5 Dividend Stocks for the Next 50 Years

If you're looking for financially secure companies, there's no better indicator than a long history of paying dividends to shareholders. And despite all the turmoil that the markets have seen over the past couple of years, several companies have managed to keep long-standing streaks of rising dividend payments intact.

Bucking the trend
Last year was a terrible one for dividend investors. Many stocks with long histories of paying significant dividends to shareholders had to break those streaks in light of the financial crisis. General Electric (NYSE: GE  ) cut its dividend for the first time in decades, and many financial stocks, including Citigroup (NYSE: C  ) and Bank of America, either completely eliminated dividend payments or cut them to a token amount.

Amid the wreckage of 2008's bear market, though, several solid stocks managed not only to maintain their dividends but also to lengthen their track record of annual increases. Just take a look at some of the companies with the longest current streaks of raising their dividend payments every year:

Stock

Current Dividend Yield

Streak of Annual Dividend Increases

Procter & Gamble (NYSE: PG  )

2.8%

53 years

Emerson Electric (NYSE: EMR  )

2.8%

53 years

3M (NYSE: MMM  )

2.6%

51 years

Diebold (NYSE: DBD  )

3.7%

57 years

Dover (NYSE: DOV  )

2.3%

54 years

Source: Yahoo! Finance, Drip Investing Resource Center.

Just think about everything that these companies have gone through since starting their streaks. After a booming market in the 1960s, these businesses all endured the oil shock and inflationary periods during the 1970s. They made it through a number of recessions, including the stagflationary slowdown in the early 1980s and the technology bust from 2000 to 2002. They've seen what used to be localized economies turn global and have adapted to extreme changes in their respective industries and how they do business.

Through it all, they've maintained one commitment to investors: They've kept the dividends coming. For some shareholders, that kind of dedication is exactly what they've needed.

Dealing with hiccups
Now as valuable as dividend stocks are, you shouldn't get the idea that it's been a smooth ride for investors every step of the way. Although the companies with long dividend streaks have seen their shares appreciate considerably over the years, shareholders have had to endure considerable bumps along the way in order to get their full share of profits.

As an example, take a look at the haircut that investors took on these stocks during 2008:

Stock

2008 Return

Procter & Gamble

(13.7%)

Emerson Electric

(33.2%)

3M

(29.4%)

Diebold

0.4%

Dover

(26.6%)

If you're thinking that Diebold was spared from the carnage, think again -- its big loss came a year earlier, as the stock dropped 36% in 2007.

Note, though, that as big as those losses were, they were less than the S&P 500's 37% drop. That suggests that at some level, investors recognize that these businesses have survived through tough times before and therefore have a better than average chance of making it through any future economic troubles.

Perhaps more importantly, though, the fact that these high-quality stocks occasionally run into big share price declines is good news for investors who want to take advantage of attractive valuations for long-term investments. If you believe that the core businesses of these companies are intact -- and there's little reason to think any of these stocks is in danger of losing its edge -- then price dips are exactly when you want to buy in cheaply.

Going for the century mark
So given their great past track record, will these companies manage to extend their current streaks to make the 100-year mark? Obviously, a lot can happen in 50 years, as we've already seen with these stocks. And certainly, other promising stocks with long histories of increasing dividends have fallen short during tough times.

Yet given all the challenges that these companies have successfully dealt with, there's every reason to believe that they can handle any future difficulties efficiently and effectively. For those looking for stable stocks with a nice income kicker to boot, you can't really ask for anything more.

Not all companies pay dividends. Fool contributor Matt Koppenheffer thinks these three stocks are shortchanging you.

Fool contributor Dan Caplinger expects all these stocks to outlive him. He owns shares of General Electric. 3M is a Motley Fool Inside Value recommendation. Emerson Electric and Procter & Gamble are Motley Fool Income Investor selections. The Fool owns shares of Procter & Gamble. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy expects 2060 to be a very good year.


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  • Report this Comment On February 19, 2010, at 11:59 AM, juanlapiz wrote:

    Dividend Aristocrats are companies in the S&P 500 that have increased dividend payouts to shareholders every year for the last 25 years:

    http://www.TopYields.nl/Top-dividend-yields-of-Dividend-Aris...

  • Report this Comment On February 19, 2010, at 12:38 PM, Aristocrisis wrote:

    Exactly the kind of stocks I would not buy. I know PG has some famous brands, but 2.8% divs? That won't even drive back inflation-effects.

    I would rather buy stocks with (maybe) a bit riskier operations, and which yields at least 7 to 15 %. In the short term you could collect and reinvest the high divs, while RISKING that the yield could fall to as low as 2.8%.

    I like single digit PEs, <2 PB cases with high yields, not megacompanies where the CEOs get more fun than the shareholders.

  • Report this Comment On February 19, 2010, at 1:01 PM, 7numismatics7 wrote:

    Aristocrisis - one thing this article notes is the history of increases on dividends. Your example, PG, has 11% growth in dividends - this translates into the dividend payment doubling almost every 7 years... I'm not going to spend too much time explaining this point, but over the long run growth in dividend payments will outperform yields in almost every case. Slow but steady wins the race...

  • Report this Comment On February 19, 2010, at 2:09 PM, Darwood11 wrote:

    I'd never purchase a stock solely because of its dividend history. That said, I do own shares in three of the five companies listed, and I do own them in part due to their dividends.

  • Report this Comment On February 19, 2010, at 6:20 PM, Aristocrisis wrote:

    Well, it's nice with dividend increments, but from what level? If you in 7 years can expect a 5,6% dividend, based on todays valuation, that still doesn't do the trick. Why not buy a stock with 8% dividend - today?

    You cannot argue that this always is a losing strategy - if you buy two stocks with, say 8% div, and one of them suddenly slashes its div in half(this might of course happen), whats the average on your investment? Still 6%, more than your investment in PG is - in 7 years.

    Besides, those companies with "steady dividend growth" tend to trade at dangerously high PE-ratios, yeah, because so many investor follow this artificial model, and pay too much for their shares. Thinking in this way will make you prefer 2% over 10% yields - without hesitation. So I question if this really is a great investment strategy. Might as well make downpayments on your mortgage.

  • Report this Comment On February 19, 2010, at 6:25 PM, Aristocrisis wrote:

    PG will pay 5.6% in 7 years (-14% inflation, at best)- come on, that won't do the trick. Following this investment strategy will make you buy low-yielding companies at high PEs. I will never advice anyone to follow this - rather buy high than low yields. Risk is return, no risk = no divs & no return.

  • Report this Comment On February 20, 2010, at 3:20 AM, walt373 wrote:

    I would say most stocks yielding above 10% are distressed companies. Remember you are risking loss of capital, not just income.

  • Report this Comment On February 20, 2010, at 4:05 AM, Seano67 wrote:

    I tend to agree with Aristocrisis. To me, investing in the Dividend Aristocrats seems much more about preserving wealth, while very safely and slowly accumulating it. In other words, you're not going to get rich with any of those stocks, especially if you're a small investor with a limited capital base to begin with. Whereas if you're willing to take the path less traveled and assume a bit more risk, that's where the possibility of *real* generation of wealth exists.

    I read a great article the other day about Coca Cola, and how it seems like everyone including Buffett considers that a must have in an equity portfolio, about how it's a Dividend Aristocrat, a #1 brand globally with continuing great growth prospects, etc etc etc. Well all that may be true, and it is a great company, its stock is not exactly a world beater. Had you put 10K into KO back in January of 1995, your money has nearly tripled, turning in an average return of 7.39%, which includes reinvesting dividends. Now that's a very respectable rate of return. It's certainly nothing to sneeze at, but the reality is that since the run-up from '95 to '99, when the stock went from $26 to $59, the share price has basically plateaued right there. The pop took place in the the very early stages of that time period, and since then KO has stagnated, despite all its allure and Dividend Aristocrat status and everything else it's supposedly got going for it.

    However, suppose you'd chosen to step outside the box a bit, and taken that same 10K in Jan. of 1995 and invested it into Alliance Capital's (now Alliance Bernstein, symbol AB) MLP units? Well, that 10K would now be worth $81,059, though at the market top of 2007 it was worth a cool $191,090, and returned 14.96% annually with dividends and distributions reinvested. And that's just one example amongst hundreds....

    The lesson to me seems very clear. I'm not rich, so I'm trying my best to generate wealth, and the best way to do that is to be mentally and emotionally willing and prepared to take on an element of risk. I'll buy KO and PG and JNJ and the other Aristocrats when I'm old and grey and have (hopefully) made my money and am more interested in just maintaining it. But for now, I feel I've got to 'go for it' a little bit, and besides, that's much more interesting and much more fun.

  • Report this Comment On February 20, 2010, at 5:41 AM, ragedmaximus wrote:

    Hello, I have a question. My question is if your holding those dividend stocks for long term with that solid return ok fine.I am wondering about the short term dividend play like buying before and selling after the special dividend dates etc. I was thinking that it might be a good way to capitalize on some free money in the stock but have found that most I have looked at run up in price before buy and fall down before the dividend pay date is achieved essentially possibly losing money per share if you plan on selling after div pay date.I have not tried but only watched from the outside,can anyone please put some input on this,I'm sure the long term dividend stock holders see this cycle alot.Thanks I love you fools!

  • Report this Comment On February 20, 2010, at 9:56 AM, grungeboater wrote:

    I am in the high dividend party too. Any company paying 2-3% divs is not a dividend stock. You better have good growth in that company. If you need income from your investments then a company like 3M is only going to help you if you invest in your early years and then you let that dividned inflate over the next 40 - 50 yrs.

    There are plenty of high divy stocks that are healthy and strong. High dividned doesnt always mean that the company is unhealthy. This is dogma. Anyway I am glad most people dont know where to find high distribution stocks. The more popular these stocks are the lower my yield would be.

  • Report this Comment On February 20, 2010, at 5:25 PM, hudsondusters wrote:

    Aritocrisis, you are missing the point I think. An 8% yield is not likely to increase al that much. PG's payout ratio is less than a utility, so more goes back in the biz for future capital appreciation. PG's shares are more likely to double in 7-8 years as well.

    So, in 28 years, say, PG will yield 2.8, 5.6, 11.2, 22.4, 44.8% on your original cost basis. In 35 years, when you are retired, it will pay 89.6%. That's right. For every $10,000.00 you put in today, it might pay you almost $9k a year as an annuity. The shares themselves may be worth 10k, 20k, 40k, 80k, 160k, $320k.

    That's likely optimistic (although not out of line with history), but you get the idea. If you were reinvesting the dividends it'd be worth even more.

    My parents have shares of stock they bought in the '50s that now have a basis under a $1 and pay more in dividends every year than the original cost of the shares.

    I bought PG, MMM, KO, MCD, HON, JNJ etc. during the crash at what I thought were generational lows (in some cases too soon, in others on the way back up-some were close to the lows, but you can't time these things exactly). I hope to still own them 20-30-40 years from now, if I live that long. My grandmother bought stocks during the Great Depression that paid dividends. She worked in a tobacco warehouse. She died subject to the estate tax, after living on the dividends.

    If you chase the highest yield instead of sustainable and growing, you may be in for some nasty surprises. If one is already retired, a high yield may be fine. It is good to have a blend.

    Good luck.

  • Report this Comment On February 20, 2010, at 6:07 PM, Snakedoc64 wrote:

    This is in response to rajedmaximus: I have found that the major telephone companies AT&T (T) and Verizon (VZ) seem to have fairly steady stock prices, and decent dividends (now at about 6% - 6.5%). Look at price fluctuations during last year, and buy when they dip. I have done the same with Pfizer (PFE), and made good profits in the past; however, I do not think they will continue to make good profits in the near future.

  • Report this Comment On February 20, 2010, at 10:00 PM, ozzfan1317 wrote:

    My Fave Dividend stocks are BP and NUE However in my opinion if your young growth is just as important as yield.

  • Report this Comment On February 20, 2010, at 10:00 PM, ozzfan1317 wrote:

    My Fave Dividend stocks are BP and NUE However in my opinion if your young growth is just as important as yield.

  • Report this Comment On February 21, 2010, at 3:58 PM, kalho13 wrote:

    In reviewing the last 10 years of dividend growth for these stocks I find less than impressive results. For example dividend growth rate for Emerson is less than 4.5%, Diebold is slightly better at 5.6% (with a unsustainable payout ratio, very poor earnings and revenue growth, and an ROE of less than 3%), and 3M at 6.2%.

    While the PG dividend yield is a little low at 2.8% I am much more comfortable as they have increased their dividend on an average of 10.5% annually over the past decade. Based on the my preference of increasing dividends I find Sysco, Paychex and J&J as preferable alternatives.

  • Report this Comment On February 22, 2010, at 7:38 AM, StockLordSr wrote:

    Aristocrisis,

    You totally underestimate the power of compounding and that is how Warren Buffett becomes the richest guy in the world. I suspect your idea of "investing" is to flip stocks and strike for fast but unsustainable gain in a long run. Good luck with that if that's your idea and by the way, if you want to get rich, you don't buy stocks. Setting up a business with superb management (hopefully you have an excellent business sense) will get you rich.

  • Report this Comment On February 22, 2010, at 7:46 AM, TMFGalagan wrote:

    To Aristocrisis and others -

    Please note that the point of the article wasn't to say that these are the *only* dividend stocks that are smart investments. Some higher-yielding dividend stocks could indeed have higher returns over the long run.

    I do believe, though, that the most successful of those high-yielding stocks won't have high yields for long -- if only because investors will recognize their potential and bid up shares to the point where their yields are much lower.

    Thanks for reading!

    dan (TMF Galagan)

  • Report this Comment On February 22, 2010, at 9:05 AM, ragedmaximus wrote:

    has anyone EVER have owned BPT bp prudhoe bay royalty trust here,it says a dividend of 16%,with compounding interest and some years of reinvesting dividends,isn't this worth more than gold?

    bp

  • Report this Comment On February 22, 2010, at 9:07 AM, sinahrdstock wrote:

    Dividend Stocks is not the best choice.

    People are still spending money. They may be worried and they may be beginning to save, but there's no sense of urgency. And there's a rally on Wall Street. You know, every bear market produces a rally. But, you can see the powerful of gold in this year! http://top-stocks-market-investment.blogspot.com/2010/02/gol...

  • Report this Comment On February 22, 2010, at 4:39 PM, Aristocrisis wrote:

    Well, it seems I have to live up to the role of the risk-taking, young-minded madman in this discussion. If you knew the amount of moneymarket-funds in my account, maybe you'd think otherwise.

    But, anyway, I know the theories of Buffett and Graham, and their very good if you already have a million or two to stash away in a safe place. Still, when choosing a stock mostly based on dividends, I'd stick to the high-yielders. Some companies have a bright (but maybe uncertain) dividend future, and a pleasing present.

    The company that has increased its dividend for 50 years does not impress me. As noted above, it's a nice strategy if it's 1950, and you have some dollars on the side for longterm investments. But this is 2010, the timemachine is not invented yet, and I think 3% dividends is not even worth considering. It's better to buy a 0%, but strong-growth company, a high-yielder (8%+), OR to buy MM-funds or pay down your debt.

    At least I think that the dividend should be higher than projected inflation. But thanks, fools, for different perspectives!

  • Report this Comment On February 22, 2010, at 4:57 PM, Aristocrisis wrote:

    Well, it seems I have to live up to the role of the risk-taking, young-minded madman in this discussion. If you knew the amount of moneymarket-funds in my account, maybe you'd think otherwise.

    But, anyway, I know the theories of Buffett and Graham, and their very good if you already have a million or two to stash away in a safe place. Still, when choosing a stock mostly based on dividends, I'd stick to the high-yielders. Some companies have a bright (but maybe uncertain) dividend future, and a pleasing present.

    The company that has increased its dividend for 50 years does not impress me. As noted above, it's a nice strategy if it's 1950, and you have some dollars on the side for longterm investments. But this is 2010, the timemachine is not invented yet, and I think 3% dividends is not even worth considering. It's better to buy a 0%, but strong-growth company, a high-yielder (8%+), OR to buy MM-funds or pay down your debt.

    At least I think that the dividend should be higher than projected inflation. But thanks, fools, for different perspectives!

  • Report this Comment On February 22, 2010, at 5:22 PM, TMFGalagan wrote:

    @Aristocrisis -

    Heh! It might well be that those money-market funds are the riskiest investment you own! :)

    Seriously, though, I applaud you for making your own decisions. You're right that stable dividend payers probably aren't the best answer for those who can afford to take on more risk with companies with better growth prospects.

    But you're absolutely right that different opinions are what make a market!

    good luck,

    dan (TMF Galagan)

  • Report this Comment On February 23, 2010, at 1:41 PM, hudsondusters wrote:

    It is good to have a blend. Yes, great to have a no div growth stock if you choose well. But consider that almost the entire historical outperformance of equities is due to dividends.

    PG is up 11x since 1990 on an adjusted basis.

    It's only up about 50% since 2000. But the S&P was down. And the small cap index is only up about 25% in that time.

    All a question of buying at the right time for any stock. But it doesn't take all that long to make decent money.

    Of course, Dave Gardner and his rule breakers is a way to make money faster. You can also get burned if you buy at the wrong time or hold for too long.

    This is why i think it is best to have a blend. And you don't have to start with a million bucks. Average in a little over time.

    PG. MMM. YUM. BDX. KO. HON. ADP. PAYX. JNJ. MSFT. INTC. IBM. XOM.

  • Report this Comment On February 23, 2010, at 6:00 PM, baseballbill730 wrote:

    Actually I get a little tired of the "Dividend Aristocrat" argument. I get the feeling that companies are more concerned with maintaining that exalted status than paying out an honest dividend. I am perfectly happy with the idea that some years will be better than others (you can only massage earnings so much to maintain that hallowed upward trend). I can't help but think the aristocrats don't pay as big dividends as they could and thus I get shortchanged. Sorry, folks, but 2.8% is a joke. Coupled with a higher P/E because of the breathless homage too many pundits pay to the aristocrats and I use them as a place to not waste my time. There are too many other better investments out there, both growth and income.

  • Report this Comment On February 24, 2010, at 3:53 PM, mikecart1 wrote:

    MO clearly takes a giant dump on the 5 stocks listed in this article. Not only is MO the best performing stock of the past 50 years but the company produces a product that will never have 0 customers. Thank you nicotine!

  • Report this Comment On February 25, 2010, at 6:05 PM, langco1 wrote:

    with the depression in the US now out of control and with no one running the country here are a few of the name bankruptcys for 2010...GM!chrysler,aig,hertz,sirius,riteaid,etrade,aol,moody's,blockbuster,street.com,sears,and palm...just a few!!

  • Report this Comment On February 26, 2010, at 2:40 PM, peters46 wrote:

    All the dividend reinvestors, and no one has mentioned a trend I saw thirty years ago. In automatic dividend reinvestment, the day that the dividends are reinvested the stock jumps (I can't remember how high) and then drops the next day. Yes, you are saving on brokers fees, but with some of the lower broker fees nowadays, it may make more sense to receive and save up the dividends and reinvest a larger amount once a year.

  • Report this Comment On February 26, 2010, at 2:44 PM, scrivener1 wrote:

    I would never invest in Diebold. Why? I do not invest in any company that has been accused of any criminal activity, like Lockheed Martin, for example. Diebold took a hit in the stock market because the SEC began a formal investigation of the company and their CEO stepped down!

  • Report this Comment On February 26, 2010, at 3:13 PM, fisherminstrel wrote:

    Hello, Raggedmaximus. You asked about BPT. Here's my take: when BPT cut down its dividend during the recent crash I somewhat peevishly reduced my investment. But I couldn't stand to sell it all - it had been such a sweet little honey hole of a dividend payer - and sure enough, the payout today is again very high and I'm glad I retained a decent chunk. BPT is a trust which pays out essentially all earnings to share holders. As a mult-decade play it is probably a loser because the entire distribution is derived from the fabulous Prudhoe Bay oil field - a finite resource now beginning its decline. Prudhoe Bay will probably stop making money sometime in the 20's or 30's, bringing a close to an eighty-year bonanza. If you invest, bear in mind that the dividend will bounce around some. If you can handle that your average yield, year-in and year-out, should be several times larger than typical blue chip picks. - Fisherminstrel

  • Report this Comment On February 26, 2010, at 7:15 PM, fandillylay wrote:

    Dividends are a powerful force to juice total returns. They may be somewhat less compelling in non-retirement accounts due to the incremental tax consequences, but they really shine in a Roth IRA, where all the compounded returns over the life of the account will be tax-free.

    http://top-stocks-usa.blogspot.com

  • Report this Comment On February 26, 2010, at 7:15 PM, fandillylay wrote:

    Dividends are a powerful force to juice total returns. They may be somewhat less compelling in non-retirement accounts due to the incremental tax consequences, but they really shine in a Roth IRA, where all the compounded returns over the life of the account will be tax-free

    http://top-stocks-usa.blogspot.com

  • Report this Comment On February 26, 2010, at 10:20 PM, gwanoy wrote:

    What are your feelings about Ship Finance International (SFL)? It certainly doesn't have the longevity of the other stocks mentioned but it has been churning out some attractive dividends for a respectable amount of time now.

  • Report this Comment On February 27, 2010, at 3:07 PM, MBLacey wrote:

    Aristocrisis - you think that it would be better to buy a money market fund than to buy P&G? I have about $10,000 in a money market fund, for stability only. Over the last six months, I have received a grand total of $.20 in money market interest. For $63 I could get $.88 of dividends in P&G over that same period, with the likelihood that that would increase to at least $.95 over the next year for the same $63.00. Since 2000, the most I have gotten in Money Market Interest is $30 in one month ($90 over one quarter) and the average over 10 years is about $13 per month ($42.00 per quarter). Looks to me like, on average, PG's dividend beats the average with 100 shares at $6300, Dover's matches it with 150 shares, for less than $5,000, Eaton's beats it with 100 shares for $6800. MMM and DBD would also match it with less money, and there are many more Aristocrats that would beat the Money Market Fund for income, even in normal times.

  • Report this Comment On February 28, 2010, at 9:06 PM, Glennn739 wrote:

    I have not read all messages here. However, Graham&Dodd, the guru's of value investing(a strategy that Buffet uses with his own variations)

    teaches:

    1) Book Value or Below

    2) History of 5 years positive income earnings

    3) Reasonable debt, less than a 2:1 ratio

    4) Low PE

    5) Paying a dividend

    Along with this, Graham & Dodd(Buffet as well) want to know "what is the story".

    What any "Value" investor is looking for and what Benjamin Graham insisted on (and Buffet has become a Master at) is what is the "Margin of Error".

    One of the best examples here, and there were a number available last year was Genworth Financial. Totally beat up for its miniscule exposure to Mortgage Banking. Had a book value of $24 per share, incredible reserves for its insurance business, an huge history of success before and after being spun off of the GE conglomerate, was knocked down to $0.65 per share for absolutely no logical reason. Currently no dividend, but it has had one in the past and certainly will in the future.

    Steady dividend growth vs. growth through capital gains should not be a black and white question, but should be approached thru the commonly accepted practice of diversification, asset allocation, and professional advice/management.

  • Report this Comment On February 28, 2010, at 9:19 PM, Glennn739 wrote:

    Dear Ragedmaximus,

    Yes, while not owning this stock (MLP), I have followed it. It's dividends are incredible, but the miles of tax return paperwork, which can change year by year, makes it real challenge for tax preparation. While some MLP's get some tax breaks, the income can generate alot of 1099 taxable income.

  • Report this Comment On March 04, 2010, at 2:44 PM, daddylight wrote:

    Two words. Winn-Dixie.

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