What are we looking for?
Opportunities to invest in defensive North American stocks with a track record of maintaining dividends.
The screen
The markets have been chugging along strongly since the beginning of the year, continuing gains since early 2016. Year-to-date, the S&P 500 is up 5.7 per cent and the Dow is up 5.4 per cent. Equities continue to gain as the Federal Reserve continues a low interest rate policy, but they have previously wobbled in response to small interest rate increases in late 2015 and 2016.
It is important investors take a detailed look at their portfolio and see whether it's time to capitalize on some of those gains, and rebalance their portfolio into defensive securities. We screened for equities that have headquarters in North America with a market capitalization of more than $20-billion (U.S.), a dividend yield greater than 5 per cent and a record of increasing their dividend. We excluded companies whose current dividend yield was lower than their five-year average; we are looking for firms that have a solid history of maintaining their payout.
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What did we find?
The screen left us with the five securities, noted below. These companies have a good track record of paying a consistent dividend:
-Energy Transfer Equity LP owns equity interests in diversified energy-related services. It has an annual dividend of 6.1 per cent.
-Plains All American Pipeline LP owns and operates midstream energy infrastructure and provides logistics services for oil and gas producers and refiners. It has an annual dividend yield of 8.4 per cent.
-Enterprise Products Partners LP is a provider of midstream energy services to producers and consumers of natural gas liquids, crude oil, petrochemicals and refined products. It has an annual dividend of 5.8 per cent.
-Las Vegas Sands Corp. is a developer of integrated resorts that feature gambling, retail, convention and exhibition facilities, and other amenities. It has an annual dividend of 5.2 per cent.
-Welltower Inc. invests with seniors housing operators and other health providers to fund real estate and infrastructure. It has an annual dividend yield of 5.2 per cent.
Paul Hoyda, CFA, is a market specialist in the financial and risk division of Thomson Reuters and specializes in governance, risk and compliance.