Of the 500 stocks in the S&P 500 index, 400 pay dividends. So, it’s no wonder the average guy gets lost and buys the wrong stocks for all the wrong reasons when he tries to buy into this segment of the market.
Here’s a time-proven, simple way to get where we all need to be.
A recent MarketWatch article talked about a 40-year-old system of picking dividend stocks that has an incredible long-term track record that not only has beaten the S&P… It has done it with less volatility.
It uses six criteria to keep it in the bluest of the blue chips, and does so at the top of their historical payout range, without buying into those with temporarily high dividends – you know, the ones that cut the dividend right after you buy them.
Here are the criteria…
First, every company has to have raised its dividend for five of the last 12 years.
Second, it must have an S&P rating of A.
Third, it has to have at least five million shares outstanding and a minimum of 80 institutional investors.
It must have paid dividends for all of the last 25 years.
It has to have increased earnings in seven of the last 12 years.
I like this system because it is simple enough for anyone to use. The information is available on virtually every company’s website under the “Investor Relations” tab, or with a quick phone call to the investor relations department.
And it gives you what all of us must have in our retirement portfolio – upside potential and lots of downside protection.
Here’s a list of this system’s current top 10 picks.
- Archer Daniels Midland… 2.4% yield
- CVS Caremark… 1.7% yield
- Cardinal Health… 2.5% yield
- Coca-Cola… 2.7% yield
- ConocoPhillips… 4.3% yield
- Johnson & Johnson…3.3% yield
- McDonald’s… 3.3% yield
- Occidental Petroleum… 2.5% yield
- Reliance Steel… 1.6% yield
- Union Pacific… 2.1% yield
As you can see, no land speed records will be set here. But if you’re thinking about (or already in) retirement, you have to own some dividend payers that give you exactly what these will – upside potential, downside protection and income.