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By GREG MADISON, Managing Editor, Money Morning • August 29, 2018
Right now, you're probably hearing a lot about financial inequality in America. It's become a popular campaign issue and a nonstop source of debate in blogs and media outlets.
What you don't hear so much about and what is still devastating to regular folks – retirement savers, workers, retail investors, small business owners, etc. – is information inequality.
Wall Street, hedge funds, accredited investors, and D.C. insiders have radically different actionable information than the average retailer investor.
They get reports from firms that cost tens of thousands of dollars, they have analysts running Bloomberg terminals (at a cost of around $23,000 a year), and have advanced algorithms that can tell them when to buy and when to sell – hundreds of times per second.
Meanwhile, most investors get… traditional media outlets. The media seems more interested in generating page clicks than providing real, actionable information – financial journalism – that can help their readers make money.
This week, I found perhaps the most stunning example of bad financial journalism and how it can actually cost you money if you follow its advice.
But I also had a chance to put my new favorite source of information – a bona fide moneymaking tool – into practice.
And I have to say, this tool just helped me whittle down a list of 53 dividend stocks down to a list of seven stocks that are sitting right in the center of the "Buy Zone."
Let me show you what happened… and then I'll show you how you can do this for yourself and learn instantly when to buy and when to sell.
The Downside of "Listicle Investing"
Mainstream financial websites love lists, but Yahoo! Finance took it to the extreme last week with a Kiplinger article: "The 53 Best Dividend Stocks for 2018 and Beyond."
It was a "listicle," a list posing as an actual news article, of Dividend Aristocrats – stocks that have increased their yield payouts every single year for the last 25 years. Each stock received a quick blurb on its recent performance, its current yield, and the sentiment of Wall Street analysts.
But here's the problem. It completely stopped short of providing any analysis of whether investors should buy, hold, or sell this stock. This was left completely to the imagination of the reader.
In other words, it was just… noise.
Now, don't get me wrong: There are a lot of amazing stocks on this list.
For example, Becton Dickinson & Co. (NYSE: BDX) has been an incredible performer for us for several years – just ask Keith Fitz-Gerald. It taps into the "must have" categories described by our Chief Investment Strategist in terms of companies that can outperform in any interest rate environment.
But is it a "Buy" right now? Just because 12 of 19 analysts recommend it?
Then there's McCormick & Co. (NYSE: MKC), a rock-solid company that dominates the global spice industry – a sector that's been going gangbusters since the 12th century.
But just two of six Wall Street analysts listed recommend it, even if it has raised its dividend for 32 years.
How would I know if McCormick is among the best dividend stocks on this monstrous list of 53 companies? Well… I know that, at the moment, it isn't.
And what I found is – right now – just seven of these "Dividend Aristocrats" are sitting in the "Strong Buy" zone right.
Here they are…
The Seven Best Dividend Stocks from Kiplinger's Dividend Aristocrat List
AT&T Inc. (NYSE: T): The telecom giant has increased its dividend for 34 years and generates an incredible amount of cash flow. Following its acquisition of Time Warner, it now has a massive amount of market share in the cable, wireless, and broadband universe. But is it a "Buy" right now?
The Money Morning VQScore System shows a perfect score of 4.75. This was the eighth stock on the Kiplinger list of the top 53 dividend stocks. The first seven didn't fall into the "Buy Zone."
Chevron Corp. (NYSE: CVX): We've seen a lot of volatility in oil prices due to tensions surrounding Iran and consumer demand in China. Energy investors looking for solid yield and growth potential should look to the energy majors. Not only do they generate an incredible amount of cash flow, they are also going to be significant leaders in the alternative energy space in the decades ahead.
Chevron has a perfect VQ Score of 4.75. We had to skip another four stocks on the Kiplinger list before we found Chevron. The VQScore system ruled out those other stocks and found that Chevron is right in the Buy Zone.
Cincinnati Financial Corp. (Nasdaq: CINF): For 57 years, this insurance company has raised its dividend. But a recent accounting rule change hit the stock after the first quarter, creating a pullback and an amazing buying opportunity. Like its cohorts above, the firm has a perfect VQScore of 4.75.
Consolidated Edison Co. of New York (NYSE: ED): We skipped stocks like Coca-Cola Co. (NYSE: KO) and Clorox Co. (NYSE: CLX) before we found our next stock in the Buy Zone. Sure, Coca-Cola and Clorox are great dividend stocks, but right now they just don't have strong VQScores – which could change, of course.
But the VQScore of 4.15 for Consolidated Edison is looking good. It's just a little lower than the other stocks on this list, but it's still sitting right in the "Buy Zone." This utility giant has a stranglehold on the energy and gas business of New York City, a competitive advantage that makes it a cash flow machine.
Dover Corp. (NYSE: DOV): The industrial conglomerate has raised its dividend for 62 years. That's what happens when you have your hand in everything from energy production to consumer goods. Though the stock has been facing pressure from activist investor Daniel Loeb to divest additional parts of its business, it has a lot of upside. Dover has a VQScore of 4.15.
Exxon Mobil Corp. (NYSE: XOM): Like Chevron, Exxon Mobil sits right in our Buy Zone with a VQScore of 4.75. Of all of the dividend aristocrats on the U.S. markets, this company has the highest market capitalization at $335 billion. This company is sitting with a 4.19% dividend and is a screaming "Buy," according to the VQScore system.
Nucor is a steel producer that has experienced some volatility and concerns among investors due to the ongoing trade battle between the United States and many of its trade partners. But the stock has remained resilient, and its recent pullback has created a buying opportunity for investors. The steel giant sports a VQScore of 4.75.
You Can Get All Our VQScore Ranked Stocks – Free
At the end of the day, the VQScore takes all of the guess work out of the omnipresent "listicles" that try to pass for actionable investment intelligence.
Powerful tools like this that put hard data, distilled, in your hands, are worth tens of thousands to Wall Street, but you get it at no charge whatsoever.
Go check it out – and get ready to buy some great stocks.