5 dividend bubble stocks to buy now
There's still time to get in on these picks, to profit from payouts and appreciation.
by Jamie Dlugosch
Come on admit it, you secretly love to invest in bubble stocks. Who doesn’t? It’s wrong for every reason, but that doesn’t stop you. There’s money to be made before the bubble bursts, right? We recently watched as the previously impenetrable gold market bubble, was pierced. Oh well, it was fun while it lasted. Perhaps it's time to find the next bubble. I think I found just the place.
If you haven’t been paying attention lately, here's where the latest rage is happening: the previously sleepy little market of dividend stocks. Here are five "dividend bubble stocks" that still have room to run.
Just look around to see the number of articles being written about dividend stocks. The number of products emanating from Wall Street touting the benefits of dividend stocks is on the rise as well.
Payouts and appreciation
It’s all dividend stocks, all the time. The environment is rich for further inflation of the dividend bubble that is brewing. Not only are these companies paying healthy dividends, the stocks are appreciating greatly. More and more buyers searching for yield are coming into the market each and every day.
And there’s plenty of fuel to keep these stocks moving higher.
The best part is, we aren’t hearing a whisper about dividend stocks being a bubble. In fact, this article might be the first to associate dividend stocks with the word "bubble." That alone tells me there is much more meat on the bone for us to chew on.
Get your dividend stocks while the bubble is still inflating. Here are the best bets:
What’s not to love about the oil business? The cash flow is insane -- and by paying that cash as a dividend, these companies are exploding like never before. Phillips shares are already up a fantastical 20%. Add in a 2% dividend and away you go.
It would take you years to get that sort of return owning a Treasury security. This run will feed on itself for some time as the return and the dividend attract future investors. I get giddy just think of what oil self-reliance in the United States would mean to the stock. Get in now while this bubble is getting larger.
Procter & Gamble (PG)
This boring consumer stock is not so boring. Procter & Gamble shares have jumped by 11% so far this year. This one pays a 3% dividend yield, pushing the total return to nearly 15%. Why settle for a paltry 2% or 3% return in Treasurys? When the rest of the market clues in to these juicy returns, there will be more buying ahead. They might be late to the party, but if you get in now you will likely get yours and theirs too. Isn’t that what a bubble is all about?
To think a simple little beverage would become this. Coca-Cola is cash cow and a growing one at that, what with global expansion. Those overseas sales help the company pay a very healthy 2.7% dividend yield.
In 2013, shares of Coca-Cola have gained 16%. Put it all together and we are pushing 20%. Investors are buying Coke like it’s a drug…oh wait, it is a drug of some sorts. You have to love the addictive quality of the cola product. That alone ensures sales and growth that will keep this dividend bubble stock expanding.
Warren Buffett got in on this one early, but it is not too late for you to hit the rails. With the Federal Reserve pumping money into the economy, more and more shipping will take place. The natural gas and oil explosion will benefit CSX, too. In place of a pipeline, look for more of the energy complex to move via trains.
CSX shares are up a whopping 27% so far this year. Don’t let that stop you from jumping on board. The company pays a 2.7% dividend yield that will attract investors for a long time – at least as long until this dividend stock bubble bursts.
Apple just recently got serious about being a dividend stock, with its latest earnings report. Before that the company was struggling mightily, with shares down sharply. It is no coincidence that the stock has rallied some $70 since the announcement.
The fun has only just begun. In addition to a healthy dividend from this Fort Knox collector of cash, investors get to own one of the best technology innovators ever. In Apple we might be witnessing the quickest transition from momentum stock to dividend bubble stock. Blink, and you might miss it.
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Shares fell 9 percent during the quarter, which offers a compelling entry price now.
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