Dividends: Take the Money and Run

• Look at the long-term record. Highly profitable, mature companies that have been paying dividends every year for decades aren't likely to stop. Look for dividends that have been gradually increasing.

A list of companies that have increased dividends annually for the past 25 years can be found on www.dividend.com. The list includes many household names: Coca-Cola, Procter & Gamble, Johnson & Johnson, Lowe's, Colgate Palmolive, Hormel Foods, Target and 3M. Such stocks are anything but cheap, but they deliver the goods in dividend checks year-in, year-out.

• Beware stocks that pay outsize dividends in comparison with their peers. Often, when a company's share price suffers, they cut dividends, which hurts the share price more.

• Seeking dividend payers should be a means to an end — getting maximum total investment return — and not end in itself. Some companies pay consistent dividends but may currently have issues that don't bode well for long-term growth in share price. So you could end up getting dividends for a few years but ultimately face a loss.

Remember that investing in dividend-paying stocks is only part of an effective strategy for total investment returns from the stock market.. The other part is to buy stocks with good performance records that appear to have the legs for continued success. By achieving this balance, you can position for continuing dividends and increasing value.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Ted Schwartz, a certified financial planner, is president and chief investment officer of Capstone Investment Financial Group. He advises individual investors and endowments, and serves as the adviser to CIFG UMA accounts. Because Schwartz has a background in psychology and counseling, he brings insights into personal motivation when advising clients on how to achieve their wealth management goals. Schwartz holds a B.A. from Duke University and an M.A. from Oregon State University. He can be reached at ted@capstoneinvest.com.

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