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3 Dividend Aristocrats to Buy and Hold Forever

By Demitri Kalogeropoulos - Updated Oct 22, 2019 at 5:08PM

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Well, one isn't quite there yet, but it should be by 2020, so why not grab it now?

There's no shortage of reasons why investors love Dividend Aristocrats. These companies, which have paid out -- and boosted -- an annual dividend for at least 25 consecutive years, represent some of the best qualities in a long-term stock holding. Their ability to steadily increase their payout is a testament to best-in-class qualities that investors treasure, including a premium industry position, an efficient management team, and pricing power.

With that in mind, let's look at two companies from this exclusive club -- and one on the path to membership -- that appear to be solid long-term holds right now.

Stacks of coins.

Image source: Getty Images.

1. Procter & Gamble

To find a year in which consumer staples giant Procter & Gamble (PG -0.36%) didn't pay a dividend, you'd have to go back all the way to 1889. The track record of annual raises for the maker of Tide detergent and Pampers diapers isn't nearly as impressive, but at 62 years, it's still one of the longest such streaks on the stock market.

To be sure, P&G has seen its share of financial struggles over that period. Those included the financial years of 2013 through 2017, which saw sales growth slow and earnings decline as the company dramatically reshaped its portfolio hoping to better compete in a sluggish selling environment. While it took time for those initiatives to pay off, they appear to be working today. In fact, P&G recently announced its fastest growth in over a decade.

That success means rivals like Kimberly-Clark (NYSE: KMB) will be using aggressive pricing and promotions to try to arrest its market-share gains in 2020 and beyond. Retailers are increasingly making their own products to put up against P&G's premium brands, too. But franchises like Gillette and Tide have generations of customer loyalty to build on, and that superior positioning should help income investors generate solid returns ahead, just as they have in past decades.

2. TJX Companies

Retailing trends come and go, but the desire to find discounts on quality products seems to be timeless. That's where TJX Companies (TJX -1.59%) comes in. The off-price retailing specialist sells apparel and home goods at discounts between 25% and 65%, after buying them from full-price industry peers that find themselves with too much inventory from time to time.

Customers clearly love this approach. The TJ Maxx, Marshalls, and Home Goods banners have posted increased sales at existing locations in each of the last 23 years, a streak that Dividend Aristocrats like Walmart and Target can't claim.

Its 23 years of consecutive dividend raises mean that TJX isn't technically a member of the club just yet. But it is on pace to notch its 24th year of growth in 2019 and should easily sail into Dividend Aristocrat status by 2020. That's why investors looking for a retailer that pairs a strong track record with impressive growth opportunities might want to put this off-price giant on their watch list.

3. McCormick

Spice giant McCormick (MKC -0.25%) has a knack for outgrowing peers in its industry niche. The company posted 10% higher sales in 2018 and enjoyed soaring profits to boot.

Sure, much of that growth came courtesy of its 2017 acquisition of massive condiment franchises. But McCormick's organic sales gains still beat peers like Campbell Soup and General Mills

The flavorings specialist aims for annual sales growth of around 5% and profit gains of around 8%. Fiscal 2019 will mark a slight departure from that path in terms of revenue, but McCormick should get right back to accelerating growth with help from increased marketing support. 

In the meantime, dividend stock investors can count on this payout to continue rising in 2020 and beyond. And by late next year, the company should have paid down enough of its debt to allow for the resumption of stock repurchasing, which should further support total shareholder returns.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool is short shares of Kimberly-Clark and Procter & Gamble. The Motley Fool recommends The TJX Companies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
$148.70 (-0.36%) $0.54
McCormick & Company, Incorporated Stock Quote
McCormick & Company, Incorporated
$92.35 (-0.25%) $0.23
The TJX Companies, Inc. Stock Quote
The TJX Companies, Inc.
$67.45 (-1.59%) $-1.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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