Editor’s Note: On Tuesdays we turn the spotlight outside of Porter & Co. to bring you exclusive access to the research, the thinking, and the investment ideas of the analysts who Porter follows.
If you’re new to The Big Secret on Wall Street and want to find out more about this membership benefit, you can read all about it here.
What’s more, if you’ve missed any of our previous Spotlights, you’ll soon be able to access them all permanently via a new section that we’re launching on our website.
At Porter & Co. we focus on the long term.
I know, I know. Everybody says that. But saying it is one thing, doing it… well… that’s a whole other story. I don’t need to tell you that in the investment world too few people can walk the talk.
The obsession with catching the next “10-bagger” has led far too many investors astray. We admit, we’ve fallen prey to it before too. The result? Rarely good.
And the irony is, if you’re truly patient, then the investment returns you can see will make you far wealthier than you’d ever imagine. Alas, too few can resist the Siren call of quick riches.
Like Odysseus, at Porter & Co., we’ve strapped ourselves to the ship’s mast to resist the Sirens, because after decades in this business (and many hard-won lessons), we know it only leads to shipwreck.
It’s why we never attempt to catch the next “hot” trend.
It’s why we don’t speculate on penny stocks or cryptos, and don’t trade options.
Instead, we stick to what we know generates real, lasting, and permanent wealth: buying well-run, capital efficient businesses when they’re trading at low valuations.
There is, however, one area that Porter & Co. is woefully lacking.
It’s something many of our readers keep asking us for more of (which we’re working to rectify in the months ahead) and that’s investing not just for capital appreciation but for yield.
To many, investing for yield seems prehistoric.
Dividends, the self-annointed experts will contend, are a rounding error, at best.
The dividend yield of the S&P 500 index is around 1.3% – that is, the annual cash payment an investor in an index fund receives. And the thing is, that return is about as much as many stocks in the index move in a single day.
But here’s the big secret…
Dividends, in addition to delivering cash to income-focused investors, are critically important to overall market returns.
One study by S&P showed that from 1926 to 2023, dividends contributed 32% of the total long-term return in the S&P 500.
And even that dramatically understates the real difference if you take into account compounding.
Case in point: if dividends are reinvested instead of withdrawn, then the impact of dividends on total returns increases to a staggering 50% to 75% depending on the time period and market.
What’s more, a dividend yield that seems like a rounding error at first can grow over time to be transformative.
Consider Warren Buffett’s history with Coca-Cola (KO).
He started buying shares in 1988, investing a total of $1.3 billion in the soft-drink maker over the next six years. Since then, Coke’s quarterly dividend payment has grown steadily, to more than 10 times its level back then.
That means that in 2024, Berkshire Hathaway will receive total dividends of around $776 million from Coke. That’s equal to roughly a 60% annual yield on the initial investment. And that money pours in every single year.
In short: overlook dividends at your own risk. Because by choosing the right stock at the right time… dividends can be transformational to your wealth.
I’m telling you all this because Pieter Slegers – the expert featured in Porter & Co.’s Spotlight this month – has just launched a brand-new service called Compounding Dividends.
His objective is to uncover the companies providing a reliable stream of dividend income… that are meanwhile growing at attractive rates that will simultaneously compound your capital.
And when I say Compounding Dividends is new, I mean it.
In fact, Pieter hasn’t even started publishing his subscriber-only research yet.
As a member of Porter & Co, however, you’re getting a first look at his research into 10 of his favorite dividend stocks (and if you want more from Pieter, he has set up an exclusive offer for our readers only).
Enjoy.
10 Attractive dividend stocks
Dividends can be very attractive.
They can form a nest egg for your retirement.
In this article, I’ll highlight 10 attractive dividend stocks.
1. Lowe’s Cos. ($LOW)
Lowe’s Corp operates as a home improvement retailer, providing a broad selection of products such as building materials, tools, and appliances to DIY customers and professionals. The company enhances its retail offering with services like installation and maintenance, available through its physical stores and online platforms.
- Dividend Yield: 1.9%
- Payout Ratio: 32.9%
- Consecutive # years of dividend payments: 62 years
Source: Finchat
2. Johnson & Johnson ($JNJ)
Johnson & Johnson operates as a global healthcare company, providing a wide range of products in pharmaceuticals, medical devices, and consumer health.
The company focuses on research, development, and manufacturing to deliver innovative solutions for health and wellness through its extensive portfolio.
- Dividend Yield: 3.2%
- Payout Ratio: 69.3%
- Consecutive # years of dividend payments: 62 years
Source: Finchat
3. Fastenal ($FAST)
Fastenal is a distributor of industrial and construction supplies, offering a variety of products such as fasteners, tools, and safety equipment.
The company serves customers through its network of stores, onsite locations, and digital platforms, emphasizing efficient supply chain solutions.
- Dividend Yield: 2.3%
- Payout Ratio: 71.1%
- Consecutive # years of dividend payments: 22 years
Source: Finchat
4. Coca-Cola ($KO)
Coca-Cola is a global beverage company that manufactures, markets, and sells a wide variety of non-alcoholic beverages, including sodas, juices, and energy drinks.
They leverage a vast distribution network to reach consumers worldwide and focus on brand marketing and product innovation.
- Dividend Yield: 3.1%
- Payout Ratio: 74.7%
- Consecutive # years of dividend payments: 62 years
5. Realty Income ($O)
Realty Income is a real estate investment trust (REIT) that owns and manages a diversified portfolio of commercial properties leased to tenants on long-term agreements.
The company generates revenue through rental income, primarily from retail and industrial properties, and aims to provide consistent monthly dividends to its investors.
- Dividend Yield: 5.6%
- Payout Ratio: 290.9%
- Consecutive # years of dividend payments: 29 years
Source: Finchat
6. Altria Group ($MO)
Altria Group is a producer and marketer of tobacco, cigarettes, and related products, including brands like Marlboro. The company also invests in alternative nicotine products and has stakes in the cannabis and wine industries, focusing on regulatory compliance and market expansion.
- Dividend Yield: 8.6%
- Payout Ratio: 81.2%
- Consecutive # years of dividend payments: 54 years
Source: Finchat
7. Air Products & Chemicals ($APD)
Air Products & Chemicals supplies industrial gases and chemicals to various industries, including healthcare, energy, and manufacturing. The company specializes in the production and distribution of atmospheric gases, process and specialty gases, and offers related equipment and services.
- Dividend Yield: 2.7%
- Payout Ratio: 63.4%
- Consecutive # years of dividend payments: 41 years
Source: Finchat
8. McDonald’s ($MCD)
McDonald’s operates as a global fast-food restaurant chain, offering a menu of burgers, fries, beverages, and other items. The company generates revenue through franchise operations and company-operated restaurants, emphasizing brand consistency, operational efficiency, and customer experience.
- Dividend Yield: 2.6%
- Payout Ratio: 53.9%
- Consecutive # years of dividend payments: 48 years
9. Verizon Communications ($VZ)
10. Automatic Data Processing ($ADP)
- Dividend Yield: 2.2%
- Payout Ratio: 58.9%
- Consecutive # years of dividend payments: 48 years
Source: Finchat
That’s it for today
Exclusive Offer from Compounding Quality for Porter & Co.
Pieter has put together an offer exclusively for Porter & Co. that’s only available through this link, and it gives you the chance to get a Founding Member package to Compounding Dividends for the price others pay for his basic membership.
To take advantage of this offer, simply click here, select the “Annual” option, and then Pieter will manually upgrade you to the full Founding Member level.