Three DividendPaying Stocks To Buy For The Long Run
Post on: 16 Март, 2015 No Comment

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If there were a Mount Rushmore for dividend stocks, the tickers of the S&P 500 Dividend Aristocrats would be etched on the peak’s face.
Each January, Standard & Poor’s compiles its index of aristocrats, stocks that have raised their dividend for at least 25 straight years. The current crop includes 51 companies that represent all 10 market sectors.
Chevron (CVX ), which raised its dividend for a 25th consecutive year in June, figures to join the ranks of aristocrats next year.
Dividends remain a focus among both investors and U.S. companies. For August, cash dividend payments totaled $34 billion, an all-time monthly record, reports Barron’s .
Within the S&P 500 Index, 402 companies currently pay a dividend, the most since December 1999, according Standard & Poor’s.
As a group, the aristocrats suffer from subpar operating momentum and rich valuations, averaging quadrix momentum scores (my proprietary rating system) of 47 and value scores of 49. And concerns about a potential rise in the dividend-taxation rate could be weighing on the shares.
For the year, the aristocrats’ total return of 6% trails the broader S&P 500’s 13% return. But as shown in the tables below, investors seeking dividend growth, attractive yields, and strong operating gains still have some good options among the aristocrats.
Below, I review three recommended dividend aristocrats.
Abbott Laboratories (ABT ) has raised its dividend for 40 consecutive years, with annualized growth of 16% over the past decade. The shares have delivered a 19% total return so far this year in advance of a spin-off expected to occur Jan. 1.
Abbott will retain its nutritionals, medical-device, and generic-drug units (about $22 billion in annual sales), while AbbVie will produce blockbuster rheumatoid-arthritis drug Humira and other branded pharmaceuticals ($18 billion).
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Abbott says the combined dividend of the two companies will at least equal the existing distribution. AbbVie will likely pay the larger dividend, but with overseas markets accounting for a significant portion of operations, the company could incur a tax bill to repatriate profits to cover the distribution. Both companies appear likely to maintain investment-grade balance sheets. Abbott Laboratories is a Dow Theory Forecasts Long-Term Buy.
As Exxon Mobil (XOM ) showed during the recession, when it continued to spend as others cut back, the energy giant is focused on the long haul. The company has spent $99.66 billion on capital projects over the last four years, boosting spending by at least 15% each year.
While cap-ex could keep rising, Exxon also plans to grow the quarterly dividend. The yield of 2.6% still trails several of Exxon’s peers, and XOM hopes to bring that yield in line with the industry. In April, Exxon hiked its dividend 21%, more than twice its annualized growth rate of 9% over the last five years.