Stocks with a 100 Year History of Paying Dividends
For investors who like to keep things really simple, buying dividend stocks can be a simple matter of starting to buy shares in companies with a long-history of paying out dividends to shareholders.
Dividends are important, but there are a lot of corporations who pay dividends.
According to a study by Bloomberg, dividends have accounted for nearly half (46 percent) of total return for the S&P 500 index the during from 1989 to 2014, before taxes. If you had reinvested all dividends received since 1989 into buying additional shares of stock, your total return would be nearly double the return if you'd done nothing. Try figuring out your returns using the S&P 500 dividends reinvested calculator.
Only a select group of companies can claim a history of paying dividends consistently year after year for a hundred years or more. Ideally you want a company that increases its dividend payout every year as well. Companies that pay increasing dividends every year are consistently profitable in both up and down markets. They are likely to dominate sales in their business sector. The management team of these companies tends to be stable and maintain a long-term view focused on returning value to shareholders.
Not all of these stocks have paid out an increasing dividend every year, but all of them have paid at least a stable dividend for 100 years.
The really simple way of investing is create a “hold forever” portfolio that will grow in value over time and then be paid a consistent dividend in your retirement years. Just remember to buy companies that are fundamentally strong and hold them as long as they remain strong companies.
Stocks that pay out dividends outperform both non-dividend stocks and the broader stock market in aggregate. More importantly, companies with a long history of paying increasing dividends out perform other stocks.
In fact, over the last 20 years, each of these blue-chip dividend stocks has delivered a total return greater than 550% — easily outpacing the S&P 500 index’s total return of about 360%.
The Case for Dividend Growth Stocks
Given the choice between a portfolio of all dividend payers and the dividend growers, you should choose stocks from the dividend growth list.
Dividend growers — those that increase the per share payouts to shareholders — have historically delivered the best track records.
Companies that don’t pay dividends or that have cut their dividends are among the worst performers. If you are buying stocks as a part of long-term strategy to build retirement income, then buying companies with a strong history of dividend growth is a promising investment strategy.
Dividends and Interest Rate Hikes
There is also some evidence to suggest that dividend stocks (and dividend growers in particular) perform quite well after rate hikes. Dividend stocks like other stocks tend to perform poorly in the months following an interest rate hike. But as stocks recover, dividend growers return to a break-even point sooner and distance themselves from other groups in terms of performance.
Why Dividend Growers Outperform
Dividend growth stocks are companies with track records of consistent earnings and rising dividend payments. Rising dividends go hand-in-hand with strong companies that are likely to continue to deliver impressive returns. Just check this chart to see how dividend stocks outperform stocks that don't pay dividends.
Contrast that with non-dividend paying stocks, these companies often have lower or even negative earnings. When a company cuts or eliminates its dividends payments the stock market will often punish those companies with sell orders. These are frequently companies that end up failing.
A dividend growth strategy is likely to outperform both the broad market and non-growing dividend payers in the long run, across varying interest rate environments.
To help you narrow down the stocks you might want to hold for long-term investing needs, look at the few companies that have a long history of paying out increasing dividends every year. These are a select set of stocks known as dividend growth stocks.
Buying shares in these companies will help boost your returns over time. Companies that pay out increasing dividends can be found by tracking the list of Dividend Kings, Champions and Aristocrats. As an added plus all of these companies allow you to reinvest your dividends automatically or buy additional shares directly from the company using a dividend reinvestment plan. This allows you to buy additional fractional shares for typically $25 to $50 per month. In a few cases you can buy additional shares for as little as $10 each month (3M Company).
Dividend Kings are the highest tier of dividend longevity. Each Dividend King has paid rising dividends for 50 or more consecutive years. Currently there are only 17 stocks that meet this standard. The list of dividend kings is at the end of this article.
Dividend Aristocrats has a performance history of paying out rising dividends for at least the past 25 years. Dividend aristocrats have a market capitalization of at least three billion and an average trading volume of at least five million. This list includes over 50 stocks. The Dividend Aristocrats Index has outperformed the market by a wide margin over the last decade.
Dividend Champions are all the companies that have annually raised dividends for the last 25 consecutive years. The list currently includes over 100 different companies.
To learn more about these companies you can review David Fish's list of 790 stocks that increased dividends each year for a least the past five years. But if you want to narrow that list down to a few very select stocks, read on about companies that have paid a dividend for over 100 years.
The top 12 companies with a history of paying dividends for over 100 years include:
1. Consolidated Edison (ED) Yield: 3.55% Dividends Paid Since 1885
Con Edison is the utility providing power to New York City and a dividend Aristocrat, but with a payout ratio last year of almost 200%, it may struggle in the future to maintain that yield.
2. Exxon Mobil (XOM) Yield: 3.50%, Dividends Paid Since 1882
Exxon pays out an excessive amount of its cash flow to keep the dividend high. Not recommended.
3. Procter & Gamble (PG) Yield: 3.24%, Dividends Paid Since 1891
P&G is a Dividend King, Dividend Champion and Dividend Aristocrat. P&G manufactures everything your household could need, from soap to razors to paper towels.
4. UGI (UGI) Yield: 2.25% Dividends Paid Since 1885 UGI is a stable, conservative company and an international distributor of propane, gas and electricity.
5. Johnson Controls (JCI) Yield: 2.69% Dividends Paid Since 1887 Johnson Controls is a large producer of battery and HVAC systems. With payout ratios at a very conservative 40%, there’s room to raise the dividend.
6. Colgate-Palmolive (CL) Yield: 2.20%, Dividends Paid Since 1895
Colgate-Palmolive is a global consumer goods business. The company has grown to a market cap of $67 billion thanks to its portfolio of well-managed brands. Colgate-Palmolive is a Dividend King, Dividend Champion and Dividend Aristocrat.
7. Coca-Cola (KO) Yield: 3.05%, Dividends Paid Since 1893
Coca-Cola is a Dividend King, Dividend Champion, Dividend Aristocrat and the number one producer of sparkling and still beverages in the world.
8. Stanley Black & Decker (SWK) Yield: 2.07%, Dividends Paid Since 1877
Stanley Black & Decker is a world-leading provider of tools and storage, commercial electronic security and engineered fastening systems and a track record of sustained profitable growth. The company has increased it’s dividend every year for the pas 49 years, so it a dividend aristocrat and dividend champion.
9. PPG Industries (PPG) Yield: 1.29% Dividends Paid Since 1899
PPG is a global supplier of paints, coatings, optical products, specialty materials, glass and fiberglass. 44 years of increasing its dividend.
10. WGL Holdings (WGL) Yield: 3.17%
WGL Holdings, Inc. is a public utility holding company serving the Washington, D.C. metropolitan region. WGL has had dividend growth for 39 years.
11. General Mills, Inc. (GIS) -- Yield: 2.8%, Dividends Paid Since 1898
General Mills, Inc., is an American multinational manufacturer and marketer of branded consumer foods sold through retail stores. While it has a history of paying dividends, it does not always increase its dividend every year.
12. Eli Lilly and Co (LLY) -- Yield: 2.8% Dividends Paid Since 1885
Eli Lilly and Company is an American global pharmaceutical company. Eli Lilly does not have a strong history of increasing dividends. I would pick Johnson and Johnson over this company.
Fiscally conservative companies are the ticket to long-lasting dividend investing. Only companies, which conservatively manage their money, will continue paying a dividend for the next 100 years. An even more select list of stocks is the list of dividend kings, companies that have over the past fifty years paid out an increasing dividend every year.
Dividend Kings: Stocks with a 50 yr. history of increasing dividends
3 Parker-Hannifin (PH) Industrial Machinery
4 Procter & Gamble (PG) Consumer Goods
5 Northwest Natural Gas Company (NWN) Gas Distribution
6 Nordson (NDSN) Industrial Machinery
7 3M Company (MMM) Diversified Operations
8 Lowe’s (LOW) Building Products
9 Lancaster Colony (LANC) Miscellaneous Food
10 Coca-Cola (KO) Soft Drinks
11 Johnson & Johnson (JNJ) Pharma
12 Hormel Foods (HRL) Meat Products
13 Genuine Parts Company (GPC) Auto Parts
14 Emerson Electric (EMR) Electrical Machinery
15 Dover (DOV) Industrial Machinery
16 Colgate (CL) Consumer Goods
17 Cincinnati Financial (CINF) Insurance
18 American States Water Company (AWR) Water Supply
My Picks
I am an investor in several dividend growth stocks and plan to increase my stocks from this very select set of stocks. All of my picks are companies with a strong history of increasing dividend payouts and three of my picks are listed as a part of the Dow Jones Industrial Average. My picks include:
Procter & Gamble (Dow)
3M Company (Dow)
Johnson & Johnson (Dow)
Each of these companies have a dividend reinvestment plan that allows to start buying shares for a small monthly contribution deducted from your checking account. Automating your investing in this manner makes it really simple to build a portfolio of excellent stocks over time. Most of these companies use computershare for their dividend reinvestment plans.
