The Best Dividend Stock. Period.

The best dividend stock?

"Who cares?" you may be thinking

Well, you better care. Because if you don't pay close attention to what I'm about to say, the chances of your perfect retirement are about slim to none.

Why so dramatic?
One of the biggest threats to a comfortable future is not being able to generate enough income to meet your expenses. There are many paths to retirement, but let's say you want to live off your interest and income without touching your principal. If you need $50,000 a year to live happily, and you've socked away $1 million, you'll need to earn 5%.

When interest rates on CDs and savings accounts were actually above 5%, this wasn't an unfathomable task. However, the financial collapse of 2008 has pushed rates so low that most investors are earning just about nothing in their primary money market funds. Even if you invest in a five-year CD, the national average APR is 2.14%, according to Bankrate.com.

The best solution out there
If you're worried about volatility in the market, you certainly can't be blamed. Don't think you need to invest in popular growth stocks just to make money; that type of investing definitely isn't for everyone. But don't forget the bottom line: You need to be in the market in order to beat inflation and survive.

The best move you can make is to invest part of your portfolio in dividend-paying stocks. Not only do they provide you with a recurring stream of income, but they also offer room for growth. This is critically important as your portfolio needs to keep pace with inflation in order for you to maintain the style of living to which you're accustomed.

Worried that dividend stocks can't grow at a significant pace?

Here's some food for thought: Intel (Nasdaq: INTC  ) , although commonly thought of as a tech giant and not a dividend payer, has increased its dividend payout over the past five years by 26%. And the kicker is that on an annualized basis, its dividend-adjusted share price has grown by 16% over the past 20 years, far superior to the adjusted returns of the S&P 500.

Think Intel is a fluke?

That couldn't be further from the truth. In fact, professor Jeremy Siegel has illustrated that, from 1957 to 2003, when reinvesting dividends, the S&P's 100 highest-yielding stocks outperformed the market by an average of three percentage points. Revisiting the previous example of a $1 million portfolio, that's an extra $30,000 a year on average -- just by investing in dividend payers. This just shows that dividend stocks don't just offer payouts; they can certainly grow as well.

The royal family of dividends
Fortunately, every year the S&P comes out with what it calls the "S&P 500 Dividend Aristocrats" -- essentially the best of the best from the dividend world. Only the cream of the crop make the team, so there's some pretty stringent requirements:

  • Minimum market cap of $3 billion.
  • Minimum average trading volume of $5 million to ensure liquidity.
  • Company must have increased dividends every year for at least 25 years.

Finding companies that have increased their dividends for a quarter-century is no easy task. These companies have had to prove they can sustain cash flow and withstand downturns in order to consistently return money to shareholders.

Let's take a look at five companies that made the squad, and see how they've performed over the past five years (adjusted for dividends, naturally).

Company

Paying Dividends Since

5-Year Dividend Growth Rate

5-Year Annualized Stock Growth Rate

Archer-Daniels-Midland (NYSE: ADM  )

1927

12.65%

7.0%

Lowe's (NYSE: LOW  )

1961

44.74%

0.4%

Aflac (NYSE: AFL  )

1973

26.11%

10.4%

Becton, Dickinson & Co. (NYSE: BDX  )

1926

16.07%

7.8%

ExxonMobil (NYSE: XOM  )

1882

9.68%

4.7%

Not only do these companies have long track records of returning cash to shareholders, they've also demonstrated the ability to grow those dividends well above inflation (typically 3%-4%). In addition, most of these stocks have handily beaten the S&P over the five-year time period when the broad index returned about 2% annually.

So not only do the aristocrats offer tremendous income, which you'll obviously need as a retiree, but they increase the value of your portfolio as well.

Now, time to deliver what has been promised. The best dividend stock. Period.

And the winner is ...

Automatic Data Processing (NYSE: ADP  ) ! Check out some quick stats on my favorite dividend superstar:

Company

Paying Dividends Since

5-Year Dividend Growth Rate

20-Year Annualized Stock Growth Rate

Automatic Data Processing

1974

21.52%

12%

One reason I think ADP is a great business is because it's so easy to understand. The company writes checks for other companies. Plain and simple. It has more than 500,000 customers, and in 2008 it processed about $1 trillion in funds -- that's more than the GDP of Australia, the world's 13th-largest economy! Every time it distributes a check, ADP takes a cut. And in the interim between receiving funds and writing a check, it generates a pile of interest. That interest is a great kicker for an already great business model. All this and more is why ADP has totally dominated the market over the past five, 10, and 20 years, and it's also why our Motley Fool Income Investor team recommended the company in June 2009.

Income Investor looks for companies just like the aristocrats: stocks that pay hefty dividends, can increase them over time, and have substantial room for growth. It's the best way to ensure that your portfolio will survive the roughest of times, and that you'll always have enough income to retire the way you imagined.

If you're serious about setting yourself up for financial success, then Income Investor may be the right place for you. Just by being a guest of our service, free for 30 days, you can see all of our past and present recommendations in addition to the six stocks you should "buy first." Click here for more information.

Already a subscriber? Log in at the top of this page.

Fool contributor Jordan DiPietro owns no shares of companies mentioned above. Intel and Lowe's Companies are Motley Fool Inside Value choices. Aflac is a Motley Fool Stock Advisor recommendation. Automatic Data Processing is a Motley Fool Income Investor pick. The Fool has created a covered strangle position on Intel. Motley Fool Options has recommended a buy calls position on Intel. The Fool has a disclosure policy that can't wait for tax season to be over.


Read/Post Comments (62) | Recommend This Article (502)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 12, 2010, at 5:20 PM, leespitler wrote:

    The best and finest "long Term" dividend play has always been the mighty "MO"!

  • Report this Comment On April 12, 2010, at 5:24 PM, TMFHockeypop wrote:

    <i>Income Investor looks for companies just like the aristocrats: stocks that pay hefty dividends,</i>

    Of the five "Dividend Aristocrats" four have lower dividends that purchase of the 500 index - SPY or VTI (total US market index) while one beats them by a little XOM. ADM seems a little better, but one wonders about such a short period as indicated -- 5 years looking back, for a retirement portfolio.

  • Report this Comment On April 12, 2010, at 5:39 PM, TMFPhillyDot wrote:

    @hockeypop,

    The yield on the S&P I believe is 1.9%, and VTI's yield is about 1.8%. The only stock out of the 5 above that is below is Lowe's, which is 1.4%.

    In addition, all have been dividend-paying stocks for a long, long time, which is very important, like you said, when considering for a retirement portfolio.

    Foolishly,

    Jordan (TMFPhillyDot)

  • Report this Comment On April 12, 2010, at 5:44 PM, luiserdz wrote:

    What happen with the REIT companies? They were in troubles but surpass any other company paying dividends.

  • Report this Comment On April 12, 2010, at 5:44 PM, mikecart1 wrote:

    Another TMF article that blows when it comes to mentioning dividends and leaving out Altria. Perhaps this site should hire me to write articles. You don't even need to pay me. I'd just shine for free because I'm tired of innocent investors being dumbed down on how to invest when most of the advice on here is elementary at best.

  • Report this Comment On April 12, 2010, at 5:51 PM, Gorbud wrote:

    Although it is a very dead stock at this time Verizon pays a very good dividend. It is over 6% at this time. If held for some time with little or no upward movement the dividend is worth it.

  • Report this Comment On April 12, 2010, at 6:13 PM, plange01 wrote:

    unless people wake up and put a stop to it next year dividends will be taxed at the same rate as bank interest making them just as worthless as putting money in a bank.in other words speak up or pay up....

  • Report this Comment On April 12, 2010, at 6:30 PM, JohnnyJay wrote:

    You listed some nice stocks. There a 2 others that I know fit this subject and they were not listed. First is ConEdison (ED). I have owned this stock for 24 years & they have raised each year. It may not be a large amount but each year it was raised. Second: Procter& Gamble(PG). They have been raising dividends for over 50 years & yet you have failed to show this blue chip stock, WHY?

  • Report this Comment On April 12, 2010, at 6:47 PM, rmb0000 wrote:

    I agree that dividends are great, growing dividends are even better, I seek them out myself.

    But any time the Dividend Aristocrats are talked about, or returns on stocks that met X criteria at the end of X period, survivorship bias should also get talked about. i.e., the stocks that have tanked out of the aristocrats over time.

  • Report this Comment On April 12, 2010, at 7:47 PM, OklaBoston wrote:

    An overlooked factor in this article, which income-oriented investors should pay more attention to is payout ratio. If a company pays out too much of it's income in dividends it won't be able to keep it's debt/equity ratio low.

    Just how low should the payout ratio be? Offhand I'd say below 30% of trailing 12 month income, lower still if you're more capital-gains oriented than income oriented. I am open to other ideas, however.

  • Report this Comment On April 12, 2010, at 7:50 PM, grandmanjb wrote:

    Dividends have been great as additional income in the past. However, when the new tax rate goes into effect we shall be paying taxes at the rate of 36% instead of 15%!!! I am better off putting money into growth stocks and paying only 20%.

  • Report this Comment On April 12, 2010, at 9:33 PM, TMFPhillyDot wrote:

    @oklaBoston,

    You are exactly correct -- payout ratio is just as important as the yield itself. One thing you can usually be sure of is that a company that's been paying and increasing dividends for a long time most likely has a reasonable payout ratio. All of the companies mentioned above have ratio's less than 50%; most are less than 35%.

    Foolishly,

    Jordan (TMFPhillyDot)

    P.S. @ JohnnyJay -- there's only room for so many companies in one article. But no doubt - P&G is a great company and an excellent dividend stock!

  • Report this Comment On April 12, 2010, at 9:33 PM, TMFPhillyDot wrote:

    @oklaBoston,

    You are exactly correct -- payout ratio is just as important as the yield itself. One thing you can usually be sure of is that a company that's been paying and increasing dividends for a long time most likely has a reasonable payout ratio. All of the companies mentioned above have ratio's less than 50%; most are less than 35%.

    Foolishly,

    Jordan (TMFPhillyDot)

    P.S. @ JohnnyJay -- there's only room for so many companies in one article. But no doubt - P&G is a great company and an excellent dividend stock!

  • Report this Comment On April 12, 2010, at 10:48 PM, F4Fjockky wrote:

    Someone enlighten me on how limited partnerships fit into this concept. Last summer you recommended OKPartners for both income and growth, and you have been right on both counts. It pays dividends at about 8% and during the last nine months its share price has increased nearly 30%. Am I the only one to whom this looks like a good deal?

  • Report this Comment On April 12, 2010, at 11:12 PM, britpick wrote:

    MO MO MO... give me MOre Altria everytime

  • Report this Comment On April 12, 2010, at 11:25 PM, predfern wrote:

    Master Limited Partners generate a K1 form when paying income taxes. Some articles say that this can be complicated to work through.

  • Report this Comment On April 13, 2010, at 12:39 AM, gfischer13 wrote:

    @ rmb0000: great comment!!! survivorship bias shows up in pretty much every Fool article

    in general: i personally believe dividend rates should not be a big part of stock purchase decisions. valuations like dcf should have a much higher priority. in fact, paying dividends is a sign that management has no good ideas of re-investing earnings. nevertheless it's better than wasting it on de-worsefication as Peter Lynch called it.

    if you truly have to rely on income, get some investment grade corporate bonds. even in "low inerest times" you'll make above 6%

  • Report this Comment On April 13, 2010, at 1:11 AM, Deibster wrote:

    What about closed-end funds (CEF)? PHK is up 45% since July 08th 2009, it is affordable at $12.75 AND it pays an 11.5% dividend.

    Try beating that!

  • Report this Comment On April 13, 2010, at 5:04 AM, gerald325i wrote:

    You all check these out for yourselves and let me know what you think:

    GMR, FTR, RSO, KCAP...that is my current investment and has averaged 15% dividend payout plus major upside potential.

  • Report this Comment On April 13, 2010, at 11:25 AM, mpendragon wrote:

    In my personal portfolio I'm looking at natural gas companies for my dividends and I also think they're set for a lot of growth as imported energy costs are likely to face another big increase and CO2 emissions become even more of an issue. This should make natural gas a bigger player as a US energy resource.

    The migration to more natural gas consumption will take a while but we're already seeing it with fleet vehicles and it should start getting a foothold into a broader consumer market in the next several years.

  • Report this Comment On April 13, 2010, at 11:45 AM, p3ntagon wrote:

    STOXX Americas Dividend Select 40 highest dividend yielding stocks:

    http://www.topyields.nl/Top-dividend-yields-of-STOXX-America...

  • Report this Comment On April 13, 2010, at 2:48 PM, rd80 wrote:

    McDonald's

    5-year div growth rate 26.8%

    20-year annualized stock growth rate 13.2%

  • Report this Comment On April 13, 2010, at 3:36 PM, LeNagus wrote:

    Almost all of these companies do not match the S&P 500 - by a mile. Why should I care about dividends, when you can't pass the first test which is the S&P 500. I like companies we all use VISA.

  • Report this Comment On April 13, 2010, at 4:38 PM, jgrichard wrote:

    Dividend growth is a good strategy for young investors. As an older investor, I invest in prerferred stocks and master limited partnerships and junk bond funds. . My portfolio average yield is a little over 8.5% and my portfolio is up 42% since the market high in October 2007. That beats the Dow and S&P 500 by a country mile. Dividends do matter a lot.

  • Report this Comment On April 13, 2010, at 10:59 PM, georcole wrote:

    I am just curious, with direct deposit and everything going electronic, what is ADP going to do when a paper paycheck is no longer needed? Is there a law that says that employers must provide employees with a paper paystub at the very least? I get direct deposit and my paychecks are available for online viewing and printing. I don't care if I ever get a paper paystub again. So I'm just wondering if ADP is possibly soon to be a dinosaur.

  • Report this Comment On April 13, 2010, at 11:32 PM, TMFPhillyDot wrote:

    @georcole,

    ADP offers web-based solutions in addition to physical checks. They are also a one stop shop for employers, providing everything from check services to payroll taxes. So I don't see them becoming extinct any time too soon!

    Thanks though for the comment.

    Foolishly,

    Jordan (TMFPhillyDot)

  • Report this Comment On April 14, 2010, at 9:38 AM, wire12 wrote:

    going into retitement which stock would you choose

    adp or a stock such as first energy or con edison?

  • Report this Comment On April 14, 2010, at 4:37 PM, JAYMRAND wrote:

    your chart reflecting 5 year dividend growth rate and 5 year annual stock growth rate are meaningless to me

    why not just show what the value of the stock was at the start of the five year period and what it is worth at the end of the five year period based upon any dividends being reinvested. you can separately list the dividends paid and the indvidual investor can make his own adjustment for taxes.

    by linjecting the 5 year dividen and growth rates into your comments you are just confusing the average investor who really has no idea of what you are talking about.

  • Report this Comment On April 14, 2010, at 4:44 PM, TMFUltraLong wrote:
  • Report this Comment On April 15, 2010, at 9:55 AM, phyrne wrote:

    agree with jaymrand comment

  • Report this Comment On April 15, 2010, at 9:56 AM, phyrne wrote:

    agree with jaymrand

  • Report this Comment On April 15, 2010, at 1:50 PM, DJDynamicNC wrote:

    On ADP vs Altria - consider the domestic war on smoking and tobacco. In this, America is something of an "early adopter." Don't think foreign markets won't take similar stances. The first time I went to England I was shocked at the ashtrays and smokers hanging around in malls. A few weeks ago I went back and you couldn't even smoke in most nightclubs any more. This trend is just gaining steam.

    By contrast, ADP is a cornerstone of doing business, well-regarded and well-respected. My roommate works for ADP and routinely brings home stories of mega-sales from his team. Sales now translate into business for years or decades.

    If I had to choose one for retirement investing (which for me is 35-40 years away), trendlines strongly indicate ADP for my book.

  • Report this Comment On April 15, 2010, at 2:10 PM, DJDynamicNC wrote:

    @Gorbud - Verizon is one of my favourite stocks. I pick up a few more shares every month through their DRiP.

  • Report this Comment On April 16, 2010, at 12:18 PM, dbman5 wrote:

    MO?? Great dividend but has anyone looked at their revenue or cash flow for the last few years? Maybe I'm missing something but it sure doesn't look sustainable to me. Comparing last year's dividend cost to their net cash plus income - both of which seem to be on a major downward trend from a few years ago - seems rather scary.

  • Report this Comment On April 16, 2010, at 2:40 PM, EBerg13 wrote:

    Check out BP for a big player. Or DPM pipeline.

    Or WWE - you may not like what they are selling but they DO sell a lot!

  • Report this Comment On April 16, 2010, at 6:10 PM, sabrecole1 wrote:

    You write as if dividend stocks are like annuities. They are not. The Board must declare the dividend. And Board policies can change in a heartbeat if the company faces unforeseen financial distress or a change of control takes place.

  • Report this Comment On April 16, 2010, at 7:13 PM, GaryGee7 wrote:

    Another reason to like ADP is that as interest rates rise, the company will earn more during the float period between when it collects from employers and when employees cash checks.

  • Report this Comment On April 16, 2010, at 9:02 PM, MRODad wrote:

    Several items:

    1) No dinosaur. Just the opposite with their ancilliary services. You might not even know that ADP has 25,000 retirement plan clients putting it the top 5. Those plans represent nearly $30 billion in assets. Another ancilliary opportunity to earn more on float.

    2) You know the company represents security to their employee's when many former employee's come back for re-remployment. That same security is comforting to clients. There have been major small payroll processors that go out of business, close their doors with client's funds,etc. ADP has bought some of them out and rescued many of their clients that were without a provider without any notice.

  • Report this Comment On April 17, 2010, at 8:52 AM, Winyah1 wrote:

    If intel was such a good investment, why are the executives of the company selling their shares?

    I believe Chimera Investment CIM with its 17% yield will outperform Intel going forward. CIM is the best dividend stock. Period.

  • Report this Comment On April 17, 2010, at 10:35 AM, j56ach wrote:

    Continuing with the concern about dividend taxation mentioned by plange01 and grandmanjb above:

    With the tax rate on ordinary dividends reverting to that of ordinary income (could be as high as 39%) in 2011:

    Place a high dividend stock in a Roth IRA if possible. Otherwise, use a traditional IRA.

    See more discussion at: http://blog.realized-app.com/strategy/2009/06/04/dividend-pl...

  • Report this Comment On April 17, 2010, at 5:23 PM, pushkart wrote:

    McDonald's and BP are good dividend plays. Both AT&T (T) and Verizon (VZ) have had good records lately.

    In general, British companies appear to have a tradition of preferring to pay dividends instead of plowing back capital into growth. Companies such as BP, RDS-B, and UL all have a long history of dividend payments, although payout ratiosI haven't analyzed payout ratios to see how viable these strategies are.

    In the pharma field, AZN has a substantial yield of 7.5% currently.

  • Report this Comment On April 19, 2010, at 12:32 PM, czbill wrote:

    DJDynamic,

    you are correct. I know many ppl at ADP, and they have the 'moat' to create sustainable advantage. It's not just the numbers people...it's the culture. And they have one that is sustainable on that front as well, including being named to top companies to work for, few layoffs, and a training program that rivals anyone in nearly ANY industry. Dinosaur? Hardly. They are kicking ___ and taking names.

  • Report this Comment On April 21, 2010, at 3:52 AM, rayndanafools wrote:

    We inherited both Altria & Philip Morris stocks in '08 (just before the market began nosediving) from a parent whose spouse spent the last 2 yrs of HER life lugging an oxygen bottle around wherever she had to go, with plastic tubes up her nose almost 24 hrs a day! A slow, agonizing death fm emphysema caused by 50+ yrs of smoking was the 'dividend' SHE got for using Altira/Philip Morris cigarettes!

    We sold both companies as soon as we could afford to take the long-term losses .... using the proceeds to pay down our 6.25% home mortgage balance.

    We also inherited some Verizon stock ... but when VZ suddenly, without cause, 'transferred' our local phone service in error WITHOUT checking with us first as the FCC regs require ... & then, 'no thanx' to ABOMINABLE 'customer NON-service' took almost 2 wks to restore it ... & then only after MANY hrs of multiple phone calls ... + the additional horror stories we've heard from numerous colleagues re. the absolute nightmares THEY'VE experienced with VZ's "FIOS" & 'bundling', or more accurately "BUNGLING"... we sold off the VZ stock as well.

    Again, some of the net proceeds immediately 'earned 6.25%' paying down home mortgage principal ... & some $'s were also used to buy shares of AT&T which pays roughly the same dividend yield as VZ.

    For us at least, we 'feel' FAR better no longer being invested in tobacco NOR in a screwed up company like VZ ... & the net $'s we rcvd helped reduce our overall mortgage debt ... & the net 'capital losses offset some of our federal & state taxable incomes for '09 & will do so again in 2010.

    In sum ... we believe 'going after' a high dividend paying stock based on 'high yield' alone is a far too simplistic approach to 'living foolishly'.

  • Report this Comment On April 21, 2010, at 1:32 PM, rayndanafools wrote:

    Ooops ... meant to add these addtl numbers which supported our decisions to dump VZ!

    Note: Figs below are as of today so slight day-to-day stock price fluctuations must be considered.

    As of 4/21/20, Price-to-Earnings ratios:

    Telecomm Industry = 15.5

    AT&T = 12.4

    Verizon = 23.1

    Lesson: VZ is 86.3% MORE EXPENSIVE than T & 49% more expensive than the industry overall.

    Dividend Payout Ratios:

    Telecomm Industry = 93,0%

    AT&T = 77.0%

    Verizon = 144.0% (GASP!)

    Lesson:

    VZ is paying out MORE THAN NET PROFITS to cover its dividend ... and 54.8% MORE than the industry overall ... while T is paying 17% LESS than the industry and keeping 23% of profits for other uses, including future raising of dividends.

    5-yr Dividend Growth Rates:

    Telecomm Industry = 4.5%

    AT&T = 4.8%

    Verizon = 3.53%

    Lesson:

    VZ comes in 3rd of 3 yet again .... sigh!

    Current Dividend Yields:

    Telecomm Industry = 6.20%

    AT&T = 6.30%

    VZ = 6.38%

    Lesson: OK ... VZ 'wins' by 0.08 of a single percentage point!

    Would like to read what other 'fools' think!

  • Report this Comment On June 11, 2010, at 5:40 PM, fire56 wrote:

    Praise one, tear one down, did I learn much here?

    Nah- Now, know it alls--which is best? Buy the stock from Scottrade or from the company??

    Does it rreally make that much diff.??

  • Report this Comment On July 02, 2010, at 3:43 AM, Latinus wrote:

    What about BP now?

  • Report this Comment On July 15, 2010, at 7:08 PM, imntacrook wrote:

    Is it rue you can buy a stock just before the ex-dividend date and sell it the next day and take the dividend?

  • Report this Comment On July 26, 2010, at 10:16 AM, Bevmach wrote:

    If you want high dividends with LOW risk, check out some of the better utility stocks, like Duke Energy or Progress energy. Yields of over 5%, well capitalized, captive market, stocks valued at about 12X-15X earnings - what's not to like!

  • Report this Comment On August 09, 2010, at 6:01 AM, nprfreak wrote:

    Good article and thoughtful (or thought provoking) comments. Since rolling a 401k into an IRA in 2006, I've expanded from a focus almost totally on funds to roughly 1/4 individual stocks - a few growth plays but mostly boring old dividend stocks.

    Beyond the risks of any single stock (largely short term and my game is long term), stocks carry zero cost after the commission to buy. Reinvesting dividends grows the position thereby increasing the dollar amount of the dividend each quarter. The effect is pretty amazing to watch over time and even a tiny boost in the dividend magnifies the effect. It's almost enough to get you rooting for a nice pullback in stocks!

    Regarding taxes on dividends: It's a non-issue in tax protected accounts which is where the vast majority of middle income Americans hold these kinds of investments. But even in taxable accounts, income is income. And very few of us have enough annual income to hit that top tax bracket. (There is a lot of hype out there on this issue. Run your own numbers before you buy into it.)

    Regarding MLPs: The K-1s look complicated but even the free tax prep services are set up to handle them. Be aware that YOU are paying the corporate tax and not the corporation, albeit at your top tax rate. The distributions you get offset that but count against your cost basis as Return of Capital. When your cost basis hits zero, it all becomes capital gain and the tax deferred benefit goes away.

    A huge caution: DO NOT hold MLPs in tax protected accounts. They can and will lead to a requirement for your account to pay taxes! That sort of defeats the purpose of a tax protected account.

  • Report this Comment On October 05, 2010, at 6:20 AM, stocksidiot wrote:

    If you're looking for dividend consistency & safety, it is worth looking at companies that have a long track record of paying dividends... Companies such as Coke, Johnson & Johnson, Eli & Lilly, Exxon Mobil, Walmart come to mind.

    These are the very companies that made Warren Buffet very rich. They are all grouped in an index called the dividend aristocrats, more on them below.

    The S&P 500's Dividend Aristocrats is the most prestigious list of dividend paying stocks in the world that are tracked by S&P 500 Index. The Dividend Aristocrats Index is a list of companies that have consistently grown their dividends for at least 25 consecutive years. The index is so strict that if a company misses even 1 year of growing its dividend, it is eliminated from the Dividend Aristocrats Index.

    Source: http://www.best-dividend-paying-stocks.com

    Note: The number of years indicated in the list below is the number of years that the company has increased its dividends consecutively.

    * Exxon (XOM) – 27 years

    * Clorox Co (CLX) – 32 years

    * McDonald’s Corp (MCD) – 33 years

    * Wal-Mart Stores (WMT) -35 years

    * Coca-Cola Co (KO) – 47 years

    * Johnson & Johnson (JNJ) – 47 years

    * Procter & Gamble (PG) – 53 years

  • Report this Comment On November 21, 2010, at 11:56 PM, Trinity84 wrote:

    Good Evening,

    I am 28 years old with a Roth set up. I've been set up for 3 years now with AMECX and Investment Company of America. Anyone have any helpful advice. I'm new with the terminology and lingo... I'm looking into some more aggressive fields with high paying dividends. Good move? or not so much?

    Thank you

  • Report this Comment On December 30, 2010, at 4:57 AM, Johnexo wrote:

    If you are set on getting a dividend every three months, there are a few things you need to look for. One is to simply find firms that have paid out dividends consistently in the past. If the dividends have been steadily rising, this is even better. This shows they will most likely continue paying them out down the road.

    http://www.guidetoinvest.net/best-dividend-stocks.html

  • Report this Comment On April 01, 2011, at 9:21 PM, Philinbos wrote:

    Take a look at York Water Company (YORW) 496 consecutive dividends

  • Report this Comment On September 08, 2011, at 11:45 AM, workingdog728 wrote:

    i find your article's very informative and i find the comment's interesting being a newbie to all of this i have read books on investing some very confusing i find the motley Fool the easiest to understand i myself have no portfolio as of yet my question to the Fools is that i would like to buy a few shares of ?? for my two godsons they are four and five years old I'm looking for dividend stocks for them and myself being almost fifty years old i don't expect them to be the same i have been looking for a mentor for a couple months now with no luck any comments or help would be appreciated FOOL ON and thanks

  • Report this Comment On September 09, 2011, at 2:33 PM, busterbuddy wrote:

    For a new Newbie I'd not consider any of these except archer Daniel's.

    If you want to listen then here it is.

    XOM no.

    T yes

    MO yes.

    Start with T and MO first.

    If you want to go the DRS or DRip route. SO or HNZ or LMT.

    No purchase cost.

    if you are doing it via broker then pick one of these right now.

    T,MO and SO.

    The list about is more for adding to a port looking for more capital gains than dividend.

  • Report this Comment On September 10, 2011, at 10:35 AM, workingdog728 wrote:

    thanks for the info busterbudder i will look in to that any suggestions on a mentor

  • Report this Comment On June 14, 2012, at 11:38 AM, thisislabor wrote:

    yeh! useful fast information. thanks guys.

  • Report this Comment On June 30, 2013, at 2:45 AM, rjsanchez wrote:

    Dividend stocks are ok, but since it's individual stocks, there is more risk involved. If you'd like to spread the risk over more stocks and you'd still like to have a high dividend, check out http://www.bestdividendetfs.com for tips. With an ETF you invest in more than one dividend stock, there is a lot of choice and a lot of quarterly and monthly payouts.

    Robert

  • Report this Comment On August 20, 2013, at 1:40 PM, sagitarius84 wrote:

    The best dividend stock to own is Phillip Morris International (PM) - high dividend yield, high dividend growth, repurchases stock consistently, international exposure:

    http://www.dividendgrowthinvestor.com/2012/08/philip-morris-...

    The stock is the largest holding in my dividend growth portfolio at around 4%.

  • Report this Comment On November 06, 2013, at 1:53 PM, carllyn wrote:

    Because of the upcoming tax on dividends use a Roth IRA account for buying the stocks you want to use for a longterm investment

  • Report this Comment On May 18, 2014, at 12:46 PM, Ron89431 wrote:

    There are 3 basic investment methodologies; income (dividends), speculation (gambling) and ownership/controlling interest/buyout. The average investor would do well to use the first strategy by direct purchase or a fund that ONLY invests in dividend payers. Speculation investing is too volatile for the average investor as they tend to panic on a downswing.

    Buyout investing is not an option for all but the people/funds that have the liquid capital to do a takeover. Then they actually have to operate the business to show a profit, or cannibalize it for asset value then walk away (vulture investing, corporate raiding).

    In all investing, the savvy investor knows the unmentioned secret of stocks; the price has no relationship to anything other than what someone is willing to pay for it. It is not a measure of the company's intrinsic value or economic outlook. It is not an indicator of national or world economic stability. A stock has absolutely no intrinsic value of its own. It is absolutely worthless until you accept a trade offer on it.

    It is worth noting how Warren Buffett invests, but not worth buying his stock for income; he doesn't pay dividends. Berkshire common stock has a good track record v. S&P but the only way to realize that gain is to sell at the right time and purchase at the right time.

    Dividend stocks are stable precisely because the income investor holds them regardless of price because they still pay dividends. Speculative stock investing thrives/succeeds on high volatility and unwise investors buying high and selling low.

  • Report this Comment On June 21, 2014, at 10:30 AM, StarM wrote:

    Any one at The Fool care to update this article?

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