Aflac (NYSE:AFL) is engaged in providing supplemental health and life insurance, through its subsidiary, American Family Life Assurance Company of Columbus, which operates in the United States and as a branch in Japan. The company has raised distributions for 30 years in a row. The stock trades at 8.60 times earnings and yields 2.60%. Check my analysis of the stock for more information.
Air Products and Chemicals (NYSE:APD) has a portfolio of products, services, and solutions that include atmospheric gases, process and specialty gases, performance materials, equipment, and services. The company has raised distributions for 30 years in a row. The stock trades at 15.20 times earnings and yields 3%. Check my analysis of the stock for more information.
Emerson Electric (NYSE:EMR) is engaged in designing and supplying products and technology, and delivering engineering services and solutions in a range of industrial, commercial and consumer markets globally. The company has raised distributions for 56 years in a row. The stock trades at 19.50 times earnings and yields 3.10%. Check my analysis of the stock for more information.
United Technologies (NYSE:UTX) provides high technology products and services to the building systems and aerospace industries worldwide. The company has raised distributions for 19 years in a row. The stock trades at 16.60 times earnings and yields 2.60%. Check my analysis of the stock for more information.
Chevron (NYSE:CVX), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. The company has raised distributions for 25 years in a row. The stock trades at 8.70 times earnings and yields 3.30%. Check my analysis of the stock for more information.
Kinder Morgan Energy Partners (NYSE:KMP) operates as a pipeline transportation and energy storage company in North America. The partnership has raised distributions for 16 years in a row. The units currently yield 6.50%. Check my analysis of this MLP for more information.
Enterprise Products Partners (NYSE:EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals in the United States and internationally. The partnership has raised distributions for 15 years in a row. The units currently yield 5.30%. Check my analysis of this MLP for more information.
It is important when you build you income portfolio is to aim at being diversified. Holding at least 30 individual stocks is essential to ensure that income is relatively diversified. While the list above includes 20 stocks, with heavy representation from Consumer Staples stocks. I have found that over time new companies could become attractively priced, and thus be added by the enterprising dividend investor.
It is important to be diversified, but do not diversify at all costs. For example technology companies are in an industry characterized with rapid technological advancement and obsolescence of existing products. As a result, tech companies might have to invest large amounts each year simply to stay competitive. This leaves little money for establishment of a consistent streak of dividend increases.
In addition, it is also important to build your portfolio slowly, by dollar cost averaging your way into positions. It is also important to focus on entry price as well, since overpaying even for quality stocks can lead to subpar returns. Investors should also remain flexible in their investment approach. They need to focus on the big picture, and not get lost in the details. Of course. dividend investing is a buy and monitor, not a buy and forget type of investment strategy. Investors should monitor each investment regularly, and decide whether it makes sense to buy more, simply hold on or sell right away.
Once invested, I would look for opportunities to add into shares of other companies’. By accumulating dividends in cash, and then selectively initiating shares of quality dividend stocks over time, the investor would be able to diversify their portfolio even further, while also compounding their capital as well.
To summarize, the companies above represent great buys at current valuations for a portfolio in 2013 and beyond. By monitoring your portfolio holdings, adding funds, and reinvesting dividends, your passive income stream will eventually lead to your dividend crossover point.
Full Disclosure: Long all shares listed above.