Tag Archives | dividends

VIDEO: How I’m Playing The End of a 30-year Bond Cycle

Watch me chat with Covestor’s Mike Tarsala about how to invest at the end of a 30-year bull market in bonds.  I discuss some of the ways I am playing the transition in my Dividend Growth Portfolio.

To read Mike’s write up of the interview, see: Sizemore: How I’m playing the end of a 30-year bull for bonds.
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Jeremy Grantham’s Top 5 Dividend Stocks

If you don’t know who Jeremy Grantham is, you should.  In fact, once you finish reading this article, you should drop whatever else you are doing, go to his website, and read his latest quarterly letter.  Make it a habit to read every quarterly letter as they come out; you’ll be a better investor for it.  (While you’re at it, make it a habit to read his colleague James Montier’s work as well; Montier’s writing on behavioral investing  is some of the most insightful I’ve ever seen.)

Grantham is the chief investment strategist of Grantham Mayo Van Otterloo (GMO), an investments firm with more than $100 billion under management.  He’s also one of those rare managers who is not afraid to be a voice in the wilderness.  Virtually alone among large money managers, Grantham steadfastly refused to get caught up in the 1990s tech bubble.  His principled stand lost him nearly half his assets under management due to client defections, but those that stuck with him did well in the bear market that followed.

A decade later, he voiced concerns again about bubbles forming in the real estate and financial sectors…and we all know how those turned out.

But lest anyone accuse him of being  a “perma bear,” Grantham was pounding his fist on the table immediately after the 2008 meltdown telling investors to buy when everyone else was too terrified to move.  

Suffice it to say, this is a guy who has had a good grasp on the market conditions of the past several years.  He’s someone you ought to listen to.

With that said, let’s take a look at Mr. Grantham’s top five stock holdings as of his firm’s SEC filings, as reported by GuruFocus.

Stock

Ticker

Current Price

Dividend Yield

Microsoft

MSFT

$30.21

2.7%

Johnson & Johnson

JNJ

$69.03

3.6%

Philip Morris International

PM

$88.99

3.4%

Pfizer

PFE

$23.60

3.8%

Coca-Cola

KO

$76.91

2.7%

 As a demanding value investor, it is not at all surprising to see that all five of Grantham’s top holdings pay dividends far in excess of the market average of approximately 2%. 

It’s also not at all surprising to see that his holdings are serial dividend growers.  After all, for long-term investors, the dividend today is far less important than the dividend 5 years from now.

Coca-Cola ($KO) is the second-largest holding of my favorite ETF, the Vanguard Dividend Appreciation ETF ($VIG), and Microsoft ($MSFT) and Philip Morris International  ($PM) will likely be holdings as well once they meet the time requirements. (In order to be included in the ETF’s underlying index, a stock must have a minimum of ten consecutive years of dividend increases.  Microsoft started paying a dividend in 2003, and Philip Morris International was spun off from parent Altria less than four years ago.)

The real king of dividend growers is Johnson & Johnson ($JNJ), however.   This iconic maker of Band-Aids, Tylenol, Listerine, and too many other health and pharmaceutical products to list has raised its dividend for an astonishing 49 consecutive years. 

The last year in which Johnson & Johnson failed to raise its dividend, John F. Kennedy was the President of the United States.  Stop and think about that for a minute. 

The only stock in Grantham’s top five that has cut its dividend in recent years is Big Pharma giant Pfizer ($PFE), which has been hard hit by the patent expirations and competitive forces that have affected its rivals. 

Big Pharma has done quite nicely in 2012, however, and Pfizer currently trades near its 52-week highs. 

There are no guarantees that owning a basket of Mr. Grantham’s largest stock holdings will beat the market, of course.  There are plenty of years in which his portfolios underperform the market by a wide margin, particularly “risk on” years in which investors throw risk tolerance to the wind.

Still, if you are looking for a portfolio of solid dividend payers for steady, consistent returns, Mr. Grantham’s stocks are worth a good look.

Disclosures: Sizemore Capital is long MSFT, JNJ and VIG.  Sizemore Capital recently sold its holdings of PM.

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Charles Sizemore on Market Carver

Listen to Big Joe Clark discuss dividend investing with Charles Sizemore and more on Market Carver.  To see the video, follow this link: http://www.screencast.com/t/V67Q9ENycih

 

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Charles Sizemore Discusses Dividend Investing

Charles Sizemore, editor of the Sizemore Investment Letter, discusses the ins and outs of dividend investing with Joe Clark on Consider This radio.

To hear the interview, follow this link.

Consider This With Big Joe Clark is a show designed to provide every day people with real, useful information that can be translated into daily life and thought. Each week Joe covers a different aspect of financial planning, retirement options, and current economic conditions in common sense language that everyone can understand.  To find out more about the show, please visit the Financial Enhancement Group’s site.

Joseph A. Clark, CFP, RFC – Big Joe, a Certified Financial Planner (CFP) and Registered Financial Consultant (RFC), has been in the financial services industry for more than 20 years. He is the managing partner of Financial Enhancement Group, LLC, a Hoosier-based financial services company with offices in Anderson, Lafayette, Indianapolis and Rensselaer. Joe is also a teacher, he began teaching a financial capstone class for the Financial Counseling and Planning students at Purdue University in the fall of 2008.

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This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.