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Don't Touch These 5 Dividend Stocks!
Posted by: Dividends4Life (IP Logged)
Date: April 30, 2014 09:57AM

Has someone near and dear to you responded with a "I was only trying to help" after royally messing something up? Have you ever tinkered with a computer, smartphone or something else only to learn it no longer works and you are not sure how to fix it? Our dividend stock investments can suffer the same fate if we provide them with too much of the wrong type of attention.

Here are some things to remember to keep your income investments on the straight and narrow.

Avoid Irrelevant Information

I tire of hearing the stock reports that sound like a horse race: "After early mixed results, the Dow edged up two points today despite a government report indicating unemployment is running at two-tenths of a percent above previous estimates..." Will any of this have meaning in 10 years? Five years? One year? In a month or a week? If you tune in to the same program tomorrow, you will likely hear an equally irrelevant, and possibly contrary, rant. Successful investing is a marathon, not a 40-yard dash.

Avoid Excess Trading

The investment community is geared toward trading. The media with their incessant play-by-play call of the market creates a sense of urgency. If the market is going up, you are made to feel like you are missing out on enormous gains, while market declines leave the investor feeling the need to sell before losing it all. The common thread here is the investor is being pushed to trade. Excessive buying and selling will at best mute a portfolio's return and at worse, will deplete it.

Buy and Hold

It's ironic that buy-and-hold (through dividend and value investing) has seen a resurgence, while concurrently being attacked on many fronts as being dead and no longer valid. Some attacks are a result of ignorance on the part of those not fully understanding the concept. Buy-and-hold is not buy-and-forget. All investment strategies should have a well-defined exit plan. Making a quick buck is not part of the exit strategy of long-term buy-and-hold dividend and value investors. Instead, it is our desire to hold the stock forever, assuming the stock continues to meet our investing criteria. When the stock no longer performs as anticipated, such as cutting its dividend, it is immediately sold.

Dividend Stocks Worth Waiting On

If our investment horizon is forever, we must do our due diligence up front and select only the very best stocks. Below are several stocks that have earned the patience of many dividend growth investors:

Johnson & Johnson (JNJ) is a leader in the pharmaceutical, medical device and consumer products industries. JNJ is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 52 consecutive years. Yield: 2.7

McDonald's Corp. (MCD) is the largest fast-food restaurant company in the world, with nearly 35,000 restaurants in 119 countries. MCD is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 37 consecutive years. Yield: 3.2%

The Coca-Cola Company (KO) is the world's largest soft drink company, KO also has a sizable fruit juice business. KO is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 52 consecutive years. Yield: 3.0%

Procter & Gamble Co. (PG) is a leading consumer products company that markets household and personal care products in more than 180 countries. PG is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 56 consecutive years. Yield: 3.1%

Genuine Parts Company (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. GPC is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 58 consecutive years. Yield: 2.6%

Conclusion

We live in an action-oriented world. In a microwave society that provides us instant everything, we look for immediate feedback for our actions. Sometimes it is hard to abide by the old adage "if it's not broke, don't fix it," but when it comes to our dividend growth stocks, we need to allow time to work its wonders on our portfolio.

Full Disclosure: Long JNJ, MCD, KO, PG, GPC. See a list of all my dividend growth holdings here.

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Stocks Discussed: JNJ, MCD, KO, PG, GPC,
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