Beef Up Your Returns With Top Dividend Stocks
Dividends have long been an excellent indicator of growth and
fundamental strength, and are one of the oldest ways for a company
to communicate that it is healthy.
Dividend stocks can be found in every sector, but the best way
to take advantage of them is to pick the ones with the strongest
fundamental and quantitative grades in my
. That way, every quarter you get not only the boost in the
company's share price following its outstanding earnings report,
but also the company-paid dividend.
So let's look at 10 high-paying dividend stocks with outstanding
fundamentals that you should consider adding to your portfolio if
you're looking for stocks with a good payoff.
American Capital Agency Corp. (AGNC)
American Capital Agency Corp.
) breaks all the common conceptions of what a dividend stock should
be. Most people expect that dividend stocks are just big companies
that are slow growers and good for little old ladies with a very
low threshold for risk.
One look at AGNC's chart and you'll see that this is far from
the case. This stock moves fast and can swing 14% - in either
direction - in a heartbeat. But the company has excellent
fundamentals, is an A-rated stock and pays a 19.6% dividend. If you
can handle this dividend stock's volatility, I'd consider it for
MFA Financial (MFA)
Mortgage real estate investment trust (REIT)
MFA Financial Inc.
) had an interesting couple of years given the mess in the mortgage
market, but it is clear that it has now emerged as a survivor.
MFA Financial primarily invests in mortgage-backed securities
(MBS) that include hybrid and adjustable-rate MBS. The Federal
Reserve has been a big player in that market, supporting MBS
prices, which has helped companies like MFA make more money. The
REIT distributes at least 90% of its taxable income to its
This great American brand name is very different from the old
) that was broken up by the government in order to increase
competition. The company now competes with its former divisions and
has turned wireless communications into one of the main drivers of
It was the first carrier to offer
) iPhone, which carries higher data carrier fees due to the
increased use of broadband Internet. The dividend is sustainable
with a payout ratio of 50%.
Verizon Communications (VZ)
Verizon Communications Inc.
) has been working extra hard to catch up with AT&T and has
recently also begun to offer iPhone service. Smartphones are likely
to surpass PCs in sales in 2011, and they typically use much more
broadband than regular phones. Phone companies like Verizon see
this as a major avenue for growth and are offering numerous plans
in order to capture that growth.
Verizon also offers TV service and optical Internet, which is
very popular with consumers.
Like most major pharmaceuticals,
) has been keenly involved in the political debate about reforming
So far, major drug companies have not been negatively affected
by health care reform, and with a stable dividend and cash flow,
Pfizer is in position to benefit from the graying of America for
In addition to being a major chemical company,
) is also a major player in fertilizer and seed markets, which have
been a big driver of growth due to record global food prices.
The company is a leader in many of the markets that it operates
in, assuring growth for many years.
A true American icon,
The Coca-Cola Company
) is one of the most popular global brands dominating the
carbonated drink business. Major avenues for growth have been
water, juices and sports drinks, which tend to grow much faster
than the old carbonated business.
Coke is seeing higher volume gains in emerging markets as its
products are seen as "affordable luxury" in many developing
As one of the largest global energy companies,
) offers a way to play the surge in energy prices driven by rising
demand from emerging markets.
The company has a very low payout ratio of 30%, giving
management ample room to increase the dividend.
Travelers Companies (TRV)
I am sure
) is glad to have been spun off from Citigroup in 2002, due to the
realization that earnings for insurance companies are erratic and
seasonal. The insurance company has made a lot of money over the
years with proper risk management and prudent investment
I like Travelers, because it is one of the most established
companies in the insurance field, with some of the best growth
prospects for the future.
Exxon Mobil (XOM)
As the largest U.S. energy company,
Exxon Mobil Corp.
) is a major consolidator in the industry embarking on an
acquisition spree to increase reserves.
The company has been criticized for paying too small of a
dividend, since it has a payout ratio of only 28% and a cash pile
that can afford much bigger one. Management's defense has been to
state that they need the money for expansion, which is credible and
I think makes the stock a good one to play the surge in energy