16 Core Dividend Stocks for Income Investors

by Dividend Growth Investor | June 30, 2011 12:07 pm

16 Core Dividend Stocks for Income Investors

There are approximately 300 stocks in the world, which have managed to increase dividends for at least ten years[1] in a row. As a dividend growth investor I have analyzed in some detail almost all of these stocks, even though most of them will probably never meet my entry criteria[2]. One reason behind that is valuation. Another, more important reason is that few of these companies have sustainable competitive advantages. As a result, in my articles describing dividend growth investing[3] I tend to focus on a narrow list of quality candidates.

The reason behind this is because there are only a handful of quality dividend growth stocks[4] which meet the above characteristics. These companies have a proven track record of dividend increases, fueled by earnings growth which was a direct result of having a strong brand name[5] and a product or service which they can charge premium prices for.
Right now, I find these quality companies to be the core of my dividend portfolio[6]. If I were starting in dividend investing today, I would certainly be accumulating these stocks first, before looking for other opportunities.

The Coca-Cola Company (NYSE:KO[7]) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. The company has raised dividends for 49 years in a row and its ten year annual dividend growth rate is 10%. Yield 2.80% (analysis[8])

PepsiCo, Inc. (NYSE:PEP[9]) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company has raised dividends for 39 years in a row and its ten year annual dividend growth rate is 13%. Yield 3% (analysis[10])

The Clorox Company (NYSE:CLX[11]) engages in the production, marketing, and sales of consumer products in the United States and internationally. The company has raised dividends for 34 years in a row and its ten year annual dividend growth rate is 9.90% . Yield 3.60% (analysis)

Colgate-Palmolive Company (NYSE:CL[12]), together with its subsidiaries, manufactures and markets consumer products worldwide. The company has raised dividends for 48 years in a row and its ten year annual dividend growth rate is 12.40%. Yield 2.70% (analysis[13])

Johnson & Johnson (NYSE:JNJ[14]) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company has raised dividends for 49 years in a row and its ten year annual dividend growth rate is 13%. Yield 3.40% (analysis[15])

The Procter & Gamble Company (NYSE:PG[16]) provides consumer packaged goods in the United States and internationally. The company has raised dividends for 55 years in a row and its ten year annual dividend growth rate is 10.90%. Yield 3.30% (analysis[17])

Chevron Corporation (NYSE:CVX[18]), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. The company has raised dividends for 24 years in a row and its ten year annual dividend growth rate is 8.10%. Yield 3.10% (analysis[19])

Medtronic, Inc. (NYSE:MDT[20]) manufactures and sells device-based medical therapies worldwide. The company has raised dividends for 34 years in a row and its ten year annual dividend growth rate is 16.90%. Yield 2.50% (analysis[21])

Aflac Incorporated (NYSE:AFL[22]), through its subsidiary, American Family Life Assurance Company of Columbus (Aflac), provides supplemental health and life insurance. The company has raised dividends for 28 years in a row and its ten year annual dividend growth rate is 21.30%. Yield 2.60% (analysis[23])

Air Products and Chemicals, Inc. (NYSE:APD[24]) provides atmospheric gases, process and specialty gases, performance materials, equipment, and services worldwide. The company has raised dividends for 29 years in a row and its ten year annual dividend growth rate is 10%. Yield 2.50% (analysis[25])

Wal-Mart Stores, Inc. (NYSE:WMT[26]) operates retail stores in various formats worldwide. The company has raised dividends for 37 years in a row and its ten year annual dividend growth rate is 17.80% . Yield 2.70% (analysis[27])

Abbott Laboratories (NYSE:ABT[28]) engages in the discovery, development, manufacture, and sale of health care products worldwide. The company has raised dividends for 39 years in a row and its ten year annual dividend growth rate is 8.80%. Yield 3.70% (analysis[29])

Kinder Morgan Energy Partners, L.P. (NYSE:KMP[30]) owns and manages energy transportation and storage assets. The company has raised distributions for 15 years in a row and its ten year annual distribution growth rate is 10.90%. Yield 6.40% (analysis[31])

Philip Morris International Inc. (NYSE:PM[32]), through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Yield 3.80% (analysis[33])

McDonald’s Corporation (NYSE:MCD[34]), together with its subsidiaries, operates as a worldwide foodservice retailer. The company has raised dividends for 34 years in a row and its ten year annual dividend growth rate is 26.50% . Yield 2.90% (analysis[35])

The Chubb Corporation (NYSE:CB[36]), through its subsidiaries, provides property and casualty insurance to businesses and individuals. The company has raised dividends for 46 years in a row and its ten year annual dividend growth rate is 8.30%. Yield 2.50% (analysis[37])

At the end of the day I understand that purchasing a new dividend achiever[38] with excellent growth prospects could deliver outstanding total returns over time. This is a hit and miss approach however, as high growth could simply be an aberration of short term economic trends. The beauty of the stocks above however is that they deliver consistent results. They deliver results like clockwork. These companies are leaders in their industries, which makes their success difficult to emulate. Their products/services are relatively immune from recessions, although they are not bulletproof. The rising stream of dividends provide investors with an edge[39] that would generate strong returns over time.

Full Disclosure: Long all stocks listed above

Endnotes:
  1. for at least ten years: http://www.dividendgrowthinvestor.com/2010/03/ten-year-dividend-growth-requirement.html
  2. my entry criteria: http://www.dividendgrowthinvestor.com/2011/03/my-entry-criteria-for-dividend-stocks.html
  3. dividend growth investing: http://www.dividendgrowthinvestor.com/2011/02/dividend-growth-investing-gets-no.html
  4. dividend growth stocks: http://www.dividendgrowthinvestor.com/2010/05/why-dividend-growth-stocks-rock.html
  5. strong brand name: http://www.dividendgrowthinvestor.com/2010/07/strong-brands-grow-dividends.html
  6. my dividend portfolio: http://www.dividendgrowthinvestor.com/2010/05/dividend-portfolio-for-long-term.html
  7. KO: http://studio-5.financialcontent.com/investplace/quote?Symbol=KO
  8. analysis: http://www.dividendgrowthinvestor.com/2011/03/coca-cola-ko-dividend-stock-analysis.html
  9. PEP: http://studio-5.financialcontent.com/investplace/quote?Symbol=PEP
  10. analysis: http://www.dividendgrowthinvestor.com/2011/02/pepsico-pep-dividend-stock-analysis.html
  11. CLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CLX
  12. CL: http://studio-5.financialcontent.com/investplace/quote?Symbol=CL
  13. analysis: http://www.dividendgrowthinvestor.com/2011/03/colgate-palmolive-cl-dividend-stock.html
  14. JNJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=JNJ
  15. analysis: http://www.dividendgrowthinvestor.com/2011/02/johnson-johnson-jnj-dividend-stock.html
  16. PG: http://studio-5.financialcontent.com/investplace/quote?Symbol=PG
  17. analysis: http://www.dividendgrowthinvestor.com/2011/01/procter-gamble-pg-greatest-dividend.html
  18. CVX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVX
  19. analysis: http://www.dividendgrowthinvestor.com/2011/06/chevron-corporation-cvx-dividend-stock.html
  20. MDT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MDT
  21. analysis: http://www.dividendgrowthinvestor.com/2010/09/medtronic-mdt-dividend-stock-analysis.html
  22. AFL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AFL
  23. analysis: http://www.dividendgrowthinvestor.com/2010/08/aflac-afl-dividend-stock-analysis.html
  24. APD: http://studio-5.financialcontent.com/investplace/quote?Symbol=APD
  25. analysis: http://www.dividendgrowthinvestor.com/2011/05/air-products-and-chemicals-apd-dividend.html
  26. WMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=WMT
  27. analysis: http://www.dividendgrowthinvestor.com/2011/06/wal-mart-wmt-dividend-stock-analysis.html
  28. ABT: http://studio-5.financialcontent.com/investplace/quote?Symbol=ABT
  29. analysis: http://www.dividendgrowthinvestor.com/2011/02/abbott-laboratories-abt-dividend-stock.html
  30. KMP: http://studio-5.financialcontent.com/investplace/quote?Symbol=KMP
  31. analysis: http://www.dividendgrowthinvestor.com/2011/06/kinder-morgan-partners-one-company.html
  32. PM: http://studio-5.financialcontent.com/investplace/quote?Symbol=PM
  33. analysis: http://www.dividendgrowthinvestor.com/2011/04/philip-morris-international-pm-dividend.html
  34. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  35. analysis: http://www.dividendgrowthinvestor.com/2011/06/mcdonalds-mcd-dividend-stock-analysis.html
  36. CB: http://studio-5.financialcontent.com/investplace/quote?Symbol=CB
  37. analysis: http://www.dividendgrowthinvestor.com/2010/07/chubb-corporation-cb-dividend-stock.html
  38. dividend achiever: http://www.dividendgrowthinvestor.com/2011/01/dividend-achievers-offer-income-growth.html
  39. with an edge: http://www.dividendgrowthinvestor.com/2009/02/dividend-edge.html

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