Don Taylor, a veteran manager from Franklin Templeton (since 1996), an $18 billion fund company, identifies three high dividend paying stocks that can benefit investors in both long and short runs.
Owing to the low interest rates, this year has been great for US stocks, and most investors have gained from high dividend payouts from majority of companies.
However, experienced trade analysts like Don Taylor, suggest that investing in companies that are capable of producing best dividend yields in the long run (irrespective of the current yields of the respective company) are the safest bet, rather than investing in companies that are currently performing well. This is the main reason behind Franklin Rising Dividends Fund (MUTF:FRDPX).
While identifying the top three companies to invest in, Don Taylor has followed some specific parameters to ensure that the companies he is going to suggest will have a handsome dividend growth for years to come.
His identification process followed a fresh subjective approach which favored the companies that are much stable, have an excellent growth prospects, great management teams and unparalleled leadership.
According to Taylor, many people invest in treasury bills because they are the safest investments. He admits that such investments are secure, but in order to get benefited one has to wait till the bond gets matured. He also reminds that the interest rates on such bonds don’t increase and the investors are not compensated well enough.
According to the statistics, US treasury bills had a dividend growth of meager 1.54% over the past ten years while S&P 500 had an overall dividend growth of 2.10%. If safety is one’s concern, according to Taylor, there some great companies operating for decades that have been paying out handsome dividend yields since their inception and this fact can further be established by having a look at S&P 500 Dividend Aristocrats.
Following are the three favorite stock dividends of Don Taylor:
- Honeywell International (NYSE:HON) announced a dividend profit of 15% last October. Though the company does not have a long history of great dividend payouts (in the recent past), it was one of those stock dividends that used to pay quite well before the financial crisis broke out. According to Taylor, investors can expect an annual dividend growth around 10% or even more in the years to come. This makes it a pretty good stock dividend to invest in.
- Microsoft (NASDAQ:MSFT) announced a dividend growth of 16% last September. Its dividend payouts have been consistently increasing for the past 12 years and according to Taylor, investors can expect an annual dividend growth in the double digits, consistently, in years to come as well.
- Medtronic (NYSE:MDT) announced a dividend growth of 13% this June. This is one of the safest companies for investors to invest in, as the company has been constantly increasing its dividend for the past 39 years now and according to Taylor, it will continue to do so even in the future with the help of its strong infrastructure and unprecedented market reach.
The companies that Don Taylor has identified also require only a modest investment capital and this helps to use the cash flow in favor of good dividend yields and for longer periods of time.