Generous dividend stocks that reliably raise their payouts year after year can be an important piece of an income portfolio. A smart way to identify attractive dividend stocks is to focus on the Dividend Aristocrats, 50 companies in Standard & Poor’s 500-index that have raised dividends for at least 25 years in a row.
Big Dividend Aristocrats with yields of more than 3% are well known to income investors and feature prominently in many retirement portfolios. (Think AT&T (T (opens in new tab)), Exxon Mobil (XOM (opens in new tab)), Procter & Gamble (PG (opens in new tab)), Coca-Cola (KO (opens in new tab)) and the like.) But there are many smaller Dividend Aristocrats with above-average yields that can go unnoticed. Take a look at five surprising dividend stocks with 3%-plus yields whose dividends have increased annually for 25 years or more.
(Dividend yields and other figures are as of June 30, 2017. Companies are listed in order of market capitalization—share price times total shares outstanding—starting with the highest. The following five stocks were selected from among the 25 smallest Dividend Aristocrats by market cap. The full list of all 50 Dividend Aristocrats is maintained by S&P Dow Jones Indices (opens in new tab). Dividend history based on company information and S&P data. Analysts’ ratings provided by Zacks Investment Research.)
Consolidated Edison
- Symbol: ED (opens in new tab)
- Share price: $80.82
- 52-week range: $68.76 - $85.13
- Dividend yield: 3.4%
- Market cap: $25 billion
- Analysts’ opinion: 0 strong buy, 0 buy, 6 hold, 0 underperform, 3 sell
Utility stocks have long been known as ideal investments for widows and orphans thanks to slow-but-steady growth secured by the near-monopolistic nature of the business. Founded in 1823, Consolidated Edison fits the profile. It provides electric, gas and steam service for the 10 million customers in New York City and Westchester County. ConEd’s dividend has gone up annually for 42 straight years and counting.
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Archer-Daniels-Midland
- Symbol: ADM (opens in new tab)
- Share price: $41.38
- 52-week range: $39.01 - $47.88
- Dividend yield: 3.1%
- Market cap: $24 billion
- Analysts’ opinion: 1 strong buy, 0 buy, 8 hold, 0 underperform, 1 sell
Archer-Daniels-Midland processes ingredients for food and feed, including corn sweeteners, starches and emulsifiers such as lecithin. It also has a commodities trading business. Following a pattern of growing through acquisitions, in January 2017 ADM bought Crosswind Industries, a company that specializes in pet treats, pet food and related ingredients. It didn’t disclose terms. ADM has increased its payout to shareholders every year for 42 years.
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V.F. Corp.
- Symbol: VFC (opens in new tab)
- Share price: $57.60
- 52-week range: $48.05 - $65.28
- Dividend yield: 3.0%
- Market cap: $23 billion
- Analysts’ opinion: 6 strong buy, 0 buy, 11 hold, 1 underperform, 1 sell
Even if you don’t have the stock in your investment portfolio, you probably have the company’s products in your closet. V.F. Corp. is an apparel maker whose well-known brands include Lee, Wrangler, Nautica, Vans and The North Face. Name recognition aside, the ongoing – and, arguably, accelerating – struggles of bricks-and-mortar retailers is taking a toll on business, with first-quarter profits and revenues declining year over year. What isn’t declining is the dividend growth. V.F. has lifted its annual payout to investors every year for 44 years.
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T. Rowe Price
- Symbol: TROW (opens in new tab)
- Share price: $74.21
- 52-week range: $62.97 - $78.95
- Dividend yield: 3.1%
- Market cap: $18 billion
- Analysts’ opinion: 3 strong buy, 0 buy, 5 hold, 0 underperform, 3 sell
T. Rowe Price faces many of the same challenges as other asset managers; namely, losing market share to indexed funds, particularly the type of low-cost U.S. index funds offered by the likes of Vanguard. The company is managing to offset some of the outflows from its actively managed U.S. funds with more inflows into its international offerings. Rising advisory fees, as well as a strong U.S. stock market that has boosted assets under management, are helping, too. T. Rowe Price has hiked its payout every year for 31 years.
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Federal Realty Investment Trust
- Symbol: FRT (opens in new tab)
- Share price: $126.39
- 52-week range: $120.50 - $171.08
- Dividend yield: 3.1%
- Market cap: $9 billion
- Analysts’ opinion: 6 strong buy, 0 buy, 7 hold, 0 underperform, 0 sell
Federal Realty Investment Trust is a real estate investment trust that specializes in leasing space to retailers. Its biggest tenants include Ahold, a supermarket operator, discounter TJX Cos. (TJX (opens in new tab)) and apparel seller The Gap (GPS (opens in new tab)). And while bricks-and-mortar retail is a shaky industry at the moment, Federal Realty diversifies its risk by leasing to non-retail tenants such as gyms and movie theaters. Since REITs are required to pay out most of their earnings as dividends in exchange for certain tax benefits, they are a go-to source for income. No REIT has been steadier than Federal Realty, which has lifted its payout annually for 49 years in a row.
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