Income investors love stability. A rock-steady stock chart comes in handy if you ever find a reason to sell your cash-dispensing shares, but predictable dividends are where the real magic happens.
Let's take a look at a true dividend champion. Say hello to Coca-Cola (NYSE:KO), a dividend investor's BFF (best friend forever).
The soft-drink giant has produced millionaires by the boatload, and dividends played a large part in this success story:
If you bought your first Coke shares when the company first started paying dividends, then you've nearly doubled the return of the Dow Jones Industrial Average (DJINDICES:^DJI) by now. But if you also reinvested every penny of payouts in more shares along the way, then you'll have another 70% gain on top of that.
How did Coca-Cola create all that extra wealth? The answer lies in this totally beautiful chart:
Come hell or high water, Coke makes certain to nudge its dividend payouts just a bit higher every year, without fail. The increases rest on strong cash-flow growth.
I find it hard (it's hard to find) another company with a dividend history to match Coke's, even among the company's stellar peers in the Dow. Coca-Cola makes General Electric (NYSE:GE) and Alcoa (NYSE:AA) look as random as lottery tickets, and even ExxonMobil (NYSE:XOM) trails far behind these unstoppable increases: