The Boring Stock Dividend That Can Light Up Your Future

| August 31, 2015 | 0 Comments

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I got in the elevator in my building the other morning at six o’clock.

A friend of mine was in there.  He’s 80 years old, and was heading out for his morning cup of coffee.

He’s a Starbucks $SBUX fan, and a longtime Starbucks investor who has seen his stock split twice.

We all get a bit envious when we hear about the successful investments other people have made.  The concept of “getting in on the ground floor” has timeless appeal.

But history tells us getting in on the ground floor is a classic way to get in trouble.

The stock dividend that can light up your future… and will be there for you when you’re 80 years old…  probably won’t come from an IPO, or from a beguiling company with an intriguing product.

The stock dividend you can depend on probably won’t come from a trendy new business.

In fact, the more boring the business, the better, which leads me to…

Duke’s Stock Dividend Law

Here it is…

“The harder it is to talk to one of your friends about a stock, the more dividends it will pay you.”

It’s easy to talk about the stock you’ve just bought where the company is waiting for patent approval on a solar panel the size of a credit card that can power an air conditioner.

That’s fun stuff.  It’s interesting and it sounds plausible.

All that’s missing is revenue (or enough revenue to more than cover the expenses).

And that’s why the stock dividend that will be there for you when you need it probably doesn’t have much of a glamorous story attached to it.

Let me show you why boring is beautiful when it comes to the best dividend stocks.

Here are three dividend stocks to take a look at.  But let me warn you…

If you’re talking about these stocks with one of your buddies, you’ll be hard-pressed to keep an interesting conversation going for more than 10 seconds.

Boring Dividend Stock #1

Is there anything as dull as insurance?

Well, if you work in the insurance business, it might be interesting.

But for most of us, it’s a huge snooze.  And there’s a corner of the dull insurance landscape that’s even sleepier.


You know how reinsurance works?  Basically, insurance company A buys insurance for itself from insurance company B.

It’s a huge business, and there’s a reinsurance company in the charming Parish of Pembroke, Bermuda that pays a charming yield of 7.45%.

Blue Capital Reinsurance Holdings Ltd. $BCRH comes with a little baggage though.

It hasn’t been around long, so the dividend history is brief.

One highlight… a special dividend paid earlier this year.

At 64.2%, the dividend payout ratio is a bit on the high side.

You know this if you’re already up to speed on our dividend payout ratio secrets.

The P/E ratio (price earnings ratio) is 9.78, well below the market average.

But history shows us that we really shouldn’t worry about the trustworthiness of Blue Capital.

For years, it went about its business paying out a 30-cent dividend.  It even paid a special 66-cent dividend a few years ago.

Boring Dividend Stock #2

Here’s another reinsurance company that has actually stirred up a bit of intrigue lately.

(And it just happens to be headquartered in Pembroke, Bermuda.  Notice a pattern?  You’ve got to love the way Bermuda’s favorable tax laws make the island perfect for insurance companies.)

AXIS Capital Holdings Ltd. $AXS was going to do a stock swap deal and merge with PartnerRe Ltd. $PRE.  Then the deal went sailing off the rails.

PartnerRe changed its mind.  It decided to hook up with an Italian outfit, EXOR S.p.A.

Dumping its dance partner costs PartnerRe $315 million in break-up fees that go to AXIS.

So EXOR, which owns Fiat and The Economist, gets PartnerRe and AXIS gets the cash.

Don’t shed a tear for AXIS.  The company has some decent dividend history, eight years of growing dividends, a 2.02% yield and a conservative 28% Dividend Payout Ratio.  And the P/E isn’t bad at all, 7.5.

Boring Dividend Stock #3

Maiden Holdings, Ltd. $MHLD is another reinsurance company that’s in Bermuda.

It turned in disappointing quarterly results a few weeks ago.

But take a look at how the stock’s been doing since the company went public in 2008…

Maiden Holdings, Ltd.

There’s a wonderful lesson in this chart.  Look at what happened to the stock right after it came out.

The stock promptly swooned and lost more than half its value in just a few months.  But patient investors who believed in the company and held on did just fine.

Is Maiden Holdings, Ltd. overpriced right now?

The P/E ratio (price earnings ratio) is attractive, 10.13.  The yield is 3.57% and the Dividend Payout Ratio is a reasonable 34.7%.

If there’s a knock on Maiden, it’s that we’re not seeing much dividend growth.  And overall business is slowing down a bit.

A good dividend stock to keep an eye on, but probably not as good a deal as AXIS.

The Boring Stock Dividend With 2 Happy Endings

So you’ve got these stocks that pay nice dividends.

They’re boring, and they don’t give you much to talk about, since none of your buddies are going to be terribly interested in hearing about reinsurance.

But hold on.  Maybe you’ve got something to talk about after all.

If you own Maiden Holdings, AXIS, or Blue Capital, you might want to think about going to the annual meeting.

After all, you’re a shareholder.

A trip to Bermuda?

Not bad.  And when you’re there, maybe you can grab a fish sandwich at Art Mel’s in Hamilton.


Paul Duke

Note:  Paul Duke writes and edits  Sign up for our free dividend reports and dividend newsletter at  We’ll show you how to create regular income by investing in dividend stocks, easily, step-by-step.

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Category: Best Dividend Stocks

About the Author ()

Paul “Dividend” Duke is a veteran investor with a longstanding interest in dividend stocks. He brings a balance of both technical and fundamental analysis to his work, and focuses on opportunities that provide safety, capital appreciation, and income.

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