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 super investor 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." But Standard & Poor's has also created another similar index that it calls the High Yield Dividend Aristocrats.
According to Standard & Poor's, "The S&P High Yield Dividend Aristocrats index is designed to measure the performance of the 60 highest dividend yielding S&P Composite 1500 constituents which have followed a managed dividends policy of consistently increasing dividends every year for at least 25 years."
Let's examine the top 25 high-yield dividend aristocrats ranked by yield. For context, I've also included their five-year annualized dividend growth rate.
|
Company |
Yield |
5-Year Dividend Growth Rate |
|---|---|---|
|
CenturyLink |
8.3% |
63.9% |
|
Pitney Bowes |
7.6% |
3.1% |
|
Mercury General |
6.3% |
5.6% |
|
National Retail Properties |
6.2% |
3.2% |
|
Cincinnati Financial |
6.0% |
4.6% |
|
HCP |
5.5% |
(5.7%) |
|
Leggett & Platt |
5.4% |
10.7% |
|
Vectren |
5.3% |
2.6% |
|
Universal Corp |
5.0% |
2.2% |
|
Black Hills Corp |
4.9% |
2.2% |
|
Consolidated Edison |
4.4% |
0.9% |
|
Atmos Energy |
4.2% |
1.5% |
|
Kimberly Clark |
4.2% |
7.7% |
|
RPM International |
4.2% |
5.8% |
|
WGL Holdings |
4.0% |
2.7% |
|
Diebold |
4.0% |
5.5% |
|
Piedmont Natural Gas |
3.9% |
4.0% |
|
Northwest Natural Gas |
3.9% |
4.8% |
|
Sonoco Products |
3.9% |
4.0% |
|
Abbott Laboratories |
3.8% |
10.0% |
|
UGI Corp |
3.6% |
8.2% |
|
Johnson & Johnson |
3.5% |
9.9% |
|
Westamerica Bancorp. |
3.5% |
2.7% |
|
Genuine Parts |
3.5% |
5.8% |
|
Clorox |
3.4% |
14.4% |
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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