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Investing Specialists

10 Solid Ultimate Stock-Pickers' Dividend Stocks

These widely held dividend-paying firms have lower uncertainty than most.

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By Drew Woodbury | Stock Analyst

As you may recall from one of our previous articles, The Ultimate Stock-Pickers Team tends to be 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 regardless of how the stock might be classified. While we'll always be drawn to value managers, given the impact investors like Benjamin Graham and Warren Buffett have had on our own investment research, we also believe in looking outside of the value investing toolbox--especially if doing so helps us to come to stronger conclusions about our own research, as well as stocks we might interested in buying or selling. One exercise that we undertake from time to time involves taking a much deeper look at the dividend-paying stocks held by our Ultimate Stock-Pickers, with the goal being to find some widely held stocks that are not only trading at reasonable valuations, but also offer attractive and sustainable dividends for investors.

Not everyone pays close attention to dividends, but for those that do the suspension of  BP PLC's (BP) dividend this summer may have raised questions about the stability of dividends. While BP's dividend elimination was due to a catastrophic event that would be nearly impossible to predict, it underscores the notion that no dividend is completely safe. During the meltdown of the credit and equity markets a year and a half ago, there were a number of firms with long histories as steady dividend players, most notably large banks and financial institutions, that cut their dividends due to liquidity concerns or simply to be more conservative with their capital base. While many nonfinancial companies made it through the crisis with their dividends intact, the subsequent downturn in the economy has started to put pressure on firms that three or four years ago would not have had the sustainability of their dividend questioned.

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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.