Investors don’t think about dividends as very important for the short term, “but over a decade typically they represent 40-50 percent of the total returns,” Greg Thomas, chairman and CEO of the advisory firm Thomas Partners, which has $1 billion assets under management, told CNBC Friday.
Thomas recommended two stocks that, in general, have good yields, an opportunity dividend growth and can be bought at a discount to Thomas Partners’ measure of the company’s intrinsic value.
Genuine Parts Company “is a very stable business distributor of automotive after-market and industrial products,” Thomas said. GPC has had 55 consecutive years of increasing its dividend, he said.
The "last dividend increase was about 9.7 percent, current yield about 3.3 percent,” he added.
Waste Management’s dividend yield is 4.4 percent, with eight consecutive years of dividend growth, said Thomas. “They’ve increased it each year for about eight years.”
“They’re very embedded in green industries, they provide biofuels [and] very, very good growth opportunities,” he said of the company.
If investors think out 10 years from now as to which portfolios have done well, he said, "those that have captured at least as much dividend income as the market offers have a far lower capital gains hurdle on their own asset structures."