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Investing Specialists

Top 10 Dividend-Yielding Stocks of Our Ultimate Stock-Pickers

Our top managers continue to focus on higher-quality businesses, with dividend-paying stocks like Philip Morris International rising to the forefront during the most recent period.

Mentioned: , , , , , , , , ,

By Greggory Warren | Senior Stock Analyst

With the U.S. stock market on pace to close out the year with its highest annual return since 2003 (when the S&P 500 TR Index was up 29% for the year), it has gotten increasingly difficult to find reasonably priced stocks. As of the middle of last week, Morningstar's stock coverage universe was trading at 1.01 times our analysts' estimates of fair value (see the Market Fair Value based on Morningstar's Fair Value Estimates for Individual Stocks graph for more details), offering no real margin of safety for investors. And yet, even with the runup in stock prices this past year, the S&P 500 has been enjoying one of the fastest periods of dividend growth on record. According to Josh Peters, director of Equity-Income Strategy and editor of Morningstar's DividendInvestor newsletter, and author of "The Ultimate Dividend Playbook: Income, Insight, and Independence for Today's Investor," per-share dividends have risen at a double-digit year-over-year rate in each of the 10 quarters through the third quarter of 2013 (when using the trailing-12-months dividend rate of the S&P 500 as a yardstick). Although the initial phase of this advance could be best characterized as a recovery from the dividend-cutting spree that took place following the 2008-09 financial crisis, Peters notes that the TTM dividend rate has surpassed its third-quarter 2008 peak by 19%.

The Morningstar Ultimate Stock-Pickers Team has a position in the following securities mentioned above: PM, MO, PG. Find out about Morningstar’s editorial policies.