By
Jim Royal
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More Articles
October 13, 2010
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Dividend-paying companies are the oasis in the desert of underperforming stocks. They offer solid payouts today, and not simply the promise of gains tomorrow (though they do offer that, too!). In fact, dividend investing is such an attractive alternative that super-investor Warren Buffett has made it a significant component of his portfolio.
A great way to find outperforming dividend-paying companies is to examine the stocks in the "Dividend Achievers Select Index," an elite group of companies that have raised their dividends annually over at least the past 10 years. The list was created by Mergent and is now overseen by Indxis, which screens eligible stocks for liquidity and investability. The index features about 140 stocks for 2010.
In case you need further convincing that dividend investing is profitable: According to a study by Ibbotson, reinvested dividends made up about 40% of total stock returns from 1926 to 2006. And as I've argued elsewhere, dividends are the most secure way to build a cash-flow powerhouse.
So let's take a look at the top dividend achievers by yield in the utilities industry. For context, I've also included their five-year annualized dividend growth rate.
|
Company
|
Trailing Yield
|
5-Year Dividend Growth Rate
|
| 1. Northwest Natural Gas (NYSE: NWN ) |
3.5% |
4.8% |
| 2. UGI (NYSE: UGI ) |
3.4% |
0% |
| 3. New Jersey Resources (NYSE: NJR ) |
3.4% |
8.2% |
| 4. Questar (NYSE: STR ) |
3.2% |
3.4% |
| 5. California Water Service (NYSE: CWT ) |
3.2% |
0.9% |
| 6. MDU Resources (NYSE: MDU ) |
3.1% |
5.5% |
| 7. Aqua America (NYSE: WTR ) |
3% |
8.3% |
| 8. American States Water (NYSE: AWR ) |
2.8% |
2.8% |
| 9. SJW (NYSE: SJW ) |
2.8% |
5% |
| 10. South Jersey Industries (NYSE: SJI ) |
2.6% |
15.5% |
| 11. National Fuel Gas (NYSE: NFG ) |
2.5% |
3.6% |
| 12. Energen (NYSE: EGN ) |
1.1% |
5.4% |
Source: Indxis.com and Capital IQ.
With cash and Treasuries yielding mere pennies on the dollar, your best bet to beat inflation is in high-yielding stocks like the 13 we've uncovered in a special report. If you'd like free access to this report, click here. Or you can check out other Dividend Achievers in the sidebar to the right.
Interested in reading more about MDU Resources? Add it to My Watchlist, which will find all of our Foolish analysis on this stock.
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