I’ve been examining dividend stocks for nearly a year now, selecting what I feel are the absolute best for my own dividend portfolio. I’m actually getting close to completing my portfolio (I’ve chosen eight stocks out of ten), but I’m running into a problem. There aren’t enough companies that meet my criteria.
While I ponder what to do about the last two selections for my portfolio, I’m going to check out what the gurus, the successful investors, are buying.
I found five companies with juicy dividends that have been purchased at a far greater rate this last quarter than they have been sold. My criteria are that the company has to be owned by at least 10 experts and that the ratio of experts buying to selling in the last quarter has to be 2:1.
These are some of the best investors in the world; shouldn’t you be considering the companies that they are buying, too?
The first company on the list is Merck & Co., Inc. (NYSE:MRK) . It is currently selling at approximately $42 and yields 4.2%. It is trading 12% off its 52-week high and has a one-year analyst target price of $48.43, for a 15% potential gain. The 13 analysts who cover it rank it a 2.3 (1.0 = Strong Buy, 5.0 = Sell) with four Strong Buys, eight Buys, seven Holds, and one Underperform.
In terms of the experts tracked by GuruFocus, 27 have positions in the company, with 15 buying in the quarter ended Dec. 31 and seven selling. Significant positions (over 1 million shares) are held by Ken Fisher (Fisher Asset Management), Edward Owens (Vanguard Healthcare Fund), Brian Rogers (T Rowe Price Equity Income Fund), Irving Kahn (Kahn Brothers), Dodge & Cox, NWQ Managers, Charles Brandes (Brandes Investments), and Hotchkis & Wiley.
In terms of my own dividend-scoring system, Merck receives a 10 on my 7-criteria scale, out of a possible perfect score of 28. As readers of my Building My Dividend Portfolio series will know, I am only accepting companies that score in the range of 18-20 into my portfolio. Companies that score 15–17 remain on the list for further investigation, and companies that score lower than 15 are usually not examined again.
The next company on the list is BP plc (ADR) (NYSE:BP). It is currently selling at approximately $42 and yields 5.1%. It is trading 13% off its 52-week high and has a one-year analyst target price of $51.09, for a 22% potential gain. The 13 analysts who cover it rank it a 2.1 (1.0 = Strong Buy, 5.0 = Sell) with five Strong Buys, three Buys, and five Holds. BP (NYSE:BP) has actually been on my Top Investors list for three quarters now.
In terms of the experts tracked by GuruFocus, 21 have positions in the company, with 10 buying in the quarter ended Dec. 31 and four selling. Significant positions are held by Charles Brandes, James Barrow (Barrow, Hanley, Mewhinney & Strauss), Richard Pzena (Pzena Investment Management), and Richard Perry (Perry Capital).
On my dividend-scoring system, BP receives an 11.