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 fastest-growing yields among these dividend aristocrats. For context, I've also included their trailing yield.
|
Company |
Trailing Yield |
5-Year Dividend |
|---|---|---|
|
CenturyLink |
6.3% |
64.7% |
|
Lowe's |
1.7% |
32% |
|
McDonald's |
3.2% |
26.8% |
|
Walgreen |
1.8% |
21.6% |
|
AFLAC |
2.1% |
21.4% |
|
Target |
1.7% |
18.5% |
|
W.W. Grainger |
1.6% |
17.8% |
|
Wal-Mart |
2.3% |
17.8% |
|
VF Corp. |
2.9% |
17.3% |
|
Automatic Data Processing |
3.1% |
17% |
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. S&P just announced its dividend aristocrats for 2011, and you can see the top yielders here.
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