Standout Stocks for the Dividend Investor
If you’re looking to protect and grow your nest egg in this uncertain market, your best course of action is to buy stable blue chips without major competitors and with hefty dividend yields.
The durable, easy to use and reliable formula I advise for investors has been my working model for nearly five decades. It also has been the basis for my Intelligence Report “Retirement Compounders” model portfolio since 2003 — and a reason I’ve beat the market seven years in a row.
Some investors attend analyst meetings, pour over quarterly reviews or calculate company earnings projections. But if you’re a conservative investor looking for a bedrock investment with a good dividend, you should focus on my retirement compounders.
Here are five standout dividend stocks you should definitely add to your portfolio:
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#1 – Xcel Energy
Xcel Energy Inc. (NYSE: XEL) is a utility stock, and like many companies in this sector, it has a solid dividend — a yield of about 4.3% at current valuations. But unlike some of its competitors, in the past 12 months Xcel has outperformed the broader market. Specifically, while S&P 500 is up around 9% this year, XEL stock is up almost 12%.
I have recommended Xcel consistently in 2010 because the power of its compounding interest should be a vital part of your portfolio. For this same reason, I think it’s a great buy for December.
The fact that it has paid dividends since 1910 also means that the plump payouts are here to stay — even if 2011 gets a bit rocky.
#2 – Heinz
H.J. Heinz Company (NYSE: HNZ) is one of my favorites stocks — and not just because of its 3.7% dividend yield.
Corporate growth strategies tend to be a lot of vague gibberish, but Heinz is an exception with a shrewd focus on the growth of its core product portfolio. The top 15 Heinz brands generate 70% of the company’s sales. Its ketchup is now the number-one brand in seven of the world’s top-10 ketchup markets.
This focus on core brands has delivered 21 consecutive quarters of organic sales growth at Heinz. In addition, the company has paid dividends since 1911, which makes HNZ stock one tasty addition to your portfolio.
#3 – Westar Energy
Westar Energy, Inc. (NYSE: WR) is another electric utility I like for December.
One of the difficulties in making money from wind-power generation on the Great Plains has been a lack of transmission capabilities for power companies to move wind power from the open plains into the cities where it is in demand. To fix that problem, Prairie Wind Transmission, a joint venture between Westar and Electric Transmission America, is working to build a 345-kv transmission line from windy areas of Kansas to population centers in the region.
The new transmission cables are a great plan for long-term growth. And with a nearly 5% dividend yield and payouts since 1924, Westar has a nice income angle for investors as well.
#4 – Northwest Natural Gas
The 2010 J.D. Power and Associates Gas Utility Residential Customer Study has ranked Northwest Natural Gas (NYSE: NWN) number one in the West among large utilities for customer satisfaction. Even more important than NWN’s top ranking was the fact that it improved its customer satisfaction score by 18 points compared to last year’s.
That’s a good sign for the health of the company. And with a 3.5% dividend yield and payouts since 1952, income investors can also take comfort in this stock’s regular distributions.
#5 – NextEra
NextEra Energy, Inc. (NYSE: NEE), formerly FPL, is continuing its aggressive drive to build, buy and source renewable power generation throughout the United States. NextEra is already North America’s largest solar and wind renewable energy generator. In the third quarter, NextEra was authorized to build a 250-megawatt solar facility in California.
My long-term trend chart shows NextEra is set for a breakout — and with a 3.9% dividend yield, this company’s payouts also give investors a reason to be bullish.