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Top 10 Dividend Stocks for 2020 & Beyond - Best Dividend Stocks in 2020 - YouTube
Channel: Learn to Invest - Investors Grow
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Hi I'm Jimmy in this video I'm going
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to walk through the 10 best dividend
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paying stocks that should do well
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going into 2020.
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Even if the stock market crashes.
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So what I did is I took the
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dividend aristocrats ETF that ticker
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symbol NOBL and I looked
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at the total return for each of the
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57 companies that are in
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that ETF and I examined
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the total return in both the Great
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Recession and the dot com bubble.
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I then selected 10 dividend paying
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stocks that had good
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returns for both time periods
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while maintaining their dividend.
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I was also careful to only include
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companies that had a current
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dividend coverage ratio of more than
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one and just so we're on the same
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page. A dividend coverage ratio.
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Basically what we do is we take the
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amount of profits we compare it to
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the amount of the dividend paid.
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So if you had a dollar in profits
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and you paid out 50 cents in
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dividends you'd have a dividend
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coverage ratio of two.
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So the key to this is to have a
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dividend coverage ratio higher than
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one. Now one really represents
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one hundred percent.
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So anything over that would
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be a good sign.
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So this is what the S&P 500 did
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during the tech bubble.
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So what I did is I took the high
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from this point and then the low
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right here and I said okay.
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That's so that's the market fall.
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And then I added one year
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to the market bottom to
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basically account for at least the
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beginning part of the recovery
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and for the tech bubble we're left
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with this time period.
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So that's from about September
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of 2000 to August of 2003.
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Then we switch over the Great
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Recession and then we did the very
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same thing. Someone from the high
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which was in October of 2007
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all the way down to the market
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bottom which was in March of 2009
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and we added a year giving us a
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total timeframe of right here.
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If we're curious during the tech
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bubble from bar to bar while the S&P
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500 was down a total of about 28
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percent.
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Now that's assuming that dividends
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are reinvested back into the index
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all the return numbers that I'm
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talking about in this video are
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going to assume that we reinvest
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all of our dividends back into that
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stock then for the Great
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Recession. Also from bar to bar
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while there the total return was
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it was down about 23
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percent. So I'll leave the numbers
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up here during this whole video
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so we can have something to compare
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to as we go from stock to stock.
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Now all of the companies that I
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touch on this video I'm going to
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touch on very very quickly
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to prevent this video from getting
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too long. So if there's any company
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that is interesting to you that
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you think deserves a deeper dive
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please let me know in the comments
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below and I'll do just that.
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So for now I'm just going to hit the
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high points and then we're going to
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look at how they performed what
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their dividend is.
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We're going to move to move on and
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hopefully we can use that
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information to help guide our
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portfolios if the market were
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going to crash whenever that is.
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OK so the first two companies come
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out of a consumer discretionary
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sector the first company is
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Leggett & Platt ticker symbol
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LEG.
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So Leggett and Platt manufacturers
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a ton of different products around
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home and office furniture.
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They also do some wire products that
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they run out of their steel rod
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mill. And the list goes on
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and on as far as the progress as
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far as the products that they make
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their division deals is a bit over 4
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percent right now.
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So this is the LEG stock chart going
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back to the tech boom during the
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tech bubble. LEG was up about thirty
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seven percent compared to the S&P
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500. That's pretty good when we
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switch over to the Great Recession.
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Well there we can see that during
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the Great Recession.
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LEG was up just short
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of twenty three percent.
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Now we may look at this chart and we
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may say there's no way that this
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that this company was up 23 percent
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and that's true from a price
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perspective. But as I already
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mentioned this all of our
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returns all the total returns that
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I'm talking about I assume
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dividends are reinvested.
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And that's important because it
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assumes that we reinvest these
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dividends down here when they paid a
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dividend or back here when they paid
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a dividend or even up here when they
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paid a dividend.
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So when the stock price is lower
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well we're able to buy the shares of
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this company at a cheaper price.
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That is one of the advantages of
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investing in dividend stocks that
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consistently raise their dividend.
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So like every company on this list.
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That's exactly what they do.
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Okay. Next company on this list.
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Also in the consumer discretionary
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sector. And that is the V.F.
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Corporation ticker symbol VFC, VFC
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is an international apparel company.
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They own Jean brands like wrangler
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or Lee and then they own companies
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like Dickies the North Face
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Timberland vans
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and a decent amount of other brands.
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Now right now VFC
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has a dividend yield of about two
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point three percent during the tech
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bubble VFC more than 90
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percent gain and then we switch over
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the Great Recession.
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Well here they posted up almost 5
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percent. So once again
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compared to the overall market they
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did quite well.
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Okay now we're switching over to
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consumer staples where we have four
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good dividend paying stocks.
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The first is a classic blue chip
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name Colgate-Palmolive
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ticker symbol CL.
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Colgate makes toothbrushes
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toothpaste shampoos
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soaps deodorant and the
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list goes on and on.
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So their basicly selling all
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the stuff that we would expect
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people to continue to buy even if
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the market crashed right now.
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Colgate has a dividend yield of
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about two point three percent.
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When we check out the tech bubble
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well during the tech bubble Colgate
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was able to put up a total return
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of almost 16 percent.
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Now if we switch over to the Great
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Recession now we can see that
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there they put up a total return of
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about twenty three percent.
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And this is one of those companies
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that I would expect to do well in
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almost any recession since
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the products that they sell.
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As I mentioned are somewhat
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recession proof.
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OK. Next up we have Hormel Foods
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ticker symbol HRL.
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This is another classic consumer
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staples company that we would expect
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to do well and they would expect
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them to sell a lot of product
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if the market were to pull back or
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the economy will pull back.
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They sell a lot of foods
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they have frozen foods not frozen
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foods meats sliced meats.
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The list goes on and on.
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Right now they have a current
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dividend yield of a bit over 2
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percent.
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And when we jump over the tech
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bubble well then we could see that
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Hormel Foods put up fantastic
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returns of more than 60 percent
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way outperforming the S&P 500
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during this time period.
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When we switch over to the Great
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Recession.
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Well here they did a solid 20
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percent thanks to their
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consistent dividend payments.
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And of course we're assuming we're
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reinvesting our defense OK
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onto our next dividend paying stock.
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This one is McCormick ticker symbol
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MKC McCormack is the
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largest seller of spices
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in the world.
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They sell spices seasoning
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sauces things along those lines.
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Currently McCormack has a dividend
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yield of a bit under one and a half
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percent. And when we switch over to
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the tech bubble well there we could
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see that MKC.
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did fantastic posting a total return
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of more than 110 percent.
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And we switch over to the Great
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Recession.
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Well once again they performed well
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putting up about a 13 percent gain
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after accounting for dividends.
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OK. Our final consumer staples
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company is Wal-Mart.
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Wal-Mart is the largest brick and
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mortar retailer in the world.
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They currently have a dividend yield
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of just shy of 2 percent.
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And when we look at the tech
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bubble well we can see that
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they picked up a decent return
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of about twenty three percent.
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Then when we switch over to the
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Great Recession here they also did
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fairly well posting up a total
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gain for this time period by 25
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percent. So once again compared to
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the S&P these companies are doing
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pretty good. OK now we jump over to
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the industrial sector where we have
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two companies.
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The first one is AO Smith
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ticker symbol AOS
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AOS currently pays a dividend of
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just shy of 2 percent
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and they focus their business on
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water heating and water treatment
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equipment during the tech bubble.
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They posted a return of more than
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100 percent and then during
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the Great Recession they posted up a
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gain of about 10 percent.
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Once again not bad especially
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compared to these guys.
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Now while other industrial companies
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W.W. Grainger ticker symbol
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GWW Grainger
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distributes and maintains
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more than one point nine million
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industrial products they do supplies
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equipment tools things
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along those lines.
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They do a ton around various
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industrial products and tools
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and equipment things like that.
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They have a dividend yield of a bit
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over 2 percent during the tech
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bubble of GWW.
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had a total return of more than 75
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percent.
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And when we switch over to the Great
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Recession well here they
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put up a respectable 19 percent.
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Once again assuming all the
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dividends got reinvested.
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OK now we're down to our final two
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companies.
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Next up we have Sherwin Williams
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from the material sector ticker
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symbol SHW Sherwin
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Williams sells paints and coatings
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to industrial commercial and
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retail customers mostly in
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North and South America.
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They have the smallest dividend
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yield of all of our companies a bit
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short of 1 percent.
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Now during the tech bubble we can
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see that they did great.
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Posting up a gain of more than 47
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percent and then while the Great
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Recession was going on well they did
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a decent putting up a gain of about
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5 percent during that time period
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but compared to the S&P.
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Quite good. Next up we have our only
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utility company on the list
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Consolidated Edison ticker symbol
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ED ConEd distributes
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electric services in the
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northeastern part of the United
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States. They have a dividend yield
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of a bit more than 3 percent.
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Now during the tech bubble
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they did quite good.
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Posting up a total return
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of a bit more than 54 percent
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while the Great Recession.
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They did decent posting up about
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a five point three percent gain.
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So once again the goal of all this
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was to try to find companies that
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have historically done well during a
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recession and could do
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well going into 2020.
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I would expect most of these
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companies to do fairly well in a
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broad economic pullback.
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Now we may have to dive deeper
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into some of these companies if
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there's any of them that would be
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more interesting to you.
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Please let me know in the comments
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below. But overall I would expect
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many of these companies to do well
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for the coming years.
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Hopefully you found this video
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interesting and if you haven't done
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so yet please hit the subscribe
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button it's the thumbs up and thank
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you for sticking with me all the way
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to the end of the video.
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I'll see in the next video.
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Thanks.
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