Recently, I was asked on another blog what are the top 5 income stocks that I like? It was an fascinating question that I quickly answered. I thought it would be interesting to expand on my answer here. It is important to note these picks will change over time (maybe even by the time the market opens on Monday) and are based on how I define “like”. These are the ones I listed:
1. ACAS – High and growing dividend yield. How can you not like a company that has a double-digit current yield and has raised it’s dividend on average 7.7% over the last 5-years? ACAS is planning, and publicly stated, its intentions to increase its dividend 4 times in 2008.
2. AFL – Low yield, strong dividend growth. A traditional dividend play. ALF’s dividend increase has averaged 22.3% over the last 10-years; 28.7% over the last 5-years. Plus my kids love the duck commercials.
3. GE – Moderate growing yield. I was once asked if I were limited to buying only one stock for the rest of my life, what would it be? GE was my answer. Over the decades I think GE has been one of the best, if not the best, managed companies. They just execute and win. They are quick to cut their losses and move one when something does not work. With a current yield of 3+%, it is a great place to park cash.
4. RY – Moderate growing yield. I am still getting to know this Canadian bank – the more I learn, the more I like it. It has been unfairly punished for the U.S. banking debacle. With a current yield of 4+% and a 10-year average dividend growth rate of 19.7% (on the U.S. ADR), I am buying all that my allocation will allow.
5. JNJ – Low yield, strong div growth. Another traditional dividend play. JNJ’s 10-year dividend growth rate is 14.6%; 15.8% for the last 5 years. This is a stock I have tried to buy for a long time and 2007’s market decline finally provided me the opportunity. I will continue to buy as long as my window of opportunity is open.
Disclaimer: Material presented here is for informational purposes only and is based solely on my opinion. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I own shares of all the above-mentioned stocks.
What are your 5 favorite stocks?