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Dividend Achievers List – Part 2 (The American List)

As promised, I will continue with the dividend achievers list, this time around I will talk about strong dividend paying stocks in the largest market in the world, the U.S.

One great source of strong dividend companies in the US is PowerShares High Growth Rate Dividend Achievers (PHJ). Here is an excerpt from the Powershares site that describes PHJ:

The PowerShares High Growth Rate Dividend Achievers™ Portfolio (Fund) seeks to replicate, before fees and expenses, the High Growth Rate Dividend Achievers™ Index, which is designed to identify the 100 Dividend Achiever™ companies with the highest 10 year annual dividend growth rate. These companies have increased their annual dividend for ten or more consecutive fiscal years. The portfolio is rebalanced quarterly and reconstituted annually.

I always find it helpful to take a look at ETF/fund lists to get some stock ideas. If you are not comfortable buying individual stocks, why not buy the ETF/fund itself and own ALL of the strong dividend paying stocks for a low management fee?

If you’re too lazy to check out the Powershares site for yourself, here is a list of some of PHJ’s top holdings:

Company Symbol Current Yield
American International Group AIG 0.95%
McDonald’s Corp MCD 2.31%
U.S. Bancorp USB 4.53%
United Technologies UTX 1.65%
Home Depot HD 2.31%
Bank of America BAC 4.48%
Wells Fargo & Co WFC 3.25%
Pfizer Inc PFE 4.65%
Johnson & Johnson JNJ 2.42%
Lowes LOW 0.63%
Walmart WMT 1.39%
Citigroup C 4.29%
Medtronic MDT 0.89%
Automatic Data Processing ADP 1.89%
Freddie Mac FRE 3.21%
Washington Mutual WM 5.17%

There are quite a few strong dividend payers in the US, but the ones listed above are the creme of the crop and have increased their payouts at least once / year for the past 10 years.What I regularly do is keep a watching the dividend payers for dips in their stock price.The stocks that I highlighted in bold are stocks that Warren Buffett holds in his portfolio. Perhaps something to look into further.

For Canadians, it is more efficient to hold U.S dividend payers INSIDE of your RRSP. Please see my article on dividend taxes here.

Hope you enjoyed the dividend series. Happy Investing!

Disclaimer: I own some of the stocks listed in this article. The stocks listed in this article are not stock recommendations, buy at your own risk.

13 Comments, Comment or Ping

  1. 1. Qubikal

    “What I regularly do is keep a watching the dividend payers for dips in their stock price.”

    Can you further explain what the monitoring of dips in stock prices does? Does this mean that this is when you buy them?

  2. Qubikal: Sorry, I should have been more clear. When the price of a strong dividend paying stock dips/decreases, the yield will go up. I usually wait until the yeild raises a certain level before purchasing.

    For example, CIBC is currently paying a $3.08/share dividend. It’s current price/share is $102.00, thus the dividend yield being: 3.08/102 = 3.02%. For me personally, I will wait until CIBC has a yield of around 3.5%-3.7% before purchasing the stock. This would work out to be a stock price of around $3.08/3.5% = $88 to $83($3.08/3.7%) at current dividend payouts.

    Make sense?

  3. 4. Qubikal

    Thanks for the explanation.

    A great time to buy then would usually be the day after the ex-dividend date, as this is the date when all shareholders of record on the day will receive a dividend. On the next day, the share price will adjust for the payments that is promised to be paid.

  4. “For Canadians, it is more efficient to hold U.S dividend payers INSIDE of your RRSP”

    Good call here FT, you canadians know how to take advantage of the exchange!

  5. 6. silverm

    “For Canadians, it is more efficient to hold U.S dividend payers INSIDE of your RRSP.”

    One thing to watch out for is the currency conversion rate. Most brokers converts your US dividends into Canadian currency. If you want to reinvest the dividends back to US, they’re converted back again. This can cost you as much as 2.5% to do the double conversions. I hold Canadian income trusts first inside RRSP. If I have more room, then US dividend payers.

  6. You might also consider the Dividend Aristocrats and High-Yield Dividend Aristocrats. The things I don’t like about dividend etf’s are several :

  7. 8. Shades

    Quick question though, what about the withholding tax that the US charges for foreign investors? It can be as high as 30% for dividends (depending on your country of residence and if you’ve submitted a W8-BEN). Shouldn’t that be a factor in deciding whether to invest in US dividend paying stocks?

  8. Shades, taxation of foreign dividends is definitely a factor. I personally would only hold US div stocks in my RRSP (no tax until withdrawn).

  9. 10. Amit

    @silverm: If you open a Discount Broker account with Questrade for your RRSP, you can keep it in USD. So, you essentially pay for the conversion only twice (once when you initially make your contribution to the QT account, and once when you take it out of that account years down the line). During the time when your money is kept in USD, you only pay at $5 fee per day that you do any trading, but apart from that you won’t lose your Dividends in any conversions.

    If you don’t keep your money in your RRSP in USD, then I agree that you will end up paying the conversion costs.

  10. 11. Jen

    fyi, PowerShares shut down the ETF in the article, PHJ, on May 18, 2009

  11. 12. connan23

    Can someone update this list above? Some of them are bankrupt or bought by government..

  12. 13. Rob

    Please update this list.

    “Investing” in the US banks is somewhat an oxymoron LOL


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