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3 Dividend Stocks to Start Your Portfolio

By Travis Hoium - Sep 10, 2013 at 6:58PM

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You may not know it but you probably see these three companies everyday and if you own them their stocks will pay you back for years to come.

So, you want to invest money but don't have hours on end to research stocks? Consider combining two investing strategies that have long created value for investors: buying what you know and buying high-quality dividend stocks.

Here are three ideas that will get any portfolio started off on the right foot.

Whether you love McDonald's (MCD 1.12%) or hate it, you can't deny that the company has found a way to grow even as it's reached new international markets and faced changing tastes domestically. The Big Mac is a foundation of its menu, but branching out into salads, chicken, fruits, and even more exotic options internationally shows a willingness to adapt to customer desires.

Add to that the massive distribution reach and the fact that its franchisees are a cash cow, and you have a company that will be relevant and profitable for decades to come. When it comes to its dividend, McDonald's has paid investors back with cash since 1976 and currently yields 3.2% annually. Even with a small investment, that's enough for a few Big Macs every year. 

3M (MMM 1.72%) may not have the same brand recognition as as McDonald's, but you probably use its products even more often. The screen you're reading this article on probably has a 3M film in it, there may be Post-it Notes on your desk, and there are 3M products in your car and on the roads you drive on. 3M is simply everywhere.

For investors, that creates an investment that's very well diversified and can weather any economic storm and keep ticking. 3M's days of high growth are in its past, but a 2.2% dividend yield isn't bad, and considering that the payout has grown for 55 straight years, the dividend alone is enough reason to own the stock.

Waste Management
What's more necessary for every person in the U.S. than waste disposal? Whether you're an individual or a business getting rid of garbage or recycling, Waste Management (WM 1.18%) has services for you. Waste Management has more than 21 million customers, and 80% of its current commercial and industrial customers are on at least three-year contracts. That keeps a solid revenue base from which to draw from.  

Like 3M, this isn't really a growth company anymore, growing just 1.9% in the first quarter, but it provides services that consumers and municipalities will need for the foreseeable future. I think the 3.7% dividend yield will continue to grow in years to come, and this is a stock you can buy today and not worry about leaving in your portfolio for a decade.

Dividends from companies you use every day
McDonald's, 3M, and Waste Management are three companies that provide vital goods and services, make products that are easy to evaluate and understand, and pay solid dividends that should grow for years to come. That's a great formula for starting a portfolio, and you should keep these stocks at the top of your list.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends 3M, McDonald's, and Waste Management and owns shares of McDonald's and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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Stocks Mentioned

McDonald's Corporation Stock Quote
McDonald's Corporation
$262.18 (1.12%) $2.90
Waste Management, Inc. Stock Quote
Waste Management, Inc.
$171.74 (1.18%) $2.00
3M Company Stock Quote
3M Company
$152.24 (1.72%) $2.58

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

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