These Are My Top Dividend Stocks for 2016
My list of top 10 dividend stocks for 2016 isn’t just an example of types of stocks those investors seeking income should look at. These kinds of stocks are a necessity for a slow-growth world. Investment risk is going up.
Even a growth investor can benefit from a few solid anchor positions in a portfolio of stocks. The kind of companies that provide stability of earnings (and dividends), combined with good potential for capital gains as well.
There are some themes to consider in a rising rate environment. Generally, resources and utilities tend to underperform. Going forward, I like a mix of some financials, some technology, and a few “special situations” in industries with above-economy growth prospects.
Investors who don’t require dividend income can make use of automatic dividend reinvestment. This is a great way to build a growing position in a solid business over time.
For a slow-growth world, dividends may just be the only return you get on stocks, especially for a market that’s already gone up tremendously.
My Top 10 Dividend Stocks for 2016
NIKE, Inc. (NYSE:NKE)
NIKE, Inc. (NYSE:NKE) stock isn’t the highest yielding position in the marketplace, but the company offers very good potential for capital gains, rising dividends, share splits and share repurchases.
NIKE should produce double-digit earnings growth each year for the rest of this decade. The company is good at managing currency fluctuations and typically management is fairly accurate with its financial outlooks.
The stock is an existing winner that should keep on doing well.
The Walt Disney Company (NYSE:DIS)
The Walt Disney Company (NYSE:DIS) is a Dow stock with a great track record of rising dividends and capital gains on the stock market. This company has a handful of main operating divisions, all of which should produce comparable numbers over the next year.
Star Wars is going to be a boon to earnings. Affiliate fees from television networks have been on the upswing and Disney’s parks and resorts are increasing prices without affecting demand.
Disney is an example of a great long-term holding.
Microsoft Corporation (NASDAQ:MSFT)
This “old tech” name offers one thing in this market: stability. Top-line growth is expected to increase for Microsoft Corporation (NASDAQ:MSFT) in its next fiscal year, and bottom-line earnings are still expected to grow by double digits.
Microsoft actually looks to be fully priced on the stock market. But it should remain this way because institutional investors are attracted to its earnings predictability, combined with a just under three percent dividend yield.
Microsoft stock has been on a roll the last few years.
Honeywell International Inc. (NYSE:HON)
Honeywell International Inc. (NYSE:HON) is its own diversified powerhouse in aerospace. This particular industry is doing far better than the general economy.
Honeywell’s recent quarterly results were very good. The company backed its 2016 sales and earnings outlook, which really pleased the market.
This stock is not overpriced and prospects for rising dividend payments going forward remain excellent.
Bank of Montreal (NYSE:BMO)
Banks can produce solid earnings growth in the early stages of a rising interest rate environment. This Canadian bank is not expensively priced on the stock market. It currently has an over four percent dividend yield.
The Canadian banking market is small, but it’s protected from foreign ownership and most of the names in this industry have great long-term track records on the stock market.
Johnson & Johnson (NYSE:JNJ)
Pharmaceuticals, combined with medical devices and brand name consumer products, make for a great long-term holding.
Johnson & Johnson (NYSE:JNJ) has been a very good stock market performer the last several years. In 2015, the position mostly drifted in consolidation after a big run and a slowdown in earnings.
For investors, this stock has proven to be a solid dividend grower. This stock is attractive on a long-term basis as a benchmark holding.
TransDigm Group Incorporated (NYSE:TDG)
This firm is not a household name. This Cleveland-based company, in the aerospace parts business, has approximately $12.0 billion in market capitalization on the stock market.
TransDigm Group Incorporated (NYSE:TDG) doesn’t pay a regular dividend, but often pays out one-time, special dividends. In the past, they’ve been pretty hefty.
Selling pumps, motors, power systems, and basically anything you can image that’s part of an aircraft, TDG’s been growing its financial results at a good clip.
The Toro Company (NYSE:TTC)
The Toro Company (NYSE:TTC) is one of my favorite small-caps for medium- to long-term investors. Selling specialized equipment for turf management and other industries, Toro is a proven winner that has provided very consistent growth in sales and earnings over the years.
It’s not the fastest growing small-cap business, but it pays a decent dividend and has a loyal customer base in the golf course and contractor markets.
Toro is now offering sprinkler refit equipment for water-starved jurisdictions like California. This company’s share price performance has been exemplary.
MasterCard Incorporated (NYSE:MA)
This is a stock to own for the long term. It has an excellent long-term track record. Management just announced another dividend increase and more share repurchases.
Earnings growth in 2016 is expected to accelerate over the performance in 2015. The big credit card brands are institutional favorites.
MasterCard Incorporated’s (NYSE:MA) sales and earnings growth have been quite consistent over the years.
Apple Inc. (NASDAQ:AAPL)
Apple Inc. (NASDAQ:AAPL) is a component of the Dow Jones Industrial Average. It’s big, not expensively priced, and boasts tremendous potential for rising dividends going forward.
Apple’s top-line sales growth is expected to accelerate in its next fiscal year over the current one. But this opportunity now is about the company’s massive cash position.
Even if sales and earnings slow for the company, Apple has plenty of tools to keep shareholders happy going forward.
Apple stock just bounced off a new, all-time record high and is in a well-earned price consolidation. The last time the stock did this (in 2013), it turned out to be a good opportunity.
(Please note that these are not presented as stock recommendations; the information in this article is only for reference purposes.)