by Lawrence Meyers | January 22, 2014 9:37 am
It can be difficult to sleep at night when you hold dividend stocks during difficult times. The unspoken worry all dividend investors have is whether those dividends will be lowered or — in a worst-case scenario — stopped entirely. And if you live on a fixed income, these worries are likely magnified.
A lot of dividend stocks, particularly in the leisure segment, suspended dividends during the financial crisis. So when choosing a dividend stock, it’s always wise to look at the company’s dividend payment track record.
Today, we’ve got three lesser-known dividend stocks that have all been paying dividends for more than thirty years.
The first of the secret dividend stocks is WGL Holdings (WGL), a rather unique stock in that it’s a diversified energy play. The company is split into four segments, of which two are regulated natural gas utilities, representing about 82% of the company’s total assets. The utility portions sell and deliver natural gas to some two million customers in the Washington D.C. and Virginia areas.
The company then does something rather clever. Another segment of its business involves retail energy marketing, which means it competes with regulated utilities and other third party marketers to sell and deliver natural gas and electricity in Maryland, Virginia, Delaware, Pennsylvania and DC.
The part I like the most is that WGL sells energy credits and carbon offsets to retail customers. The company makes good money on these elements, selling to customers who just like to feel good about how they are “helping the environment”. WGL has a long history as an energy company and has paid a dividend for 37 years. It currently pays 4.3% annually.
The next of our dividend stocks is one you may have heard of: Old Republic International (ORI). Old Republic started back in 1887 and is an insurance company that offers a huge array of products. A lot of insurance products are very high margin, and Old Republic has mastered the art of selling these. Extended Automobile Warranty, Home Warranty an Travel Accident Insurance are great segments to be playing in.
Still, Old Republic handles all the more traditional products like general liability, commercial auto, commercial multi-peril, aviation, inland marine, worker’s comp, and a suite of commercial financial products (surety, fidelity, asset protection).
I like the diversification, and the fact that the company has offered many of these products for anywhere from 30 years to 100 years may explain why it’s paid a dividend for the last 32 years. That dividend is presently at 4.3%.
The final stock on our list of secret dividend stocks is Vectren Corporation (VVC). VVC is another an energy play that’s diversified into four segments. The company provides 566,000 customers with natural gas delivery in Indiana.
The company owns coal mines and sells the coal it unearths, and also operates an infrastructure segment that will construct and repair underground pipelines. In addition, it has a few legacy businesses invested in various energy opportunities.
It’s a wee bit riskier in that it pays out almost all its FCF as a dividend, but it’s also been paying a dividend for 54 years. Somehow I think management has figured out how to juggle the cash just fine. That payout is presently at 3.9%.
Lawrence Meyers does not own shares in any company mentioned.
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