Yes, there has been some talk lately that especially in a "confused" market, some dividend plays have a HISTORY of outperformance. I am NOT here to deny that. If anything, I am here to CONFIRM that, but with one difference. I want YOU to make MONEY.

Anybody with complaints on that, is free to leave now, because it will not not better.

Many are giving advice to get into the conservative stocks that pay a dividend. They MAY be right. But, I am betting I can beat that by 2-5% a year, or more. Why? Because not only are those stocks BIG, and reliable I might add, they are also LETHARGIC. Yes, they may provide a 3% dividend, and the lucky ones may add a 2% profit. Yes, they may beat a fair percentage of the market in returns. Optimistically, let's say they beat 40% of the market in total returns.
Heck, that is not all bad. And, if the market turns up, well you still have returns, but it will be slower than the market as a whole. At least it will be, based on historic results.

Ok, to name a few, Pepsi, Merck, Procter & Gamble, Kellogg , Johnson & Johnson, McDonald's, Chevron, and more have all at one time had good runups. Is it likely to happen again? I would bet against it. Are they stable and secure? Yes.

Are there better plays? I am willing to bet there are. But, I must add, the market does reward RISK, and some of these ARE riskier plays.

With few exceptions, (I do like Chevron), the dividend offered by the others PALES to that offered by other companies, and not only will you get better dividends, but you SHOULD get stock price appreciation, at a substantially market beating rate.

So, let's look at a few.

TNH (Terra Nitrogen,,, subsidiary) pays over a 6% dividend. Lately, stock price has been flat, or trading within a few dollars of it's "normal price" at just over $100 a share. Yet, could I remind you, less than 3 years ago, it traded over $140 a share. Somewhere in that formula, is the POTENTIAL for a 40+% stock price gain, and while you maintain the market beating 6+% dividend. Ok, the dividend, might drop to 4% if the stock rises to that level. It STILL beats the rest of the market in dividends. Will it happen? It has a good chance, because agriculture will be, or should be a prominent sector. Yes, let's do feed the world (and our bank account?).

BP is another one I like. The need for oil is not going away any time soon. They too have a dividend in the 6% range. And, while the are not Exxon, Chevron, or Conoco, they ARE a significantly large player, to not be squeezed out. Well run, diversified company. Safe dividend,
and potential for a significant rise in stock price.

Well, those are MY favorite dividend plays right now. But, let's look at some UNDER-VALUED stocks too.

Chevron tops my list, and I am not sure why. I simply expected more from them. They are due.
The market has seen fit to see merit in Conoco, for alternate energy, but a time will come for a strong number two in mostly oil, to get it's come uppance. I continue to see a decent dividend, and a market beating return on investment. Not by a LOT, but, beating, none the less.

Then again, I do like so TRIED and TRUE. BHP (Billiton), is a hard stock not to like. It is into mining just about EVERYTHING. Gold, iron ore, precious gems, you name it. If the ground produces it, they have a stake in it somewhere. It has an "average" dividend, of maybe 2%.
But, it too, is running less than 25% of it's stock price less than 3 years ago. It has a MOUNTAIN of cash for acquistions. Folks, I own a fair amount of this, and it is one I keep buying. I have yet to be dissappointed. Then again, the key here,, is buy low.

And, it is not ALWAYS, just about the dividend. Sometimes you just have to OWN it. DO,
{Diamond Offshore Drilling), NE (NOBLE), CMI (Cummins), DE (John Deere), IBM (ITSY BITSY MACHINE Compnay,,, lol) (note, I am a programmer, IBM is BIG,,,, no, HUGE in computing)

All with decent dividends, in GROWTH markets. Ok, some of the dividends are less, but count on the GROWTH opportunities.

If you are a QUICK in, QUICK out investor, FORGET EVERY WORD, I just said. To invest in any of these would be foolishness, if that is your plan. You may catch them on a day, and good luck, if you try.

For the LONG term, take some RISKS,,, and then take some more. Overall these are not RISKY companies. They are market beating ones.

DO maintain diversity, but a healthy helping of market BEATING dividend players won't hurt you.

And, if you find one or more does not beat the market this year? How many I recommended did? To get them ALL right would take a miracle. Add one more year, and I MIGHT get them all right. Then again, markets change. You ARE allowed to rebalance. At any time.

I like GROWTH stock too. A LOT. But, I will never snub my nose at a GOOD dividend. When looking for dividends, look for the best, AND, there ARE better, than "what the media wants you to buy into".

Yes, it has RISKS.

Not too long ago, I was reminded, of something else that may shed light on this too. Back in a day, those who "marched to the beat of a different drummer", were FROWNED upon. Yet, not too long ago, those that thought "out of the box", were REWARDED.

The only difference, may have been the times, and the individuals.

Times changed. The past is no guarantee. Then again, history does repeat itself, because people DO NOT LEARN, but they do improve technology.

So, shall I post on Technology? There are good plays there too.

Take a look at the balance sheet of Western Digital (WDC), and even CY (Cyress) is showing signs of revival. But, in the tech world, it is hard to ignore, the tried and true right now.

Microsoft, might, maybe, have market beating results, Intell, will contine to be a BULLY. TI (Texas Instruments), will regain, some market share. IBM will LAUGH, at all of them. HPQ (Hewlett-Packard) will beat IBM in returns.

Anybody can guess, those are a few of mine.

Comments: View Comments |  Wednesday February 17, 2010