When it comes to buying stocks with yield power, a lot of investment pros like to get a little tricky. By tricky, I mean trying to buy all kinds of exotic high-yield assets such as energy Master Limited Partnerships, real estate investment trusts, private equity partnerships, etc.
Now, I’m not against these securities, as many have proven to be big winners in 2013. What I am against is advisors shunning the tried-and-true, sure-fire dividend stocks that have proven to deliver consistently over the years, both on the yield front and in terms of capital appreciation.
I realize that many old-guard dividend stocks aren’t the sexiest way out there to generate income. But the way I see it, there’s nothing sexier than a reliable quarterly payout that A) you don’t have to worry about coming in, and B) that also offers you the potential for strong share-price appreciation and total return.
With that dual mandate in mind, here are five sure-fire dividend stocks to buy.
Dividend yield: 5.4%
YTD total return: 1%
Dividends paid since 1984
The iconic telecom company has been around a very long time. It has also paid dividends every quarter for decades. In fact, AT&T (T) is one of those stalwart entities with a storied corporate history that continues providing telecom services to each new generation of customers around the world.
The latest high-profit area for AT&T is cellular phone service, but who knows where the possible revenue streams will come from over the next decade or so. One thing for sure is that wherever there’s money to be made in telecom services, AT&T has the fiscal might and management acumen to adapt and overcome to virtually any challenge the future may pose.
Dividend yield: 2.9%
YTD total return: 8%
Dividends paid since 1893
No brand is more ubiquitous around the world than Coca-Cola (KO). The beverage giant can be found even in the far reaches of the third world. And as third-world nations become second-world nations — and second-world nations grow their way into first-world status — we are liable to see the already mammoth Coca-Cola brand become exponentially bigger.
KO stock has been a huge winner over the past decade, with gains continuing to be solid this year. However, the fizz is by no means over, and that means investors could continue tasting these level of returns for years to come.
Dividend yield: 2.6%
YTD total return: 13%
Dividends paid since 1882
Oil is the lifeblood of gargantuan global behemoths, and Exxon Mobil (XOM) provides that oil to our thirsty world. This is one of the most profitable companies in history, and that’s because Exxon has managed to keep the cost of finding, extracting and refining oil into usable petroleum products well below the price at which it can sell those products.
Global demand from burgeoning emerging markets will be the key to Exxon Mobil’s growth in the years to come, and if those years are similar to those of the past, XOM stock will continue fueling investors’ portfolios.
Johnson & Johnson
Dividend yield: 2.9%
YTD total return: 30%
Dividends paid since 1944
More and more of us are approaching our golden years, and this massive demographic shift by the Baby Boom generation means more demand for healthcare products like the kind made by Johnson & Johnson (JNJ). The company’s diverse product lines — everything from oral care to pain relievers to prescription arthritis medications — means that whatever ails the world, Johnson & Johnson is likely to provide a remedy.
I suspect that there will be many more billions of dollars in healthcare products consumed by a growing global population over the next decade, and that means JNJ stock could be just what the doctor ordered for maintaining a healthy income portfolio.
Dividend yield: 3.4%
YTD total return: 8%
Dividends paid since 1976
There’s nothing more iconic in the fast-food world than a Big Mac, fries and a chocolate shake. This tasty, profitable combination is the of restaurant giant McDonald’s (MCD), a company that has made a mission out of providing fast food to more countries than any other restaurant chain in history.
In fact, McDonald’s global growth has really helped fuel the company’s profits over the past decade, and that growth has helped MCD stock supersize its way to huge gains. As citizens across the globe continue to get a taste of McDonald’s, investors will likely continue getting a taste of those huge MCD share price gains.
As of this writing, Jim Woods was long KO and MCD.