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Outside the Box
Oct. 5, 2010, 12:00 a.m. EDT · Recommend (2) · Post:
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"¹ Previous Column
Extend the failed Bush tax cuts "” for now
First Take "º
Rocky turnaround for Talbots
By Jeff Reeves
ROCKVILLE, Md. (MarketWatch) "” Wouldn't it be great if you could pick stocks for free and still reap the rewards if they do well?
Unless you have a rich benefactor doling out play money or you count your paper trades as "profits," that's just a pipe dream for most of us.
But dividend-stock investors can get the next best thing via high-yield plays with reliable paydays. These companies can literally pay for themselves in a decade or so "” and then the value of the shares is 100% profit when you cash out.
Hundreds of people showed up for a foreclosure help event in Tampa, Fla., that was sponsored by J.P. Morgan Chase. Video courtesy of Fox News.
Not every dividend stock pays for itself in a reasonable time, of course. Companies that slash payouts or keep yields at 1% or so could take a lifetime to shell out the dividends to offset your initial investment. But a select group of stocks have "paid" for themselves in less than 15 years of disbursements. That's certainly long term, but considering that many of these picks also have seen share prices jump dramatically, that 100% return on investment is nothing to sniff at. Read about the best dividend stocks to grow your nest egg.
Here are seven high-yield dividend stocks that have paid for themselves in less than 15 years, using real dividends and real share prices from the third quarter of 1995 to the present day:
Adjusted share price Oct. 2, 1995: $6.42. Dividends paid since Oct. 2, 1995: $32.19.
The math is a bit strange accounting for the 2008 spinoff of Philip Morris and a 3-for-1 split in 1997. But investors who jumped into what is now Altria /quotes/comstock/13*!mo/quotes/nls/mo (MO 24.13, +0.30, +1.26%) in 1995 had a cost basis of around $6.42. The total dividends paid by Altria across the last 15 years add up to $32.19. That means the stock is paid for and then some even at current valuations "” though on this cost basis, shares would be paid for five times over. And that's not counting the 0.7 of a shares of Kraft Foods Inc. /quotes/comstock/13*!kft/quotes/nls/kft (KFT 31.21, +0.27, +0.87%) for every one share of Altria held in 2007 when it spun off its majority stake. Current investors should be pleased that Altria still has a big dividend payday, with a current yield of 6.3%.
Share price Oct. 2, 1995: $30.50. Dividends paid since Oct. 2, 1995: $33.47.
The math on utility stock Consolidated Edison /quotes/comstock/13*!ed/quotes/nls/ed (ED 48.37, +0.30, +0.62%) is a bit easier, with no splits to worry about. Shares are up 60% from valuations 15 years ago, and the regular dividend payments add up to a total of $33.47. It's worth noting that ED has paid a dividend on its shares for 125 consecutive years, so it's highly unlikely this stock will stop paying for itself anytime in the near future. Current yield for ConEdison is 4.8%. Read about utilities to avoid.
Adjusted share price Oct. 2, 1995: $18.94. Dividends paid since Oct. 2, 1995: $36.10.
Another stalwart utility stock, Dominion Resources /quotes/comstock/13*!d/quotes/nls/d (D 44.50, +0.61, +1.39%) , has seen shares more than double over the last 15 years when adjusted for a 2-for-1 stock split in 2007. But that's not the only way this pick has paid for itself "” this utility stock has delivered $36.10 a share in dividend payments since 1995. That almost pays for the current price of the stock, and is almost double the initial buy-in per share 15 years ago. Dominion stock currently yields a dividend of 4.1%, so it remains a pretty strong dividend play.
Talbots Inc. cuts its sales forecast for the third quarter and the year and unveils the next steps in its three-year turnaround plan. Wall Street is not impressed, writes Angela Moore.
32 min ago12:14 p.m. Oct. 5, 2010 | Comments: 1
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