Dividends Are the Key

11/19/2008 10:26 am EST


Richard Young

Editor, Young's Intelligence Report

Richard Young, editor of Young's Intelligence Report, tells conservative investors that now is the time to pick up some good dividend payers.

I invest—as should you—to receive dividends and interest for compounding. I do not invest to sell my shares to someone else at a higher price, nor should you. If you invest to finance a comfortable retirement cash flow, your 100% concentration must be on dividends and interest, not on price action.

Xcel Energy (NYSE: XEL) has 3.3 million and 1.8 million regulated electricity and natural gas customers in eight states, and has been providing service for 130 years. Xcel's value is built on its assets, including 16 coal plants, 28 natural gas plants, 2 nuclear plants, 26 hydro plants, 4 oil plants, 3 garbage-burning plants, and 1 wind farm. Xcel also owns 82,483 miles of electric transmission lines, 190,414 miles of electric distribution lines, and 34,886 miles of natural gas pipeline. You can buy shares today with a 5.3%yield. My price chart shows Xcel in the "bargain basement" range.

SYSCO (NYSE: SYY) has had consistent dividend payments, reinvested over long periods of time, will enhance the value of your portfolio through the power of compound interest. SYSCO has been increasing dividends for 31 years and paying them for 38. Dividend growth protects a portfolio from losing value during busts, and adds an extra kick to growth during boom times. SYSCO is the largest food service company serving the needs of the "meals away from home" industry. The food services industry is more than just restaurants; it is also hospitals and schools that are not going to shut down during economic troughs. Buy SYSCO now below trend.

A.G. Lafley, CEO of Procter & Gamble (NYSE: PG) recently said, "The reason P&G has grown so consistently for so long is that we're a company that sticks to the fundamentals. We build brands that improve consumers' lives. We deliver superior value day in and day out. We manage cash and costs with unrelenting discipline. And we invest in innovation as the primary driver of profitable organic sales growth." Could there be a better summary of a winning business strategy? P&G has returned an average 16% to shareholders per year for the past 20 years. And, to hammer home the quality of P&G, I'll mention that the company has paid uninterrupted dividends for 118 years! The past 52 years have each seen dividend increases averaging more than nine percent. My chart shows that you can buy P&G below trend today.

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