More Dividend Aristocrat Winners of 2013

One diversified manufacturer and two financial services companies reigned supreme.

Jan 22, 2014 at 9:59AM

Income investors have favored dividend-paying stocks for a long time. And these investments have gained even more popularity in recent years due to extremely low interest rates. In a previous article, I examined three top-performing Dividend Aristocrat stocks of 2013. Today we'll focus on three more stocks that deserve honorable mentions.

Roll out the red carpet
Dividend Aristocrats adhere to the highest dividend-paying criteria. Companies in the exclusive group must boast 25 consecutive years of dividend increases. Here are some of last year's best performers.


Dividend Yield

Dividend Payout Ratio

5-Year Dividend Growth Rate

Cincinnati Financial





Illinois Tool Works





Franklin Resources





Sources: Yahoo! Finance; The Motley Fool. 

All three companies returned respectable gains last year. Diversified manufacturer Illinois Tool Works' stock returned nearly 39% to shareholders in 2013. Meanwhile, financial-services stocks Cincinnati Financial and Franklin Resources returned 36% and 34%, respectively. By comparison, the S&P 500 grew roughly 29% last year.

A closer look
Property and casualty insurer Cincinnati Financial raised its dividend for a 53rd consecutive year last August. And its 46% payout ratio suggests the company can continue to raise its dividend in future years. Like most financial-services stocks, Cincinnati Financial took a big hit during the financial crisis, when its stock price was down more than 50%. But profitability has certainly turned around for the insurer. The company posted $131 million in net income for the third quarter, representing an 18% increase over the same period last year. 

Manufacturer Illinois Tool Works also faced challenges during the past several years, mostly due to its exposure to the construction and transportation industries, which were hit hard during the economic downturn. But this manufacturer boasts ample future growth opportunities. And with no more than 14% of company revenue derived from any single business segment, diversification will help the company ride out future bumps in the road.

Even though Franklin pays a modest dividend, it has increased its dividend more than 48% annually during the past five years. Also, its low payout ratio suggests the asset manager can raise its dividend in the future. But life's not all rainbows and unicorns at the California-based company. Like all active fund-management companies, Franklin faces heated competition from passively managed fund shops and exchange-traded-fund providers like BlackRock, Charles Schwab, and Vanguard. Net outflows of actively managed mutual funds have negatively affected managers like Franklin in recent years and will likely continue to do so.

No crystal ball
Don't bet on past performance to predict future results. Instead, focus on buying attractively valued companies that possess uninterrupted track records of not only paying dividends, but also growing them.

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Fool contributor Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends BlackRock and Illinois Tool Works. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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