3 Dividend Stocks Every Income Investor Should Own

In the wake of persistently low savings rates, income investors continue to flock to dividend-paying stocks. But there's more to just finding high-dividend payers. It's also important to examine how much of a company's earnings are paid out in dividends and how much it is growing its dividend.

Lucky for you, I've done some homework and found three stocks, all boasting a dynamic one-two punch of sustainable dividend payout ratios  and lots of dividend growth.

1. Procter & Gamble (NYSE: PG  ) -- The household goods giant is a reigning member of the S&P 500 Dividend Aristocrats list, which is comprised of blue-chip companies that have consecutively raised their dividend for at least 25 years. Yet P&G has increased its dividend for an impressive 57 straight years.

The stock currently boasts a dividend yield of 3.1% and recently grew its dividend by 7%. P&G's payout ratio, a measure that indicates how much of the company's net income is returned to shareholders in the form of dividends, is a sustainable 50%.

And in a sometimes-considered boring industry, yet one that isn't here today, gone tomorrow, P&G's Tide and Pampers  are some of the most well-recognized and reached-for brands in the world. 

2. 3M (NYSE: MMM  ) -- Another Dividend Aristocrat, 3M has increased its dividend for an amazing 55 consecutive years. The stock pays a dividend yield of 2.4% and recently grew its dividend by 7%. 3M's payout ratio is a very healthy 38%, indicating that the company has plenty of room to increase its dividend in the future.

And there's certainly more to 3M than Post-it Notes. The company boasts extremely diversified revenue streams in six distinct business segments, spanning industries such as health care, graphics, and transportation. In fact, no more than 35% of 3M's sales come from any one business segment.

3. Coca-Cola (NYSE: KO  ) -- This beverage giant earns serious kudos as a Dividend Aristocrat, by boosting its dividend every year since the Kennedy Administration. The stock currently boasts a dividend yield of 2.6%, which it recently grew by 10%. Coke has a dividend payout ratio of 55%.

Long envied for its incredible brand strength, Coca-Cola has been crowned Interbrand's Best Global Brand since the list's 2001 inception. Coke's ability to develop new products and reinvent old ones generates stable profits for the company and its shareholders.

One of the world's most far-reaching distribution systems makes Coke's more than 500 brands accessible to billions of people worldwide every day. And the company's production techniques are so well developed that it costs a sliver of the product's selling price to manufacture, resulting in high profit margins.

Foolish final thoughts
Great dividend-paying stocks like these three boast not only great dividend yields but also sustainable payout ratios and growth potential, making them solid buys for income investors.

If you're an investor who prefers returns to rhetoric, you'll want to read The Motley Fool's new free report, "5 Dividend Myths ... Busted!" In it, you'll learn which stocks provide premium growth and whether bigger dividends are better. Click here to keep reading. 

 

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