It takes a significant amount of hard work and determination by a lot of people for a company to become profitable. It takes even more hard work to sustain those profits year in and year out.
After all, nothing brings on fierce competition quite like profits do.
Big money, no whammies
As a result, successful companies constantly reinvest in themselves in order to maintain market share. Eventually, however, they begin to feel secure in their competitive advantage. And when they do, they can set their sights toward an equally important goal: Rewarding investors.
One of the best ways to do that is through dividends, which, unlike stock prices, aren't subject to the market's whims. In fact, several of the world's strongest companies each pay out well over $1 billion in dividends every year:
|
Company
|
Trailing Annual Dividends
(in Billions)
|
|
Wyeth (NYSE: WYE )
|
$1.4
|
|
DuPont (NYSE: DD )
|
$1.4
|
|
PepsiCo (NYSE: PEP )
|
$1.9
|
|
Intel (Nasdaq: INTC )
|
$2.3
|
|
Wachovia (NYSE: WB )
|
$3.8
|
|
Altria (NYSE: MO )
|
$6.8
|
|
Citigroup (NYSE: C )
|
$10.0
|
That means these companies are generating billions upon billions of dollars above and beyond their needs to operate, sustain, and even grow their businesses.
Even more impressive
Since common shareholders are the last in line to get paid and the first to face a cut in tough times, companies that can so richly reward these folks are clearly operating with a lot of confidence. That's confidence in their balance sheets, operations, and competitive advantages.
Is it any wonder these same companies tend to outperform the market over time?
It all adds up
Whether from the financial strength they represent or the discipline they enforce, dividends do a tremendous job of adding value for the current and potential shareholders of a company. And that's before you even consider the best part of all -- the cash in your pocket. After all, those billion-dollar dividends wind up as spendable cash for shareholders.
That's how you can get paid well for investing in some of the strongest and most disciplined companies around. That's our approach to investing at Motley Fool Income Investor. You can view our top dividend stocks with a free 30-day trial.
At the time of publication, Fool contributor Chuck Saletta owned shares of Intel. Intel is a Motley Fool Inside Value pick. The Fool has a disclosure policy.
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