5 Set-and-Forget Dividend Stocks

by Jim Woods | January 4, 2014 6:00 am

When it comes to dividend stocks, many investors like to “set and forget” their portfolios and put them on virtual autopilot.

dividend-stocks-ge-jnj-kmi-blk-vz[1]That kind of strategy for dividend stocks isn’t something I advocate, because I’m never comfortable with simply buying and holding and then forgetting about a position. I mean, it just doesn’t sit well with the trader in me.

Still, it’s hard to argue the efficacy of the set-and-forget strategy for dividend stocks, especially if you’ve owned a basket of some of Wall Street’s best-performing stalwart dividend stocks in the past few years.

So far this earnings season, some of Wall Street’s biggest dividend stock bellwethers have reported results for their respective fourth quarters, and what we’ve seen so far is a continuation of the strength in many of these big-name dividend stocks.

Here are five set-and-forget dividend stocks that just gave investors another quarter to kick back, relax, and smile all the way to the bank.

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General Electric (GE)

dividend-stocks-GE-stock[3]Industrial giant and Dow component General Electric (GE[4]) is no stranger to delivering strong earnings, and it did so again on Friday, Jan. 17, with fourth-quarter earnings per share that rose 4.8% year over year to $4.2 billion, or 41 cents per share. Excluding one-time items, GE stock experienced EPS of 53 cents, a metric that was in step with analysts’ expectations.

Although CEO Jeff Immelt said the company, “Saw good conditions in growth markets, strength in the U.S., and a mixed environment in Europe,” GE did fail to meet its own projections that it would improve profit margins in its industrial businesses. Still, there is no question that GE stock is one of the best set-and-forget dividend stocks, especially with a 3.3% dividend yield and upside of nearly 19% over the past 12 months.

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Johnson & Johnson (JNJ)

dividend-stocks-jnj-stock[5]Health care products behemoth Johnson & Johnson (JNJ[6]) is the kind of profit machine every company wished it could be. The company delivered on the earnings front yet again with Tuesday’s stellar quarter that showed revenue rolling in at $18.4 billion — a 6.3% year-over-year increase.

Excluding special items, JNJ earned $3.6 billion, or $1.24 per share, a marked increase from the $3.4 billion, or $1.19 per share, in Q4, 2013. Both top- and bottom-line metrics beat Wall Street expectations.

For JNJ stock, it’s another quarter of outstanding performance, and for investors who like to set and forget their dividend stocks, JNJ stock is about as good as it gets. The company’s annual dividend yield of 2.8%, along with its 12-month price gain of nearly 30%, make JNJ stock a must-own, set-and-forget dividend stock.

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Kinder Morgan (KMI)

dividend-stocks-kmi-stock[7]When it comes to set-and-forget dividend stocks, you don’t want to exclude energy partnerships. The nature and structure of these partnerships make them conducive to income seekers, as their yield is usually outstanding, as is their share price appreciation potential.

One of the best in the business is Kinder Morgan (KMI[8]). The company, which owns Kinder Morgan Energy Partners L.P. (KMP[9]), just reported strong quarterly earnings of 33 cents per share, a penny higher than EPS in the same quarter a year ago. That 33 cent figure, however, did fall short of expectations for EPS of 36 cents.

Still, KMI stock continues to deliver, and as my colleague Aaron Levitt expertly points out, Kinder Morgan’s recent earnings prove KMI is still the best[10]. For income seekers, KMI provided another reason to smile, reporting that cash available to pay dividends[11] surged approximately 21% during 2013 to reach $1.7 billion. That number eclipsed management’s original estimate of just $1.63 billion.

KMI then estimated that its dividends will grow about 8% in 2104 to reach a $1.72 per share. That translates into a yield of nearly 4.7%. Now that is a set-and-forget yield appropriate for any fan of dividend stocks.

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Verizon (VZ)

dividend-stocks-vz-stock[12]Telecom giant Verizon (VZ[13]) has been one of the top dividend stocks for years now, and for good reason. The company continues its magnificent growth, and VZ stock keeps delivering in terms of share price appreciation and dividend yield.

On Tuesday, Verizon reported adjusted Q4 earnings of 66 cents per share, way up from the 38 cents per share in the same quarter a year prior. Analysts were expecting EPS of 65 cents. Revenue in Q4 also impressed, coming in at $31.1 billion, also above expectations.

VZ stock currently pays a dividend yield of 4.4%, a stellar dividend stock payout that’s even more impressive when you factor in the 10% gain in the stock over the past 12 months. If we expand our look at this set-and-forget dividend stock to five years, we get a share price gain of nearly 60%. VZ stock is the kind of stable dividend payer that’s perfectly suited for the set-and-forget type.

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BlackRock185[14]Investment management firm BlackRock (BLK[15]) isn’t the kind of company that comes to mind when you contemplate a list of set-and-forget dividend stocks, but BLK stock should be. The company recently delivered big Q4 profits that rose 22%.

The world’s biggest asset manager reported an adjusted profit of $4.92 per share, well above the $4.33 per share Wall Street anticipated. On the revenue front, BlackRock saw a 9.4% year-over-year rise to $2.8 billion. Those gains came via an increase in management advisory fees, as well as performance fees.

For dividend stock investors, BLK stock also got an increase in its quarterly dividend to $1.93, which translates into a 15% hike in the BLK stock payout. Current yield on BLK stock is 2.4%, and while that’s at the low end of a set-and-forget dividend paying stock, there’s nothing low-end about the capital appreciation potential.

Over the past 12 months, BLK stock is up more than 36% — a substantive gain that has definitely made shareholders in this dividend stock smile. And, with the latest dividend hike by BLK stock, this financial belongs in a well-heeled, set-and-forget portfolio.

As of this writing, Jim Woods was long JNJ.

  1. [Image]: https://investorplace.com/wp-content/uploads/2010/10/piggy-bank.jpg
  2. Compare Brokers: https://investorplace.com/options-trading/broker-center/
  3. [Image]: https://investorplace.com/wp-content/uploads/2011/12/GeneralElectric.jpg
  4. GE: http://studio-5.financialcontent.com/investplace/quote?Symbol=GE
  5. [Image]: https://investorplace.com/wp-content/uploads/2010/08/JohnsonJohnsonLogo-e1282585796958.jpg
  6. JNJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=JNJ
  7. [Image]: https://investorplace.com/wp-content/uploads/2011/07/kinder.gif
  8. KMI: http://studio-5.financialcontent.com/investplace/quote?Symbol=KMI
  9. KMP: http://studio-5.financialcontent.com/investplace/quote?Symbol=KMP
  10. Kinder Morgan’s recent earnings prove KMI is still the best: https://investorplace.com/2014/01/kmi-kmp-epb-kinder-morgan/#.UuAKR_vTmWg
  11. cash available to pay dividends: http://phx.corporate-ir.net/phoenix.zhtml?c=93621&p=irol-newsArticle&ID=1891152&highlight=
  12. [Image]: https://investorplace.com/wp-content/uploads/2010/08/VerizonLogo-e1282588394281.jpg
  13. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  14. [Image]: https://investorplace.com/wp-content/uploads/2012/07/BlackRock185.jpg
  15. BLK: http://studio-5.financialcontent.com/investplace/quote?Symbol=BLK

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