Rising Rates & Dividends: These are the dividend stocks you should own

Our next guest looking for stocks that can grow their dividends in a higher rate environment and he is putting money to work in two new buys. Joining us now Post Nine’s Matt Powers of Powered Advisory Group. Welcome back to Post 9. It’s good to see you again. Well, this is a pertinent conversation given the backup in rates, right. I’m I’m sure you’re thinking about this a lot And if you’re looking for dividend growers, the so-called aristocrats are down 5% month to date on fears of backed up rates for a longer period of time. How are you thinking about that? Yeah, no doubt it’s a headwind for dividend growth stocks. I mean I think we can all agree on that. You know, it’s, it doesn’t impact our strategy. It does not change how we’re investing it. Just I think any dividend growth investor is going to realize it’s going to require a lot more patience just moving forward. Yeah. And you think it’s going to impact performance of of, you know, money managers or fund managers who are explicitly looking for stocks like this if rates remain higher for a longer period of time than we first thought? Yeah, absolutely. You know just from our perspective, our end when we are in kind of getting this out there our our lean, we focus more on dividend growers, less on high yield. So we’re not looking for a bond alternative or a fixed income alternative, we’re looking more at growth. So it’s total return is what we’re after. OK. So recent buys, let’s highlight a couple of them. MasterCard is is one, it offers a, you know, I think what most people would say is a a small yield, not even not even a 1% dividend, but they have grown their dividend over a period of time, which qualifies them for the kinds of stock you look for. Tell us why this one particularly stands out. So normally we’re looking for a two 2% yield on the stocks, but Mastercard’s at .54% and it’s staggering. Over the past 10 years they’ve grown the the dividend 27% a year over the past 10 years. So that’s anything that is growing at that rate eventually obviously is going to catch up. So you know that’s one part. The other part too that’s kind of missed in this entire equation is the payout ratio. So that’s the percentage of earnings that is being paid out in the form of a dividend. MasterCard 19 percent, 20% roughly somewhere in there, which means they’ve got a lot of space to grow. OK. Hershey, Hershey 2.6 yield, Why this one cocoa prices. So over the past we just showed those on the network within the last hour. Oh, seriously, Yeah, good. So over the past year, hopefully I’m quoting this right is somewhere roughly around 2:00. It’s I mean it’s 250% year over year. So I think a lot of that comes from supply Africa, some issues with weather but you know her Hershey is a great dividend payer was not on our radar before. But as the prices move down, I think the price is down about 27% over the past year. Yield is one up and it hit our radar and they’ve got a we look for a 10 year track record of dividend growth. How are you thinking about dividend growers here? So what’s different from your strategy versus buying the dividend aristocrats as kind of like a smart beta factor driven strategy? What are you doing qualitatively that doesn’t get captured in something quantitative like that. So Aristocrats is a 25 year period and that gets stretched out so long. That’s such an extended period. We look at 10 year on the dividend growth side. I mean that’s the, the simple answer to it. So you’ll pick up on stocks before they become aristocrats, correct. Oh, interesting point. Others that are part of your buys recently. Lockheed, right, Starbucks, McDonald’s. You want to talk about any of those, why they stood out? Yeah. So Lockheed, purely a geopolitical play. You know with the tensions in Iran and Israel, it’s a long time holding one of our original holdings on our books. Loved it ever since. It’s got a great dividend growth rate track record. I mean performance has been great over the past decade, but purely A geopolitical play, what about McDonald’s? So you can almost, I mean I don’t know if it’s OK to bet Starbucks, McDonald’s almost lumped them into the same group. You know, they’re both kind of kings of the the fast food industry. They’re both down. I mean stock price, stock price is depressed, you know year to date and really not a great reason as to why. So their valuation looks excellent and they fit that dividend growth rate perfectly. All right, you, you keep us up to date on what moves you’re making. It’s good to see you again. I’ll do it. Yeah. Thank you. Thank you very much. Joining us here post.