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The press is beginning to catch on to an area generally ignored by large investors. However, it's an extraordinary place to shop for great income investments. These income-producing businesses have top brand-name products. They generate steady free cash flow. They have major competitive advantages over their competitors and they pay out big dividends. I'm talking about the best small-cap dividend-paying companies in America.
One of my favorite stocks here, Diebold (NYSE: DBD), was just profiled in the financial weekly Barron's. Diebold is the world's No. 1 supplier of automatic teller machines (ATMs). It's also a leading supplier of security products, like bank vaults and safes. It's a 150-year-old company. and it has increased its dividend payment every year for 59 years, which is the longest streak of any company in North America. Even the 2008 financial crisis didn't stop Diebold from raising its dividend payouts a few cents each quarter.
In 2007, Diebold paid $0.94 per share in dividends. For 2012, shareholders received a total of $1.14 per share. That's a 3.6% yield at today's price. It's important to focus on elite dividend-paying companies like Diebold because they allow you to safely compound your money. Any sophisticated investor – including Peter Lynch and Warren Buffett – will tell you that "compounding" is one of the most important investment concepts to understand. Albert Einstein called it "the most powerful force in the universe."
Compounding is reinvesting the money you make from an initial investment to make even more money. In short, you earn money on the money you earn. If you do this over a long period, with an asset that pays increasing rates of income, you can earn staggering profits from your initial investment. Most people who want to compound their returns over decades will look to buy well-known staple stocks, like Coke or McDonald's. The trouble with many top dividend-payers like these is that you often have to wait years to pick them up at bargain prices. Since everyone is familiar with these names, everyone wants to buy them.
I'd guess not one investor in 100 has heard of Diebold and its amazing dividend streak. It has a lot of the same positive attributes that giant dividend-payers like Coke and McDonald's have. It just happens to be much, much smaller than these giants. With a $2 billion market cap, it's less than 2% the size of Coke.
Like other top small-cap dividend-payers, Diebold provides brand-name products and services you might use every month but its small size makes it fly under the radar of most investors. Big pension funds, mutual funds, and hedge funds are often too big to buy this kind of stock but I'm seeing the press mention these stocks more often. If you're interested in a serious income stream for the future, make sure to buy soon.
One of my favorite stocks here, Diebold (NYSE: DBD), was just profiled in the financial weekly Barron's. Diebold is the world's No. 1 supplier of automatic teller machines (ATMs). It's also a leading supplier of security products, like bank vaults and safes. It's a 150-year-old company. and it has increased its dividend payment every year for 59 years, which is the longest streak of any company in North America. Even the 2008 financial crisis didn't stop Diebold from raising its dividend payouts a few cents each quarter.
In 2007, Diebold paid $0.94 per share in dividends. For 2012, shareholders received a total of $1.14 per share. That's a 3.6% yield at today's price. It's important to focus on elite dividend-paying companies like Diebold because they allow you to safely compound your money. Any sophisticated investor – including Peter Lynch and Warren Buffett – will tell you that "compounding" is one of the most important investment concepts to understand. Albert Einstein called it "the most powerful force in the universe."
Compounding is reinvesting the money you make from an initial investment to make even more money. In short, you earn money on the money you earn. If you do this over a long period, with an asset that pays increasing rates of income, you can earn staggering profits from your initial investment. Most people who want to compound their returns over decades will look to buy well-known staple stocks, like Coke or McDonald's. The trouble with many top dividend-payers like these is that you often have to wait years to pick them up at bargain prices. Since everyone is familiar with these names, everyone wants to buy them.
I'd guess not one investor in 100 has heard of Diebold and its amazing dividend streak. It has a lot of the same positive attributes that giant dividend-payers like Coke and McDonald's have. It just happens to be much, much smaller than these giants. With a $2 billion market cap, it's less than 2% the size of Coke.
Like other top small-cap dividend-payers, Diebold provides brand-name products and services you might use every month but its small size makes it fly under the radar of most investors. Big pension funds, mutual funds, and hedge funds are often too big to buy this kind of stock but I'm seeing the press mention these stocks more often. If you're interested in a serious income stream for the future, make sure to buy soon.
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