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 superinvestor 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."
Let's examine the top 10 dividend aristocrats by yield. For context, I've also included their five-year annualized dividend growth rate.
|
Company |
Trailing Yield |
5-Yr Dividend Growth Rate |
|---|---|---|
|
1. CenturyLink |
7.1% |
64.7% |
|
2. Pitney Bowes |
6.6% |
3.3% |
|
3. Eli Lilly |
5.5% |
5.6% |
|
4. Cincinnati Financial |
5.2% |
7.4% |
|
5. Leggett & Platt |
5.1% |
11.1% |
|
6. Integrys Energy Group |
5.1% |
4.1% |
|
7. Consolidated Edison |
4.8% |
0.9% |
|
8. Kimberly Clark |
4% |
8.2% |
|
9. Johnson & Johnson |
3.4% |
11.1% |
|
10. Abbott Laboratories |
3.3% |
9.7% |
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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