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Dividends Show Markets 'Getting Better': Stock Picker

Monday, 14 Jun 2010 | 11:55 AM ET

So far this year, a total of 135 companies have raised, initiated or reinstated dividends; only two firms have cut them. Is this another signal that the economy is rebounding? Robert Froehlich, senior managing director at The Hartford, and John Dorfman, portfolio manager of Dorfman Value Fund, offered their insights and their best plays.

Best Dividend Plays
Some companies are raising their dividends, with Bob Froehlich, The Hartford and John Dorfman, Thunderstorm Value Fund.

“This is a sign that the economy and the markets are getting better," Dorfman told CNBC.

“Dividends are a sincerity barometer: Boards aren’t going to raise them if they think they’re going to turn around and cut them, because they hate to do that. So it’s a sign that earnings are sustainable.”

Dorfman said he favors companies that have 4 percent dividend payouts with a 5-year growth rate.

In the meantime, Froehlich said as companies continue to raise capital, he expects an uptick in M&A activity as well an increase in dividends.

“I’d rather look at the history of a consistent 2.5- to 3-percent dividend story and those are the types of companies you have to look at,” he said.

Froehlich’s Dividend Picks:

ExxonMobil

Chevron

BP

Bank of America

JPMorgan

Wells Fargo

Dorfman’s Dividend Picks:

Merck

Cal-Maine Foods

Paychex

Scorecard—What They Said:

  • Dorfman's Previous Appearance on CNBC (Apr. 9, 2010)
  • Froehlich's Previous Appearance on CNBC (Apr. 28, 2010)

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Opposing Market Views:

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CNBC Data Pages:

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CNBC Slideshows:

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Disclosures:

Froehlich personally owns shares of XOM, CVX, BP, BAC, WFC and JPM.

Dorfman personally owns shares of MRK and CALM but not PAYX.

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Disclaimer

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BP.
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JPM MLP ETN
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MRK
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WFC
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XOM
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