High-Quality Dividend Stocks That Underperform The S&P 500

Since 1995, the S&P 500 has created wealth at a rate of 8.88% per year. Coca-Cola, meanwhile, has compounded at a rate of 7.53%. A lot of that underperformance is due to the fact that Coca-Cola was absurdly priced, giving investors a starting earnings yield in the 3% range if they timed it well that year, but for a moment—let’s pretend that wasn’t the case.

Let’s just say that both the S&P 500 and Coca-Cola were fairly priced in 1995, and the S&P 500 won by 1.3% per year. Why on earth would someone hold Coca-Cola stock if it was having trouble matching a diversified collection of American enterprises that you could easily … Read the rest of this article!

Finally, A Deal

It has been a while since I have been able to make an investment that truly qualifies as a “deal” in something approaching Benjamin Graham’s use of the term. For the past several years, most of the investments that have caught my attention have been of the “well, this is likely to grow at a rate in excess of 10%, and the P/E ratio is close enough to 20” variety. 

But now, it’s been refreshing to find something with a truly high dividend yield, dividends supported by the profits, an objectively cheap valuation, and profits that are likely to grow in the coming years. Better yet, the company has a geographic footprint in … Read the rest of this article!