Pointing to a recent study, we showed that the average return of high dividend yielding stocks was 13.04% between 1927 and 2009. Dividend stocks beat the overall market by an average of 1.36% per year in that period.
Insider Monkey, your source for free insider trading data, thinks these are risky times for fixed income investors. Ten-year treasuries yield less than 4% and the Federal Reserve is pursuing a highly inflationary monetary policy. Legendary investors Warren Buffett, George Soros, and Jim Rogers already voiced their concerns about the Fed’s policy. Warren Buffett thinks investing in long-term bonds is a bad idea. Jim Rogers is certain that commodities will benefit no matter what happens in the world economy. Ray Dalio, the owner of the world’s biggest hedge fund, recommended gold and emerging market securities.
For conservative investors who don’t want to speculate about commodities and want a stable quarterly income, we prepared a list of 35 dividend paying stocks that have below market average PE ratios and managed to increase their earnings per share over the past 5 years. A portfolio of these stocks should be able to make its dividend payments, preserve capital by increasing earnings per share over the long term, and protect investors against possible spikes in inflation. The data is sourced from Google Finance. We expect these stocks to perform better than 10-year treasuries over the next 10 years.
| Company name | Symbol | Market Cap | Div yield (%) | P/E ratio | 5y EPS growth rate |
| Bank of Montreal (USA) | BMO | 36.31B | 4.64 | 12.5 | 2.7 |
| National Grid plc (ADR) | NGG | 33.85B | 6.39 | 12.48 | 8.41 |
| Lockheed Martin Corporation | LMT | 28.47B | 3.83 | 11.31 | 11.89 |
| Exelon Corporation | EXC | 26.87B | 5.26 | 10.5 | 22.41 |
| Dominion Resources, Inc. | D | 26.23B | 4.51 | 8.87 | 27.34 |
| NextEra Energy, Inc. | NEE | 22.62B | 4.18 | 11.33 | 15.19 |
| Raytheon Company | RTN | 18.16B | 3.01 | 10.51 | 19.29 |
| Public Service Enterprise Group | PEG | 15.65B | 4.52 | 10.07 | 12.39 |
| Consolidated Edison, Inc. | ED | 14.56B | 4.89 | 14.37 | 2.65 |
| Turkcell Iletisim Hizmetleri | TKC | 13.18B | 4.32 | 11.27 | 8.67 |
| iShares MSCI Brazil Index (ETF) | EWZ | 12.83B | 3.64 | 6.08 | 5.96 |
| Enersis SA (ADR) | ENI | 12.59B | 8.1 | 12.92 | 32.69 |
| CenturyLink, Inc. | CTL | 12.42B | 7.31 | 12.99 | 4.75 |
| Edison International | EIX | 11.89B | 3.61 | 9.61 | 2.51 |
| PPL Corporation | PPL | 11.87B | 5.75 | 10.86 | 4.06 |
| Entergy Corporation | ETR | 11.81B | 4.98 | 9.92 | 8.64 |
| Xcel Energy Inc. | XEL | 11.30B | 4.32 | 14.49 | 6.17 |
| Campbell Soup Company | CPB | 10.71B | 3.47 | 14.31 | 9.19 |
| Mattel, Inc. | MAT | 8.62B | 3.77 | 13.23 | 12.85 |
| Brookfield Properties Corp | BPO | 8.47B | 3.36 | 5.84 | 49.04 |
| DTE Energy Company | DTE | 8.04B | 4.7 | 12.67 | 19.26 |
| New York Community Bancorp | NYB | 7.74B | 5.72 | 14.29 | 2.17 |
| Tele Norte Leste Participacoes | TNE | 6.35B | 21.13 | 10.31 | 45.27 |
| Hudson City Bancorp, Inc. | HCBK | 5.26B | 6.24 | 9.18 | 18 |
| SCANA Corporation | SCG | 4.99B | 5.09 | 13.05 | 1.15 |
| H&R Block, Inc. | HRB | 4.92B | 3.79 | 11.95 | 9.07 |
| Pinnacle West Capital Corp | PNW | 4.51B | 5.03 | 13.66 | 5.95 |
| Siliconware Precision Industries | SPIL | 3.83B | 6.69 | 12.92 | 20.06 |
| Ares Capital Corporation | ARCC | 3.33B | 8.71 | 4.05 | 17.05 |
| DPL Inc. | DPL | 3.10B | 5.1 | 10.6 | 20.95 |
| TAM SA (ADR) | TAM | 3.08B | 4.42 | 7.79 | 7.27 |
| Westar Energy, Inc. | WR | 2.94B | 5.02 | 14.37 | 3.28 |
| KKR Financial Holdings LLC | KFN | 1.66B | 6.3 | 4.02 | 64.48 |
| Anworth Mortgage Asset Corp | ANH | 864.46M | 12.57 | 8.23 | 17.5 |
| Navios Maritime Holdings Inc. | NM | 549.85M | 4.52 | 4.37 | 0.74 |
Some of these stocks are also popular among hedge funds and insiders. Jim Simons’ Renaissaince has LMT in its portfolio. Several insiders bought LMT, ED, and SCG. Mohnish Pabrai has recently added BPO to his portfolio. Andreas Halvorsen’s Viking Global and Ray Dalio’s Bridgewater have large HRB positions. Dan Loeb and Leon Cooperman are invested in KFN.There were recent insider purchases in KFN as well.
