Collecting a bigger dividend yield than your neighbours is fun, but add in capital gains and a history of dividend increases, and you have the recipe for a really good portfolio mix.
Think there is no such thing as “investing utopia?” Think again, because I make a habit of seeking out stocks that not only have a history of raising their dividends, but are also profitable and are in a bull trend.
I start by focusing on stocks I already either trade or follow and those with large dividends. I add in a screen for large-yield stocks and add the ones that meet the following criteria:
- A stock must be highly liquid to avoid slippage.
- The company must have a history of increases in dividend payments.
- The company needs to demonstrate a likely ability to continue paying at least the current dividend.
- The chart must be in a bullish uptrend; there is no point in looking for an oversized yield if the shares are expected to drop as much or more in the next year.
How does a dividend investor exploit the following list of bullish high-yielders? This should be your beginning point, not an end-all for your research.
Make sure the company is a match for your investment objectives. Use your current professional knowledge as applicable to garner a market edge when entering or exiting a position. Being an industry insider for any company you’re considering is a big edge compared to other market participants.
52-Week Range: $48.63 to $67.45
Yield: 3.1 per cent
Abbott currently pays $2.04 per share in yearly dividends. Looking back at the three year history of declared dividends, this company has paid on average $1.72 per share each year. Over the last five years, the dividend has witnessed incredible growth, with an average increase of 10.1 per cent per year.
More than half the analysts covering Abbott rate it as a buy or strong buy and they also expect earnings of $5.06 per share this year. At $2.04 a year, the payout ratio is under 50 per cent, and Abbott can be expected to continue the strong performance.
Abbott’s prognosis, based on the stock price chart, looks fantastic. All the key moving averages that I track are moving higher at a steady 45-degree angle. If you’re not fully allocated in this space, I easily recommend researching this big pharma to see if this is the right prescription for your portfolio.
The last reported short interest is very small. Short interest is only 1.1 per cent.
Background: Abbott Laboratories is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health.
Abbott products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Abbott Laboratories trades a recent average of 3.4 million shares per day with a marketcap of $102.8-billion.
52-Week Range: $86.68 to $113.87
Yield: 3.21 per cent
Investors are receiving $3.60 a year in dividends. Over the last five years, the dividend has grown by an average of 9 per cent per year. The payout ratio, based on estimated earnings of more than $12 this year, is very small. It’s not easy to imagine anything short of cold fusion disrupting the flow of profits out of the ground and into your portfolio for the foreseeable future.
Chevron’s chart isn’t the best looking chart in this list. The relative stability of Chevron’s share price makes it clear that even a slow uptrend can have advantages. Last week wasn’t kind to shareholders, but after the previous two months, it appears that normal profit-taking may provide a window of opportunity.
The last reported short interest is tiny. Short interest is 1.1 per cent.
Background: Chevron is the fifth-largest integrated energy company in the world. The company was founded in 1879 and trades a recent average of 4.9 million shares per day with a marketcap of $219.5-billion.
Eli Lilly & Co.
52-Week Range: $34.94 to $44.67
Yield: 4.5 per cent
Investors are receiving $1.96 in dividends for a yield of 4.62 per cent. Reviewing the dividend payment history of a company is essential research. While past payments don’t guarantee future dividends, the history does provided color. Over the last five years, the dividend has grown by an average of 4.1 per cent per year.