Procter & Gamble (PG) is one of the best Dow Jones stocks Wednesday after the consumer products giant beat top- and bottom-line expectations for its fiscal 2025 second quarter and reaffirmed its outlook for 2025.

In the three months ending December 31, Procter & Gamble's revenue increased 2.1% year over year to $21.9 billion. Its earnings per share (EPS) rose 2.2% from the year-ago period to $1.88.

"The P&G team delivered an acceleration in organic sales growth, core EPS growth and strong cash return to shareowners in the second quarter," said CEO Jon Moeller in a statement. "Our first-half results keep us on track to deliver within our guidance ranges on all key financial metrics for the fiscal year."

The company's results topped analysts' expectations. Wall Street was anticipating revenue of $21.5 billion and earnings of $1.86 per share, according to CNBC.

As its CEO stated, P&G reaffirmed its outlook for fiscal 2025. The company expects to achieve revenue growth in the range of 2% to 4% and earnings of $6.91 to $7.05 per share.

Is Procter & Gamble stock a buy, sell or hold?

Procter & Gamble has lagged the broader market over the past 12 months, up 12% on a total return basis (price change plus dividends) vs the S&P 500's nearly 27% gain. But Wall Street remains mostly bullish on one of the best dividend stocks for dependable dividend growth.

According to S&P Global Market Intelligence, the average analyst target price for PG stock is $179.27, representing implied upside of nearly 8% to current levels. Additionally, the consensus recommendation is Buy.

However, not all analysts are upbeat. Financial services firm Stifel, for one, has a Hold rating on the blue chip stock, along with a $161 price target, which sits below where PG is currently trading.

In a January 16 note, Stifel analyst Mark S. Astrachan said he believes PG shares are trading near fair value. "Our Hold rating reflects less expected relative outperformance as comparisons become increasingly difficult, including downside risk from slower sales growth and higher input costs," he added.

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Procter & Gamble (PG) stock is trading notably lower Tuesday after the consumer products giant reported fiscal fourth-quarter earnings results that were mixed compared with analysts' expectations.

In the three months ended June 30, P&G's revenue declined 0.1% year-over-year to $20.5 billion due to a 2% unfavorable foreign exchange impact. This offset a 1% rise in volume and a 1% increase in prices. The company said its earnings per share (EPS) improved 2.2% from the year-ago period to $1.40.

"Fiscal year 2024 was another year of strong results for P&G," said Procter & Gamble CEO Jon Moeller in a statement. "The team met or exceeded our going-in plans for organic sales growth, core EPS growth, cash generation and cash returned to shareowners in a challenging economic and geopolitical environment."

Wall Street, meanwhile, was anticipating revenue of $20.7 billion and earnings of $1.37 per share, according to Yahoo Finance.

"As we look forward to fiscal 2025, we expect to deliver strong organic sales growth, EPS growth and free cash flow productivity – each in-line with our long-term growth algorithm," Moeller said.

For fiscal 2025, Procter & Gamble is targeting revenue growth in the range of 2% to 4%. It expects earnings per share to arrive between $6.91 to $7.05, which is in-line with analysts' forecasts for 3% revenue growth and earnings of $6.97 per share.

Is Procter & Gamble stock a buy, sell or hold?

Heading into Tuesday's session, Procter & Gamble was one of the better-performing Dow Jones stocks this year, up 18.2% on a total return basis (price change plus dividends). 

As a result, Wall Street is bullish on the blue chip stock. According to S&P Global Market Intelligence, the average analyst target price for PG is $174.68, representing an upside of more than 9% from current levels. Additionally, the consensus recommendation is Buy. 

Speaking for the bulls is UBS Global Research analyst Peter Grom, who has a Buy rating on PG. While Grom did not expect the company's fiscal Q4 results to be a positive catalyst for the shares amid lagging top-line growth, he has "high conviction in P&G being able to deliver on-algorithm growth in fiscal 2025, which should drive continued outperformance in our view."

Grom has an above-average price target of $191 on Procter & Gamble.

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One of the primary reasons companies undergo stock buybacks is because it can have a salubrious effect on the shares that remain outstanding. Mathematically, this is true. 

A simple example will illustrate the point. If a company has 1 million shares outstanding, earns $2 per share and trades at $30 per share, it has a price-to-earnings (P/E) ratio of 15, i.e., $2 per share times 15 equals $30. But what happens if this company buys half of its shares back? Its earnings per share will become $4. If the market continues to value the company at 15 times earnings, the stock price should trade up to about $60, a big jump. 

Here, we look at some of the most aggressive buyers of their own shares. For instance, Marathon Petroleum (MPC) has bought back about 29% of its shares over the last four quarters according to FactSet. Steel Dynamics (STLD) has bought back about 11%, small by comparison, but still a big number. 

If you remain in a stock where buybacks are high, it's important to assess the overall health of the company, since a decline in earnings will ultimately take the shares down. Also important is to look at the stock buybacks relative to the cash the company is generating from operations.  

Large buybacks relative to cash flow can spell trouble if a company's fortunes change, but even absent trouble, it can also bring the buyback program to a halt. In that case, an investor is simply left with a company that must succeed on its merits and not its metrics. As a result, investors should not buy a stock because of buybacks, but fundamentally superior stocks that buy their own shares aggressively have the wind at their backs. 

Below, we take a closer look at six companies actively involved in stock buybacks.

Data is as of March 29. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. 

• Market value: $53.4 billion
• Dividend yield: N/A

Internet and cable provider Charter Communications (CHTR, $349.71) has been reducing its share count since 2016, when it reached a high of 270 million shares. This was also the year Charter purchased Time Warner Cable and Bright House Networks for $67 billion.  

Since then, Charter has whittled its share count which now sits at about 153 million shares.  According to the latest 10K filing, the company can purchase about $400 million under its  current authorization, which, at today's prices, could be another 1.2 million shares. 

Merger-related costs took the punch out of 2017 earnings, but since 2016, Charter has grown total earnings at 6.2% annually. Owing to the reduction in share count over the past six years, earnings per share have increased almost twice as quickly, at 12% average annually. 

The communication services stock has responded in kind, rising from about $175 to today's $350, a neat double. All of this was a bit more compelling in the summer of 2021, however, when CHTR shares reached a peak of more than $800. Still, a double is a double. 

Buying the buybacks is a strategy that works when you are in the stock for a long time, which begs the question of whether or not Charter is a good long-term hold. This may be more questionable. First, the cable and internet businesses are wracked by fierce competition and rapid technological change. Who knows what's next? Second, sales, earnings and margin growth, while positive, have been tepid at Charter.

The last item that merits a close eye at Charter is the amount of shares bought back in 2022 as a percentage of cash from operations. CHTR operations generated about $15 billion in cash last year, and the company bought back $10.2 billion in stock, a high ratio by some yardsticks.  

With capital expenditures at $9 billion, that means Charter is funding stock buybacks with debt. The company already has more than $97 billion in debt. With interest rates rising across the board, refinancing debt, if not less likely, is definitely more expensive and this could bring the buyback game to an end at CHTR.  

• Market value: $19.0 billion
• Dividend yield: 1.5%

The share count at Steel Dynamics (STLD, $110.04), which makes a variety of steel products, reached a high in 2016 at around 244 million shares. At the end of last year, the figure was approximately 175 million, a reduction of 28%.  

Since that time, earnings per share have grown at about 56% per year on average. Total earnings, i.e., profits before dividing by the number of shares outstanding, grew 47%, indicating that share repurchases drove earnings per share by about nine percentage points each year. 

If you have held onto STLD during this time, you have been richly rewarded, with shares rising from about $18 to the current $113. Shorter term, shares might be choppier. Spending that accompanied the recovery from COVID is abating. Further, 50% of revenues are construction-related, which is interest-rate sensitive, and would be susceptible to a recession, should one occur. And finally, the fortunes of STLD are tied to steel prices which it cannot control.

For now, however, steel prices are a benefit. Using rebar as a proxy for the market at large, prices bottomed out in November of last year at about $3,500 a ton, but have since risen 20% to the current price of roughly $4,200.  

A recession is in the offing, but against this possibility are a construction boom as China reopens and a generation shift in energy infrastructure for green, as well as traditional, power sources. When you look at a wind farm stretching off to the horizon, think steel.

Steel Dynamics is a well-managed company. Since 2016, It has acquired mills, built others and added additional capacity. While earnings and the return on equity have been lumpy during this period, overall, the trajectory is upward, and at intervals spectacularly so. 

Slated for 2024 is a biocarbon facility that will provide some of its mills with a renewable alternative to fossil fuel carbon. In 2025, a $2.5 billion aluminum mill is slated to come on line.

Finally, STLD offers a modest dividend, around 1.5% but has grown it on average about 17% annually since 2016.  

• Market value: $12.9 billion
• Dividend yield: 1.1%

Homebuilding is the kind of business that could easily, and perhaps justifiably give an investor the willies these days. Inflation is driving up the cost of materials, mortgage rates have been on the rise and there's the threat of a looming recession. And though this is the recession that never arrives, its looming prospect is making homebuyers twitchy. 

However, if investors only bought stocks under ideal conditions, they might never buy anything. 

The case for PulteGroup (PHM, $57.15) is the inexorable demand for new homes, a strong balance sheet, a strong market position backed with skilled management and a commitment to buying its shares back that has sent earnings per share soaring.

Pulte has been reducing its share count since 2012. Over the last five years starting in 2017, shares have shrunk from 287 million to about 226 million, a reduction of 21%. During this time, earnings per share have soared, growing from $2.24 in 2017 to last year's $11.01, or 37.5% average annually. Total earnings, i.e., not earnings per share, have grown at about 30% average annually, indicating that stock buybacks have seven and a half percentage points to earnings per share each year.

With such a stellar contribution to earnings per share, the wise investor might ask if PHM's financial performance can support continued buybacks. Maybe.

Pulte bought $1.1 billion of its own shares in 2022, but cash flow from operations was just $668 million. It didn't take out debt to fund these purchases, but largely drew down its cash on hand. In 2021, cash from operations was greater than share repurchases. The change was driven by a big spike in homes in inventory, almost doubling in 2022 to $2.3 billion and hoovering up a lot of PHM's cash in the process.  

The company authorized a fresh $1 billion for share repurchases about a year ago, and has about $383 million in dry powder. Earnings are expected to dip in 2023, so there may be a pause, but since Pulte has been reducing its share count every year for more than a decade, it may be the pause that refreshes.  

• Market value: $114.5 billion
• Dividend yield: 2.2%

In an inflationary environment, consumer spending typically takes a hit and Lowe's (LOW, $191.94), a home improvement retailer, has been hurt by this trend. Unsurprisingly, in its fourth-quarter results, the company reported a drop of 1.5% in its comparable sales versus year-ago figures. Earnings per share also fell to $1.58 for the quarter from $1.78 of the previous year. 

But while the short term looks uncertain for LOW, the stock merits long-term consideration due to its strong commitment to return excess capital to its shareholders. The company has been consistently reducing its share count every year, managing to decrease the number of shares by almost half, from 1.24 billion in 2011 to 670 million in 2021. In 2022, the company bought back 71 million more shares for a total of $14.1 billion. The Dividend Aristocrat also paid its shareholders $2.4 billion in dividends for the year.

Lowe's impressive cash flow generation, thanks to a strong gross margin of 33.2% and an admirable operating margin of 10.5% in 2022, sets the stage for continued stock buybacks. 

That said, the company's buyback activity has been aggressive relative to cash. For the nine months ended Oct. 28, year-to-date stock repurchases were $12.1 billion, while cash flow from operations was $8.1 billion. Lowe's investment-grade rating enables it to raise debt capital relatively easily, and it did during the first nine months of the year to the tune of $9.7 billion, which, de facto, financed some of the repurchases. This can continue, but cannot go on forever. 

While the company's 2023 outlook is muted, LOW remains confident in the medium- and long-term outlook for the discretionary sector, with plans of strengthening its Total Home strategy to establish itself as a one-stop shop for both DIY and Pro customers in the U.S.

The company's decision to divest out of its Canadian retail business, which was finalized last quarter, also indicates that Lowe's is ready to cut underperforming areas and focus on segments of its business with more growth potential.

LOW is now trading about 10% below its value a year ago. For investors who are looking for a stable company that provides a steady stream of passive income, the stock is worth considering.

• Market value: $44.1 billion
• Dividend yield: N/A

AutoZone (AZO, $2,395.37) has been aggressive with its stock buybacks for decades now, making shares very attractive, especially for long-term investors. In fact, the company's share count has gone down to less than a third of what it was 15 years ago – from 66 million shares in 2007 to just 19 million in 2022. It seems as if AZO management is taking the company private drip by drip. 

Fueling its share buyback program is AutoZone's healthy cash flow, maintaining its operating margin above 20% in the past decade, and growing its profit consistently over the same period.

Further, in the current environment where prices of new cars in the U.S. are going through the roof, and with higher interest rates, more consumers are deciding to hang onto their current wheels, even if it's a clunker. 

This is good news for automotive parts and accessories retailers like AutoZone, which saw 5.3% growth in same-store sales last quarter, and an increase of 6.9% in operating profit. In fact, AutoZone's same-store sales growth consistently beats growth in total auto parts sold at retail. 

Nevertheless, the same forces that help buoy AZO's profits could be a double-edged sword. That is, higher fuel costs and smaller wallets may tamp down driving altogether or cause consumers to seek other transportation alternatives altogether. Electric vehicles (EVs), while not immune to the auto parts business, require less maintenance, and for now, are too intimidating for most do-it-yourselfers.

AZO has been a consistent long-term buyer of its stock, but recently, it has been an aggressive buyer too. For instance, in 2020, share repurchases of about $930 million were about a third of cash flow from operations. In 2021, share repurchases were almost equal to cash flow from operations, and in 2022, the $4.44 billion in stock buybacks were $1.2 billion more than cash from operations. This is good for earnings per share, but levers up the company through the issuance of more debt. 

Mixing and stirring, this could mean that AZO eases back on share repurchases. After all, the debt needed to finance share repurchases in excess of cash from operations is going to be more expensive due to interest rate increases and may stay that way due to generally hawkish Fed policies. 

• Market value: $60.3 billion
• Dividend yield: 2.2%

Marathon Petroleum (MPC, $133.94), a crude oil refiner based in Ohio, has slowly but surely been repurchasing its own stock – from a high of 680 million shares in 2018, the company's share count now stands at 442 million. The share count reduction has driven an increase in earnings per share, albeit a lumpy one, but what's really driving MPC earnings are energy prices – making the stock worthy of consideration for investors to buy.

Longer term, stock buybacks will exert their influence, and Marathon is an enthusiastic buyer of its own shares, making nearly $12 billion of purchases during 2022. This was below cash provided from operations, which was $16.3 billion. In 2020, Marathon didn't purchase any stock, and in 2021 it bought nearly $5 billion, suggesting that its appetite may be tied to energy prices. 

Looking at short-term trends, the energy stock has benefited from the geopolitical uncertainties and sanctions imposed against Russia, one of the biggest oil and gas producers in the world. In fact, MPC almost doubled its net income in the most recent fiscal year, from $9.7 billion in 2021 to $14.5 billion in 2022.

With the reopening of China and easing travel restrictions due to COVID, as well as the continued unpredictability of the Russia-Ukraine war, things are looking good for MPC in the medium term. 

Additionally, crude oil prices are expected to firm up soon due to rising demand in spring as the weather improves. Gasoline inventories in the U.S. are currently at the lowest level in 10 years, so refiner stocks like MPC remain very attractive. Marathon is currently trading about 58% higher than its value a year ago.

Still, with the Fed still hiking interest rates, the looming threat of a recession could dampen demand. Regardless, the energy patch remains the oasis for the foreseeable future, and with MPC's strong fundamentals and prospects for the future, the stock is worth considering now. As they say, strike while the iron is hot.  

Goldman Sachs’ analysts last month homed in on an investing strategy designed to generate outsize returns for investors. The strategy focuses on stocks that are dominating their respective industries – aka, “superstar stocks.” Interestingly, the number of these giant, dominant companies are on the rise due to a wave of consolidation across multiple industries.

“The market positioning of superstar firms often allows for greater bargaining power over consumers and workers and higher profitability,” the firm’s chief U.S. equity strategist, David Kostin, explained to clients. “Superstar firms have been one driver of the explosion in US corporate margins post-crisis.”

And the numbers speak for themselves. Kostin writes that companies with the highest share of industry sales have returned 49% since 2015. In contrast, companies with the lowest share of industry sales have delivered returns of just 16% during the same period.

Here are five “superstar” stocks to buy, according to Goldman Sachs. We’ll look at the bull theses behind each one, and see what the rest of Wall Street thinks about these stock picks.

Data is as of July 2.

• Market value: $40.4 billion
• TipRanks consensus price target: $11.68 (15% upside potential)
• TipRanks consensus rating: Moderate Buy

Goldman Sachs points out that auto giant Ford (F, $10.12) holds an impressive 40% of the American auto market. Goldman analyst David Tamberrino is excited about the future growth potential for F shares, which already have climbed 32% year-to-date. He has reiterated a “Buy” rating on Ford with a price target of $13, implying that shares could soar another 28%.

The analyst cited the company’s aggressive restructuring as behind his bullish outlook on the stock, writing, “We believe investors will begin to start underwriting improvement in the company’s European region as restructuring actions come to fruition.” Ford is cutting back heavily in Europe, with plans to pare 20% of its workforce there by the end of 2020, as well as shut six of its 24 manufacturing plants. This will allow the company to focus on more lucrative opportunities, including electric vehicles and autonomous driving.

Tamberrino thinks the company can generate a level of European earnings “well above Street expectations for the region over the long-term.”

Bank of America’s John Murphy is also bullish on Ford, upgrading the stock from “Neutral” to “Buy” in May, writing, “Our annual Car Wars analysis indicates that Ford will have one of the freshest line-ups in the US market over the next four years.” He sees the stock hitting $14 within the next 12 months.

See what other top analysts have to say about F on TipRanks.

• Market value: $276.6 billion
• TipRanks consensus price target: $109.36 (2% downside potential)
• TipRanks consensus rating: Moderate Buy

With 41% of U.S. industry sales, Procter & Gamble (PG, $111.48) holds the highest share of the household products market, Goldman Sachs says. Indeed, PG is the name behind scores of popular brands that crop up in our daily lives: Bounty paper towels, Charmin bathroom tissue, Crest toothpaste, Gain laundry detergent, Gillette razors, Pampers diapers and Vicks cough and cold products are just a few of the company’s billion-dollar brands.

Goldman Sachs analyst Jason English has upgraded the stock from “Hold” to “Buy” and hiked his price target from $114 to $125 (12% upside potential). And this comes despite a roaring 43% advance in PG shares over the past 52 weeks.

“(Procter & Gamble) has been a clear benefactor of the recent acceleration in end-market growth, and we expect the market to continue to grow in the 3%-plus range in the future,” English writes.

Investors have been deterred in recent years by concerns that PG wasn’t able to “grow volume profitably,” he continues. But the tide is finally changing: “We forecast organic volume and profit dollar growth in 12 of the next 13 quarters.” English sees the potential for double-digit total returns annually, coming from stock appreciation amid high-single-digit earnings growth, as well as the company’s low-single-digit dividend yield. And a reminder: PG is a Dividend Aristocrat that has been growing its payout for 63 consecutive years without interruption.

With this upbeat outlook in mind, the analyst writes: “We believe there is a role in investors’ portfolios for a large liquid global staples company such as this and note that PG remains the most underweight US listed mega-cap global consumer packaged goods company among mutual funds.” Find out how the Street’s average price target for PG breaks down.

• Market value: $256.5 billion
• TipRanks consensus price target: $154.25 (8% upside potential)
• TipRanks consensus rating: Strong Buy

Mickey Mouse creator Walt Disney (DIS, $142.53) remains one of the world’s leading entertainment companies. Disney accounts for 49% of American entertainment sales, according to Goldman’s research.

DIS already is buzzing in 2019, logging a 36% gain on numerous successes (and anticipated successes), including Avengers: Endgame – the second-highest-grossing movie of all time with $2.74 billion in global ticket sales – new Star Wars park attractions and the upcoming launch of its direct-to-consumer streaming service, Disney+, later this year.

“It is the dawn of a new era at Disney,” Goldman analyst Drew Borst told investors recently as he reinstated coverage of the company with a bullish “Buy” rating. “The $70 bn acquisition of Fox is now closed and the approaching debut of Disney+ streaming service in late CY19 marks a momentous shift in the company’s content monetization model from third-party licensing to direct-to-consumer streaming.”

Borst expects near-term headwinds for Disney+ but views it as a “positive long-term strategy. He expects the service will reach 7.5 million global subscribers by 2020 and 73 million by 2025. What are other financial experts saying about Disney’s outlook? Find out on TipRanks.

• Market value: $772.4 billion
• TipRanks consensus price target: $1,333.89 (21% upside potential)
• TipRanks consensus rating: Strong Buy
• Alphabet (GOOGL, $1,112.60) is the only FAANG stock to make it onto Goldman’s list of “superstar” stocks to buy. The parent of Google captures 63% of the media & services sales in the U.S., Goldman says. For perspective, Facebook (FB) only laid claim to 24%.

But is this dominance set to last? According to media reports, the Department of Justice is preparing to investigate Google for potentially anti-competitive conduct. The news has clipped the wind from underneath Alphabet’s sales. “Potential implications for Google could include new regulations on business practices, or an antitrust probe leading to a breakup,” Bank of America’s Justin Post says. “It is very rare to break up a company but not unheard of.”

Nonetheless, analysts (including Post) are sure that GOOGL remains a stock worth buying into. Needham’s Laura Martin argues that Alphabet looks “too cheap” right now and reminds investors that the DoJ “only has an antitrust agenda, not privacy goals.” This five-star analyst has a “Buy” rating on the stock and a $1,350 price target (21% upside potential).

What’s more, she calculates that Alphabet shareholders could even see 50% upside in a worst-case breakup scenario. “Investors generally pay more (in aggregate) for pure plays because each investor can decide how much cloud risk vs video risk vs. search engine risk vs Waymo risk, etc. they want, rather than owning all of them,” Martin explained.

Likewise, Jefferies’ Brent Thill believes a breakup is unlikely, but that in any case Alphabet’s “sum-of-the-parts may be worth more than the whole.” He reiterated his GOOGL “Buy” rating on June 13 with a $1,450 price target (34% upside potential). See why other top analysts are also bullish on Alphabet.

• Market value: $90.9 billion
• TipRanks consensus price target: $55.33 (14% upside potential)
• TipRanks consensus rating: Moderate Buy

By far the most prominent tobacco company in the U.S. is Marlboro maker Altria Group (MO, $48.60). The company, which owns Philip Morris USA, earns a whopping 88% of American tobacco sales. That makes it Goldman Sachs’ No. 1 “superstar stock.”

However, as most investors appreciate, this is a tough time for the tobacco industry. Regulatory pressures continue to mount, and that has constrained share price growth. Most notably, the FDA is likely to publish a proposed rule on maximum nicotine levels this October.

“Reducing nicotine in cigarettes to non-addictive or minimally addictive levels would be a potential gamechanger for the US industry,” writes Morgan Stanley’s tobacco research team. But even though this would be a negative catalyst, implementation would take years. “The consensus view is that maximum nicotine regulation is unlikely to come into force within the next 10+ years, and that this is far enough away to allow the tobacco manufacturers to delever their balance sheets, protect their dividends and pivot their businesses away from traditional cigarettes.”

Indeed, Altria has already made a strategic investment by snapping up 35% of popular e-cigarette manufacturer Juul. “We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in Juul, a world leader in switching adult smokers,” Altria CEO Howard Willard said back in late 2018.

More recently, Altria surprised investors by raising cigarette prices 6 cents per pack, including for signature brand Marlboro. Wells Fargo’s Bonnie Lee Herzog sees this as a sign of the company’s significant pricing power, and reiterated her “Outperform” rating (equivalent of “Buy”) on MO with a $65 price target, implying 34% upside potential.

“We increasingly believe MO has multiple levers to pull to offset decelerating cigarette volumes and drive increased profitability including; strong pricing power, cost savings and JUUL service agreement payments,” Herzog writes. Discover how the overall analyst consensus breaks down on TipRanks here.

Harriet Lefton is head of content at TipRanks, a comprehensive investing tool that tracks more than 5,000 Wall Street analysts as well as hedge funds and insiders. You can find more of their stock insights here.

Dividends play an unsurprisingly prominent role when it comes to long-term wealth creation. Indeed, take a look at the best stocks of all time, and you'll see that most of them have long histories of returning cash to shareholders through regular dividend payments.

We know this thanks to research by a finance professor who made a startling discovery about the stock market: Over a 90-year span, 96% of all stocks collectively performed no better than risk-free one-month Treasury bills. After analyzing the lifetime returns of 25,967 common stocks, Hendrik Bessembinder, of Arizona State University's W. P. Carey School of Business, determined that just 1,092 of those stocks -- or about 4% of the total -- generated all of the $34.8 trillion in wealth created for shareholders by the stock market between July 1926 and December 2016. Even more striking, a mere 50 stocks accounted for well over one-third (39.3%) of that amount.

Although price appreciation did much of the heavy lifting, dividends played a key role in wealth creation, as well.

Now, here's a look at the 10 best-performing dividend payers since 1926, culled from these top-50 stocks.

Stocks are listed in reverse order of the dollar amount of lifetime wealth creation, which includes reinvested dividends. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. Current stock data as of April 16. Analysts' ratings provided by Zacks. For more details on Bessembinder's study methodology and findings, download a copy of his paper, "Do Stocks Outperform Treasury Bills?"

• Lifetime wealth creation: $355.0 billion
• Annualized return (September 1929-December 2016): 10.5%
• Current dividend yield: 3.5%
• Current analyst ratings: 6 strong buy, 1 buy, 6 hold, 0 sell, 1 strong sell

When it comes to income investing, Procter & Gamble (PG, $78.61) is synonymous with reliability. P&G, which has been in the Dow Jones Industrial Average since 1932, has paid shareholders a dividend since 1891 and has raised its dividend annually for 61 years in a row. Few stocks are as venerable and dependable. P&G's products are also known for reliability. The company owns some of the best-known brands in the business including Charmin toilet paper, Crest toothpaste, Tide laundry detergent, Pampers diapers and Gillette razors.

Despite selling consumer staples that are supposed to be less sensitive to the ups and downs of the economy, Procter & Gamble is sensitive to competition. The growing popularity of discount retailers stocking cheaper store brands has been particularly challenging. Look to the stock price for proof: Shares in P&G have lost 2% in the last five years versus a 65% gain for the Dow.

• Lifetime wealth creation: $368.2 billion
• Annualized return (December 1972-December 2016): 18.4%
• Current dividend yield: 2.4%
• Current analyst ratings: 10 strong buy, 0 buy, 14 hold, 0 sell, 0 strong sell

It stands to reason that the world's largest retailer happens to have one of the best-performing stocks over the long haul. But it's been a long road to greatness. At the close of its first day of trading on the New York Stock Exchange in 1972, Walmart (WMT, $86.84) was worth 4 cents a share, adjusted for splits and dividends. From humble beginnings as a single discount store, Walmart now operates more than 11,600 retail locations around the globe and employs 2.3 million workers.

The emergence of Amazon (AMZN), in particular, as a competitor has prompted Walmart to invest heavily in its e-commerce business, and the early returns from these efforts look promising. In February, the company dropped "Stores" from its corporate name in a bid to move its image beyond its brick-and-mortar origins. A component of the Dow since 1997, Walmart has increased its dividend every year since 1974.

• Lifetime wealth creation: $390.4 billion
• Annualized return (July 1926-December 2016): 11.0%
• Current dividend yield: 3.7%
• Current analyst ratings: 13 strong buy, 0 buy, 4 hold, 0 sell, 0 strong sell
• Chevron (CVX, $120.70) is yet another member of the Dow delivering a disproportionate share of the stock market's wealth creation since 1926. It's also been a reliable deliverer of dividend income. With 30 consecutive years of annual growth in its cash payouts to shareholders, Chevron's track record instills confidence that the dividend will continue to rise well into the future.

Chevron's origins as a company date back to the 19th century and run through John D. Rockefeller's legendary oil empire. Chevron operated for decades as Standard Oil of California, though the Chevron brand was used on products as far back as the 1930s. The corporate name didn't officially change to Chevron Corp. until 2005. (Immediately prior to that, the company was known as ChevronTexaco in recognition of its 2001 merger with Texaco.) Chevron, under its various names, was a component of the Dow from 1930 to 1999, and then again from 2008 to the present.

• Lifetime wealth creation: $426.2 billion
• Annualized return (October 1944-December 2016): 15.5%
• Current dividend yield: 2.6%
• Current analyst ratings: 8 strong buy, 2 buy, 6 hold, 0 sell, 2 strong sell
• Johnson & Johnson (JNJ, $131.86) operates in several different areas of health care, including pharmaceutical products and medical devices. The company is best-known, however, for its over-the-counter consumer brands including Listerine mouthwash, Tylenol pain reliever and Johnson's Baby shampoo. J&J has been at the health-care game for a very long time. Founded in 1886 by three brothers, the company created the first commercial first aid kits and it was the first to mass-produce dental floss – all before 1900. Its iconic Band-Aid bandages hit the market in 1921.

Somewhat surprisingly, J&J wasn't added to the Dow until 1997, even though shares had been publicly traded since 1944. The ever-rising dividend, along with the popularity of its products, eventually made the stock too conspicuous to ignore. J&J has increased the amount of its annual cash payout to shareholders every year since 1963.

• Lifetime wealth creation: $470.2 billion
• Annualized return (July 1926-December 2016): 17.7%
• Current dividend yield: 4.1%
• Current analyst ratings: 10 strong buy, 0 buy, 3 hold, 0 sell, 0 strong sell
• Altria's (MO, $64.25) origins can be traced back to a 19th century tobacco shop in London. Today, the company's operating businesses continue to focus on tobacco including cigarettes (Philip Morris USA), smokeless tobacco (U.S. Smokeless Tobacco) and cigars (John Middleton). Altria also owns St. Michelle Wine Estates, a major wine producer. The company is best known for its iconic Marlboro brand of cigarettes, but at one time or another Altria and its predecessors had a hand in other famous names including Miller Brewing and Kraft Foods.

The stock originally joined the Dow in 1985, when the company was called Philip Morris Cos. The name changed to Altria in 2003, and the stock was replaced in the Dow in 2008. Philip Morris International (PM) is a separate publicly traded company that was spun off from Altria in 2008 to sell cigarettes outside the U.S.

• Lifetime wealth creation: $520.2 billion
• Annualized return (July 1926-December 2016): 13.8%
• Current dividend yield: 3.9%
• Current analyst ratings: 3 strong buy, 2 buy, 11 hold, 0 sell, 1 strong sell

Think of International Business Machines (IBM, $157.89) as the granddaddy of tech stocks. The company, which began operating under its current moniker in 1924, was originally included in the Dow from 1932 to 1939. It was added back to the industrial average in 1979 and remains a component to this day. In many ways, IBM's history is a history of 20th century technological progress.

As for the current century, it's a tougher call. IBM produces computer hardware and software for businesses. Consulting is another important area of operation. However, cloud-based services appear to be the future, and IBM has no shortage of competition. Amazon, Microsoft (MSFT) and Google (GOOGL) are just some of the well-known tech companies jostling for space.

• Lifetime wealth creation: $608.1 billion
• Annualized return (July 1926-December 2016): 10.7%
• Current dividend yield: 5.6%
• Current analyst ratings: 2 strong buy, 1 buy, 7 hold, 0 sell, 2 strong sell

As hard as it may be to believe these days, shares in General Electric (GE, $13.33) have been one of the best bets in history. That may not be the case going forward. Shares in the industrial conglomerate have lost more than half their value over the past 52 weeks. Heck, they're down almost 60% on a price basis over the past decade. The Dow, meanwhile, is up more than 90% over the last 10 years.

The company has undergone tremendous change over time. Its latest transformation was spawned during last decade's Great Recession. In response to tightening regulations, management was compelled to sell off the company's sprawling financial operations, a powerful source of profits. The GE of today is a sputtering industrial conglomerate, and investors aren't quite sure what to make of its prospects. Warren Buffett, renowned for his patience, finally threw in the towel and sold his remaining stake in GE in 2017.

General Electric, one of the original 12 Dow stocks, might not have a place in the blue-chip average for much longer.

• Lifetime wealth creation: $629.8 billion
• Annualized return (April 1986-December 2016): 25.0%
• Current dividend yield: 1.8%
• Current analyst ratings: 20 strong buy, 1 buy, 4 hold, 1 sell, 1 strong sell

In 1975, Bill Gates dropped out of Harvard to start a computer company with childhood friend Paul Allen. In 1985, the first Windows operating system went on sale. A year later, Microsoft (MSFT, $94.17) went public at $21 a share (or the equivalent of 6 cents a share once the price is adjusted for stock splits and dividends). The company quickly revolutionized personal computing and created a generation of so-called "Microsoft Millionaires."

Not long ago, Microsoft's glory days looked to be behind it as sales of desktop PCs slipped into a seemingly irreversible decline amid the consumer shift to mobile technology. However, the company is experiencing a renaissance thanks to the move away from licensed software to cloud-based subscription software. Today, Microsoft is a top player in cloud computing and its stock reflects this success. Microsoft joined the Dow in 1999 at the height of the dot-com boom.

But you know what often gets overlooked in this story? MSFT has been paying rising dividends since 2004.

• Lifetime wealth creation: $745.7 billion
• Annualized return (January 1981-December 2016): 16.3%
• Current dividend yield: 1.5%
• Current analyst ratings: 13 strong buy, 0 buy, 13 hold, 0 sell, 1 strong sell

True, the vast majority of Apple's (AAPL, $175.89) lifetime wealth creation comes from price appreciation. Investors can thank the iPhone for the eye-popping run-up in the value of the stock in recent years. Before founder Steve Jobs debuted the revolutionary smartphone in 2007, Apple was a well-regarded maker of pricey personal computers that catered to niche markets. In the 10-plus years since, more than a billion iPhones have been sold. Shares in Apple have gained more than 900% since the gadget's initial release and the company's cash hoard has grown to epic proportions.

Indeed, with a record $285 billion cash pile, it's safe to say that dividends are going to be a fixture of Apple's future. The company first started paying dividends in 1987, but was forced to scrap the payout in 1995 amid a cash crisis. Apple brought the dividend back in 2012 and has hiked it annually ever since. To get a sense of the dividend's importance to returns, note that AAPL stock is up 191% over the past five years by price alone. Add in the dividends, however, and the total return comes to 221%.

• Lifetime wealth creation: $1.0 trillion
• Annualized return (July 1926-December 2016): 11.9%
• Current dividend yield: 4%
• Current analyst ratings: 3 strong buy, 0 buy, 9 hold, 0 sell, 2 strong sell

Between 1926 and 2016, Exxon Mobil (XOM, $78.54) created a staggering $1 trillion in wealth, according to the "Do Stocks Outperform Treasury Bills?" research study authored by Bessembinder. No doubt the reliable dividend that Exxon has paid out to shareholders since 1882 has contributed mightily to the energy giant's remarkable performance. Over the last 35 years alone, amid cycles of oil booms and oil busts, the company has increased its dividend payment at an average annual rate of 6.3%.

Exxon has been part of the Dow ever since the industrial average expanded to 30 companies in 1928. Back then it was known as Standard Oil of New Jersey. The name officially changed to Exxon in 1972.

Like rival Chevron, Exxon has to contend with uncertainty regarding the future of fossil fuels, not to mention the wild swings in oil prices. The stock's performance reflects that uncertainty; Exxon's share price is lower today than it was a decade ago.

But hey, at least the dividend checks kept coming.

The winning formula for retirees who count on dividend stocks for income comes in two parts. A dividend-paying stock must be reliable in making regular payments, and it should increase its dividend annually. To find dependable dividend payers, look no further than the Dividend Aristocrats, a list of 50 companies in Standard & Poor's 500-stock index that have hiked their dividends every year for at least 25 consecutive years.

But as impressive as a quarter-century track record of annual dividend increases may be, there are some stocks that boast even longer streaks. After combing through the Dividend Aristocrats, we found eight stocks that have increased their dividends every year for at least 50 years. With more than a half-century of regular hikes, these dividend payers are as dependable as they come, and fit well in any retirement portfolio.

Data is as of February 24, 2017, unless otherwise indicated. Click on symbol links in each slide for current share prices and more.

SEE ALSO: 10 Stocks Every Retiree Should Own

(Companies are listed in order of market cap—share price times total shares outstanding—starting with the highest. Analysts’ ratings provided by Zacks Investment Research. The list of 50 Dividend Aristocrats is maintained by S&P Dow Jones Indices.)

• Symbol: JNJ
• Market cap: $334 billion
• Dividend yield: 2.6%
• Analysts’ opinions: 5 strong buy, 2 buy, 10 hold, 0 underperform, 1 sell

Johnson & Johnson, founded in 1886 and public since 1944, operates in several different segments of the health care industry. In addition to pharmaceuticals, it makes over-the-counter consumer products such as Band-Aids and Listerine. It also manufactures medical devices used in surgery. Like many health care companies, a radical change in Obamacare under the Trump administration could hurt business, so it's comforting that J&J has raised its dividend every year for 54 straight years.

• Symbol: PG
• Market cap: $233 billion
• Dividend yield: 2.9%
• Analysts’ opinions: 6 strong buy, 2 buy, 7 hold, 0 underperform, 1 sell

With major brands such as Tide detergent, Pampers diapers and Gillette razors, Procter & Gamble is among the world's largest consumer products companies. Although the economy ebbs and flows, demand for products such as toilet paper, toothpaste and soap tends to remain stable. That hardly makes the company recession-proof, but it has proven to be a reliable dividend payer for over a century. P&G has paid shareholders a dividend since 1891 and has raised its dividend annually for 60 years in a row.

• Symbol: KO
• Market cap: $180 billion
• Dividend yield: 3.4%
• Analysts’ opinions: 2 strong buy, 0 buy, 10 hold, 0 underperform, 1 sell

Coca-Cola has long been known for quenching consumers’ thirst, but it’s equally effective at quenching investors’ thirst for income. The company has paid a quarterly dividend since 1920, and that dividend has increased annually for the past 55 years. With the U.S. market for carbonated beverages on the decline for more than a decade, according to market research, Coca-Cola has responded by adding bottled water, fruit juices and teas to its product lineup to keep the cash flowing.

• Symbol: MMM
• Market cap: $112 billion
• Dividend yield: 2.4%
• Analysts’ opinions: 3 strong buy, 0 buy, 7 hold, 0 underperform, 2 sell

Industrial conglomerate 3M, which makes everything from adhesives to electric circuits, has been hurt by the renewed strength of the U.S. currency. Since the company sells its products worldwide, a strong dollar makes 3M’s goods more expensive to overseas buyers and reduces revenue when foreign sales made in local currencies are converted into greenbacks. Foreign-currency translation reduced sales by 1.2% in 2016. Still, the company has weathered tough times before without sacrificing a dividend that dates back a century and has increased annually for 59 consecutive years.

• Symbol: CL
• Market cap: $65 billion
• Dividend yield: 2.1%
• Analysts’ opinions: 2 strong buy, 1 buy, 12 hold, 0 underperform, 0 sell

Selling staples ranging from toothpaste to dish detergent, demand for Colgate-Palmolive’s products tends to remain stable in economies both good and bad. However, the company derives the vast majority of its sales from outside the U.S., making it vulnerable to a strong dollar like the one we have today. (The value of foreign sales gets diminished when local currencies are converted into dollars.) Over the long haul, however, you can count on Colgate’s dividend, which dates back more than a century to 1895 and has increased annually for 53 straight years.

• Symbol: EMR
• Market cap: $39 billion
• Dividend yield: 3.1%
• Analysts’ opinions: 3 strong buy, 0 buy, 11 hold, 0 underperform, 1 sell

Emerson Electric makes a wide variety of industrial products, ranging from control valves to electrical fittings. The prolonged downturn in oil prices weighed on Emerson last year, as energy companies continued to cut back on spending. However, the company reported some improvement in orders from North American energy customers toward the end of 2016. Emerson has boosted its dividend payout for 60 straight years.

• Symbol: GPC
• Market cap: $14 billion
• Dividend yield: 2.8%
• Analysts’ opinions: 1 strong buy, 0 buy, 5 hold, 1 underperform, 0 sell

The company is best known for its NAPA Auto Parts chain, which has 6,000 locations in the U.S., but Genuine Parts also makes industrial replacement parts, office products and electrical materials. Sales for 2016 came in at $15.34 billion, essentially flat with 2015, but the company is projecting a 3% to 4% increase in sales this year. Since its founding in 1928, Genuine Parts has pursued a strategy of acquisitions to fuel growth. In October, it bought Braas Company, a distributor of products and services for industrial automation and control. The deal is expected to generate an extra $90 million a year in sales. A long-time dividend machine, Genuine Parts has hiked its dividend annually for 60 years in a row.

• Symbol: DOV
• Market cap: $12 billion
• Dividend yield: 2.2%
• Analysts’ opinions: 5 strong buy, 0 buy, 9 hold, 0 underperform, 0 sell

The global manufacturer operates in four industries: energy, fluids, engineered systems and refrigeration equipment. You might have fueled up your car from one of its gas pumps or bought groceries from one of its refrigerated display cases. Since Dover sells to customers worldwide, unfavorable foreign exchange rates have hurt sales of late. A strong dollar means sales made overseas lose value when converted back into U.S. currency. Foreign exchange rates reduced 2016 sales by 1% and are projected to shave 2% off sales this year. But that hasn’t stopped the company from maintaining it focus on dividend growth. Dover has recorded 60 straight years of dividend increases.

The 30 companies that make up the Dow Jones Industrial Average are household names. Their sheer size and dominance of their respective fields make them not only well known but also good bets in bad markets. All 30 pay dividends, too, and that steady income can beef up total returns during markets both good and bad. Any stock carries risk, of course, but it's fair to say that as a group Dow stocks are among the more reliable names that investors can buy.

There are eight stocks in the Dow that have taken the concept of reliability to a whole new level when it comes to dividends. Known as Dividend Aristocrats, these stocks have seen their payouts to investors increase every year for at least 25 consecutive years. Some of these Dow component have hiked dividends for twice as long—50 years or more—and paid out dividends for over a century. Track records like these give investors an added layer of comfort no matter which direction the market turns.

Take a look at the eight Dow stocks that have raised dividends for 25 years in a row or more.

Data is as of February 16, 2017, unless otherwise indicated. Click on symbol links in each slide for current share prices and more.

(Companies are listed in order of market cap—share price times total shares outstanding—starting with the highest. Analysts’ ratings provided by Zacks Investment Research. The list of 50 Dividend Aristocrats is maintained by S&P Dow Jones Indices.)

• Symbol: XOM
• Market cap: $338 billion
• Dividend yield: 3.7% (S&P 500: 2.0%)
• Analysts’ opinions: 2 strong buy, 2 buy, 10 hold, 0 underperform, 3 sell

A descendant of John D. Rockefeller's Standard Oil, today’s Exxon Mobil remains one of the world's largest oil companies and the single largest company among the 50 Dividend Aristocrats. As a dividend stalwart—Exxon has paid a dividend since 1882—it continued to hike its payout even as oil prices declined in recent years. Over the last 34 years, Exxon’s dividend payment has increased at an average annual rate of 6.4%.

• Symbol: JNJ
• Market cap: $322 billion
• Dividend yield: 2.7%
• Analysts’ opinions: 5 strong buy, 2 buy, 10 hold, 0 underperform, 1 sellJohnson & Johnson, founded in 1886 and public since 1944, operates in several different segments of the health care industry. In addition to pharmaceuticals, it makes over-the-counter consumer products such as Band-Aids and Listerine. It also manufactures medical devices used in surgery. Like many health care companies, a radical change in Obamacare under the Trump administration could hurt business, so it's comforting that J&J has raised its dividend every year for 54 straight years.

• Symbol: PG
• Market cap: $233 billion
• Dividend yield: 2.9%
• Analysts’ opinions: 6 strong buy, 2 buy, 7 hold, 0 underperform, 1 sellWith major brands such as Tide detergent, Pampers diapers and Gillette razors, Procter & Gamble is among the world's largest consumer products companies. Although the economy ebbs and flows, demand for products such as toilet paper, toothpaste and soap tends to remain stable. That hardly makes the company recession-proof, but it has proven to be a reliable dividend payer for over a century. P&G has paid shareholders a dividend since 1891 and has raised its dividend annually for 60 years in a row.

• Symbol: CVX
• Market cap: $208 billion
• Dividend yield: 3.9%
• Analysts’ opinions: 10 strong buy, 2 buy, 4 hold, 0 underperform, 0 sellChevron, like its competitors, was hurt when oil prices started to tumble. The company has been forced to slash spending, but—reassuringly—it hasn’t slashed its dividend. The outlook for oil remains uncertain, with Kiplinger forecasting that prices will stay below $60 a barrel at least through the spring. But with 31 consecutive years of dividend growth under its belt, Chevron's track record instills confidence that the payouts will continue.

• Symbol: WMT
• Market cap: $212 billion
• Dividend yield: 2.9%
• Analysts’ opinions: 8 strong buy, 0 buy, 12 hold, 0 underperform, 3 sellThe world's largest retailer isn't conceding the race to Amazon.com, even as the online juggernaut claims an ever-larger piece of the retail pie. Walmart went on the offensive in 2016 by spending more than $3 billion to acquire Jet.com, an up-and-coming online retailer. More recently, Walmart took another jab at Amazon by unveiling free two-day shipping on more than 2 million items—no membership fee required. (Amazon charges $99 a year for a Prime membership, which includes free two-day shipping among other perks.) Walmart has increased its dividend every year since 1974.

• Symbol: KO
• Market cap: $178 billion
• Dividend yield: 3.4%
• Analysts’ opinions: 2 strong buy, 0 buy, 10 hold, 0 underperform, 1 sellCoca-Cola has long been known for quenching consumers’ thirst, but it’s equally effective at quenching investors’ thirst for income. The company has paid a quarterly dividend since 1920, and that dividend has increased annually for the past 54 years. With the U.S. market for carbonated beverages on the decline for more than a decade, according to market research, Coca-Cola has responded by adding bottled water, fruit juices and teas to its product lineup to keep the cash flowing.

• Symbol: MMM
• Market cap: $109 billion
• Dividend yield: 2.8%
• Analysts’ opinions: 3 strong buy, 0 buy, 7 hold, 0 underperform, 2 sellIndustrial conglomerate 3M, which makes everything from adhesives to electric circuits, has been hurt by the renewed strength of the U.S. currency. Since the company sells its products worldwide, a strong dollar makes 3M’s goods more expensive to overseas buyers and reduces revenue when foreign sales made in local currencies are converted into greenbacks. Foreign-currency translation reduced sales by 1.2% in 2016. Still, the company has weathered tough times before without sacrificing a dividend that dates back a century and has increased annually for 58 consecutive years.

• Symbol: MCD
• Market cap: $106 billion
• Dividend yield: 2.9%
• Analysts’ opinions: 8 strong buy, 0 buy, 14 hold, 0 underperform, 1 sellThe world's largest hamburger chain also happens to be a dividend stalwart. Changing consumer tastes will always be a risk, but McDonald's dividend dates back to 1976 and has gone up every year since. Fast-food competition remains intense, but in 2017 the company is looking to hold on to the momentum it gained from the introduction of all-day breakfast in the U.S.

Way back when, if you owned stock in a company, you’d often find a glossy annual report in your mailbox. Nowadays, all you may receive is a letter telling you where to download the report on the company’s Web site. And truth be told, annual reports are being supplanted by the Form 10-K, the annual filing required by the Securities and Exchange Commission. Don’t be put off by the form’s intimidating appearance. We’ve highlighted some key sections—and what to focus on in each.

1. Business. The first part of the 10-K provides a thorough look at what the firm does or makes, its divisions, and where in the world its products are made and sold. It also gives info on key customers and competitors, and where the company stands in its industry. You may even learn an interesting fact or two—for example, that there really were a Mr. Procter and a Mr. Gamble, and that they founded P&G in 1837.

2. Risk factors. Listed in order of importance, these are the factors that may adversely affect the company’s business. Much of this section, found just after the “Business” description, may elicit a big duh, such as P&G’s disclosure that “our businesses face cost fluctuations and pressures that could affect our business results.” But read carefully and you may ferret out less-obvious risks, such as a disproportionate share of sales coming from a single product or customer.

3. Management’s discussion and analysis. In Part II of the 10-K, the company reports and analyzes its performance over the past year compared with the previous year’s results.

4. Income statement. This is a basic report of sales, expenses and profits. Ideally, you want to see a trend of rising sales and earnings. A 10-K typically shows three years of results, as well as a five-year summary in the section called “Selected Financial Data.” Focus on the trend in net earnings rather than earnings per share, in part because share buybacks, which cut the number of outstanding shares, can skew earnings per share and thus camouflage a drop in overall profits.

5. Balance sheet. This is a snapshot of the company’s assets (such as cash and inventory) and its liabilities (such as outstanding debt). Zero in on how much long-term debt the firm carries and whether retained profits, the earnings a company reinvests in its business, have grown in each of the past three years. Great companies have little or no long-term debt on their balance sheets—or they generate enough profit annually to pay off that debt within three to five years.

6. Notes to financial statements. To some people, the 10-K notes matter as much as the statements. That’s because Note 1 describes the accounting methods used to prepare the financial statements. If a company has made a change to its methodology from the previous year, any results from prior years, as well as the current year, that are stated in the current 10-K will be adjusted to reflect that change.

7. Auditor’s report. Look for this key sentence: “In our opinion, the financial statements present fairly...the financial position of the company.” That means the company has honestly described its finances over the past year to the best knowledge of the accounting firm that is auditing the 10-K.

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This item was originally published in the September 2014 issue of Kiplinger's Personal Finance.