The Power of Dividends

I am not the only one that invests with this style. Read this post from Marketwatch.com. Tony

ROCKVILLE, Md. (MarketWatch) -- Wouldn't it be great if you could pick stocks for free and still reap the rewards if they do well?



Unless you have a rich benefactor doling out play money or you count your paper trades as "profits," that's just a pipe dream for most of us.



But dividend-stock investors can get the next best thing via high-yield plays with reliable paydays. These companies can literally pay for themselves in a decade or so -- and then the value of the shares is 100% profit when you cash out.







Not every dividend stock pays for itself in a reasonable time, of course. Companies that slash payouts or keep yields at 1% or so could take a lifetime to shell out the dividends to offset your initial investment. But a select group of stocks have "paid" for themselves in less than 15 years of disbursements. That's certainly long term, but considering that many of these picks also have seen share prices jump dramatically, that 100% return on investment is nothing to sniff at. Read about the best dividend stocks to grow your nest egg.



Here are seven high-yield dividend stocks that have paid for themselves in less than 15 years, using real dividends and real share prices from the third quarter of 1995 to the present day:



Altria Group Inc.



Adjusted share price Oct. 2, 1995: $6.42. Dividends paid since Oct. 2, 1995: $32.19.



The math is a bit strange accounting for the 2008 spinoff of Philip Morris and a 3-for-1 split in 1997. But investors who jumped into what is now Altria in 1995 had a cost basis of around $6.42. The total dividends paid by Altria across the last 15 years add up to $32.19. That means the stock is paid for and then some even at current valuations -- though on this cost basis, shares would be paid for five times over. And that's not counting the 0.7 of a shares of Kraft Foods Inc. for every one share of Altria held in 2007 when it spun off its majority stake. Current investors should be pleased that Altria still has a big dividend payday, with a current yield of 6.3%.



Consolidated Edison Inc.



Share price Oct. 2, 1995: $30.50. Dividends paid since Oct. 2, 1995: $33.47.



The math on utility stock Consolidated Edison is a bit easier, with no splits to worry about. Shares are up 60% from valuations 15 years ago, and the regular dividend payments add up to a total of $33.47. It's worth noting that ED has paid a dividend on its shares for 125 consecutive years, so it's highly unlikely this stock will stop paying for itself anytime in the near future. Current yield for ConEdison is 4.8%. Read about utilities to avoid.



Dominion Resources Inc.



Adjusted share price Oct. 2, 1995: $18.94. Dividends paid since Oct. 2, 1995: $36.10.



Another stalwart utility stock, Dominion Resources , has seen shares more than double over the last 15 years when adjusted for a 2-for-1 stock split in 2007. But that's not the only way this pick has paid for itself -- this utility stock has delivered $36.10 a share in dividend payments since 1995. That almost pays for the current price of the stock, and is almost double the initial buy-in per share 15 years ago. Dominion stock currently yields a dividend of 4.1%, so it remains a pretty strong dividend play.



General Electric Co.



Adjusted share price Oct. 2, 1995: $10.58. Dividends paid since Oct. 2, 1995: $15.94.



Much-maligned conglomerate General Electric was trading for under $11 a share 15 years ago (accounting for a 2-for-1 split in 1997 and a 3-for-1 split in 2000). The GE haters will point out that a return of around 55% in 15 years is hardly better than a CD -- and let's not forget that 75% drop from its dot-com highs. Still, dividend investors have been rewarded by this company over the long term, despite recent slashes in payouts and a yield that remains a fraction of levels enjoyed a few years ago. GE has paid for itself 1.5 times over since 1995, and has even paid for itself at current valuations. GE stock currently yields about 2.9%. Read about five stocks set to rally in a short squeeze.



Public Storage Inc.



Share price Oct. 2, 1995: $18.50. Dividends paid since Oct. 2, 1995: $24.93.



Technically a real-estate investment trust, Public Storage is a dividend stalwart that has paid for itself easily in the past 15 years. What's more, share prices are up about 450% in the last decade and a half, making this a heck of a retirement investment for those who jumped in back in 1995. Current dividend yield for Public Storage is 3.1%. The company could be a strong investment as many people are afraid to buy a home in this volatile housing market, and are relying on storage units to house their furnishings as they rent.



Rayonier Inc.



Adjusted share price Oct. 2, 1995: $14.23. Dividends paid since Oct. 2, 1995: $20.34.



Also technically an REIT just like Public Storage, timber powerhouse Rayonier has been paying dividends since 1994 and has paid for itself for any investor that bought in across those early years. After two 3-for-2 stock splits (one in 2003 and one in 2005), Rayonier stock was trading for an adjusted price of around $14 in 1995, and has paid more than $20 in dividends. Equally pleasing are the stock's 15-year returns, with gains of about 180%. The current dividend for Rayonier is 4%.



United Technologies Corp.



Adjusted share price Oct. 2, 1995: $10.84. Dividends paid since Oct. 2, 1995: $11.28.



Aerospace and industrial giant United Technologies has seen three 2-for-1 splits -- in 1996, 1999 and 2005. Adjusted for those events, investors would have bought into UTX at under $11 a share in 1995 and enjoyed a stunning return of nearly 550% in the next 15 years. To top it off, United Technologies shares would have paid for themselves with more than $11 in dividends. Current dividend yield for UTX is 2.4%.



Jeff Reeves is the editor of InvestorPlace.com. Follow him on Twitter at twitter.com/JeffReevesIP