5 Dividend Champions To Buy And Hold Forever
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In a previous blog entry Andrés Cardenal wrote about the suggested holding period for constant dividend producing stocks. The answer of course is forever. Only a fool would trade short term profit for consistent income; better yet: increasing income. Here are a couple of classic picks that unfailingly yield dividends and have done so over the years.
If it ticks like a metronome, it must be good
Their famous secret recipe is just over 125 years old and The Coca-Cola Company (NYSE: KO) has no intention of changing it. They know they are on to a good thing.
A 2.80 % dividend yield and five year average also of 2.8 % isn’t very impressive, even though payouts have averaged growth of 8.69 % over the last five years. It’s when looking further back that you come to fully appreciate Coke’s worth as a metronomic dividend producer.
For the last 49 years dividends have increased and they’ve been declaring dividends since 1893. My bet is when their fourth quarter and full-year 2011 financial results are released on February 7th this will be the case once more.
Already a prominent brand in 200 countries, Coca-cola still finds investment and growth opportunities, most recently in the Middle East. Looking at the current numbers, Coca-cola might not seem that attractive at first, until you consider the future growth that exists outside of the U.S. The populations of India and China combined are more than eight times that of the United States. Yield might be lower than that of other companies, but their growth outlook is above average.
Indisputably essential
Listed since 1883 on the New York Stock Exchange and boasting the longest running consecutive listing, Consolidated Edison, Inc. (NYSE: ED) has the energy market in New York cornered. Their reliability has been rewarded with excellent results and they’ve rewarded investors consistently in turn.
Con Edison has increased their dividend payment for the last 37 years, although as a caution it must be stated their dividend payout ratio is 65%. At a dividend yield of 4 %, with steady, if not dramatic annual dividend increases, they offer value as a low volatility (beta of 0.24) income producer.
This is another solid performer with an excellent track record. Despite a drop in fourth quarter earnings outlook remains positive. Currently trading near one year highs, you’ll pay a premium for their reliably solid performance and good prospects, but Con Ed’s consistency makes them an outstanding pick for the long run.
Think water for growth
Operating through a set of subsidiaries in three distinct market segments: regulated water services, real estate transactions, and services and rentals,
Connecticut Water Service, Inc. (NASDAQ: CTWS) supplies water for drinking purposes to 55 towns in Connecticut. The company’s exposure to real estate is a downside in my opinion though.
As a positive, the company declared their latest quarterly dividend payment in November, an uninterrupted event dating back to 1956. Better yet, dividends have shown an increase for the last 42 of those 56 years.
Trading in a scarce and essential commodity clearly has an upside - the stock has risen 6.66% in the last year. With a dividend yield of 3.5 %, Connecticut Water Service provides excellent exposure for investors to profit from the ongoing problem of water scarcity.
Ever an eye on further growth, Connecticut Water Service completed the acquisition of Aqua Maine, Inc. on January 3rd, thereby increasing their customer base by 18 %. Excellent dividends, coupled with future growth and exposure to an ever more prominent and important sector, Connecticut Water Service gets my vote as long term champion to reign for some time to come.
Trust an investor to be a good investment
With a history dating back to before the great depression, Eaton Vance Corp. (NYSE: EV), offers a wide variety of investment products and knows how to tough it out in troubled markets. Despite a 6.91 % drop in earnings, attributable to market volatility, and a drop of 1 cent earnings per share in their November results, the company has declared growing dividends since 1981. In a tough market their dividend yield still is 2.90 % and the 5 year average dividend growth rate is an impressive 12.12 %.
As a further plus, the market has largely discounted Eaton Vance’s stock after their somewhat disappointing set of results. Currently it trades well below one year highs with a price earnings ratio of 14.50 %, much lower than the industry average of 19.90 %. Their excellent dividend average five year growth rate plus their ability to bounce back still makes this a good prospect.
Not a big name blue chip, but a safe bet
Belonging in the same class as Coca-Cola and Con Edison when it comes to a track record for increasing dividends, Diebold, Inc. (NYSE: DBD) has declared growing dividends for the last 58 years.
The company is well diversified, yet sticks to what they do well; being active in the sale, manufacture, installation and service of self-service transaction systems (ATMs amongst them), security products (such as vaults), and software and systems for financial and commercial markets.
Their current dividend yield is 3.60 % and a five year average growth rate of 5.45 % good too, but dampened by a high dividend payout ratio of 68 %. An important cog in international trade, Diebold looks good now, but especially for the future.
The Motley Fool owns shares of The Coca-Cola Company. Vatalyst has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
