STORE Capital (STOR) is a REIT that manages hundreds of restaurants, retailers and other business pr...
Navellier's Top Dividend Picks
03/01/2012 9:45 am EST
Louis Navellier reviews the top dividend-paying stocks in his portfolio, which has an overall yield of over 4%.
Louis, what dividend stocks have you been tracking lately?
Well, just to put it into perspective, the whole market has over a 2% dividend yield, which of course is more than the ten-year Treasury. So that means you can get a lot of yield now that you don’t normally get.
We took our Blue Chip Growth stocks and went in and cherry-picked 11 of the best and got a 4.4% dividend yield. Now those dividends were taxed at 15%. If we throw in some pipeline companies, which are limited partnerships, we get about 4.8%, but those dividends will be taxed at a little higher rate.
Some examples? these companies would be the tobacco companies like Reynolds American (RAI), Altria (MO), and Philip Morris (PM). We have the ketchup company, Heinz (HNZ). Sugar is pretty addictive and they’re selling that all over the world; there’s sugar in ketchup.
We have Pfizer (PFE) in there, and so is Verizon (VZ). We have a Brazilian beer company called AmBev (ABV). We’re up like 140% and the dividend yield is still 4.7%. BT Group (BT), British Telecom Group, is another one.
So, you know, it’s a wonderful time now where you can have your cake and eat it too and get a 4%-plus dividend yield in those stocks, plus have some capital appreciation.
The pipeline companies, if somebody wants even more, would be Plains All American Pipeline (PAA), DCP Midstream (DPM), ONEOK (OKS). So they don’t go so much up and down with the price of energy; it’s just how much is going through the pipelines. They’re very, very exciting, and they’ve done very well.
When investors are looking for dividend stocks themselves, what are other metrics should they be screening for?
Well, we insist to put them in our portfolio grader, which is our online stock grading tool. They should rank an A or B overall. That’s very, very important. Also, you can check on the parameters. You can check cash flow, return on equity, and things like that.
Are there any technical metrics that you factor into your models?
Not really. We do quantitative research, and what it does is it looks for buying pressure on any of the stocks.
Usually, the more buying pressure there is, the more the volatility will drop. So our quantitative ratio is the return uncorrelated to the market divided by volatility, and you should come up with the buying pressure.
What’s so fascinating now is that so many companies are buying their stock back on the open market, because they can borrow at 2% and 3% and internally earn a lot more than that. So a lot of the buying pressure is coming from stock buybacks. I mean, in Blue Chip we have over 25 stocks buying back $1 billion or more a year, and that makes the ratings per share go up.
So we really like to find stocks under accumulation. Some of our smoothest charts would be in AutoZone (AZO), McDonalds (MCD), Chipotle Mexican Grill (CMG), they’ve been going pretty smooth. Steady appreciation for us.
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