Please ensure Javascript is enabled for purposes of website accessibility

5 Rock-Solid Dividends to Buy Today

By Travis Hoium - Feb 11, 2013 at 12:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

5 stocks that will pay investors back for years to come.

One of the best ways for investors to make money investing is by looking for companies that pay regular dividends. This is one of the best ways for companies to pay investors back and it forces management to focus on cash flow, which is what investors like.

With the 10-year Treasury currently paying just 2%, dividends from solid companies that will be around for the long haul are a way for investors to make a better yield and potentially benefit from price appreciation. Here are five dividend stocks from rock-solid companies that yield more than Treasuries.

Intel
There is a lot of pessimism in the investment community over any company with ties to the PC. One of the poster children is Intel (INTC 2.46%), the chip maker that has dominated the PC for decades but has struggled to get any meaningful share in the mobile space. Intel has been stagnant as the PC declines, but the market is treating the stock as if PCs will die tomorrow and Intel won't ever be able to take meaningful share in the mobile space. I just don't think either is the case and I believe there's upside to go along with a great dividend. 

Intel has $18.2 billion in cash, pays a lofty 4.3% dividend yield, and has a P/E ratio of just 10. As long as the PC doesn't die tomorrow, investors should be getting a great dividend for years to come.  

3M
Want a rock-solid dividend? How about a company that has paid a dividend for 96 consecutive years and has increased that dividend 55 years in a row? Let me offer up 3M (MMM 1.04%). The company makes everything from Post-it Notes to bandages, products many of us don't think twice about purchasing on a regular basis. This creates a company so diversified that its dividend is safe even through disastrous economic and financial situations.  

Right now, 3M yields 2.5% for investors, and if 55 years of dividend growth continues, it is likely to outyield the Treasury on a cost basis for shareholders for years to come. It may not be as safe as a Treasury, but it's close.

Verizon
Warren Buffett often talks about investing in companies with a competitive moat. There may not be a better moat than Verizon (VZ 0.36%) subsidiary Verizon Wireless has in the U.S. mobile market. The company owns the spectrum to operate a wireless network, but even better is the capital cost it takes to put that spectrum to work. Verizon Wireless has spent billions of dollars building a 3G and now 4G wireless network to dominate the wireless space. It's this superior network that creates an advantage over AT&T and Sprint that is nearly impossible to catch up with. Verizon has staying power to attract customers and pricing power to charge those customers more money.

Verizon currently pays a 4.6% dividend yield, the highest on this list. But it also holds one of the strongest competitive advantages.

ExxonMobil
Let's be honest, the oil business isn't going anywhere anytime soon. Oil consumption may be falling domestically but it's rising globally, and ExxonMobil (XOM 0.95%) will be there to take advantage. The company also has large exposure to the natural gas market, which is struggling with lower prices but provides some diversification.

ExxonMobil generated $44.9 billion in earnings last year and $63.8 billion in cash from operations and asset sales. That's plenty of cash to pay a 2.6% dividend yield, which should continue to grow in coming years.

McDonald's
When the economy struggles, McDonald's (MCD 0.50%) does well; when the economy does well, McDonald's does well. Even when the country begins to worry about fat, carbs, or any other health factors, McDonald's seems to be able to adjust and grow. The company has one of the great global brands of our generation, something that doesn't come easily.

For investors, the company pays a solid 3.2% dividend and trades at just 15 times forward earnings. That's a value dividend investors should love.

Foolish bottom line
Focusing on dividends is one of the best ways to build long-term wealth. These five stocks have dividends that should be safe for years, if not decades to come. 

Fool contributor Travis Hoium manages an account that owns shares of Intel. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw

The Motley Fool recommends 3M, Intel, and McDonald's. The Motley Fool owns shares of Intel and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$261.36 (0.50%) $1.30
Intel Corporation Stock Quote
Intel Corporation
INTC
$35.37 (2.46%) $0.85
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$91.45 (0.95%) $0.86
3M Company Stock Quote
3M Company
MMM
$149.38 (1.04%) $1.54
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$44.84 (0.36%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.