top dividend stocks for 2019

Top Dividend Stocks to Beat the Market [Double the Market Return]

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This dividend stock portfolio is already beating the market and I've got five more stock picks.

I wanted to do a quick video today because this dividend portfolio is blowing up! I’m adding five more stocks to my 2019 stock market challenge and am already up almost 12% since the beginning of the year.

That’s 5% over the market return so far and there’s a lot of room left in these dividend paying stocks.

The video is part of the Grow Your Dough challenge on YouTube with some of the biggest names in investing. Make sure you click through to see how these dividend stocks can rocket your portfolio.

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Updating the 2019 Stock Market Challenge Portfolio

It hasn’t been a month yet since we started the Grow your Dough challenge on YouTube but I wanted to finish updating you on all the dividend stocks in our portfolio.

These 10 stocks are exploding with the portfolio already beating the market and one of the picks from our last video up 32% already.

best dividend stocks for 2019
My Dividend Stock Portfolio for 2019

Today I’m going to be finishing out the portfolio, revealing the next five dividend stocks. I’ll go into the upside on each and then give you a review of the entire portfolio. The portfolio is up double-digits in just two weeks so you’re definitely going to want to stick around.

I’m linking the first video, detailing the challenge and how you can set up your own portfolio right here. Make sure you check that out because I shared what I was looking for in these stocks and those first five picks.

To track my portfolio of dividend stocks, I’m investing $1000 on M1 Finance, a no-fee platform that lets you pick your stocks and automatically invests any new deposits across your group.

Unlike some of the other investing apps, M1 doesn’t charge a monthly management fee which is why I’m using it for no-cost investing. It also has retirement accounts available, something Robinhood doesn’t have so that’s important anytime you’re investing in high yield stocks paying dividends.

Get started and Create Your No-Cost Portfolio on M1 Finance

What’s great about this year’s stock market challenge is that we’ve got 14 other YouTube channels participating, all taking a different perspective on investing and tracking their portfolios for the year.

There’s some heavy-hitters in the group too. David over at From Military to Millionaire is doing a flipping strategy and has already made some returns that will be hard to beat. Tela Holcomb is picking from her Swing Trading portfolio and Jeff Rose is tracking nine different investment accounts which actually sounds exhausting but he’s a hard-charger so good for him.

The Top Dividend Stocks for 2019

But let’s get to the five dividend stocks I added to the portfolio and why I think these could be some of the best investments of the year.

Our first dividend pick is one of my favorites and already up 17% since we added it to the portfolio. Hanesbrands, ticker HBI is a leader in activewear and apparel globally and pays a 4.3% dividend yield.

The company is either first or second in nearly all its product categories and markets with world-class brands. The U.S. activewear category is growing at 3.2% annually versus sales growth of just 0.7% for all apparel so the company is definitely positioned in the right space.

International sales grew from just 11% in 2013 to nearly a third of total revenue and continue to expand. Consumer direct sales, so the company’s online presence is now almost a fifth of total revenue which gives it a runway for higher profitability.

Debt has been the problem over the last few years, sending investor sentiment plunging and the shares down by more than half since 2015. Management expects to be within its debt-to-earnings range this year though and that could bring back the share repurchase program.

Management is targeting a 25% to 30% payout ratio, one of the key factors we talked about in dividend safety in our last video, so definitely some profits available for growing the company.

Shares are trading for just 8.3-times earnings on this one, about a 25% discount to the average price multiple for competitors in apparel and a dividend payout that’s twice the market.

top dividend stocks for 2019

My next dividend pick is General Mills, ticker GIS, a leader in just about every one of its product categories. The company controls nearly a third of the cereal market, 18% of the domestic yogurt market, 50% for baking mixes, 40% of the grain snacks market and could be about to corner the pet food market with its Blue Buffalo acquisition.

Management is expecting up to 10% sales growth this year on its Blue Buffalo acquisition which is huge for a food company. Operating profit is expected up 9% and the shares pay a 4.7% dividend yield.

Blue Buffalo is a market leader in pet food specialty channels and the e-commerce channel but still only accounts for 7% of U.S. retail pet food sales. That means there’s lots of upside for market share gains once you combine it with General Mills’ distribution and marketing.

In other products, the company increased its market share by 0.7% to a record 31.6% in cereals last year and yogurt market share increased in Q4 for the first time since 2017, so some very positive trends.

General Mills has improved profitability with an increase in the operating margin of 1.3% since 2015, a move that has saved $1.6 billion with another $700 million savings expected.

Besides the dividend yield that’s more than twice the market average, the company has decreased its share count by 12% over the last five years helping to grow the dividend by 8% annually. Shares trade for 13.8-times earnings which is very low for a consumer staples company so lots of value and dividends in this one.

I’ll have to admit that my next dividend pick is a little boring. PPL is a regulated utility company with customers in Pennsylvania, Kentucky and the United Kingdom.

I’m putting this one in the portfolio on really solid fundamentals and an excellent 5.5% dividend yield but also because I wanted something from the utilities sector in case the rest of the market hit a speed bump this year.

I’m not expecting as much out of PPL as others in the portfolio but it’s going to save my butt if we run into trouble.

Relative to other utilities though, PPL is a great dividend stock. Management has affirmed its guidance on five to six percent earnings growth through 2020 and 4% annual dividend increases. Projected rate increases are above 5% through 2020 with double-digit growth coming from Pennsylvania transmission.

Even on the worries around Brexit, U.K. customers are still going to need electricity so I think the stock has suffered too much, down 20% since the first Brexit vote. The Bank of England certainly isn’t looking to raise interest rates to that’s a positive for the stock.

PPL is planning $430 million in capex savings through 2020 in a move that will support cash flow and dividends. The shares are trading at 12.3-times earnings which is a 23% discount to the average multiple for utility companies.

Our next two dividend picks are funds, adding to the Vanguard real estate fund and the Alerian MLP fund we covered in our last video. I talked about Chinese stocks in the last video, adding China Life, and it’s now my second-best performing company.

Here I’m adding the iShares China Large-Cap fund, a fund holding 50 of the largest Chinese companies trading on the Hong Kong exchange and paying a 2.7% dividend.

I talked about the upside to China stocks in our last video. I truly believe that this could be the best opportunity in a generation to pick up these stocks.

This could be China’s century and you need exposure to the companies. Neither President Trump or President Xi want the trade war and in fact, we’re getting headlines last week of some major movements in the negotiations.

The FXI is overexposed to the financials sector with 46% of holdings. Part of that is because financials are some of the largest companies and were the first to enter the markets. Another 20% of the fund is in communications and tech companies while another fifth is in energy and real estate.

I’ve actually preferred some of the more diversified China funds like the S&P China GXC ETF but here I like the FXI better and I’ll tell you why. The government is coming out with some major economic stimulus this year. They already made the largest capital injection into the banking system in history, they’re lowering bank holding requirements and tax cuts.

China is a command economy, meaning if the government wants the economy to grow 6% plus, it’s going to do what’s necessary to make that so. It’s going to use some of that massive $3.5 trillion in foreign reserves and everything else in its power to drive the economy.

Banks are going to be the first to benefit from that stimulus because it’s the most direct. Overall, stocks in the China fund trade for 10.4-times earnings, almost half the cost of U.S. stocks with an average price-to-earnings of 20.5-times for the S&P 500.

The other fund I’m adding is the iShares Europe Financials, ticker EUFN, a fund holding 80 stocks in the European Financials sector.

This one has been the laggard so far with a return just under 5% since I started the portfolio but I think it could be a surprise for the year. The fund pays an amazing 6.5% dividend yield and trades for a price of 0.9-times book value.

That’s a 30% discount to the 1.3-times book multiple that U.S. banks trade on and the shares are off their 2018 high by 28%.

We talked about the upside to U.S. financials in our last video. In fact, in that portfolio review next, one of our community bank stocks is up over 30% already, but there are some solid plays in Europe as well.

A third of the fund is in UK-based banks but that doesn’t necessarily worry me. Shares are trading around the lows reached after the Brexit vote so I think they’re pricing in for the worst possible outcome. About half the overall fund is in European banks with another third of the holdings in insurance and the rest in diversified financial companies.

Solid economic data now has the markets expecting a first rate hike in years to come this September before ECB President Draghi finishes his term. This combined with slowing rate hikes from the U.S. Fed should support the Euro and drive rates which would be good for profitability at European financials.

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Portfolio Review of My 2019 Dividend Stock Investments

Now that we have all ten dividend stocks in our portfolio, I wanted to review how it’s done since funding on January fourth. I bought $100 worth of shares in all ten companies and funds for $1,000 and it’s now up 11.5% in the three weeks.

dividend stocks beating market 2019
Dividend Stocks Beating the Stock Market in 2019

That’s almost double the return on the S&P 500 and more than double the Vanguard Dividend Appreciation ETF over the period.

China Life and Hanesbrands were the standouts until late last week when Bank OZK stunned Wall Street with earnings that beat expectations by 7% as well as revenue that beat. Shares of the bank jumped more than 10% on Friday alone and are up almost 32% since adding them to the portfolio.

In fact, from the day I started the portfolio to last Friday, every one of the 10 dividend stocks was beating the stock market. Three of the funds are lagging the individual stocks but I like having them in the portfolio for that diversification.

my dividend stock portfolio 2019

I’m updating the portfolio with a new video each month so make sure you subscribe to the channel and follow the stocks. Check out the first video with those first five dividend stocks in the portfolio and how to get started on your own 2019 investing challenge.

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