Income investors know the benefit of an annual increase. When it comes to long-term investing, many investors understand the power dividends offer. However, some are obsessed with yield above all else. This can be risky…
Income investors know the benefit of an annual increase.
When it comes to long-term investing, many investors understand the power dividends offer. However, some are obsessed with yield above all else. This can be risky when payouts are unsustainable. History shows it can be more profitable to rely on stocks that may not make the biggest payout but focus on making slightly larger payouts every year. A growing dividend is a sure sign a company’s future is brighter this year than last, and hints your investment is in good hands. If you’re looking for consistent dividend growers, here are nine stocks that have annually raised their payout for at least 20 years.
Home products giant Clorox likely needs no introduction, with long-standing products that include its namesake bleach as well as Kingsford charcoal and Glad trash bags. Just as these big brands have been around for decades, so has the CLX dividend. And they’ve been growing steady since 1977 to top four decades of annual dividend increases. Sure, there may not be breakneck growth in cleaning products. However, the stability of sales from this household name is exactly what long-term dividend investors want.
AT&T, one of the biggest telecommunications companies in the world, is another example of dividend stability. Thanks to an entrenched network of both wireless and terrestrial services, the company is valued at more than $230 billion and books over $39 billion in operating cash flow each year. That kind of scale means AT&T can generously share its success with stockholders. At the end of 2017, the company increased its quarterly dividend by a penny to mark the 34th consecutive year of increases. While shares have been sluggish in 2018, long-term investors have nothing to fear.
Foods giant McCormick can really kick up your portfolio with its generous dividend, which has been paid out for roughly a century — and has been growing annually for more than 30 years. From its eponymous spices to sauces like Frank’s Red Hot and French’s mustard to ethnic product lines like Thai Kitchen, MKC has a regular spot in the shopping carts of most Americans. And that steady flow of sales means steady revenue to fuel current and future dividend increases. And with dividends less than half of its current earnings, investors can expect the payouts to continue to increase going forward.
From Hormel lunch meats to Skippy peanut butter to Muscle Milk nutrition products, this is one company that knows the tastes of American consumers. The strong brand portfolio of HRL allows for consistent revenue. While it’s impressive to boast more than 25 years of consecutive payouts, Hormel actually should be in a category of its own with 52 consecutive years of increases — double the threshold required to become a so-called “dividend aristocrat.” Its overall yield may not knock you over, but that kind of reliable history is incredibly attractive to long-term investors who want consistency above anything else.
Fossil fuels are as much a staple in 2018 as consumer goods at the grocery store. Exxon has diversified far beyond oil drilling, with a huge natural gas operation thanks to the $41 billion purchase of XTO Energy about a decade ago and current efforts to bolster its renewable energy portfolio. The diversified energy portfolio of Exxon and annual revenues north of $300 billion ensures this company will withstand big-picture changes. XOM has paid dividends to shareholders for decades, back to its roots in behemoth Standard Oil, and has increased payouts for 36 consecutive years.
Keeping with the theme of big-time brands that can’t be kept down, PepsiCo has its share of troubles in a changing world where soda and junk foods are falling out of favor. But while its flagship soft drink and snacks like Doritos are current powerhouses, this consumer company has also invested heavily in the future of your pantry. Offerings like Stacy’s pita chips and Pure Leaf teas speak to a healthier and less-processed approach. This is a $160 billion company that operates all over the world — and that strength has fueled dividends that have grown for 45 consecutive years.
Retailer Target isn’t as old as many companies on this list, opening in Minneapolis in 1962 and going public in 1967. However, Target has been committed to dividends in a way that makes it stand out. Unlike many companies, TGT stock started paying a dividend in that first year of public trading. And soon after, in 1971, the company began a history of annual increases — putting it at a streak of 47 consecutive years. Despite challenges in the age of e-commerce, a strong brand and history of payouts give income investors big reasons to check out Target.
Another very consistent sector worth exploring for the dividends is health care. After all, folks get sick in both good times and bad. Abbott is one of the oldest pharmaceutical companies, taking its roots in the late 1800s. It’s also one of the oldest dividend payers on Wall Street, with a dividend history that is almost a century long and includes 46 consecutive years of increases. With a strong and diversified portfolio of products, from blockbuster patented drugs like its arthritis drug Humira to consumer health products like Pediasure infant formula, ABT likely has staying power.
Utilities are rock-solid businesses that can weather both good times and bad. After all, electricity is right up there with food and shelter in the list of basic needs for most human beings in the 21st century. While demand can fluctuate, utilities like ED are as safe as an investment as they come. There may not be much growth but a highly regulated environment creates geographic monopolies and limits competition. Consolidated, which serves the New York City region, just marked its 44th consecutive annual dividend increase earlier this year — likely just one more in a long string of increases investors can expect.