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Investing Specialists

Top 10 Ultimate Stock-Pickers' Dividend Stocks

We've taken a deep look at the dividend-paying stocks held by our top managers.

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By Brett Horn | Associate Director of Equity Research

As many of you already know, when sifting through the holdings, purchases, and sales of the top managers included in our Investment Manager Roster, the main goal of the Ultimate Stock-Pickers Team is to uncover and highlight investment ideas that are trading at what our analysts consider to be attractive valuations. In that regard, we're basically agnostic to stock classifications like growth or value, preferring to focus on whether or not a company's shares are trading at a deep enough discount to our fair value estimate to warrant purchasing. While we will always be drawn to value managers, given the impact that investors such as Benjamin Graham and Warren Buffett have had on our own investment research, we believe that we should always be willing to look outside of the value investing toolbox--especially if it helps us come to stronger conclusions about our own research, as well as the stocks we might be looking to buy or sell.

It is in that spirit that we decided to take a deeper look at the collection of dividend-paying stocks held by our Ultimate Stock-Pickers, with the hope being that we could find widely-held stocks that are not only trading at reasonable valuations, but which offer attractive and sustainable dividends for investors. Not everyone pays close attention to dividends, and some investors see dividends as a sign of poor growth prospects. But dividends can actually help investors earn superior total returns. Professor Jeremy Siegel, in his 2005 book, The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New, identified dividends as one of the key drivers of long-term equity outperformance. While companies that pay dividends may not grow as fast as successful non-dividend payers, the income they generate--in addition to the signals that dividends send about financial strength, business stability and capital discipline--have been extremely valuable for long-term investors.

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The Morningstar Ultimate Stock-Pickers Team does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.