|Back to main|
5 Of My Favorite 'Dividend Champions'
This is the most foolproof way I can think of to earn 1,000% returns and yields above 50%.
It may sound impossible, but this will be a reality for many forward-thinking investors.
The numbers will be different for every investor, depending on when they recognized this opportunity. Those who saw it earliest will make the most money.
I'll explain everything you need to know shortly. But before we go any further, you need to understand one very critical point...
To take advantage of this opportunity you have to change the way you look at your portfolio...
As it stands, many investors will ignore what I'm going to share with you... and I know exactly why.
You see, as with any great goal, this one will take time to reach.
Try to think of a great achievement that only took a few weeks or months to accomplish -- they are few and far between. It took decades to put a man on the moon. It took decades to develop a vaccine for polio. It took four years to construct the Golden Gate Bridge... and five years to build the Hoover Dam.
These accomplishments weren't done in a few weeks or a few months. The biggest goals -- the ones that can truly change the path of your life -- take years, if not decades, to accomplish.
And nowhere is this more applicable than with investing.
Do you think Warren Buffett became one of the world's richest men in the span of a couple of years? Of course not. Buffett bought his first stock about 70 years ago.
The world's greatest businesses weren't built in just a few months, either. Starbucks (Nasdaq: SBUX ) didn't build 18,000 stores overnight. The company is more than 40 years old. Intel (Nasdaq: INTC ), synonymous with personal computers, has actually been around since 1968 -- well before the personal computer.
And just like Buffett... or the world's greatest businesses... your greatest wealth-building will come from years or decades of work -- not days, weeks, or months.
Even today, long-term thinking doesn't come naturally. That's why so many people have trouble saving for retirement...
But the best way to maximize your returns is to be patient and invest in businesses that have a track record of raising dividends. Take a look at the chart below, and you'll see what I mean...
This clearly shows the benefit of investing in stocks that raise dividends. They handily outperform stocks that either don't raise dividends or cut them -- or don't pay dividends altogether.
There are dozens of stocks out there that have tremendous track records of growing their dividend payments. There are so many, in fact, that it's difficult to tell you about all of them.
The best are known as "Dividend Champions." This term, coined by investment researcher David Fish, refers to stocks that have raised dividends for 25 consecutive years or more.
If you want to own dominant companies that deliver consistent long-term returns and are committed to raising their dividend payments, then there's no better place to start than with the list of "Dividend Champions."
Take Colgate-Palmolive (NYSE: CL ), for example. In the past 10 years it has raised its dividend 183%. If you had bought it back then, you'd be earning a 6% yield (based on cost) and a total return of 178%.
And it's a similar story with the other "Dividend Champions."
A Few of My Favorite Dividend Champions
|Security||Yield||Years of Dividend Increases||
Annual Div. Growth
(Last 10 Years)
|10-Year Total Return||P/E|
|McDonald's ( MCD )||3.4%||37||+29%||411%||17.3|
|Colgate-Palmolive ( CL )||2.3%||50||+13%||178%||24.7|
|Johnson & Johnson ( JNJ )||3.4%||51||+11%||129%||19.2|
|Kimberly-Clark ( KMB )||3.4%||41||+10%||157%||20.0|
|AT&T ( T )||5.3%||30||+5%||134%||26.0|
|S&P 500 Index||2.1%||N/A||N/A||96%||16.1|
There's only one problem...
Right now, these stocks look expensive. Like the rest of the market, they have enjoyed a nice run up, yet now sit at fairly rich valuations.
Every day more investors are figuring out that investing in dominant companies that return billions of dollars to investors is a great way to make money. But you don't want to overpay. Instead, if you know what to look for you can keep on eye on your favorites and buy them at the right time. (In fact, Amy Calistri, editor of our Daily Paycheck advisory, alerted readers to this situation several months ago.)
Of course, just because a company has a history of raising dividends and returning money to investors, that doesn't guarantee future results.
That said, this list is a great starting point for further research. I plan to continue watching these stocks, and if one or more fall by a significant amount, then I'll consider buying them.