comfortable retirement, then there is no risk-free path. Yield and risk tend to follow each other. As risk increases, the investor demands more yield to compensate for that risk. Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk.
A stock with a high yield doesn't offer much if the price significantly declines after its dividend is cut or eliminated. Fortunately, the market does not always behave in a rational manner. This will sometimes create an abnormal relationship between risk and yield.
As a society we have grown accustom to wanting it all, including our investments. Specifically, many income investors want both high yield and low risk. Sometimes individual stocks find themselves in the unusual position of providing both higher yields and lower risks. If you don't look for them, you will never find them.
This week week, I screened my dividend growth stocks database for stocks rated as Low risk and with yields above 4%. (Click here to see how I calculate Risk.) The results are presented below:
Old Republic Intl (ORI) is an insurance holding company that engages mainly in the general (property and liability), title, and mortgage guaranty and consumer credit indemnity run-off businesses. The company has paid a cash dividend to shareholders every year since 1942 and has increased its dividend payments for 35 consecutive years. Yield: 4.0%
Universal Health Realty Income Trust (UHT) is a real estate investment trust (REIT) that invests in healthcare and human service related facilities. The company has paid a cash dividend to shareholders every year since 1987 and has increased its dividend payments for 30 consecutive years. Yield: 4.3%
Helmerich & Payne, Inc. (HP) is the holding company for Helmerich & Payne International Drilling Company, an international drilling contractor. The company has paid a cash dividend to shareholders every year since 1959 and has increased its dividend payments for 28 consecutive years. Yield: 4.5%
National Health Investors (NHI) is a real estate investment trust that invests in income-producing health care properties primarily in the long-term care industry. The company has paid a cash dividend to shareholders every year since 2002 and has increased its dividend payments for 16 consecutive years. Yield: 4.5%
Mercury General Corp., (MCY) operating primarily in California, writes a full line of automobile coverage for all classifications of risk. The company has paid a cash dividend to shareholders every year since 1942 and has increased its dividend payments for 35 consecutive years. Yield: 4.7%
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 250+ 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: No position in the aforementioned securities. See a list of all my Dividend Growth Portfolio holdings here.
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- Why Dividend Growth Stocks Are Evil
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- 9 Higher-Yielding Financial Services Stocks With Rising Dividends
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