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Companies that Continually Raise Dividends
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If you want to invest in a stock that pays dividends you can't do much better than the so-called Dividend Aristocrats, which have raised payouts consistently for sometimes as much as 50 years.
The really smart investors let their money work for them with minimal interference. Maybe you don’t have a large multinational company selling products, but you can invest in “Dividend Aristocrats.”
Companies that have history of paying dividends that increased over the previous year are considered Dividend Aristocrats. Some of these companies have much better track records: 100 years and more.
The Dividend Aristocrats are an exclusive bunch. The fund called U.K. Dividend Aristocrats has just 30 shares and the U.S. Dividend Aristocrats fund has 52 shares, despite having a slightly stricter barrier to entry: in the U.S. fund, companies must have a 25-year record, while in the U.K. it’s just 10 years.
In a recent article from Investment U, Marc Lichtenfeld explained how these perpetual dividend raisers can make you big bucks over the years — but you have to be patient. It is possible to turn a $10,000 investment into $131,000 in 20 years if the investor simply reinvests the dividends. Or, after 20 years you could be making $2,831 per year in dividend payouts. Read the full article to see where he got the numbers from and one stock that can help you get there.
The United Kingdom’s newspaper The Telegraph recently dug in to find the British and American companies with the best track records for raising dividends year after year.
Alex Robins, client portfolio manager of the JP Morgan Global Dividend fund, told The Telegraph that investors with their money in dividend aristocrats will do well if there’s another financial crisis. However, he also pointed out that banking and technology do well in a recovery, so people invested in dividend aristocrats might miss out of that strong performance.
Here are some of the best in alphabetical order.
AT&T
Sector: Technology
Price: $35.90
Current dividend yield: 5.1%
The telecom giant has been increasing payouts to shareholders for almost 30 years. However, since 2009, AT&T has only made increases of $0.01.
Coca-Cola
Sector: Consumer Goods
Price: $40.13
Current dividend yield: 2.8%
Businessinsider.com
The beverage company has paid dividends for more than 100 years and it began its streak of consecutive increases back in 1963. Since 1985, the annualized return is roughly 12%.
Colgate-Palmolive
Sector: Consumer Goods
Price: $65.81
Current dividend yield: 2.1%
Colgate.com
Like Coca-Cola, the personal care company has paid uninterrupted dividends for more than 100 years—since 1895. Plus, it has increased those payments for 50 years now. In 2013 it upped its payment by 9.6%.
Exxon
Sector: Basic Materials
Price: $93.22
Current dividend yield: 2.8%
Exxon may take the cake. The oil company has been paying dividends since 1882 — an astonishing 131 years. And for the past 28 those payments have been increased.
Johnson & Johnson
Sector: Health Care
Price: $92.85
Current dividend yield: 3.1%
The company has increased its payments for the last 51 consecutive years and in 2013 Johnson & Johnson increased its dividends by 8.2%.
L’Oreal
Sector: Consumer Goods
Price: $33.62
Current dividend yield: 1.41%
The cosmetic company has increased its dividends every year for the last 25. For this year its yield is forecast at 2%, which is particularly high, but it has shown to be consistent, which makes it attractive.
Nestlé
Sector: Consumer Goods
Price: $72.37
Current dividend yield: 2.53%
Nestleusa.com
The company has increased dividends every year since 1996, which means that although it may be a Dividend Aristocrat in Europe, it wouldn’t make the cut in the U.S. But, since 2001 dividends per share in the local currency have increased by 12.5% per year.
Novo Nordisk
Sector: Health Care
Price: $170.97
Current dividend yield: 1.4%
The one-year dividend growth rate for Novo Nordisk is 28.6%, according to Motley Fool. The company has a 25-year history of paying rising dividends.
Pearson
Sector: Services
Price: $20.95
Current dividend yield: 2.4%
Telegraph.co.uk
For 21 years Pearson increased its dividend above the rate of inflation, and for the past decade that dividend increase was at a compound annual rate of 7%.
Procter & Gamble
Sector: Consumer Goods
Price: $82.92
Current dividend yield: 3.1%
The company is the oldest Dividend Aristocrat on the Dow and its increased its dividend every year since 1957. Since 1985 P&G’s quarterly dividend has increased 1,380%. According to Motley Fool, if you reinvested dividends back into the stock your total return would be 4,578.9% since 1985.
