Hey YouTube, I'm Jimmy.
In this video, I'm going through 5 stocks that have provided great cash flow for investors
since the year 2000.
now I'm not just talking about dividends, even though that's a big part of it.
but in order for them to make this list, these stocks must, in addition to paying dividends,
also be actively buying back their own stock, which helps move their stock price higher.
a double win.
so if passive income is something you are looking for in your investments.
then this is the video for you.
and stick around until the end.
because, in the end, I present three stocks that made, we'll call it the runner-up list.
they didn't make this list, but they're good.
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OK, let's get started.
So, I've been looking for solid stocks that have reliably returned capital to investors
and for me, these companies, these types of companies are the foundation of my long-term
portfolio.
they're stocks that I expect to own for many many years.
so, to identify potential cash flow kings, I created a few criteria.
first, they must be in the S&P 500.
second, starting in the year 2000 through the first half of 2018, I totaled up how much
each company in the S&P 500 paid towards dividends and how much they paid towards buying back
stock.
then, I choose 5 companies were at the top of both of those lists that I feel happy owning
for the long run.
OK, so let’s begin the countdown with number 5.
at number 5 we have Johnson and Johnson.
ticker symbol JNJ.
Johnson and Johnson makes a variety of healthcare products.
they have been around for a long time and it’s likely that you already know who they
are and what they do.
Johnson and Johnson has consistently bought back stock and paid dividends for many years.
revenue, earnings per share, free cash flow, they're all expected to consistently grow
over the next few years and even though Johnson and Johnson has struggled in 2018 I’m more
looking at this as an opportunity since its already begun to rally again.
ok moving on to number 4.
number four is taken by jp Morgan chase.
ticker symbol JPM.
JP Morgan chase is in the financial services and banking business they've had an OK 2018
but they've had a real strong past few years.
once again.
they're projected to have a strong next few years.
which is a good thing for our portfolio.
now the U.S. tax changes that happened recently, it’s expected that that JP Morgan chase
will be big beneficiaries of this tax change.
that’s one of the reasons why I put them on this list outside of their good with dividends
and they're really good with buybacks.
OK Number three.
In the number three spot we have home depot.
ticker symbol HD.
Home depot is a home improvement store that operates in the united states, Canada, china
and Mexico.
they have great upside potential especially as they continue to expand worldwide and although
their stock pulled back in early 2018, I expect for them to have great long-term prospects
as they continue to expand, and I also expect for them to continue to add to their impressive
history dividends and stock buybacks.
ok coming in at the number two spot.
Microsoft.
ticker symbol MSFT.
Microsoft has been a steady business performer.
with a five-year compounded annual growth rate of over 7%.
Now while this number might not appear to be great compared to companies like apple.
its significantly better than the average company.
and it should provide solid growth for our portfolio over the next few years.
another interesting point is that Microsoft landed in the second spot on our buyback list
and in the fourth spot on the dividend list and I wouldn’t be surprised if it remained
there in the coming years which is one of the reasons, the primary reason I have them
at number 2 on this list.
coming in at the number one spot is Pepsi.
ticker symbol PEP.
Pepsi has strong free cash flow.
solid revenue and earnings per share growth and they look like they have a very bright
future.
like the rest of the companies on this list they've been strong dividend payers and they
have remained devoted to buying back stock.
ok, so that’s the top five list.
new before I give you the three runner up stocks.
I just want to make two quick points.
first, I realize that I didn’t go very deep into any of these stocks and that’s partially
because all these stocks are very large companies and I recognize that many people already know
who they are and what they do.
but if you want me to go deeper if you want me to go deeper into my analysis or how I
value them or things like that.
I would be happy to do that.
post in the comments below and I’d love to dive deeper into any one of these.
and then the second thing that I wanted to point out is, I just want to make a point
about company buybacks.
because I recognize that dividends are very popular and it’s easy to understand a company
pays a dividend, you get cash into your investment account.
it’s as simple as that.
but what a lot of people might not realize about buybacks is, the reason I like buybacks,
is it works much in the same way as dividends in that a company issues a buyback, so they
put X number of dollars into buying back their own stock so instead of those shares being
publicly available.
so if there were a million share available and they bought half of them, if you owned
10 shares well your ten shares half of the stock goes to them and your ten shares remain
as ten shares but they are in theory worth twice as much so the reason I like buybacks
is that essentially what the buyback does for you is it increases the value of your
stock so its a lot like a dividend except you haven’t received the cash.
the advantage to that is, you have to pay taxes on a cash dividend, buybacks you don’t.
you can elect to sell a share whenever you want or whenever you need that cash.
so, people like buybacks some people like dividends.
this list tackles both.
ok to the three runner ups.
first Exxon Mobil.
Exxon mobile actually ranked first on our dividend list and our buyback list.
and I really to put them on the top five list but at the end of the day I realized that
the price of their stock can often be whipsawed by the market price of oil and gas and they
don’t really have control over that so I thought it would be best to keep them off
the list since what I was after is companies that in theory fundamentally control their
own destiny.
ok next up is apple.
now this is actually a layup for this list.
but, since this list was supposed to be for steady dividend payers, well apple just started
paying dividends a few years ago and a lot of their dividends that they've paid happened
really early on, the first year or two they paid most of their dividends then they dropped
their dividend amount and they've been doing pretty good since then.
but they haven't been doing it long enough to make this list.
ok finally we got coke.
now this is a tricky one because I put Pepsi on the list, at number one no less.
and I think coke is a great company.
but ultimately, I went with Pepsi because I think their growth prospects are a bit better
over the next couple of years and I couldn’t do both Pepsi and coke since I was aiming
to stay diversified with each of the companies that I would hypothetically in my portfolio.
so, you may notice that the goal of this video wasn’t to pick the highest dividend paying
stocks although I’ve thought about doing a video like that, so if you'd be interested
in seeing a video on companies that have high dividend yields let me know in the comment
below.
I’d be happy to do that type of video, that would be interesting.
besides that.
did you like these companies.
would you have added any other companies that were both good dividend payers and good buyback
companies and let me know what you think if you like these types of videos, hit the thumbs
up and if you've made it this far in the video, I really do appreciate it and if you haven’t
done so already, hit the subscribe button and I’ll see you in the next video.