Thursday, November 10, 2011

15 Dividend Stocks With A 15% Yield In 15 Years

Who wouldn't like to earn a safe 15% on their original investment? Normally double-digit returns are the fodder of con artists or associated with extraordinarily risky investments. In either of these cases, the person is usually left holding despair in one hand and an empty wallet in the other.

However, I have discovered that you can actually enjoy high yields with minimal risk, but there is one catch... Safe high-yielding investments can't be purchased today. Instead, you will have to grow them and that takes time.

The secrect to building long-term wealth that will withstand the ravages of inflation is to focus on a growing income stream. The easiest way to acquire a growing income stream is to hand select quality dividend growth stocks and hold them for years.

Quality dividend growth stocks don't have double digit yields today. Most yield well under 5%. Some people scratch their head and wonder why I or anyone else would buy a stock that only yields 2%, 3% or even 4%. To understand why, one must first understand this very important concept...

Yield On Cost

Yield-on-cost (YOC) is simply the Current Annual Dividend dividend by Original Cost Per Share. YOC not a substitute for calculating an internal rate of return (IRR). The IRR calculation takes into account both capital appreciation and the timing of cash flows (purchases, sells and dividends).

However, as a dividend growth investor, my primary focus is on dividend growth and since my desired holding period is forever, capital appreciation is little more than an interesting side note.

YOC is much better suited for tracking dividend growth since it is individually tied to a stock and takes into account all the variations of growth rates over time, along with the timing of purchases. Also, it is useful when trying to explain to our yield-focused brethren why we chose the stock yielding 3% over 'Amalgamated Risk' at 8%.

15 Stocks Yielding 15% (or more) In 15 Years

This week week, I screened my dividend growth stocks database for stocks that will be yielding at least 15% in 15 years at current yield and dividend growth rate. The results are presented below:

Avista Corporation (AVA)
Yield: 4.4% | Dividend Growth: 8.8% | 15 Year Yield: 15.7%
Avista Corp. generates, transmits and distributes energy as well as engages in energy-related businesses. The company operates in two business segments.

Cardinal Health,Inc. (CAH)
Yield: 2.0% | Dividend Growth: 15.0% | 15 Year Yield: 16.0%
Cardinal Health Inc. is one of the leading wholesale distributors of pharmaceuticals, medical/surgical supplies and related products to a broad range of health care customers.

Murphy Oil Corporation (MUR)
Yield: 2.0% | Dividend Growth: 15.0% | 15 Year Yield: 16.2%
Murphy Oil Corp. is an international integrated oil company has exploration and production interests worldwide, as well as refining and marketing operations in the U.S., which it plans to divest.

Praxair, Inc. (PX)
Yield: 2.0% | Dividend Growth: 15.0% | 15 Year Yield: 16.2%
Praxair Inc. is the largest producer of industrial gases in North and South America, and the second largest worldwide. It also provides ceramic and metallic coatings.

Wal-Mart Stores, Inc. (WMT)
Yield: 2.5% | Dividend Growth: 13.3% | 15 Year Yield: 16.6%
Wal-Mart Stores, Inc. is the largest retailer in North America. Wal-Mart operates a chain of discount department stores, wholesale clubs, and combination discount stores and supermarkets.

Owens & Minor, Inc. (OMI)
Yield: 2.7% | Dividend Growth: 13.2% | 15 Year Yield: 17.1%
Owens & Minor Inc. is a leading domestic distributor of medical and surgical supplies to the acute care market, a health care supply chain management company, and a direct-to-consumer (DTC) supplier of testing and monitoring supplies for diabetes.

T. Rowe Price Group Inc. (TROW)
Yield: 2.4% | Dividend Growth: 15.0% | 15 Year Yield: 19.1%
T. Rowe Price Group Inc. operates one of the largest no-load mutual fund complexes in the United States.

Intel Corporation (INTC)
Yield: 3.3% | Dividend Growth: 13.3% | 15 Year Yield: 21.4%
Intel Corporation is the world's largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products.

McDonald's Corporation (MCD)
Yield: 2.7% | Dividend Growth: 15.0% | 15 Year Yield: 21.9%
McDonald's Corporation is the largest fast-food restaurant company in the world, with about 32,900 restaurants in 117 countries.

AFLAC Incorporated (AFL)
Yield: 2.7% | Dividend Growth: 15.0% | 15 Year Yield: 22.1%
Aflac Incorporated provides supplemental health and life insurance in the U.S. and Japan. Products are marketed at work sites and help fill gaps in primary insurance coverage. Approximately 80% of earnings comes from Japan and 20% from the U.S.

Microsoft Corporation (MSFT)
Yield: 3.0% | Dividend Growth: 14.3% | 15 Year Yield: 22.7%
Microsoft, the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.

Target Corporation (TGT)
Yield: 2.1% | Dividend Growth: 14.7% | 15 Year Yield: 23.3%
Target Corp. operates about 1,500 Target and 250 SuperTarget general merchandise stores across the U.S.

Lowe's Companies, Inc. (LOW)
Yield: 2.5% | Dividend Growth: 17.9% | 15 Year Yield: 29.3%
Lowe's Companies, Inc. sells retail building materials and supplies, lumber, hardware and appliances through more than 1,700 stores in the U.S. and Canada.

Walgreen Co. (WAG)
Yield: 2.3% | Dividend Growth: 18.8% | 15 Year Yield: 30.1%
Walgreen Co. is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico.

ConocoPhillips Co. (COP)
Yield: 3.7% | Dividend Growth: 15.0% | 15 Year Yield: 30.4%
ConocoPhillips Co. was formed via the 2002 merger of Phillips Petroleum and Conoco, is the fourth largest integrated oil company in the world.

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 210+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long WMT, OMI, INTC, MCD, AFL, MSFT, TGT, LOW, WAG, COP. See a list of all my dividend growth holdings here.

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