Year-Round Dividends Will Get Your Portfolio Through Thick and Thin
January 30, 2019
One of my favorite strategies for building a dependable portfolio, one that can deliver through the thick and thin of the stock market, is to include stocks that pay their dividends throughout the year.
Now, most leading US stocks pay dividends each quarter. But by selecting good dividend-paying stocks that pay in different cycles—meaning January, April, July and October, then February, May, August and November and, finally, March, June, September and December—you can count on dependable monthly payouts throughout the entire year.
As an introduction, let me walk you through the three payout cycles in my Incredible Dividend Machine portfolio and some prime examples of good dividend-payers you can depend on for year-round payouts.
Cycle A: January, April, July and October
In Cycle A, there’s a great technology company that’s not only increasingly focused on more dependable revenue and dividend payments, but also a strong performer.
Cisco (CSCO), up 10.58% for the trailing year, is shifting to the successful business model of more recurring income. Bundling equipment with services is adding to the rise in dependable revenue flows. There is much still to be done at this company, but the proof elements have been coming. Yielding 2.87%, it makes for a good start to the year’s income.
Drug companies continue to be one of the big winning sectors in the market and, in Cycle A, Merck (MRK), up 22.50% for the trailing year, is a great performer for dividends. Like for other successful drug-makers, Merck is balancing the management of its existing products and funding its pipeline of development to keep revenues growing. Yielding 3.02%, it makes for another great Cycle A buy.
Cycle B: February, May, August and November
In the second dividend payout cycle, there are also plenty of great companies to look to for income.
In particular, the market for natural gas continues to be bullish on genuine supply and demand conditions. One of the best in this market is ONEOK (OKE). Up 12.68% for the trailing year, it’s a gas-focused company that is making hay while the sun shines on gas. With its hefty dividend payout, running at 5.51%, it is a buy for income and growth.
From the turn on February 8, 2018 to date, REITs in general have been strong performers. And in Cycle B, the diverse real estate portfolio of Realty Income Corp. (O), up 31.80% for the trailing year, continues to perform and pays a nice 4.07% dividend yield.
Utilities are another segment of the market that continues to be dependable. And in Cycle B, Verizon (VZ), up 3.01% for the trailing year, keeps delivering good income with its yield of 4.52%. The switch to next generation wireless (5G) is costing the company but is being offset with cost controls. It remains a good buy for dividends and growth.
Cycle C: March, June, September and December
The third dividend cycle, Cycle C, includes many solid companies with histories of strong dividend payments. Here are some particularly good highlights…
Like Merck noted above, Pfizer (PFE), which is up 8.22% for the trailing year, is in the right space of drug-making. And it is now moving towards a better focus on prescription products with its co-op deal with GlaxoSmithKline (GSK). The deal allows it to engage in the over-the-counter market and should be a benefit for shareholders. It also sets up the potential for a spin-off of some structure that will have better scale for cost control and pricing. It makes for a good buy in Cycle C, with a yield of 3.53%.
Utilities have come back since the second half of last year. Public Service Enterprise Group (PEG) serves the Northeastern and Mid-Atlantic markets in the US and is up 7.81% for the trailing year. The stock is a buy, with its nice dividend yield of 3.42%.
Lastly, as noted above, REITs keep working, and that includes senior housing and care properties. Ventas (VTR), up 21.19% on a total return basis over the trailing year, makes for a good dividend-paying buy, with a yield of 5.08%.