{"id":37122,"date":"2013-03-27T19:44:07","date_gmt":"2013-03-27T23:44:07","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37122"},"modified":"2013-03-27T19:44:07","modified_gmt":"2013-03-27T23:44:07","slug":"this-simple-income-strategy-has-beaten-the-sp-500-by-32-since-march-2008","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/03\/27\/this-simple-income-strategy-has-beaten-the-sp-500-by-32-since-march-2008\/","title":{"rendered":"This Simple Income Strategy Has Beaten the S&P 500 by 32% Since March 2008"},"content":{"rendered":"

By Jim Nelson<\/strong><\/p>\n

Here’s a prediction…<\/a><\/p>\n

If you are searching for stocks that yield super-high dividends, you’re probably making a big mistake.<\/p>\n

That’s because high yielders are much more volatile and tend
\nto underperform larger, safer dividend payers with longer histories of
\ndividend payments.<\/strong><\/p>\n

The first step to building a bulletproof income portfolio is not to reach for yield into riskier stocks<\/a>. It’s to start with a solid foundation. To buy only the safest dividend stocks.<\/p>\n

These stocks should make up the “bedrock” of your portfolio.<\/p>\n

Take a look at the chart below. It shows the performance of three
\nimportant indexes since the start of the 2008 crash, all reset to a
\nbaseline of 100. They are the S&P 500 (blue line), the S&P 500
\nDividend Aristocrats Index (green line) and the S&P High Yield
\nDividend Aristocrats Index (red line).<\/p>\n

\"\"<\/a>
\nView Larger Chart<\/a><\/p>\n

As you can see, the Dividend Aristocrats Index wins hands down. This
\nindex contains only S&P 500 companies that have grown their
\ndividends every year for at least 25 years.<\/p>\n

Only 51 companies — a hair over 10% of the entire index — qualify. That’s the kind of “bedrock” you’re looking for. <\/strong><\/p>\n

The High Yield Dividend Aristocrats Index selects its constituents
\nfrom the S&P Composite 1500, a larger group of stocks that includes
\nmany riskier plays. Also, it requires only 20 years of dividend
\nincreases. That’s how it can find higher-yielding stocks than the
\nDividend Aristocrats Index.<\/p>\n

But sticking to larger, longer-paying dividend stocks would have made
\nyou 14.4% more on your investment than if you had stretched for those
\nhigh yields. And it outperformed the S&P 500 by an impressive 32%.<\/p>\n

The reason is simple. High-yielding stocks often don’t stay that way for long. <\/strong><\/p>\n

Typically, the reason they have higher-than-average yields<\/a>
\nis they carry more risk and have less growth potential than their
\nrivals. So they bump up their dividend payments to attract investors.
\nOther times, these higher yielders are paying out too much of their
\nearnings through dividends and can’t sustain their payout ratios.<\/p>\n

Take beauty products maker Avon Products Inc. (NYSE:AVP<\/a>)<\/strong>,
\nfor example. Its board was recently forced to cut the company’s
\nquarterly dividend from 23 cents to just 6 cents per share. That’s a
\nmassive blow to income-hungry shareholders.<\/p>\n

This is why I recommend that readers of my income advisory service, Income & Dividend Report<\/em>, start off by building a solid bedrock of income.<\/p>\n

That means buying shares in companies that have long histories of
\nraising their dividend payments. I also look for large-cap companies
\nwith strong earnings growth, products that their customers can’t live
\nwithout and strong management teams.<\/p>\n

These companies are best placed to weather market storms. They are
\nalso best placed to continue growing their earnings — which they must
\ndo if they are to keep paying out higher dividends.<\/p>\n

One my favorite “bedrock” dividend payers right now is consumer products maker The Clorox Co. (NYSE:CLX<\/a>)<\/strong>, which owns household brands such Pine-Sol cleaners, Poett home-care products, Fresh Step cat litter and Glad trash bags.<\/p>\n

Clorox has been paying a growing dividend for 35 consecutive years.
\nAnd it has continued to lay the foundation for future dividend hikes by
\nentering new, fast-growing emerging markets.<\/p>\n

Make this — and stocks like it — the bedrock of your income
\nportfolio. And don’t get suckered by high yielders that can’t sustain
\ntheir dividend payouts.<\/p>\n

Sincerely,<\/p>\n

Jim<\/p>\n

P.S. Clorox is a great way to start building a bulletproof income
\nportfolio. But there are even more solid and safe dividend stocks out
\nthere. I recently recommended two of these super-safe stocks to Income & Dividend Report <\/em>readers. To find out how to get access to them and to start receiving future recommendations, follow this link.<\/a><\/strong><\/p>\n

\u00a0<\/a><\/p>\n

\n
\n

Disclaimer<\/span><\/span><\/span><\/h3>\n
\n

Article brought to you by Inside Investing Daily. Republish
\nwithout charge. Required: Author attribution, links back to original
\ncontent or www.insideinvestingdaily.com<\/a>. Any investment contains risk. Please see our disclaimer<\/a>.<\/em><\/p>\n

 <\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By Jim Nelson Here’s a prediction… If you are searching for stocks that yield super-high dividends, you’re probably making a big mistake. That’s because high yielders are much more volatile and tend to underperform larger, safer dividend payers with longer histories of dividend payments. The first step to building a bulletproof income portfolio is not … <\/p>\n

Continue reading “This Simple Income Strategy Has Beaten the S&P 500 by 32% Since March 2008”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-37122","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37122","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=37122"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37122\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=37122"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=37122"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=37122"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}