Chasing Value: Final 8 -- love dividends

Posted Jan 7th 2008 2:40PM by Sheldon Liber
Filed under: Reliance Steel and Aluminum (RS), Valero Energy (VLO), Huaneng Power Intl ADS (HNP), Chasing Value™, Anglo American (AAUKY), Stocks to Buy, Newcastle Investment (NCT), Raytheon Company (RTN), Best Stocks for 2008, Bunge Ltd. (BG), Loews Corporation (L)

I recently posted Chasing Value: Final list -- 8 stocks for 2008 and mentioned that all of them pay a dividend. If this year is going to be as gloomy as some would have you believe, then stocks that pay dividends, as a group, will outshine those that do not.

The following are my eight picks, with the closing stock price as of my start date December 28, 2007 and the dividend yield. Last year, there were more stocks among my picks that paid a dividend higher than the S&P 500 Index average of 1.8% . This year there are only two.

Anglo American plc (ADR) (NASDAQ: AAUK) $30.79. 1.9%
Bunge Limited (NYSE: BG) BG was $119.03. 0.56%
Huaneng Power International, Inc. (ADR) (NYSE: HNP) HNP was $41.75. 3.5%
Loews Corp. (NYSE: LTR) at $49.35. 0.50%
Newcastle Investment Corp. (NYSE: NCT) was $13.08. 22%
Raytheon Co. (NYSE: RTN) RTN was $61.51. 1.65%
Reliance Steel & Aluminum (NYSE: RS) $54.32 per share. 0.58%
Valero Energy Corp. (NYSE: VLO) VLO was $70.55. 0.66%

The overall average yield for the pool of eight stocks is 3.91%, more than double the average of the indices. This will remain true even if Newcastle is forced to cut its yield in half, something I do not anticipate. Over the last 75 years, it is a historic fact that dividend paying stocks have had, as a group, a higher return than non-dividend paying stocks. This may account for why the Dow Jones Utility Index has outperformed the Dow Jones Industrial Average.

I will be tracking the progress of these stocks all year long in the Chasing Value section of BloggingStocks.

DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT,and VLO

Sheldon Liber is the CEO of a small private investment company and the principal for design and research n architecture & planning firm.

Tags: aauk, anglo amer, AngloAmer, bg, bunge, hnp, huaneng power, HuanengPower, loews, ltr, nct, newcastle investment, NewcastleInvestment, raytheon, reliance steel and aluminum, RelianceSteelAndAluminum, rs, rtn, valero energy, ValeroEnergy, vlo