Dividend investing is all about stability. After all, what good is a 10% yield if the dividend is slashed next quarter and the share price falls off a cliff? If you’re truly an income-oriented investor, capital preservation and reduced risk are almost as important as the regular paychecks you get from your investments.
That’s why dividend investors flock to stalwarts like Coca-Cola (NYSE:KO), which yields a nice 2.6% and has a bulletproof brand. Or Exxon Mobil (NYSE:XOM), which has paid dividends since 1882, back in its days as part of Standard Oil.
But if you’re looking for stability and yield, you don’t have to be locked into crowded trades with the rest of the dividend crowd. There are some smaller, low-profile companies with big yields and a great record of dividends that could be worth a look right now.
Here are three unknown but airtight dividend plays:
Sector: Real Estate Investment Trusts (REIT)
Market Cap: $18.6 billion
Dividend Since: 1984
HCP (NYSE:HCP) is a real estate investment trust that invests exclusively in health care-related holdings. As dividend investors should know, REITs must deliver 90% of their taxable income back to shareholders via dividends — which is a mandate for great yields. And as anyone interested in demographics should know, the aging baby boomer population means health care operations such as hospitals, doctor’s offices or senior housing facilities are growing strong.
That puts HCP stock in a good place. Shares are up 7% so far this year, and up 16% in the last year. Its dividend yield is a nice 4.5%, too, and has been increased annually for over 25 years in a row. HCP reports earnings July 31.
Market Cap: $9.3 billion
Dividend Since: 1948
Look at the logo of Genuine Parts (NYSE:GPC) and you may recognize the yellow and blue shield of NAPA, a well-known auto parts provider. That means this company is well positioned to cash in on the boom in auto service, thanks to cash-strapped Americans driving older cars longer and delaying new vehicle purchases. The average age of autos on the road now tops a stunning 11 years. Yes, that’s the average. So it’s natural for an auto parts stock to see sunny times as a result.
Investors have reason to be cheery, too, what with GPC’s 3.2% yield and a dividend paid since just after World War II. Throw in a strong history of annual dividend increases, and that sweetens the pot even more. GPC has boosted its payout 26% across the last 10 years. GPC reports earnings July 19.
Market Cap: $3.2 billion
Dividend Since: 1922
Bemis (NYSE:BMS) certainly isn’t a household name, but chances are you’ve had to break through some of its packaging to get to household goods in the last week or two. It’s flexible products include polyethylene bags and wraps for everything from a 12-pack of water bottles to frozen fish sticks. If you’re looking for a recovery play, this packaging giant is it because it will have its hands (and plastics) all over products once they begin shipping faster to businesses and consumers.
And if the recovery isn’t imminent, well, at least you have a 3.2% dividend and a history of payouts dating back almost 100 years. Those paydays keep getting plumper, too, as dividends have almost doubled from 13 cents per quarter in 2002 to 25 cents currently. That’s a great history of dividend growth for investors focused on income. BMS reports earnings July 26.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, Jeff Reeves owned a position in AA.