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 dividend aristocrats by yield in the Capital Goods industry. For context, I've also included their five-year annualized dividend growth rate.
|
Company |
Yield |
Five-year dividend growth |
|---|---|---|
|
3M |
2.4% |
4.6% |
|
Emerson Electric |
2.4% |
9.8% |
|
Dover |
1.7% |
10.1% |
|
W.W. Grainger |
1.5% |
17.7% |
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. You can see the fastest-growing 2011 aristocrats here.
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