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Seeking Alpha: 5 Dividend-Paying Companies You Should Own Forever

Image: Seeking Alpha: 5 Dividend-Paying Companies You Should Own Forever
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By    |   Thursday, 14 Jan 2016 08:47 AM


Some stock holding truly are like friends with benefits. Savvy investors will hold them tight and never let them go.

Seeking Alpha recently spotlighted what it described as “five companies that make sense for most investors.”

“Four of the five are very established dividend growth champions,” SA explained.

“Most investors are well aware of these companies, but sometimes the best deals hide in plain site,” SA explained. “There is absolutely nothing exciting about these companies. They are big, boring, and fundamentally sound.”

The fabulous five stocks:
  • Altria Group Inc.   (NYSE:MO)
  • Exxon Mobil Corp. (NYSE:XOM)
  • McDonald's Corp. (NYSE:MCD)
  • Philip Morris International (NYSE:PM)
  • Wal-Mart Stores Inc. (NYSE:WMT)
And while Newsmax Finance Insider Charles Sizemore is a big dividend fan, he also recently offered some advice.

"I’m not going to tell you to dump all of your dividend-paying stocks. But I am going to give you some advice on how to better think about dividends," he wrote.

"To start, longevity and growth are far more important than current yield. The longer a stock has paid a dividend, the less likely it is that that dividend will be cut. There can always be a crisis that comes out of the blue – think the 2010 Gulf of Mexico oil spill that clobbered BP (BP) – but if a company has managed to pay and grow its dividend for multiple consecutive decades, this is a company that can likely survive a zombie apocalypse," he said.

"The next point to remember is the payout ratio. This can be defined differently for different types of stocks (for example, REITs and MLPs use different accounting terminology), but the concept is the same. A healthy company should be paying out considerably less in dividends than it takes in as earnings and cash flow. It’s not sustainable for a company to pay out more than it takes in. Yet I never cease to be amazed by how investors routinely get suckered into yield traps like these," he said.

So, if you want a durable income portfolio to tide you over in retirement, repeat after me:
  •     Don’t chase yield!
  •     Dividends are riskier than bond interest
  •     A company can’t pay out more than it takes in forever.

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Some stock holding truly are like friends with benefits. Savvy investors will hold them tight and never let them go.
Seeking Alpha, Dividend, Companies, Invest
366
2016-47-14
Thursday, 14 Jan 2016 08:47 AM
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