Why Wouldn’t You Add These Stocks to Your Portfolio?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With the general market continuing to be volatile and the presidential election right around the corner, investors, including myself, are understandably uncertain about where to put our hard-earned investment capital. Savings accounts, certificates of deposits (“CD’s”), money markets, and treasury bills yield next to nothing; that leaves us wondering where we can get even a reasonable nominal return, let alone find any hope of exceeding the rate of inflation? Looking deeper at high quality, stable dividend-paying stocks seems to be the best option, as the average company in the S&P 500 is yielding approximately 1.9%, which is considerably higher than any of the other options listed above. The following are well-known, stable companies that should continue to churn out not only attractive dividends, but capital appreciation over the long-term as the general market (aka “Mr Market” as Professor Benjamin Graham eloquently named it) catches on to these companies' attractive prospects.
Dow component and consumer goods giant Procter & Gamble (NYSE: PG) is a company I personally own and is well-known worldwide for a variety of products including, but not limited to, Crest toothpaste, Gillette razor blades, and Pampers diapers. Even amidst the current bleak economic times, the so-called “BRIC” countries continue to raise millions out of poverty and into the middle class; this means millions of more consumers that will look to companies such as PG to meet their needs. Over the past twelve months the company has brought in over $83.5 billion in revenue, thanks to economies of scale and negotiating leverage over suppliers and retailers.
Moreover, P&G has the necessary infrastructure and supply chain management in place to ensure that their customers’ needs are met more effectively than pretty much the rest of the competition. Add in the fact that the company has consistently raised its dividend for an impressive 56 years and currently still sports an attractive 3.3% dividend yield, and I believe that the stock will serve long-term investors well.
If looking to diversify, fellow consumer goods giant Kimberly-Clark (NYSE: KMB) is an adequate stock. The company is no slouch as well, generating over $21 billion in revenue the past twelve months while sporting well-known brands such as Kleenex tissues and Huggies diapers. The company also delivers a nice 3.5% dividend yield and has a great track record, like Procter, of rewarding shareholders through dividend hikes, making it a high quality holding as well.
Diversified machinery conglomerate Dover (NYSE: DOV) generated over $8 billion in revenue and nearly $850 million in net income the past twelve months. Perhaps more impressive, this past quarter Dover raised its dividend for an incredible 57th consecutive year and now currently yields a very respectable 2.5%. Moreover, with just a current 27% dividend payout ratio, investors should feel confident that the dividend is not only secure, but should be raised in the foreseeable future.
If looking to diversify with another high quality equipment company, Eaton (NYSE: ETN) may fit the bill. The company churned over $16 billion in revenue and $1.4 billion in net income the past twelve months, while scoring an impressive return on equity near 18% over the same period of time. The stock yields a very nice 3.4% dividend, and with just a 35% payout ratio, investors should feel assured that the dividend is safe and nice potential to be raised in the near future.
I’d also like to say I appreciate you reading my thoughts and reiterate that these are just the views of the blogger and should not serve as a substitute for any professional financial advice or counsel in general. Respectful comments and questions are always welcome below on the comment board.
Wiseinvestors owns shares of The Procter & Gamble Company. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Kimberly-Clark and The Procter & Gamble Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.