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." But Standard & Poor's has also created another similar index that it calls the High Yield Dividend Aristocrats.
According to Standard & Poor's, "The S&P High Yield Dividend Aristocrats index is designed to measure the performance of the 60 highest dividend yielding S&P Composite 1500 constituents which have followed a managed dividends policy of consistently increasing dividends every year for at least 25 years."
Let's examine the top 25 high-yield dividend aristocrats ranked by yield. For context, I've also included their five-year annualized dividend growth rate.
|
Company |
Trailing Yield |
5-Year Dividend Growth Rate |
|---|---|---|
|
CenturyLink |
6.8% |
64.3% |
|
Pitney Bowes |
6.0% |
3.2% |
|
National Retail Properties |
5.9% |
3.1% |
|
Mercury General |
5.9% |
6.1% |
|
HCP |
5.2% |
2.5% |
|
Cincinnati Financial |
5.2% |
5.0% |
|
Vectren |
4.9% |
2.7% |
|
Black Hills |
4.6% |
2.4% |
|
Universal Corp. |
4.4% |
2.3% |
|
Consolidated Edison |
4.4% |
0.9% |
|
Leggett & Platt |
4.2% |
10.8% |
|
Kimberly-Clark |
4.1% |
7.8% |
|
Atmos Energy |
4.0% |
1.6% |
|
WGL Holdings |
4.0% |
2.6% |
|
Northwest Natural Gas |
3.8% |
4.9% |
|
Piedmont Natural Gas |
3.7% |
4.0% |
|
RPM International |
3.6% |
6.0% |
|
Questar |
3.6% |
4.6% |
|
Abbott Laboratories |
3.6% |
10% |
|
Johnson & Johnson |
3.4% |
10.4% |
|
Diebold |
3.4% |
5.6% |
|
Sonoco Products |
3.3% |
4.0% |
|
Genuine Parts |
3.2% |
5.7% |
|
UGI Corp |
3.2% |
8.2% |
|
Procter & Gamble |
3.1% |
11.5% |
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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