High-Dividend, Low-Beta Stocks From the Mama Screen

People say you should marry a woman who's like your mother. (Or is that an old wives' tale?) As it turns out, using the same rationale to pick stocks can lead to good returns.

Last year, fellow Fool Joe Magyer came up with a theory: Companies that demonstrated the same character traits his Mom has might make good investments. After developing his Mama Screen, he found seven stock candidates for Moms everywhere.

I couldn't resist looking back to see how those stocks have done over the past year. Although Joe's Mom taught him modesty, I'm quite comfortable sharing the results:

Company

Return Since Last Mother's Day

Johnson & Johnson

8.7%

Procter & Gamble

9.8%

3M

(7.0%)

UPS

0.5%

Diageo

5.0%

Coca-Cola

12.7%

Abbott Laboratories

(7.5%)

Mama Screen Average

3.2%

S&P 500 (with dividends)

(5.0%)

Last year's Mama Screen stocks came through, outperforming the market by 8 percentage points. These high-quality companies did well in a troubled market. Their above-average dividend yields helped add to their overall returns, and low betas meant that they were less exposed to falling stock prices in the overall market.

Your Mom might tell you it's impolite to give the same gift year after year, but in investing, good ideas are worth repeating. With that in mind, here's this year's look at some stocks from the Mama Screen, each with a dividend yield above the S&P 500's average of 2.14%, five-year returns on equity above 15%, and a beta less than 0.8.

Company

5-Year ROE

Dividend Yield

Beta

General Electric (NYSE: GE)

19.2%

3.7%

0.50

Wells Fargo (NYSE: WFC)

18.6%

4.0%

0.36

US Bancorp (NYSE: USB)

21.7%

4.9%

0.64

Home Depot (NYSE: HD)

20.1%

3.0%

0.70

Colgate-Palmolive (NYSE: CL)

98.2%

2.2%

0.21

Anheuser-Busch (NYSE: BUD)

55.5%

2.6%

0.56

Kimberly-Clark (NYSE: KMB)

30.4%

3.6%

0.60

Again, the screen's results serve up host of well-known, Mom-friendly companies. With solid financials, a dollop of dividend income, and less-extreme price movements in volatile markets, these more-conservative stocks should give your Mom a portfolio she can feel comfortable with -- no matter what the stock market does between now and Mother's Day 2009.