Dividend-paying companies are an oasis in the desert of underperforming stocks. They offer solid payouts today and the promise of capital gains tomorrow. According to a study by Ibbotson, reinvested dividends made up about 40% of total stock returns from 1926 to 2006. In fact, dividend investing is so appealing that superinvestor Warren Buffett has made it a significant component of his portfolio.
When searching for great dividend stocks, it makes a lot of sense to start with companies that have been playing the dividend game the longest. Standard & Poor's has culled the dividend winners from the also-rans in a list it calls the "dividend aristocrats." These companies have paid and increased their dividend for at least 25 years.
Let's examine the top dividend aristocrats by yield in the Consumer Durables and Apparel industry. For context, I've also included their five-year annualized dividend growth rate.
|
Company |
Trailing Yield |
5-Year Dividend |
|---|---|---|
|
1. Leggett & Platt |
5.3% | 11.1% |
|
2. V.F. Corp. |
3% | 17.3% |
|
3. Stanley Black & Decker |
2.3% | 3.3% |
Source: Capital IQ, a division of Standard & Poor's.
These aren't formal recommendations -- just ideas for your own further research. Still, they could give you a great start toward find companies capable of paying rising dividends for a quarter-century or more.
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