Dividend investors love to get as much income as they can find. But picking the best dividend stocks in the Dow Jones Industrials (DJINDICES: ^DJI ) takes more than just finding a high yield. You also need an ongoing commitment from a company to keep its payout growing over time. If you're planning to hold onto stocks for the long run, dividend growth is much more important than current dividend yield to your eventual results.
Fortunately, investors in the Dow Jones Industrials can get the best of both worlds: dividend growth and promising yields. All you have to do is look to an elite group of companies known as the Dividend Aristocrats. Let's take a closer look these stocks and why Coca-Cola (NYSE: KO ) , 3M (NYSE: MMM ) , and Procter & Gamble (NYSE: PG ) stand out from the crowd.
Joining the aristocracy
To become a Dividend Aristocrat, a company needs to have raised its dividend payout every single year for at least 25 years. Only a few dozen companies qualify for this prestigious list throughout the entire stock market.
But just because a stock is a Dividend Aristocrat doesn't mean that it deserves your hard-earned cash. For instance, both of the energy giants in the Dow Jones Industrials are Dividend Aristocrats, but both of them also face the ongoing challenges of growing their oil and gas production even though their aging existing wells are constantly in a state of production decline. Similarly, the world's biggest retailer has a long history of dividend increases, but lately, it has struggled to boost its revenue and maintain its customer base of middle-class Americans.
Still, Coca-Cola, 3M, and Procter & Gamble have certain characteristics that make them stand out from their illustrious Dow peers. Coca-Cola's beverage business sounds simple, but the Atlanta giant has turned its red cursive logo into a $79 billion brand that topped the world's most valuable brand names until 2013. Coca-Cola has a presence in more than 200 countries, and even though its soft-drink business has undergone pressure in the U.S. and elsewhere, Coca-Cola's non-sparkling beverage lines have taken off. A critical partnership with the maker of the Keurig home-brew coffee machine could open new growth avenues for Coca-Cola, and meanwhile, investors enjoy a 3% dividend and a 52-year streak of rising dividend payments.
3M is best-known for Post-It Notes, but it offers tens of thousands of different products in diverse industries from health care and computer screens to commercial safety and security items. Despite the inevitable rises and falls in its business, 3M has maintained a 56-year history of annual dividend increases, resulting in a current yield of 2.4%. More importantly, though, 3M has moved toward reinventing itself as an innovation-focused conglomerate, looking for what could become the next industry-changing products wherever it might apply.
Investors in Procter & Gamble see the success of their stock every day, with products in your own home showing the way consumers need the company. With more than 4 billion customers in 180 countries across the globe, Procter & Gamble has an impressive stable of around two dozen billion-dollar brands. Even though Procter & Gamble has been immensely successful, the consumer-products giant is still working hard to find new avenues for growth, especially in emerging-market areas where consumers are coming into contact with P&G products for the very first time. Meanwhile, with 58 years of dividend increases and a 3.2% yield, Procter & Gamble treats Dow investors right.
These three Dow stocks have just about everything you want to see from a high-quality dividend stock. With long histories of rising dividends, solid yields, and promising prospects, all three components in the Dow Jones Industrials are worth considering for your dividend portfolio.
Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term, whether they come from the Dow Jones Industrials or not.. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.