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Investing Specialists

Top Dividend-Paying Stocks Held by Our Ultimate Stock-Pickers

While Warren Buffett may have put the kibosh on a dividend for Berkshire's shareholders, he and the rest of our Ultimate Stock-Pickers continue to hold stocks yielding more than the S&P 500 Index.

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By Greggory Warren | Senior Stock Analyst

Domestic equity markets, as represented by the S&P 500 TR Index, are up nearly 10% since the start of the year, and Morningstar's universe of stock coverage is collectively trading above the fair value estimates derived by our cadre of stock analysts. Thus we expect dividend-paying stocks, which had fallen out of favor in the back half of 2012 (as investors fretted over potential tax increases) to once again work their way on to some investors' radar. Although we've seen increased interest in equities this year, with close to $35 billion flowing into actively managed stock funds since the start of 2013, according to data provided by Morningstar DirectSM, most of the capital has been dedicated to international stock funds (primarily those dedicated to diversified emerging markets and foreign large cap stocks), which tend to be geared more toward capital appreciation than income generation. Among U.S. stock funds, large cap value has generated the most interest among investors since the start of the year, which is a bit surprising given the category's poor relative performance generated (compared to large cap growth and large cap blend funds) during the one-, three-, and five-year periods ended December 2012. We have, however, seen more yield-driven flows among sector funds, with domestic real estate funds being the largest recipient of investor capital. That said, interest in funds dedicated to utilities, a more traditional sector for dividend investors, remains low, with more than $100 million flowing out since the start of the year.

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