividends"

If you think oil will be going up in the next 5 years, DO would be a great investment.  They charge up to $600,000 per day for their rigs.  Also, some of these contracts last up until 2014.

I own this in my RRSP (Canadian)

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#25) On January 29, 2009 at 11:18 PM, Seano67 (37.69) wrote:

I look internationally really for most of my favorite dividend payers. Paying shareholder dividends is generally considered to be an overall part of corporate culture for European companies, and so they put a lot of emphasis on doing that, much moreso than American companies typically do. You will find a lot of very high-yielders across the pond, among them some of the finest companies in the world such as BP,  Diageo PLC, ENI, and TKG (South Africa). All have treated me quite well, and each with that booming dividend. :)

 

And then there's always Nordic American Tanker. A touch more speculative, but I love the company personally. I love how responsibly and how debt-free they're run. That's a difficult feat to accomplish in the shipping/tanker biz, and but these Norwegians manage to do it and do it really, really well....and then there's the dividend, which can only be described as ginormous. Their dividend will fluctuate based upon their earnings, but it hasn't flutuated much, paying over $1 per share per quarter in twelve of the past fourteen quarters, all the way up to as high as $1.88 They paid $1.61 per share in Q4 '08, that following $1.60 per share in Q3. I'm no Einstein, but in my opinion you can't beat that kind of dividend return with a stick. I love this company. If I could marry it- well, it's possible I would.

I'll take the minor pain of a little share dilution when necessary for that kind of payoff. That's only used as a measure of last resort- and at any rate, it's worth it to me in the long run as I've watched the value of this thing grow and grow. 

 

 

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