I’ve been analyzing and writing about dividend companies for over six months, looking to build what I believe is the best Dividend Portfolio. I developed a complete ratings system, through which I assign scores to a company based on seven separate criteria I have chosen to represent superior dividend-paying potential, as well as possible gains in share price.
So far I have selected seven companies for my Portfolio. I continue to examine dozens of companies every week.
The companies on this list are not the ones that are going to form the foundation of my dividend portfolio. They have not been paying and raising dividends for 10 years or more, which is the minimum that I am permitting for the ten base stocks in my model portfolio. However, these are stocks that have been raising their distributions for at least five years, and they may merit a spot as part of the higher-risk, higher-reward section of my portfolio once I have the base in place.
I examined over 100 stocks that are going ex-dividend in February, and found four stocks that have been paying for more than five years, are yielding more than 3% and have returned more than 16% (the current 52-week return of the SPDR S&P 500 ETF Trust) in the past twelve months.
I examined each company’s yield, total 52-week return, where it is trading relative to its 52-week high and low, and its recent dividend-paying history in order to project its ability to continue.
I present these four companies, in order of ex-dividend date:
Health Care REIT, Inc. (NYSE:HCN) is a real estate investment trust (REIT) involved primarily in senior living and health care properties.
HCN is currently trading at $63 per share and yields 4.8%. It has been raising dividends for five years and is trading at its 52-week high (I include this information because some investors prefer to buy a stock on a pull-back from its high). The company is up 9.6% since this time last year.
As a REIT, HCN is legally obligated to pay out 90% of its income yearly. The current FY2013 analyst earnings estimate is $3.89 per share. The forward-looking annual dividend is $3.06, or 79% of the earnings estimate. The company’s five-year dividend growth rate is 3.0%.
Health Care REIT went ex-dividend on Feb. 1 and will pay a dividend of $0.765 per share on Feb. 20.
Magellan Midstream Partners, L.P. (NYSE:MMP) is a Master Limited Partnership (MLP) and as such its investors enjoy the extremely attractive tax-deferred benefits of investing in such a vehicle. MMP is currently trading at $50 per share and yields 4.1%. It is trading at its 52-week high, and has returned 53.5% since last year.