Two stocks that have long been popular among the top performing advisers Love, the Scriptures teach us, “bears all things, believes all things, hopes all things, endures all things.” Something akin to that is needed by beleaguered investors who — for many years now — have steadfastly believed in a group of stocks that, at least so far, have failed to keep up with the overall market. Prominent members of this group are stocks like Pfizer PFE, -0.23% and IBM IBM, -0.20% Unfortunately for those stocks, many investors have not exhibited the loyalty of true love — which explains in no small part why they have lagged the market in recent years. But, and this is key, the top-performing advisers I track continue to bet on these stocks. On the theory that they are more likely to be right than wrong, therefore, these stocks represent an opportunity to pick up some good quality stocks at surprisingly cheap prices. To construct my group of top-performing advisers, I included only those on the Hulbert Financial Digest’s monitored list who have beaten a broad stock market index fund over the last 15 years. That’s a long-enough period of time to largely exclude those advisers whose good performance was due to luck alone. Just 46 advisers made the cut. Next, courtesy of the Hulbert Interactive section of the MarketWatch website, I constructed a list of the stocks that are currently held in the greatest number of these top performers’ model portfolios. Take Pfizer, which has been at or near the top of the top performers’ most-recommended list for many years — despite performance that, on balance, has barely kept up with the broad market. Pfizer currently is tied for second most popular among these top performers, recommended by no fewer than eight of the 46 of them. Kelley Wright, editor of Investment Quality Trends, is one of them. His approach is to pick companies that are trading near the high end of the historical range of their dividend yields. So long as the company’s financials are in strong enough shape to make a dividend cut very unlikely, the only way for such companies’ yield to make it back to the middle of their historical ranges is for their stock prices to rise. This theory leads to a very strong recommendation of Pfizer, since its financials are in strong shape and its 3.6% dividend yield is more than double the low end of the historical range of the company’s yield — which is 1.3%. On the seemingly safe assumption that the company doesn’t cut its dividend, the only way its stock would ever trade again at or even near that low yield would be for it to shoot up in price. That might take a long time, of course. But in the meantime, the company’s hefty dividend yield — double that of the 10-year Treasury — softens the pain of waiting. Or take IBM, which is almost as popular as Pfizer among these top performers, being recommended by six of them. Its dividend yield — at 2.9% — is also far higher than the 10-year Treasury. Many fair-weather investors have dumped IBM in favor of high-tech darlings that seem to be on the cutting edge of technology, arguing that IBM represents the “old” rather than the “new” in the tech world. This is a mistaken view of the company, according to Steven Check, editor of Blue Chip Investor, and another of the top performers. Check points out that, contrary to the perception that IBM remains heavily dependent on a legacy hardware business, “90% of [IBM’s] profits [are] generated from software and services.” Also relevant to the misperception that IBM is not on the cutting edge, according to Check: The company was “awarded 6,809 U.S. patents in 2013, more than Google GOOGL, +1.49% and Microsoft MSFT, -0.21% combined.” If the confidence the top performers are placing in these two companies turns out to be well founded, then over the long term they not only will significantly outperform the market, but also leave in the dust those high-tech darlings that currently are capturing investors’ wallets (if not their hearts). That’s not the same as true love, of course, but perhaps the closest that Wall Street can come! Mark Hulbert