Dividend stocks are all the rage in this era of high market volatility and uncertain economic times. If you can lock in a 3% dividend yield — or higher — and guarantee a modest return on your investment, many investors leap at the chance.
However, it’s important to remember that not all dividend stocks do right by their shareholders. There are a host of big dividend payers in the MLP or REIT space that have very volatile paydays. While the headline yield might sound nice, it’s never as simple as just multiplying the last quarterly payday by four — because fluctuations quarter-to-quarter can be big.
And then there are the dividend disappointments like TheStreet (NASDAQ:TST), SuperValu (NYSE:SVU) and RadioShack (NYSE:RSH) that have slashed their payouts to zero because of struggling business models.
That’s why more than ever you need a dependable dividend. Sure, the yield is important — but reliability is equally so.
At InvestorPlace.com, we highlight the most bulletproof dividend payers in our Dependable Dividend Stocks section. These are companies that have paid dividends for over three decades — dating all the way back to 1885 in the case of the oldest payer, utility Consolidated Edison (NYSE:ED) — but more importantly are companies with sustainable paydays that increase their distributions at least one time a year.
There is a minimum of 25 years of consecutive increases to join this list, which means your income stream is not just reliable, but growing.
This year, thanks to years of focusing on dividend increases, five new names just joined our list by paying (or at least announcing) their 25th consecutive year of dividend increases. They are:
- Atmos Energy (NYSE:ATO), a natural gas utility yielding 3.9%.
- Cardinal Health (NYSE:CAH), a health care service company yielding 2.4%.
- Chevron (NYSE:CVX), an energy mega-cap yielding 3.2%.
- Universal Health Realty Trust (NYSE:UHT), an REIT that focuses on health care yielding 5.7%.
- UGI Corp. (NYSE:UGI), a gas and electricity provider yielding 3.5%.
There also are nine other names that are worth noting because they are rapidly approaching the 25-year mark. This “waiting list” of picks all have between 20 and 24 consecutive years of dividend increases:
- Aqua America (NYSE:WTR), a water and wastewater utility yielding 2.8%.
- Avon Products (NYSE:AVP), a cosmetics and consumer goods stock yielding 5.9%.
- Community Bank System (NYSE:CBU), a regional financial stock yielding 3.8%.
- General Dynamics (NYSE:GD), an aerospace and defense company yielding 3.1%.
- MDU Resources Group (NYSE:MDU), a natural gas and electricity utility yielding 3.1%.
- National Retail Properties (NYSE:NNN), a commercial REIT yielding 5.1%.
- SEI Investments (NASDAQ:SEIC), a global investment company yielding 1.4%.
- Universal Corp. (NYSE:UVV), a tobacco stock yielding 4.1%.
- Westamerica Bancorporation (NASDAQ:WABC), a regional bank yielding 3.2%.
Collectively, this group has some pretty impressive share appreciation in 2012, too. The top performer year-to-date is SEIC, up almost 26% since Jan. 1 as of this writing. The runner-up is REIT National Retail Properties, which has gained more than 17%.
Aside from Avon — which is down by double digits year-to-date because of unique troubles that include a CEO shakeup, ugly earnings and a botched buyout offer — the “worst” performer on the list is Cardinal Health, which is down just 2% since Jan. 1.
The big dividends and stable share prices mean that these 14 stocks are worth a look. And if you like what you see, check out the entire Dependable Dividend Stocks section for dozens of more dividend ideas.
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, he did not own a position in any of the stocks named here.