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All Contents © 2018The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
| November 13, 2017
The Dividend Aristocrats are companies in the Standard & Poor's 500-stock index that have hiked their dividends every year for at least 25 consecutive years. And they exemplify a winning formula for investing in dividend stocks.
Companies with a long track record of consistent dividend payments are attractive, but dividend growth matters, too. Steady dividend hikes not only make a stock more alluring to new income investors, but also reward existing investors with increasingly higher yields on shares purchased at lower prices in the past.
Dividend stocks that raise their payouts have appeal in an aging bull market, when the pace of shareholder-friendly stock buybacks and mergers can slow, according to Heidi Richardson, an investment strategist for BlackRock. Dividend growers, she adds, also can offer an edge when interest rates are going up: "Stocks with a history of consistently growing their dividends have historically tended to perform well and exhibit less volatility in a rising rate environment." Kiplinger’s expects at least two Federal Reserve rate hikes in 2018.
Because size, longevity and familiarity can provide comfort amid market uncertainty, here are the Dividend Aristocrats. Dominated by household names, this list of 50 dividend stocks is a good starting point for investors seeking out high-quality companies to add to their long-term portfolios in 2018.
(Dividend yields and other figures are as of Nov. 10, 2017. Analyst ratings are from Zacks Investment Research. Companies are listed alphabetically.)
Windpower Engineering & Development
Market value: $135.5 billion
Dividend yield: 2.1%
Consecutive annual dividend increases: 59
Analysts’ opinion: 4 strong buy, 0 buy, 6 hold, 0 underperform, 3 sell
Industrial conglomerate 3M (MMM, $227.45), which makes everything from adhesives to electric circuits, had been slowed by renewed strength of the U.S. currency. Because the company sells its products worldwide, a strong dollar makes 3M’s goods more expensive to overseas buyers and reduces revenue when foreign sales made in local currencies are converted into greenbacks.
Fortunately for 3M shareholders, the dollar has weakened over the past year. For instance, foreign currency translation actually increased year-over-year sales by 0.6% in the third quarter ended Sept. 30.
3M sports a dividend that dates back a century and has improved it annually for 59 consecutive years.
Market value: $95.4 billion
Dividend yield: 1.9%
Consecutive annual dividend increases: 45
Analysts’ opinion: 12 strong buy, 2 buy, 7 hold, 0 underperform, 0 sell
Following its 2013 spinoff of AbbVie (ABBV) – another Dividend Aristocrat on this list – today’s Abbott Laboratories (ABT, $54.80) is focused on branded generic drugs, medical devices, nutrition and diagnostic products. Its product list includes the likes of Similac infant formulas, Glucerna diabetes management products and i-Stat diagnostics devices.
The company, which dates back to 1888, first paid a dividend in 1924. Abbott has raised its dividend for 45 straight years.
Market value: $152.1 billion
Dividend yield: 3%
Analysts’ opinion: 8 strong buy, 0 buy, 6 hold, 0 underperform, 0 sell
AbbVie’s (ABBV, $95.43) corporate heritage will sound very familiar. The pharmaceutical maker was spun off from Abbott Laboratories (ABT) in 2013, and like its parent, it carries a longstanding dividend payment. Including its time as part of Abbott, AbbVie upped its annual distribution for 45 consecutive years.
Best-selling treatments include Humira for rheumatoid arthritis and AndroGel, a testosterone replacement therapy. All told, AbbVie’s pipeline includes more than 30 products across various stages of clinical trials.
Market value: $32.1 billion
Dividend yield: 2.2%
Consecutive annual dividend increases: 35
Analysts’ opinion: 2 strong buy, 1 buy, 6 hold, 1 underperform, 2 sell
Aflac (AFL, $83.44) is a supplemental insurance company – popularized by the loud Aflac duck – with roots going back to 1955 that covers numerous workplace offerings, such as accident, short-term disability and life insurance.
Aflac’s earnings exceeded analysts' average estimate for the quarter ended Sept. 30, even as revenue declined. A decline in insurance premium income in Japan, which is Aflac’s largest market, and a weaker yen, was partially to blame. Still, the insurance company has hiked its dividend every year for more than three decades, including a 4.7% boost to the payout in 2017.
Air Products and Chemicals
Market value: $34.9 billion
Dividend yield: 2.4%
Analysts’ opinion: 11 strong buy, 0 buy, 5 hold, 0 underperform, 1 sell
Air Products and Chemicals (APD, $160.30) spent much of past couple years restructuring. Under pressure from investors, it started to shed some weight, including spinning off its Electronic Materials division and selling its Performance Materials business.
Air Products, which dates back to 1940, now is a slimmed-down company that has returned to focusing on its legacy industrial gases business. But it hasn’t taken its eye off the dividend, which it has improved on an annual basis for 35 years in a row.
Archer Daniels Midland
Market value: $22.3 billion
Dividend yield: 3.2%
Consecutive annual dividend increases: 42
Analysts’ opinion: 2 strong buy, 0 buy, 9 hold, 0 underperform, 2 sell
Archer Daniels Midland (ADM, $39.93) processes ingredients for food and feed, including corn sweeteners, starches and emulsifiers such as lecithin. It also has a commodities trading business.
Following a pattern of growing through acquisitions, in January, ADM bought Crosswind Industries, an animal nutrition business that produces a variety of pet foods. That will add to the company's own operations, which include selling more than 50 ingredients and commodities used by American pet-food makers
Archer Daniels Midland has paid out dividends on an uninterrupted basis for 85 years. That includes 42 consecutive years of payout increases.
Market value: $210.1 billion
Dividend yield: 5.7%
Consecutive annual dividend increases: 34
Analysts’ opinion: 5 strong buy, 1 buy, 13 hold, 0 underperform, 0 sell
Telecommunications stocks are synonymous with dividend payments. Customers pay for service every month, which ensures a steady stream of cash to fund dividends. AT&T (T, $34.22) – the second-largest U.S. telecom by subscribers – is a perfect example.
AT&T has raised its dividend on an annual basis for 34 consecutive years. That’s in large part because of the cash flows generated by the telecom business, though AT&T also is trying to keep generating growth via DirecTV, which it acquired in 2015 for $48.5 billion.
AT&T also typically boasts one of the highest dividend yields in the S&P 500.
Automatic Data Processing
Market value: $49.3 billion
Dividend yield: 2.3%
Consecutive annual dividend increases: 43
Analysts’ opinion: 3 strong buy, 0 buy, 14 hold, 0 underperform, 1 sell
Automatic Data Processing (ADP, $111.09) is the world's largest payroll processing firm with 39 million employees in the U.S. and overseas helping to service more than 650,000 clients across more than 110 countries.
One of ADP’s great advantages is its "stickiness." It's difficult and expensive for corporate customers to change payroll service providers. That competitive advantage helps throw off consistent income and cash flow. In turn, ADP has become a dependable dividend payer – one that has provided an annual raise for shareholders since 1974.
Market value: $49.9 billion
Dividend yield: 1.3%
Analysts’ opinion: 9 strong buy, 0 buy, 6 hold, 0 underperform, 0 sell
Medical devices maker Becton Dickinson (BDX, $219.23) first bulked up with its 2015 acquisition of CareFusion, a complementary player in the same industry. Earlier in 2017, it struck a $24 billion deal for fellow Dividend Aristocrat C.R. Bard (BCR) – another medical products company with a strong position in treatments for infections diseases. The company is increasingly looking for growth to be driven by markets outside the U.S., including China.
Annual dividend increases stretch back 45 years and counting – a track record that should offer peace of mind to antsy income investors.
Market value: $22.1 billion
Consecutive annual dividend increases: 33
Analysts’ opinion: 0 strong buy, 0 buy, 6 hold, 0 underperform, 2 sell
Brown-Forman (BF.B, $57.28) is one of the largest producers and distributors of alcohol in the world. Jack Daniel’s Tennessee whiskey and Finlandia vodka are just two of its best-known brands, with the former helping drive better-than-expected growth in the most recent quarter. Tequila sales – Brown-Forman features the Herradura and El Jimador brands, among others – also are on the rise.
The company has raised its payout annually for 33 years, and has delivered an uninterrupted regular payout for 71 years.
Market value: $18.5 billion
Consecutive annual dividend increases: 31
Analysts’ opinion: 1 strong buy, 0 buy, 11 hold, 0 underperform, 0 sell
A steady stream of acquisitions helped wholesale drug and medical device distributor Cardinal Health (CAH, $58.55) become the giant that it is today.
More recently, it has been embroiled in legal actions related to the nation's opioid epidemic. In late 2016, Cardinal Health agreed to pay $44 million to the Department of Justice to settle allegations that it failed to report suspicious drug orders. And in early 2017, the company agreed to a $20 million settlement with the state of West Virginia. However, Cardinal Health is looking for new life with an acquisition of Medtronic’s (MDT) Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency business, completed in July 2017.
On the dividend front, Cardinal Health has provided an increased annual payout for 31 years and counting.
Market value: $222.6 billion
Dividend yield: 3.7%
Consecutive annual dividend increases: 29
Analysts’ opinion: 9 strong buy, 1 buy, 6 hold, 0 underperform, 2 sell
Chevron (CVX, $117.18) is an integrated oil giant that also has operations in natural gas and geothermal energy. And like its competitors, Chevron hurt when oil prices started to tumble in 2014. The energy major was forced to slash spending as a result, but – reassuringly – it hasn’t slashed its dividend.
The outlook for oil remains uncertain, with Kiplinger’s forecasting that prices will stay below $60 a barrel at least through the winter. But with nearly three decades of uninterrupted dividend growth under its belt, Chevron's track record instills confidence that the payouts will continue.
Market value: $12 billion
Dividend yield: 2.7%
Consecutive annual dividend increases: 56
Analysts’ opinion: 0 strong buy, 0 buy, 1 hold, 0 underperform, 1 sell
Insurance company Cincinnati Financial (CINF, $73.40) exceeded analysts' expectations in the quarter ended Sept. 30 even as profits plunged year-over-year. The drop was hardly a surprise after the devastating Atlantic hurricane season of 2017. The wildfire and storm in Gatlinburg, Tennessee, has also taken a toll on the insurer's bottom line this year.
Still, the property and casualty insurance specialist has one of the Dividend Aristocrats’ longest streaks of increases at 56 years, and given that Cincinnati Financial only pays out less than two-thirds of its profits as dividends, that trend should continue.
Market value: $15.5 billion
Dividend yield: 1.1%
Analysts’ opinion: 5 strong buy, 0 buy, 5 hold, 0 underperform, 1 sell
Cintas (CTAS, $146.10) – which is well-known for providing corporate uniforms, but also offers maintenance supplies, tile and carpet cleaning services and even compliance training – is seen by some investors as a bet on jobs growth. There may be something to that. Shares are up more than 30% over the past 52 weeks, which coincides with unemployment hitting 17-year lows recently.
Regardless of how the labor market is doing, Cintas is a stalwart as a dividend payer. The company has raised its payout every year for 34 years – including a sizable 21.8% jump in the payout announced in October 2017.
Market value: $17 billion
Dividend yield: 2.5%
Consecutive annual dividend increases: 40
Analysts’ opinion: 0 strong buy, 0 buy, 8 hold, 1 underperform, 0 sell
Clorox (CLX, $132.05), whose brands include its namesake bleaches, Glad trash bags and Hidden Valley salad dressing, reported better-than-expected results for the three months ended Sept. 30. Record shipments of Clorox disinfectant wipes, as well as Scentiva wipes and sprays, helped drive the quarter, but the company still pared back its sales outlook for 2018.
Beyond that, however, analysts expect solid and steady growth from the consumer products company; earnings are expected to rise an average of almost 7% a year for the next five years. That should apply more upward pressure on Clorox’s dividend, which has increased in size annually for four decades.
Market value: $198.3 billion
Consecutive annual dividend increases: 55
Analysts’ opinion: 3 strong buy, 0 buy, 11 hold, 0 underperform, 0 sell
Coca-Cola (KO, $46.54) has long been known for quenching consumers’ thirst, but it’s equally effective at quenching investors’ thirst for income. The company has paid a quarterly dividend since 1920, and that dividend has increased annually for the past 55 years.
With the U.S. market for carbonated beverages on the decline for more than a decade, according to market research, Coca-Cola has responded by adding bottled water, fruit juices and teas to its product line-up to keep the cash flowing.
Market value: $64.3 billion
Consecutive annual dividend increases: 54
Analysts’ opinion: 3 strong buy, 1 buy, 9 hold, 0 underperform, 0 sell
Colgate-Palmolive (CL, $73.21) sells staples ranging from toothpaste to dish detergent, and thus demand for its products tends to remain stable in good and bad economies alike.
The company derives the vast majority of its sales outside the U.S., making it sensitive to a stronger dollar. (The value of foreign sales is diminished when local currencies are converted into dollars.) However, that effect reverses when the greenback pulls back in value. Colgate saw that during the three months ended Sept. 30, when a weakened dollar helped foreign exchange add 1.5% to total sales.
You can still count on Colgate’s dividend, however. It dates back more than a century to 1895 and has increased annually for 54 straight years.
Market value: $27 billion
Analysts’ opinion: 1 strong buy, 0 buy, 3 hold, 0 underperform, 4 sell
Consolidated Edison (ED, $87.19) is one of the nation’s largest utility stocks by market value. Founded in 1823, it provides electric, gas and steam service for the 10 million customers in New York City and Westchester County. And like most utilities, Consolidated Edison enjoys a fairly stable stream of revenues and income thanks to a dearth of direct competition.
As a result, the utility company has been able to hike its annual distribution without interruption for more than four decades.
Market value: $14.6 billion
Dividend yield: 2.0%
Consecutive annual dividend increases: 62
Analysts’ opinion: 5 strong buy, 1 buy, 10 hold, 0 underperform, 0 sell
Industrial conglomerate Dover (DOV, $93.79) has its hands in all sorts of industries, from Dover-branded pumps, lifts and even productivity tools for the energy business, to Anthony-branded commercial refrigerator and freezer doors. It’s not an exciting business, though it has gotten more headline-worthy of late. Activist investor Daniel Loeb’s Third Point hedge fund has taken a stake in the company and is calling on it to separate its energy business.
Dividend growth has been a priority for Dover, which at 62 consecutive years of annual distribution hikes boasts the third-longest such streak among publicly traded companies.
Market value: $37.7 billion
Consecutive annual dividend increases: 25
Analysts’ opinion: 9 strong buy, 1 buy, 8 hold, 0 underperform, 0 sell
Ecolab (ECL, $130.30) provides water treatment and other industrial-scale maintenance services for several industries, including food, healthcare, and oil and gas. Ecolab’s fortunes can wane as industrial needs fluctuate; for instance, when energy companies pare spending. Over the long haul, though, ECL shares are a proven winner.
That’s thanks in no small part to a dividend that dates back 80 years. And that payout has grown on an annual basis for a quarter-century.
Market value: $39.4 billion
Consecutive annual dividend increases: 60
Analysts’ opinion: 5 strong buy, 0 buy, 7 hold, 0 underperform, 1 sell
Emerson Electric (EMR, $61.61) makes a wide variety of industrial products, ranging from control valves to electrical fittings. The prolonged downturn in oil prices weighed on Emerson for a couple years as energy companies continued to cut back on spending, but shares have been on the rebound since early 2016. A bevy of divestitures – including its network power unit – will cause sales to fall this year, analysts expect, before rebounding in 2018.
Emerson has paid dividends since 1956 and has boosted its annual payout for 60 consecutive years.
Market value: $351.4 billion
Analysts’ opinion: 4 strong buy, 2 buy, 9 hold, 0 underperform, 2 sell
A descendant of John D. Rockefeller's Standard Oil, today’s Exxon Mobil (XOM, $82.94) remains one of the world's largest oil companies and is the single biggest company by market value among the 50 Dividend Aristocrats.
As a dividend stalwart – Exxon and its various predecessors have strung together uninterrupted payouts since 1882 – it continued to hike its payout even as oil prices declined in recent years. Exxon has increased its dividend for 35 consecutive years, and has done so at an average annual rate of 6.3%.
Federal Realty Investment Trust
Market value: $9.6 billion
Consecutive annual dividend increases: 50
Analysts’ opinion: 7 strong buy, 0 buy, 6 hold, 0 underperform, 1 sell
Real estate investment trusts like Federal Realty Investment Trust (FRT, $132.01) are required to pay out at least 90% of their taxable earnings as dividends in exchange for certain tax benefits. Thus, REITs typically are a go-to source for income, and few have been more steady than FRT.
Federal Realty Investment Trust – which owns retail and mixed-use real estate across 12 states, as well as the District of Columbia – has now hiked its payout every year for half a century, and at an annual growth rate of more than 7%.
Market value: $22.9 billion
Consecutive annual dividend increases: 37
Analysts’ opinion: 1 strong buy, 0 buy, 6 hold, 0 underperform, 2 sell
The name Franklin Resources (BEN, $41.13) might not be well-known among investors; however, along with its subsidiaries, it’s called the more familiar Franklin Templeton investments. The global investment firm is one of the world’s largest by assets under management, and is known for its bond funds, among other things.
Mutual fund providers have come under pressure because customers are eschewing traditional stock pickers in favor of indexed investments. However, Franklin is fighting back by launching its first suite of passive exchange-traded funds.
The asset manager has raised its dividend for 37 consecutive years, including an 11% hike announced in August 2017.
Market value: $59.7 billion
Dividend yield: 1.7%
Analysts’ opinion: 9 strong buy, 1 buy, 5 hold, 0 underperform, 1 sell
Defense contractor General Dynamics (GD, $199.97) is one of the newest members of the Dividend Aristocrats, having been added to the elite list of dividend growers at the end of January 2017. Shares in the company are up by double digits for the year-to-date, and analysts are generally bullish on its prospects under the Donald Trump administration.
General Dynamics has upped its distribution for 25 consecutive years. With a payout ratio of just 31% – the S&P 500 has an average payout ratio of almost 40% – General Dynamics should have ample room for more dividend hikes.
Market value: $12.5 billion
Consecutive annual dividend increases: 61
Analysts’ opinion: 1 strong buy, 0 buy, 6 hold, 1 underperform, 0 sell
Automotive and industrial replacement parts maker Genuine Parts (GPC, $85.45) is best-known for the NAPA brand, though it also operates under AutoTodo in Mexico and UAP in Canada. Since its founding in 1928, it has pursued a strategy of acquisitions to fuel growth. Most recently, it bought Alliance Automotive Group, one of the largest distribution companies in Europe, for $2 billion.
A long-time dividend machine, GPC has hiked its dividend annually for more than six decades. That includes a 3% improvement to the payout in February 2017.
Market value: $17.1 billion
Consecutive annual dividend increases: 51
Analysts’ opinion: 5 strong buy, 0 buy, 6 hold, 0 underperform, 1 sell
Shares in Hormel (HRL, $32.33), the maker of Spam, have been down in the dumps recently. The stock is off about 7% over the past 52 weeks, hurt primarily by weak results from its Jennie-O turkey operations. However, a recent $850 million acquisition of millennial-focused Columbus Manufacturing's premium deli meat should start to help turns things around.
Analysts at Zacks remain cautious on this food producer, but it's safe to say the dividend will just keep rolling along. Hormel pays out a conservative 40% of its profits out as dividends, and has hiked its dividend annually for 51 consecutive years.
Illinois Tool Works
Market value: $53.8 billion
Analysts’ opinion: 8 strong buy, 0 buy, 8 hold, 0 underperform, 0 sell
Founded in 1912, Illinois Tool Works (ITW, $157.14) makes construction products, car parts, restaurant equipment and more. While ITW sells many products under the namesake brand, it also operates businesses including Foster Refrigerators, ACME Packaging Systems and the Wolf Range Company. Cost cuts, asset sales and share buybacks helped its stock rise 27% over the past 52 weeks versus a 19% gain for the broader market.
Illinois Tool Works announced a 20% increase to its dividend in August 2017, good for the company’s 54th consecutive year of payout hikes.
Market value: $374.9 billion
Analysts’ opinion: 10 strong buy, 2 buy, 5 hold, 0 underperform, 2 sell
Johnson & Johnson (JNJ, $139.56), founded in 1886 and public since 1944, operates in several different segments of the health care industry. In addition to pharmaceuticals, it makes over-the-counter consumer products such as Band-Aids, Neosporin and Listerine. It also manufactures medical devices used in surgery.
Like many health care companies, it faces at least some amount of uncertainty over federal health care policy. However, investors can take some comfort in a very manageable 55% payout ratio, which should ensure the health of its 55-year streak of consecutive annual dividend increases.
Market value: $40.2 billion
Dividend yield: 3.4%
Analysts’ opinion: 1 strong buy, 0 buy, 9 hold, 0 underperform, 1 sell
Kimberly-Clark's (KMB, $114.14) well-known brands include Huggies diapers, Scott paper towels and Kleenex tissues. Like other makers of consumer staples, Kimberly-Clark holds out the promise of delivering slow but steady growth along with a healthy dividend to drive total returns. Sales slowed down in 2016 in part due to heavier competition, but they're expected to rebound a bit this year and in 2018.
Kimberly-Clark has paid out a dividend for 82 consecutive years, and has raised the annual payout for the past 45 years.
Market value: $6.1 billion
Dividend yield: 3.1%
Consecutive annual dividend increases: 46
Analysts’ opinion: 2 strong buy, 1 buy, 3 hold, 0 underperform, 0 sell
Leggett & Platt (LEG, $45.94) has its hands in several pies, including producing steel wire; designing and manufacturing seating support systems for automobiles; and making components for manufacturers of upholstered furniture, beds and other home furnishings.
It’s not a particularly famous company, but it has been a star for long-term shareholders. The stock is up 152% on a price basis alone over the past 10 years, more than double the 71% gain for the S&P 500. That doesn’t include the company’s dividend, which has improved for 46 consecutive years and in 54 of the past 55 years.
Market value: $64.5 billion
Analysts’ opinion: 7 strong buy, 2 buy, 8 hold, 0 underperform, 1 sell
Home improvement chain Lowe’s (LOW, $77.49) has paid a dividend every quarter since going public in 1961, and that dividend has increased annually for more than half a century. Rival Home Depot (HD) is also a longtime dividend payer, but its string of annual dividend increases only dates back to 2009.
Lowe’s is investing in its customer experience, including adding “incremental customer-facing hours in our stores,” which is weighing on margins. However, in a sign that the company still has plenty of excess cash to return to shareholders, the company announced a new $5 billion share repurchase program in early 2017. Lowe’s also boasts an attractive 41% dividend payout ratio.
Market value: $12.7 billion
Analysts’ opinion: 4 strong buy, 1 buy, 7 hold, 0 underperform, 0 sell
A couple of acquisitions are expected to spice up McCormick & Company’s (MKC, $96.92) growth. The company, which makes herbs, spices and other flavorings bought RB Foods in August 2017 and Enrico Giotti in December 2016. The two pickups contributed to higher sales by 4%, Zacks notes.
Analysts expect average annual earnings growth of almost 11% for the next five years. That should provide support for McCormick’s dividend, which has been improved on an annual basis for 31 consecutive years.
Market value: $134.1 billion
Dividend yield: 1.0%
Consecutive annual dividend increases: 41
Analysts’ opinion: 19 strong buy, 1 buy, 7 hold, 0 underperform, 0 sell
The world's largest hamburger chain also happens to be a dividend stalwart. Changing consumer tastes will always be a risk, but McDonald's (MCD, $165.59) dividend dates back to 1976 and has gone up every year since.
Fast-food competition remains intense, but in 2017 the company has managed to hold on to the momentum it gained from the introduction of all-day breakfast in the U.S. last year. That’s thanks in part to new offerings such as its Signature Crafted sandwiches, but also value plays such as $1 beverages and McPick 2 deals.
Market value: $107.5 billion
Analysts’ opinion: 10 strong buy, 2 buy, 8 hold, 0 underperform, 0 sell
Medtronic (MDT, $79.33) is one of the world’s largest makers of medical devices, holding more than 4,600 patents on products ranging from insulin pumps for diabetics to stents used by cardiac surgeons. Look around a hospital or doctor’s office – in the U.S. or in about 160 other countries – and there's a good chance you'll see its products.
The company is focused on the health of its shareholders as well as its patients: Medtronic has been steadily increasing its dividend every year for a full four decades.
Market value: $17.8 billion
Consecutive annual dividend increases: 44
Analysts’ opinion: 7 strong buy, 0 buy, 5 hold, 0 underperform, 0 sell
Steelmaker Nucor (NUE, $55.83) exceeded analysts’ forecasts for profits in the third quarter ended Sept. 30, thanks to higher volume and the continuation of rising steel prices. The company expects stable or improving market conditions for nonresidential construction, automotive, energy, heavy equipment and agriculture in 2018.
Despite the volatility in the steel business, investors can feel good about Nucor’s dividend. The company has hiked its annual payout every year since 1974, and it pays out a conservative 42% of profits as dividends.
Market value: $12.4 billion
Analysts’ opinion: 3 strong buy, 0 buy, 8 hold, 1 underperform, 1 sell
U.K.-based diversified industrial company Pentair (PNR, $68.05) intends to split into two publicly traded companies, including a tax-free spin-off of the electrical segment (to be called nVent Electric) to Pentair shareholders in the second quarter 2018. The remaining company will be water-focused, operating in businesses such as Flow Technologies, Filtration & Process and Aquatic & Environmental Systems.
The U.K.-based company has raised its dividend every year for more than four decades. Analysts on average project 11% earnings growth annually for the next five years, which should help Pentair keep the pedal on that streak.
Market value: $160.4 billion
Dividend yield: 2.9%
Analysts’ opinion: 6 strong buy, 1 buy, 6 hold, 0 underperform, 0 sell
Like Coca-Cola (KO), PepsiCo (PEP, $112.75) is working against a long-term slide in soda sales. It too has responded by expanding its offerings of non-carbonated beverages. One advantage Pepsi has that Coca-Cola doesn’t is its foods business – the company owns Frito-Lay snacks like Doritos, Tostitos and Rold Gold pretzels, and demand for salty snacks remains solid. Through the nine months ended Sept. 9, 2017, Frito-Lay's sales rose 3% year-over-year even as Pepsi’s overall sales were flat.
Pepsi has paid out a quarterly dividend ever since 1965, and the company has raised the annual payout for 45 consecutive years.
Market value: $29.2 billion
Dividend yield: 1.6%
Analysts’ opinion: 10 strong buy, 0 buy, 8 hold, 0 underperform, 0 sell
Paints and coatings company PPG Industries (PPG, $114.67) tried to get a little bigger in March 2017, making an unsolicited bid to buy out Dutch multinational AkzoNobel, but giving up on the venture by June.
Nonetheless, PPG is making progress on its own. The company swung back to a profit from a year-ago loss in the three months ended Sept. 30, and it now expects moderate global growth in the year ahead, which should help it eke out a sales increase after an underwhelming 2017. That in turn should help prop up PPG’s dividend, which has been paid since 1899 and improved on an annual basis for 46 years.
Market value: $223.7 billion
Analysts’ opinion: 5 strong buy, 1 buy, 6 hold, 0 underperform, 0 sell
With major brands such as Tide detergent, Pampers diapers and Gillette razors, Procter & Gamble (PG, $88.16) is among the world's largest consumer products companies. Although the economy ebbs and flows, demand for products such as toilet paper, toothpaste and soap tends to remain stable.
That hardly makes P&G completely recession-proof, but it has helped fuel reliable dividend payments for more than a century. The company has paid shareholders a dividend since 1891, and raised its dividend annually for 61 years in a row.
Courtesy B64 via Wikimedia Commons
Dividend yield: 1%
Analysts’ opinion: 4 strong buy, 1 buy, 3 hold, 0 underperform, 0 sell
S&P Global (SPGI, $157.91), formerly known as McGraw Hill Financial, is the company behind S&P Global Ratings, S&P Global Market Intelligence and S&P Global Platts. Although most investors probably know it for its majority stake in S&P Dow Jones Indices, it's also a central player in corporate and financial analytics, information and research.
Shares have outperformed the S&P 500 in the bull market, with a gain of 182% vs. 121% since March 2009. The company also has been a dependable dividend machine. S&P Global has paid uninterrupted dividends since 1937 and has increased its distribution for 44 years in a row.
Market value: $36.4 billion
Dividend yield: 0.9%
Consecutive annual dividend increases: 39
Analysts’ opinion: 8 strong buy, 1 buy, 5 hold, 0 underperform, 0 sell
Sherwin-Williams (SHW, $389.46) completed its $11 billion acquisition of Valspar over the summer to create one of the largest paints, coatings and home-improvement companies in the world. The buyout is expected to create $320 million in annual run-rate synergies by 2020, and should be immediately accretive to earnings.
While Sherwin-Williams did issue $6 billion in bonds to finance the transaction, investors shouldn’t worry about the company’s 39-year streak of annual dividend increases. SHW pays out a meager 29% of its earnings as dividends, which means it has plenty of wiggle room while it pays off its debts.
Stanley Black & Decker
Market value: $25 billion
Analysts expect power and hand toolmaker Stanley Black & Decker (SWK, $162.97) to generate average annual earnings growth of nearly 11% a year over the next five years, thanks to a strategy of growth through acquisitions and cost cuts. Stanley Black & Decker bought Newell Tools from Newell Brands (NWL) for $2 billion in 2016, and in January 2017 negotiated the purchase of Craftsman tools from Sears Holdings (SHLD) for a total of $775 million over three years and a percentage of annual sales.
That’s good news for the company’s dividend, which has been paid for 140 years on an uninterrupted basis and increased annually for half a century.
Market value: $28.2 billion
Consecutive annual dividend increases: 47
Analysts’ opinion: 4 strong buy, 0 buy, 5 hold, 0 underperform, 1 sell
Sysco (SYY, $54.19), a food services and restaurant supply company, is generating sales growth by making acquisitions. The company bought European services and supplies company Brakes Group in 2016, as well as the Supplies on the Fly e-commerce platform. However, Sysco has been able to generate plenty of growth on its own, producing a steady ramp-up in revenues for years.
Analysts expect earnings growth of more than 8% annually over the next half-decade. That should allow Sysco to keep up its streak of 47 consecutive years of paying higher dividends.
Market value: $33.5 billion
Dividend yield: 4%
Analysts’ opinion: 3 strong buy, 0 buy, 12 hold, 0 underperform, 3 sell
The No. 2 discount retail chain after Walmart (WMT) was late to the e-commerce game and is suffering accordingly. Shares in Target (TGT, $61.40) are off 15% so far in 2017 versus a similarly sized gain in the S&P 500. But the retail giant is starting to turn things around by closing or remodeling stores, cutting costs and investing in e-commerce.
Whether it pays off remains to be seen, but investors can still have confidence in the dividend. Target paid its first dividend in 1967, seven years ahead of Walmart, and has raised its dividend annually since 1972.
T. Rowe Price
Market value: $22.7 billion
Analysts’ opinion: 3 strong buy, 0 buy, 7 hold, 0 underperform, 3 sell
Asset managers such as T. Rowe Price (TROW, $93.57) have been losing market share to indexed funds of the type Vanguard offers, but the company still boasts $950 billion in assets under management, and analysts expect solid revenue growth in 2017 and beyond. Aided by advising fees, the company is forecast to see a 13% gain in revenue this year and another 7% in 2018, according to data from Thomson Reuters.
T. Rowe Price has improved its dividend every year for 31 years, and it boasts a lean 37% payout ratio that should keep the annual hikes coming.
Market value: $27.5 billion
Dividend yield: 2.6%
Analysts’ opinion: 5 strong buy, 0 buy, 13 hold, 1 underperform, 0 sell
VF Corporation (VFC, $69.63) is an apparel company with a large number of brands under its umbrella, including Lee and Wrangler jeans and The North Face outdoor products. Most recently, it added to its brand portfolio with the acquisition of Icebreaker Holdings – another outdoor and sport designer – for undisclosed terms in November 2017.
Better-than-expected earnings for the quarter ended Sept. 30 helped shares touch a two-year high. Analysts also see 2018 as being a rebound year, which should allow VFC to extend its 44-year streak of annual dividend payout increases.
Market value: $71.7 billion
Analysts’ opinion: 8 strong buy, 2 buy, 5 hold, 0 underperform, 0 sell
The nation's largest drugstore chain by store count is getting even bigger. Walgreens Boots Alliance’s (WBA, $70.99) original deal to buy out Rite Aid (RAD) fell through, but an adjusted transaction to buy up 1,932 Rite Aid stores passed antitrust muster in the fall, and the company started buying the locations in October. Walgreens already had 13,000-plus stores in 11 countries.
Tracing its roots back to a single drugstore founded in 1901, Walgreens has boosted its dividend every year since 1972. It merged with Alliance Boots – a Switzerland-based health and beauty multinational – in 2014 to form the current company.
Market value: $271.6 billion
Analysts’ opinion: 10 strong buy, 0 buy, 10 hold, 0 underperform, 2 sell
Walmart (WMT, $90.92) isn't conceding the retail race to Amazon.com (AMZN), even as the online juggernaut claims an ever-larger piece of the pie. The world's largest retailer, with roughly 4,700 stores in the U.S., has hardly been passive as Amazon seduces its customers.
A series of acquisitions – including a 2016 buyout of Jet.com – are boosting its e-commerce business. In January, Walmart eliminated the $49 membership fee for free two-day shipping and cut the minimum order for free shipping from $50 to $35. At Amazon, customers either need to sign up for Amazon Prime, which costs $99 a year, to get free two-day shipping, or make a minimum order of $35.
Walmart has been delivering meager penny increases to its dividend since 2014, but that has been enough to keep up its 44-year streak of consecutive annual dividend increases.
Market value: $11.6 billion
Analysts’ opinion: 2 strong buy, 0 buy, 14 hold, 0 underperform, 4 sell
W.W. Grainger (GWW, $203.48) – which not only sells industrial equipment and tools, but provides other services such as helping companies manage inventory – posted better-than-expected quarterly earnings in October 2017. However, some analysts warned that margins could come under pressure in the long-term. Analysts on average project average earnings growth of less than 3% a year for the next five years.
Fortunately for the income-minded, Grainger has lifted its payout every year for 46 years and maintains a reasonable 60% payout ratio.
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