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All Contents © 2020The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
Lisa Springer, Contributing Writer
Will Ashworth, Contributing Writer
| October 29, 2018
Dependable dividend stocks that routinely grow their payouts are welcome in any environment. But they seem especially attractive nowadays.
Stock market volatility is back with a vengeance. The Dow Jones Industrial Average went from powering ahead to an all-time high of 26,828 on Oct. 3 to losing 8% in the span of about three weeks. These kinds of rocky markets tend to give investors motion sickness. But they can add a dose of Dramamine to their portfolios – in the form of reliable dividend-growth stocks.
“Dividend growers, which tend to be quality companies, have generally shown greater resilience in unsteady markets and could address concerns about dividend stocks in a rising-rate environment,” write Tianyin Cheng, director of strategy and ESG Indices at S&P Dow Jones Indices; and Vinit Srivastava, head of strategy and ESG indices at S&P Dow Jones Indices. “This argument applies to not only to the U.S. large-cap space, but it also extends to small- and mid-cap segments and international markets.”
Dividend stocks – both at home and abroad – with long track records of rock-solid rising payments tend to generate superior returns over long periods of time and can help investors weather shorter periods of market turbulence.
This is a look at the most reliable long-term dividend stocks in the world. Dubbed the “Dividend Aristocrats,” they have raised dividends for at least five straight years (Canadian firms), 10 years (E.U.-based firms) or 25 years (U.S. companies). Such stocks provide reliable and rising income streams – and a sense of security that will help you sleep better at night. We’ve listed them here alphabetically; take a look.
Data is as of Oct. 28, 2018, unless otherwise noted. Dividend history based on company information and S&P data. Companies are listed in alphabetical order. U.S. and Canadian dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. European yields represent the trailing 12-month yield, which is a standard measure for international stocks. Dollar figures are in U.S. dollars unless otherwise indicated.
Windpower Engineering & Development
Market value: $107.7 billion
Dividend yield: 2.9%
Country: United States
Consecutive annual dividend increases: 60
Industrial conglomerate 3M (MMM, $184.95), which makes everything from adhesives to electric circuits, is having a tough 2018. Shares tumbled after a disappointing third-quarter earnings report that reflected weakness in the company’s automotive, dental and consumer electronics markets.
The stock is down 21% for the year-to-date as a result of its difficulties – a rare down year amid a long upward run.
However, whatever the shorter-term holds for 3M’s share price, investors can bank on the conglomerate’s steady payouts over the long haul. While inclusion in the S&P 500 Dividend Aristocrats requires a minimum of 25 years of uninterrupted annual dividend growth, MMM has much more – its dividend has improved annually for 60 consecutive years, and the payout dates back a century.
Market value: $117.5 billion
Dividend yield: 1.7%
Consecutive annual dividend increases: 46
Following its 2013 spinoff of AbbVie – another Dividend Aristocrat on this list – today’s Abbott Laboratories (ABT, $66.99) is focused on branded generic drugs, medical devices, nutrition and diagnostic products. Its product list includes the likes of Similac infant formulas, Glucerna diabetes management products and i-Stat diagnostics devices.
The company has been expanding by acquisition as of late, including medical-device firm St. Jude Medical and rapid-testing technology business Alere, both snapped up in 2017.
The company, which dates back to 1888, first paid a dividend in 1924. Abbott has raised its dividend for 46 straight years.
Market value: $122.3 billion
Dividend yield: 4.8%
AbbVie’s (ABBV, $80.79) corporate heritage will sound very familiar. The pharmaceutical maker was spun off from Abbott Laboratories in 2013, and like its parent, it carries a longstanding dividend payment. Including its time as part of Abbott, AbbVie upped its annual distribution for 46 consecutive years.
What should really excite investors, however, is that AbbVie upped its payout twice in 2018. The first one was an 11% hike that came during its usual payout-increase time at the start of the year. However, ABBV also announced an additional 35% boost to its dividend starting with the payment made in May, citing additional capital from U.S. tax reform.
Best-selling treatments include Humira for rheumatoid arthritis and AndroGel, a testosterone replacement therapy. All told, AbbVie’s pipeline includes more than 35 products across various stages of clinical trials.
Market value: $31.8 billion
Dividend yield: 2.5%
Consecutive annual dividend increases: 36
Aflac (AFL, $41.70) is a supplemental insurance company – popularized by the loud Aflac duck – with roots going back to 1955 that covers numerous workplace offerings, such as accident, short-term disability and life insurance.
The company’s stock started the year in horrific fashion after a report of alleged fraud sent shares into a dive. But shares in Aflac have quietly come back after evidence of wrongdoing failed to materialize. Analysts at Janney Montgomery Scott have been steadfast throughout with a “Buy” rating on the stock. “It has a significantly simpler business profile with a more reliable stream of earnings than its life insurance peers, and has shown an inflection point in the sale of its benefits products both in Japan and the U.S.,” they write.
Market value: $7.5 billion
Dividend yield: 2.0%
Consecutive annual dividend increases: 25
A.O. Smith (AOS, $43.74) is one of the newest members of the Dividend Aristocrats.
The manufacturer of commercial and residential water heaters was added to the illustrious group of dependable dividend growers in 2018. In January, A.O. Smith hiked its quarterly cash dividend to 18 cents a share, a 29% increase. Then the company upped its payout again, by 22% in October to 22 cents per share.
Over the past five years, the company’s compound annual growth rate of its dividend is more than 25%.
Analysts at Boenning and Scattergood rate shares at “Outperform” (buy, essentially), thanks to the rollout of A.O. Smith water heaters at home-improvement chain Lowe’s, as well as strength across the North American market.
Air Products and Chemicals
Market value: $32.8 billion
Air Products and Chemicals (APD, $149.43) spent much of past couple years restructuring. Under pressure from investors, it started to shed some weight, including spinning off its Electronic Materials division and selling its Performance Materials business.
Air Products, which dates back to 1940, now is a slimmed-down company that has returned to focusing on its legacy industrial gases business. But it hasn’t taken its eye off the dividend, which it has improved on an annual basis for 36 years in a row. That includes a 15-cent upgrade in January 2018 – its largest in company history.
Archer Daniels Midland
Market value: $26.0 billion
Consecutive annual dividend increases: 43
Archer Daniels Midland (ADM, $46.46) processes ingredients for food and feed, including corn sweeteners, starches and emulsifiers such as lecithin. It also has a commodities trading business. It’s a truly global agricultural powerhouse, too, boasting customers in 170 countries that are served by 500 crop procurement locations and 270 ingredient plants.
But it’s a difficult business, too. Analysts surveyed by Thomson Reuters expect ADM’s earnings to decline at an average annual rate of 8.8% for the next five years.
Archer Daniels Midland has paid out dividends on an uninterrupted basis for 86 years. That includes 43 consecutive years of payout increases.
Market value: $11.2 billion
Dividend yield: 1.9%
Country: United Kingdom
Consecutive annual dividend increases: 14
U.K.-based Ashtead Group (ASHTY, $93.01) is a major player in the U.K. and American rental equipment markets. Ashtead leases construction and industrial equipment to customers that use its machines for road building, facilities management, climate control, special events and disaster relief.
The company’s Sunbelt division is the second largest equipment rental firm in the U.S., with 712 locations nationwide. Its A-Plant division operates from 187 rental locations in the U.K. and is that country’s largest equipment renter.
The company pays dividends semi-annually, and five-year dividend growth has averaged an impressive 45% annually. Note that European Dividend Aristocrats have a lower bar than their American counterparts, only requiring a minimum of 10 consecutive annual dividend increases for inclusion.
Dividends on some international stocks may be taxed at a higher rate; however, the IRS offers a foreign tax credit that investors can use to offset taxes collected by foreign governments.
Courtesy Alexandre Dulaunoy via Wikimedia Commons
Market value: $24.8 billion
Dividend yield: 1.0%
Consecutive annual dividend increases: 18
Associated British Foods (ASBFY, $31.28) is a multinational food processor and retailer operating in 50 countries. Americans might not be familiar with the corporate parent, but they may know a few of its brands, including Ovaltine hot chocolate, Twinings teas, Mazola corn oil and Kingsmill bread. ABF also owns the Primark clothing brand and a chain of 350 Primark retail stores across Europe and North America.
Associated British Foods has improved its dividend by an average of 7.4% annually over the past five years, including a 12% hike in 2017 to 41 pence (roughly 54 cents).
Market value: $211.5 billion
Dividend yield: 6.9%
Consecutive annual dividend increases: 34
Telecommunications stocks are synonymous with dividend payments. Customers pay for service every month, which ensures a steady stream of cash to fund dividends. AT&T (T, $29.09) – the largest U.S. telecom company – is a perfect example.
AT&T has raised its dividend on an annual basis for 34 consecutive years, and typically boasts one of the highest dividend yields in the Standard & Poor’s 500-stock index. That’s in large part because of the cash flows generated by the telecom business, which enjoys what some call an effective duopoly with rival Verizon (VZ). Together, the pair command roughly 70% of the U.S. wireless subscriptions market.
Automatic Data Processing
Market value: $59.6 billion
Automatic Data Processing (ADP, $136.35) is the world’s largest payroll processing firm, responsible for paying more than 39 million employees and serving more than 650,000 clients across more than 110 countries.
One of ADP’s great advantages is its “stickiness.” It’s difficult and expensive for corporate customers to change payroll service providers. That competitive advantage helps throw off consistent income and cash flow. In turn, ADP has become a dependable dividend payer – one that has provided an annual raise for shareholders since 1975.
Market value: $21.8 billion
Dividend yield: 3.4%
BAE Systems (BAESY, $27.33) is one of the world’s largest defense contractors, serving government customers mainly in the U.K. and U.S. The company designs and manufactures military aircraft, land vehicles and surface ships and is expanding its capabilities in cyber security and intelligence.
Despite flat revenues last year, BAE was able to increase cash flow from operations by 54% and earnings per share by 8% while significantly reducing debt.
BAE’s dividend has improved for 14 consecutive years, though its progress has been slow, at just 2.4% annually over the past five years.
Market value: $65.8 billion
Dividend yield: 5.0%
Consecutive annual dividend increases: 8
Bank of Nova Scotia (BNS, $53.45) is one of Canada’s five big banks, serving more than 24 million customers in North America, Latin America, the Caribbean, Central America and Asia-Pacific.
BNS has gone on a buying binge over the past 10 months, spending almost C$7 billion on acquisitions both in Canada and Latin America. However, the deals have yet to have a positive effect on the bank’s stock, which is down over the past 52 weeks relative to its Canadian peers.
Bank of Nova Scotia’s third-quarter earnings were buoyed by strong results in its Canadian and Asian operations, however. That prompted the bank to raise its quarterly dividend by 3.7% to 85 Canadian cents per share – its sixth hike in just three years.
Qualification for aristocracy in Canada is a little different and less stringent than the U.S. version – most importantly, it only needs to increase its annual payout for five consecutive years, and can even maintain the same dividend for two consecutive years within that time.
Note: The exchange rate as of Oct. 1, 2018, is 1.28 Canadian dollars for every U.S. dollar.
Market value: $35.4 billion
Dividend yield: 5.9%
Consecutive annual dividend increases: 10
BCE (BCE, $39.42) is Canada’s largest communications company with annual revenue of $22.7 billion. It generates approximately 54% of its sales from wireline broadband and TV, 35% from wireless, and the remaining 11% from the company’s media operations.
The company’s fiber-optic network is 240,000 kilometers in length – the largest in Canada – delivering internet, phone and TV to more than 9.2 million locations across seven provinces.
BCE has raised its annual dividend by 5% or more for 11 consecutive years, keeping its payout ratio within a healthy range of 65% to 75%.
Market value: $61.3 billion
Dividend yield: 1.3%
Medical devices maker Becton Dickinson ( BDX, $229.00) first bulked up with its 2015 acquisition of CareFusion, a complementary player in the same industry. Last year, it struck a $24 billion deal for fellow Dividend Aristocrat C.R. Bard, another medical products company with a strong position in treatments for infectious diseases.
The company, which makes everything from insulin syringes to cell analysis systems, is increasingly looking for growth to be driven by markets outside the U.S., including China.
Annual dividend increases stretch back 46 years and counting – a track record that should offer peace of mind to antsy income investors.
Market value: $105.1 billion
Consecutive annual dividend increases: 20
British American Tobacco (BTI, $45.83) isn’t terribly well-known in the U.S., but it’s the world’s largest publicly traded tobacco company. BAT owns the popular Dunhill and Rothmans cigarette brands, which are sold to millions of consumers worldwide.
BAT aims to deliver future EPS gains each year at high-single-digit levels. Earnings should receive a boost in 2018 from more than $400 million in anticipated acquisition-related synergies. The last increase to the quarterly dividend on BTI’s stock was a 15.2% bump last year.
Market value: $22.4 billion
Dividend yield: 1.4%
Brown-Forman (BF.B, $46.61) is one of the largest producers and distributors of alcohol in the world. Jack Daniel’s Tennessee whiskey and Finlandia vodka are just two of its best-known brands, with the former helping drive better-than-expected growth in the most recent quarter. Tequila sales – Brown-Forman features the Herradura and El Jimador brands, among others – also are on the rise.
The company has raised its payout annually for 34 years, and has delivered an uninterrupted regular payout for 72 years.
Courtesy Graham Richardson via Flickr
Market value: $9.8 billion
Bunzl (BZLFY, $29.13) is an international distributor of food packaging, cleaning supplies, personal-protection equipment and other consumable items. The company serves customers from several industries, including foodservice, grocery, cleaning, retail and health care. Roughly 60% of sales come from North America, while Europe and the U.K. contribute another 35%.
The company’s dividend has increased for 25 years in a row, which would be enough to qualify even as an American Dividend Aristocrat. The company’s last hike to its semi-annual dividend was a 10% boost in 2017.
Market value: $38.0 billion
Dividend yield: 4.9%
Canadian Imperial Bank of Commerce (CM, $85.70) is the smallest of Canada’s five big banks. It greatly expanded its U.S. business in 2017 buying Chicago-based PrivateBancorp for $5 billion in cash and shares. As a result of its purchase of PrivateBancorp, the bank’s third-quarter earnings from its U.S. business increased by 295% to C$162 million.
On Sept. 13, CIBC sold $769 million of Canada’s first gender-diversity bond, the funds used to lend to companies advancing women in the executive ranks and the boardroom. Considering they pay about 70 basis points more than similar-maturity Canadian federal government bonds, investors can expect to see more of this from CIBC and other banks.
CIBC most recently raised its quarterly dividend by 3 cents to C$1.36 a share.
Market value: $59.8 billion
Consecutive annual dividend increases: 22
Canadian National Railway (CNI, $82.15) was once run by Hunter Harrison, the executive Bill Ackman hired to turnaround its rival, Canadian Pacific Railway (CP).
CN is North America’s second largest publicly traded North American railway with a network of almost 20,000 route miles serving more than $250 billion of goods annually across Canada and the American Midwest.
Over the past six years, Canadian National has grown revenues and operating profits by 6% and 9%, respectively, compounded annually. Investors will like the fact that the railroad operator has grown its annual dividend payment every year since it went public in 1995, averaging 16% a year.
Market value: $34.4 billion
Dividend yield: 3.7%
Consecutive annual dividend increases: 17
Canadian Natural Resources (CNQ, $28.19) is one of the world’s top independent energy producers, with natural gas, heavy crude oil and oil sands operations in North America and offshore operations in Africa and the U.K. It produces the oil equivalent of 1.1 billion barrels daily.
Business is so good for Canadian Natural Resources that it has been able to pay down its long-term debt by C$2.5 billion over the past 12 months. Its debt is now 2.1 times adjusted EBITDA, down from 3.4x.
In addition to debt reduction, the company has returned C$1.2 billion via share buybacks and dividends through the first six months of 2018. It currently pays a quarterly dividend of 33.5 Canadian cents, which is 22% higher than its year-ago payout.
Market value: $15.0 billion
Dividend yield: 3.8%
Consecutive annual dividend increases: 33
A steady stream of acquisitions helped wholesale drug and medical device distributor Cardinal Health (CAH, $49.92) become the giant that it is today.
More recently, it has been embroiled in legal actions related to the nation’s opioid epidemic. In late 2016, Cardinal Health agreed to pay $44 million to the Department of Justice to settle allegations that it failed to report suspicious drug orders. And in early 2017, the company agreed to a $20 million settlement with the state of West Virginia. However, Cardinal Health is looking for new life with an acquisition of Medtronic’s (MDT) Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency business, completed in July 2017.
On the dividend front, Cardinal Health has upped the ante on its annual payout for 33 years and counting.
Market value: $213.7 billion
Dividend yield: 4.0%
Consecutive annual dividend increases: 32
Chevron (CVX, $111.53) is an integrated oil giant that also has operations in natural gas and geothermal energy. And like its competitors, Chevron hurt when oil prices started to tumble in 2014. The energy major was forced to slash spending as a result, but – reassuringly – it never slashed its dividend.
Cut to today, and the outlook for oil looks much more stable. Oil prices topped $75 per barrel in early October. Kiplinger forecasts that prices will range from $65 to $70 a barrel through the end of the year – a far better environment than what energy companies were dealing with a few years ago.
With three decades of uninterrupted dividend growth under its belt, Chevron’s track record instills confidence that the payouts will continue.
Market value: $12.4 billion
Dividend yield: 2.8%
Consecutive annual dividend increases: 57
Inclement weather was unkind to Cincinnati Financial (CINF, $76.50) in 2018. The insurer said it suffered close to $100 million in losses from Hurricane Florence in the third quarter alone. The hit from Hurricane Michael, which made landfall in October, will take a toll on fourth-quarter results.
But while hurricane seasons always come and go, Cincinnati Financial’s dividend always stays strong. The property and casualty insurance specialist has one of the Dividend Aristocrats’ longest streaks of increases at 57 years, and given that Cincinnati Financial pays out only about two-thirds of its profits as dividends, that trend should continue.
Analysts expect forecast average annual earnings growth of 6.1% for the next five years, according to Thomson Reuters data.
Market value: $18.3 billion
Dividend yield: 0.9%
Consecutive annual dividend increases: 35
Cintas (CTAS, $171.47) – which is well-known for providing corporate uniforms, but also offers maintenance supplies, tile and carpet cleaning services and even compliance training – is seen by some investors as a bet on jobs growth. There may be something to that. Shares are up 12% for the year-to-date – they were doing far better just a month ago thanks to unemployment reaching 49-year lows, but then pulled back during the broader-market swoon.
Regardless of how the labor market is doing, Cintas is a stalwart as a dividend payer. The company has raised its payout every year since 1983.
Market value: $18.9 billion
Dividend yield: 2.6%
Consecutive annual dividend increases: 41
Clorox (CLX, $147.82), whose brands include its namesake bleaches, Glad trash bags and Hidden Valley salad dressing, is raising prices to offset higher input costs. Analysts at Wells Fargo applaud the move, but think investors are taking a wait-and-see approach with the stock because of uncertainty as to how consumers will respond. They rate CLX shares at “Market Perform” (hold).
In the longer run, analysts expect solid and steady growth from the consumer products company; earnings are expected to rise an average of 6.1% a year for the next five years. Clorox’s dividend has increased in size annually since 1977.
Market value: $195.2 billion
Consecutive annual dividend increases: 55
Coca-Cola (KO, $45.92) 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. In addition to the namesake Coca-Cola brand, KO also sports names such as Minute Maid, Powerade, Simply Orange and Vitaminwater.
Market value: $51.7 billion
Colgate-Palmolive (CL, $59.58) sells staples ranging from toothpaste to dish detergent, and thus demand for its products tends to remain stable in good and bad economies alike.
The company derives the vast majority of its sales outside the U.S., and that has been a problem in 2018. A stronger dollar, stagnant demand in key overseas markets and higher input costs have weighed on Clorox’s results.
You still can count on Colgate’s dividend, however. It dates back more than a century, to 1895, and has increased annually for 55 consecutive years.
Courtesy of Flickr user Lost Parcels
Market value: $19.8 billion
Dividend yield: 1.8%
Denmark’s Coloplast (CLPBY, $9.33) is the worldwide leader in ostomy and incontinence products and has an expanding presence in wound care, skincare and urology. Coloplast has the top market share for continence care and ostomy care products, the No. 4 share of the urology market and the No. 5 share of the wound and skincare market.
Over the past five years, Coloplast has produced 5.9% annual sales gains and 7.2% annual EPS growth, then turned that into 8.5% annual dividend increases on average.
Market value: $31.6 billion
Dividend yield: 1.6%
Compass Group (CMPGY, $19.97) is the world’s largest contract foodservice business. This British company operates in 50 countries worldwide, has more than 55,000 client locations and serves more than 5.5 billion meals each year.
Alphabet (GOOGL), Intel (INTC) and other large corporate customers account for 39% of Compass Group sales. Other important customers include health-care and senior-care facilities (23% of sales), as well as colleges and schools (18%). North America is the company’s primary market, representing 59% of sales, and Europe contributes 25%.
The company’s 8.7% annual EPS growth rate is almost mirrored by its 8.6% dividend growth rate over the same time frame. The payout is made semi-annually.
Market value: $23.7 billion
Consolidated Edison (<ED, $76.33) is one of the nation’s largest utility stocks by market value. Founded in 1823, it provides electric, gas and steam service for the 10 million customers in New York City and Westchester County. And like most utilities, Consolidated Edison enjoys a fairly stable stream of revenues and income thanks to a dearth of direct competition.
As a result, the utility company has been able to hike its annual distribution without interruption for more than four decades.
Market value: $84.3 billion
Dividend yield: 3.0%
Diageo (DEO, $138.02) is a multinational purveyor of beers and premium liquors that records sales in more than 180 countries. The company was formed in 1997 when Irish beermaker Guinness merged with U.K. liquor merchant Grand Metropolitan.
With iconic liquor brands such as Johnnie Walker, Crown Royal, J&B, Smirnoff and Tanqueray, North America is Diageo’s largest market. But the company sees better growth opportunities in emerging markets like India and Africa, where incomes are rising and more than 750 million new consumers will reach drinking age during the next decade.
Diageo has raised its dividend 8% annually for the past five years.
Market value: $10.3 billion
Dividend yield: 2.3%
Consecutive annual dividend increases: 63
Industrial conglomerate Dover (DOV, $70.50) has its hands in all sorts of industries, from Dover-branded pumps, lifts and even productivity tools for the energy business, to Anthony-branded commercial refrigerator and freezer doors.
It’s not an exciting business, though it has gotten more headline-worthy in 2018. Under pressure from activist investor Daniel Loeb’s Third Point hedge fund, Dover spun off its upstream energy business earlier this year. Known as Apergy Corp. (APY), the spinoff began trading on the New York Stock Exchange on May 9.
Dividend growth has been a priority for Dover, which at 63 consecutive years of annual distribution hikes boasts the third-longest such streak among publicly traded companies.
Market value: $42.6 billion
Dividend yield: 1.1%
Consecutive annual dividend increases: 26
Ecolab (ECL, $147.34) provides water treatment and other industrial-scale maintenance services for several industries, including food, healthcare, and oil and gas. Ecolab’s fortunes can wane as industrial needs fluctuate though; for instance, when energy companies pare spending.
Over the long haul, though, ECL shares are a proven winner. That’s thanks in no small part to a dividend that dates back 81 years. And that payout has grown on an annual basis for more than a quarter-century.