Oil stocks have made a big push on to Morningstar's list of the 10 dividend stocks most widely held by the firm's top ranked money managers, who they call "ultimate stock pickers."
And what can they teach us?
"What looks to be shaping into a potential trade for some income-seeking investors is the appearance of a handful of oil-related stocks — ConocoPhillips, Occidental Petroleum, National Oilwell Varco
and Exxon Mobil
— on our list of top 10 dividend-yielding stocks," writes Morningstar Senior Stock Analyst Greggory Warren
"No doubt, this is in response to the impact that the dramatic drop in oil prices has had on the price of oil company stocks the last couple of quarters, as the yields on these firms' shares have risen enough to supplant other names on the list."
Oil prices have plunged 60 percent since late June. ConocoPhillips sports a dividend yield of 4.6 percent and Exxon Mobil of 3.2 percent.
Among the stocks exiting the list from six months ago are Vodafone Group, Pfizer, Roche and Eli Lilly.
When choosing dividend stocks in general, you would do well to search for ones that have room to increase their dividends. MarketWatch columnist Philip van Doorn
has put together such a list, based on cash flow yield.
Such a yield is calculated by dividing cash flow per share by the share price. "If the resulting figure is higher than the dividend, the company has headroom to increase the dividend," van Doorn writes.
Using free-cash flow estimates for 2015 and actual cash flow from the past 12 months, he created a list of the S&P 500 stocks with the highest dividends that have room to increase those dividends.
The tally includes Windstream Holdings, Mattel, CenturyLink, AT&T, Frontier Communications, Verizon Communications, Plum Creek Timber, GameStop, Seagate Technology and Garmin.
AT&T offers a dividend yield of 5.6 percent, Verizon's dividend yield totals 4.4 percent and Garmin's stands at 3.9 percent.
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