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15 Dividend Stocks with 15% Yields in 15 Years

Dividends4Life

Dividends4Life

53 followers
Who wouldn't like to earn a safe 15% on their original investment? Normally double-digit returns are the fodder of con artists or associated with extraordinarily risky investments. In either of these cases, the person is usually left holding despair in one hand and an empty wallet in the other.

However, I have discovered that you can actually enjoy high yields with minimal risk, but there is one catch: Safe high-yielding investments can't be purchased today. Instead, you will have to grow them and that takes time.

The secret to building long-term wealth that will withstand the ravages of inflation is to focus on a growing income stream. The easiest way to acquire a growing income stream is to hand select quality dividend growth stocks and hold them for years.

Quality dividend growth stocks don't have double digit yields today. Most yield well under 5%. Some people scratch their head and wonder why I or anyone else would buy a stock that only yields 2%, 3% or even 4%. To understand why, one must first understand this very important concept...

Yield On Cost

Yield-on-cost (YOC) is simply the Current Annual Dividend dividend by Original Cost Per Share. YOC not a substitute for calculating an internal rate of return (IRR). The IRR calculation takes into account both capital appreciation and the timing of cash flows (purchases, sells and dividends).

However, as a dividend growth investor, my primary focus is on dividend growth and since my desired holding period is forever, capital appreciation is little more than an interesting side note.

YOC is much better suited for tracking dividend growth since it is individually tied to a stock and takes into account all the variations of growth rates over time, along with the timing of purchases. Also, it is useful when trying to explain to our yield-focused brethren why we chose the stock yielding 3% over amalgamated risk at 8%.

15 Stocks Yielding 15% (or more) In 15 Years

This week, I screened my dividend growth stocks database for stocks that will be yielding at least 15% in 15 years at current yield and dividend growth rate. The results are presented below:

Avista Corporation (AVA)

Yield: 4.4% | Dividend Growth: 8.8% | 15 Year Yield: 15.7%

Avista Corp. generates, transmits and distributes energy as well as engages in energy-related businesses. The company operates in two business segments.

Cardinal Health Inc. (CAH)

Yield: 2.0% | Dividend Growth: 15.0% | 15 Year Yield: 16.0%

Cardinal Health Inc. is one of the leading wholesale distributors of pharmaceuticals, medical/surgical supplies and related products to a broad range of health care customers.

Murphy Oil Corporation (MUR)

Yield: 2.0% | Dividend Growth: 15.0% | 15 Year Yield: 16.2%

Murphy Oil Corp. is an international integrated oil company has exploration and production interests worldwide, as well as refining and marketing operations in the U.S., which it plans to divest.

Praxair Inc. (PX)

Yield: 2.0% | Dividend Growth: 15.0% | 15 Year Yield: 16.2%

Praxair Inc. is the largest producer of industrial gases in North and South America, and the second largest worldwide. It also provides ceramic and metallic coatings.

Wal-Mart Stores Inc. (WMT)

Yield: 2.5% | Dividend Growth: 13.3% | 15 Year Yield: 16.6%

Wal-Mart Stores, Inc. is the largest retailer in North America. Wal-Mart operates a chain of discount department stores, wholesale clubs, and combination discount stores and supermarkets.

Owens & Minor Inc. (OMI)

Yield: 2.7% | Dividend Growth: 13.2% | 15 Year Yield: 17.1%

Owens & Minor Inc. is a leading domestic distributor of medical and surgical supplies to the acute care market, a health care supply chain management company, and a direct-to-consumer (DTC) supplier of testing and monitoring supplies for diabetes.

T. Rowe Price Group Inc. (TROW)

Yield: 2.4% | Dividend Growth: 15.0% | 15 Year Yield: 19.1%

T. Rowe Price Group Inc. operates one of the largest no-load mutual fund complexes in the United States.

Intel Corporation (INTC)

Yield: 3.3% | Dividend Growth: 13.3% | 15 Year Yield: 21.4%

Intel Corporation is the world's largest manufacturer of microprocessors, the central processing units of PCs, and also produces other semiconductor products.

McDonald's Corporation (MCD)

Yield: 2.7% | Dividend Growth: 15.0% | 15 Year Yield: 21.9%

McDonald's Corporation is the largest fast-food restaurant company in the world, with about 32,900 restaurants in 117 countries.

AFLAC Incorporated (AFL)

Yield: 2.7% | Dividend Growth: 15.0% | 15 Year Yield: 22.1%

Aflac Incorporated provides supplemental health and life insurance in the U.S. and Japan. Products are marketed at work sites and help fill gaps in primary insurance coverage. Approximately 80% of earnings comes from Japan and 20% from the U.S.

Microsoft Corporation (MSFT)

Yield: 3.0% | Dividend Growth: 14.3% | 15 Year Yield: 22.7%

Microsoft, the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.

Target Corporation (TGT)

Yield: 2.1% | Dividend Growth: 14.7% | 15 Year Yield: 23.3%

Target Corp. operates about 1,500 Target and 250 SuperTarget general merchandise stores across the U.S.

Lowe's Companies Inc. (LOW)

Yield: 2.5% | Dividend Growth: 17.9% | 15 Year Yield: 29.3%

Lowe's Companies, Inc. sells retail building materials and supplies, lumber, hardware and appliances through more than 1,700 stores in the U.S. and Canada.

Walgreen Co. (WAG)

Yield: 2.3% | Dividend Growth: 18.8% | 15 Year Yield: 30.1%

Walgreen Co. is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico.

ConocoPhillips Co. (COP)

Yield: 3.7% | Dividend Growth: 15.0% | 15 Year Yield: 30.4%

ConocoPhillips Co. was formed via the 2002 merger of Phillips Petroleum and Conoco, is the fourth largest integrated oil company in the world.

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 210+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long WMT, OMI, INTC, MCD, AFL, MSFT, TGT, LOW, WAG, COP. See a list of all my dividend growth holdings here.

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About the author:

Dividends4Life
Visit Dividends4Life at:
http://www.dividend-growth-stocks.com/

Rating: 4.1/5 (22 votes)

Comments

silverman89
Silverman89 - 2 years ago


I don't know how you came up with your projected dividend growth rates, but they are much too optimistic. In fact they are ridiculous.
mcwillia
Mcwillia - 2 years ago
Dear Dividends4Life;

Indeed, something really is ridiculous here, at least as to Aflac...

The third quarter 2011 conference call reiterated management's dedication to the long-standing policy of increasing dividends roughly in line with earnings growth, the problem is that trailing 10 year dividend growth has been 22% per year, and trailing 10 year earnings growth has been 14.5% (by Valueline). If I use either figure, Aflac's present 3.2% yieldwill grow to 15% in only 8 years or 11 years, depending, but certainly not the 15 years you suggest. The nerve. Your math skills...Puh-leeze!

Aflac's e.p.s growth would have to slow to 10.5% per year to force us to wait 15 years until our we get 15% dividend yield on our present payout, and that presumes the impossibility of zero inflation. (Shirakawa and Bernanke will both do what they can to inflate at least 2% per year.)

You make no effort to show just how Aflac would be able to push profitability down this low. To push growth down below 10% annually over the long term, Aflac would have to drastically reduce its 70% Japan cancer-policy market share, cut down its 95% persistency rate, and possibly exit the entire business before the Japan government cuts even more health coverage and forces another wave of customers Aflac's way. Aflac would also need to donate a great part of its bond portfolio to its dreadfully undercapitalized competitors, so they could pick up the underwriting slack, otherwise Aflac's insured's would still return for more Aflac every year...lastly, Aflac could take over the anachronistic sales forces from Mizuho and Nippon Life, so the latter could exchange places with Aflac as the low-cost providers. Aflac's leadership is indeed skillful, but even they might not be able to accomplish all of this and make it last. One final idea, Aflac could provoke new Euro-crises every single year for 10 years, so it would have to write down about as much bond value as it otherwise grows earnings...

You cavalierly also presume nobody will acquire Aflac in the meantime and sop up the rich dividend for themselves, or that the Amos family with 20% voting-power won't grow tired of all those dividends and cut'em down. By the way, talk about exasperating, a 20%+ROE and they're paying a dividend? Arrrrgh! Obviously they think that just because they earned an average 14.5% per annum eps growth over the last 10 years, and a 19% average they decade before that, they will keep earning money forever, or that they somehow don't 'need' to invest more in the business, as if these figures were even close to satisfactory! For shame.

And if Berkshire buys Aflac, the dividend will NEVER reach 15% per year. In fact, it will plunge to exactly zero. I shudder that they might, since at current quotations Aflac is yielding about 22% return on equity, has an 83 Billion dollar float (more than Berkshire), a 5% annual underwriting profit, all available at a operating income p/e of 6.5...Aflac is priced so low that its entire American-side insurance business is essentially free, darn-it. If Buffett buys it, we will all be forced to take a paltry 30% gain or so, and the rest of the profits will forever after go to BRK. Then what will we do? Where will we find another Aflac. It is a nightmare to be long AFL.

(tongue in cheek, of course...wink wink)

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