Investing in dividend-paying stocks definitely has its advantages. Stocks with high dividend yields generally offer more downside risk protection than growth stocks because the steady cash payouts these stocks provide give investors peace of mind when the going gets rough. (To learn more about the benefits of dividends, check out Dividends Still Look Good After All These Years and How Dividends Work For Investors.)
A regular dividend will only help to keep a stock's price stable as long as the dividend payment keeps getting paid out. If a company decides to decrease its regular dividend amount, or cease it altogether, a stock that was once considered a dividend darling can easily take a nasty tumble. So, if you are looking to beef up your portfolio with some dividend darlings, usually the best place to start hunting is with stocks that have paid out increasing dividends consistently over a period of years. Generally speaking, the longer a company has paid out a high dividend yield, the more likely it is to continue doing so in the future.
With that in mind, here are five stocks with sizable current dividend yields that have a history of strong dividend growth as well:
|
Company
|
TTM Dividend Yield
|
Market Cap
|
|
Barclays
(NYSE:BCS)
|
10.29%
|
41.9B
|
|
Calumet Specialty Products
(Nasdaq:CLMT)
|
12.45%
|
466M
|
|
Compass Diversified Holdings
(Nasdaq:CODI)
|
9.67%
|
424M
|
|
Iowa Telecom Services (NYSE:IWA)
|
8.6%
|
602M
|
|
Ship Finance International (NYSE:SFL)
|
8.38%
|
2.01B
|
|
Data as of Market close September 3, 2008
|
Ship Finance International
Bermuda-based Ship Finance International owns and operates chemical and oil tankers and support vessels. Recently the company made headlines for what looked like a strong second quarter.
During Q2 Ship Finance saw a profit of $71.3 million or 98 cents per share. That was a marked improvement over the $39.5 million, or 54 cents per share, it earned in the comparable period last year. The Street had been looking for 82 cents per share.
Ship Finanace also raise its quarterly dividend by 2 cents to 58 cents per share. That's not a huge increase but it is a signal that management is optimistic about the company's future. The recent bump means this is the 18th consecutive quarter that the company has declared stable or increasing dividends.
The company is expected to earn $3.28 per share this year and $2.92 per share in 2009. That's fairly attractive given that the stock currently trades at $27.26. (To learn more, check out Investment Valuation Ratios: Price/Earnings Ratio.)
Dividends for the Long Haul
In short, I intend to do a little more research on the company as what I'm seeing so far grabs my attention. Despite the cliché, you certainly don't have to be a widow or an orphan to appreciate the staying power dividend-paying stocks can add to your portfolio over the long haul. Keep your eye on these high dividend-yielding stocks and share your opinion about them in the FREE Stock Picking Community.
