Hi I'm Jimmy in this video I'm going
to walk through the 10 best dividend
paying stocks that should do well
going into 2020.
Even if the stock market crashes.
So what I did is I took the
dividend aristocrats ETF that ticker
symbol NOBL and I looked
at the total return for each of the
57 companies that are in
that ETF and I examined
the total return in both the Great
Recession and the dot com bubble.
I then selected 10 dividend paying
stocks that had good
returns for both time periods
while maintaining their dividend.
I was also careful to only include
companies that had a current
dividend coverage ratio of more than
one and just so we're on the same
page. A dividend coverage ratio.
Basically what we do is we take the
amount of profits we compare it to
the amount of the dividend paid.
So if you had a dollar in profits
and you paid out 50 cents in
dividends you'd have a dividend
coverage ratio of two.
So the key to this is to have a
dividend coverage ratio higher than
one. Now one really represents
one hundred percent.
So anything over that would
be a good sign.
So this is what the S&P 500 did
during the tech bubble.
So what I did is I took the high
from this point and then the low
right here and I said okay.
That's so that's the market fall.
And then I added one year
to the market bottom to
basically account for at least the
beginning part of the recovery
and for the tech bubble we're left
with this time period.
So that's from about September
of 2000 to August of 2003.
Then we switch over the Great
Recession and then we did the very
same thing. Someone from the high
which was in October of 2007
all the way down to the market
bottom which was in March of 2009
and we added a year giving us a
total timeframe of right here.
If we're curious during the tech
bubble from bar to bar while the S&P
500 was down a total of about 28
percent.
Now that's assuming that dividends
are reinvested back into the index
all the return numbers that I'm
talking about in this video are
going to assume that we reinvest
all of our dividends back into that
stock then for the Great
Recession. Also from bar to bar
while there the total return was
it was down about 23
percent. So I'll leave the numbers
up here during this whole video
so we can have something to compare
to as we go from stock to stock.
Now all of the companies that I
touch on this video I'm going to
touch on very very quickly
to prevent this video from getting
too long. So if there's any company
that is interesting to you that
you think deserves a deeper dive
please let me know in the comments
below and I'll do just that.
So for now I'm just going to hit the
high points and then we're going to
look at how they performed what
their dividend is.
We're going to move to move on and
hopefully we can use that
information to help guide our
portfolios if the market were
going to crash whenever that is.
OK so the first two companies come
out of a consumer discretionary
sector the first company is
Leggett & Platt ticker symbol
LEG.
So Leggett and Platt manufacturers
a ton of different products around
home and office furniture.
They also do some wire products that
they run out of their steel rod
mill. And the list goes on
and on as far as the progress as
far as the products that they make
their division deals is a bit over 4
percent right now.
So this is the LEG stock chart going
back to the tech boom during the
tech bubble. LEG was up about thirty
seven percent compared to the S&P
500. That's pretty good when we
switch over to the Great Recession.
Well there we can see that during
the Great Recession.
LEG was up just short
of twenty three percent.
Now we may look at this chart and we
may say there's no way that this
that this company was up 23 percent
and that's true from a price
perspective. But as I already
mentioned this all of our
returns all the total returns that
I'm talking about I assume
dividends are reinvested.
And that's important because it
assumes that we reinvest these
dividends down here when they paid a
dividend or back here when they paid
a dividend or even up here when they
paid a dividend.
So when the stock price is lower
well we're able to buy the shares of
this company at a cheaper price.
That is one of the advantages of
investing in dividend stocks that
consistently raise their dividend.
So like every company on this list.
That's exactly what they do.
Okay. Next company on this list.
Also in the consumer discretionary
sector. And that is the V.F.
Corporation ticker symbol VFC, VFC
is an international apparel company.
They own Jean brands like wrangler
or Lee and then they own companies
like Dickies the North Face
Timberland vans
and a decent amount of other brands.
Now right now VFC
has a dividend yield of about two
point three percent during the tech
bubble VFC more than 90
percent gain and then we switch over
the Great Recession.
Well here they posted up almost 5
percent. So once again
compared to the overall market they
did quite well.
Okay now we're switching over to
consumer staples where we have four
good dividend paying stocks.
The first is a classic blue chip
name Colgate-Palmolive
ticker symbol CL.
Colgate makes toothbrushes
toothpaste shampoos
soaps deodorant and the
list goes on and on.
So their basicly selling all
the stuff that we would expect
people to continue to buy even if
the market crashed right now.
Colgate has a dividend yield of
about two point three percent.
When we check out the tech bubble
well during the tech bubble Colgate
was able to put up a total return
of almost 16 percent.
Now if we switch over to the Great
Recession now we can see that
there they put up a total return of
about twenty three percent.
And this is one of those companies
that I would expect to do well in
almost any recession since
the products that they sell.
As I mentioned are somewhat
recession proof.
OK. Next up we have Hormel Foods
ticker symbol HRL.
This is another classic consumer
staples company that we would expect
to do well and they would expect
them to sell a lot of product
if the market were to pull back or
the economy will pull back.
They sell a lot of foods
they have frozen foods not frozen
foods meats sliced meats.
The list goes on and on.
Right now they have a current
dividend yield of a bit over 2
percent.
And when we jump over the tech
bubble well then we could see that
Hormel Foods put up fantastic
returns of more than 60 percent
way outperforming the S&P 500
during this time period.
When we switch over to the Great
Recession.
Well here they did a solid 20
percent thanks to their
consistent dividend payments.
And of course we're assuming we're
reinvesting our defense OK
onto our next dividend paying stock.
This one is McCormick ticker symbol
MKC McCormack is the
largest seller of spices
in the world.
They sell spices seasoning
sauces things along those lines.
Currently McCormack has a dividend
yield of a bit under one and a half
percent. And when we switch over to
the tech bubble well there we could
see that MKC.
did fantastic posting a total return
of more than 110 percent.
And we switch over to the Great
Recession.
Well once again they performed well
putting up about a 13 percent gain
after accounting for dividends.
OK. Our final consumer staples
company is Wal-Mart.
Wal-Mart is the largest brick and
mortar retailer in the world.
They currently have a dividend yield
of just shy of 2 percent.
And when we look at the tech
bubble well we can see that
they picked up a decent return
of about twenty three percent.
Then when we switch over to the
Great Recession here they also did
fairly well posting up a total
gain for this time period by 25
percent. So once again compared to
the S&P these companies are doing
pretty good. OK now we jump over to
the industrial sector where we have
two companies.
The first one is AO Smith
ticker symbol AOS
AOS currently pays a dividend of
just shy of 2 percent
and they focus their business on
water heating and water treatment
equipment during the tech bubble.
They posted a return of more than
100 percent and then during
the Great Recession they posted up a
gain of about 10 percent.
Once again not bad especially
compared to these guys.
Now while other industrial companies
W.W. Grainger ticker symbol
GWW Grainger
distributes and maintains
more than one point nine million
industrial products they do supplies
equipment tools things
along those lines.
They do a ton around various
industrial products and tools
and equipment things like that.
They have a dividend yield of a bit
over 2 percent during the tech
bubble of GWW.
had a total return of more than 75
percent.
And when we switch over to the Great
Recession well here they
put up a respectable 19 percent.
Once again assuming all the
dividends got reinvested.
OK now we're down to our final two
companies.
Next up we have Sherwin Williams
from the material sector ticker
symbol SHW Sherwin
Williams sells paints and coatings
to industrial commercial and
retail customers mostly in
North and South America.
They have the smallest dividend
yield of all of our companies a bit
short of 1 percent.
Now during the tech bubble we can
see that they did great.
Posting up a gain of more than 47
percent and then while the Great
Recession was going on well they did
a decent putting up a gain of about
5 percent during that time period
but compared to the S&P.
Quite good. Next up we have our only
utility company on the list
Consolidated Edison ticker symbol
ED ConEd distributes
electric services in the
northeastern part of the United
States. They have a dividend yield
of a bit more than 3 percent.
Now during the tech bubble
they did quite good.
Posting up a total return
of a bit more than 54 percent
while the Great Recession.
They did decent posting up about
a five point three percent gain.
So once again the goal of all this
was to try to find companies that
have historically done well during a
recession and could do
well going into 2020.
I would expect most of these
companies to do fairly well in a
broad economic pullback.
Now we may have to dive deeper
into some of these companies if
there's any of them that would be
more interesting to you.
Please let me know in the comments
below. But overall I would expect
many of these companies to do well
for the coming years.
Hopefully you found this video
interesting and if you haven't done
so yet please hit the subscribe
button it's the thumbs up and thank
you for sticking with me all the way
to the end of the video.
I'll see in the next video.
Thanks.
