Dependable dividend stocks are an important part of any portfolio. In addition to providing stability, good dividend stocks also throw off a steady stream of income to help grow your portfolio or provide reliable cash flow for your living expenses.
Of course, finding these kind of dependable dividend stocks is much easier said than done.
In recent years, a number of dividend stocks have run into trouble. Some companies were forced to cut or eliminate dividends during the Great Recession, while others have kept their payments constant even as share prices have crumbled.
So how can investors be sure that the stocks they are buying now are reliable income plays that will serve them well both in 2014 and for the long haul?
To help, here’s a list of dependable dividend stocks with a good mix of both short-term and long-term performance. Every stock on this list has a very long history of dividend payouts and dividend increases, but also outperformance in share price since Jan. 1 and a current dividend yield of about 3% or better.
Dividend Stocks — Questar Corporation (STR)
- YTD return: +4% vs. +2% for the S&P 500
- Current dividend yield: 3.0%
- Total return since 2004: 415% vs. 68% total return for the S&P
- Dividend increase since 2004: 68%
- Consecutive annual dividend increases: 41, since 1973
- Years of dividends paid: 68, since 1935
Questar Corporation (STR) is an integrated natural gas company. And while natural gas prices have been soft in recent years thanks to lower demand and big supply increases, Questar has been going like gangbusters.
The stock is up five-fold since early 2004, and has increased its dividend steadily across the same period.
At just $4.2 billion in market size, Questar may not be on your current list of dividend champions. But considering the dividend growth and long-term share appreciation, STR stock is definitely worth a look.
Dividend Stocks — HCP, Inc. (HCP)
- YTD return: +14%
- Current dividend yield: 5.3%
- Total return since 2004: +205%
- Dividend increase since 2004: 15%
- Consecutive annual dividend increases: 29, since 1985
- Years of dividends paid: 29, since 1985
HCP, Inc. (HCP) is a real estate investment trust or REIT. That means a mandate for big dividends, as these kind of companies must return 90% of taxable income to shareholders.
But the big difference that sets HCP stock apart is its focus on the healthcare industry. HCP leases or owns space for senior housing facilities, medical offices and even hospitals.
What with the aging Baby Boomer demographic and the advent of Obamacare insuring more “customers” for healthcare-related businesses, HCP is a great growth industry.
And if you look at the long-term dividend trends, HCP stock also has a ton of income potential to boot.
Dividend Stocks — Johnson & Johnson (JNJ)
- YTD return: +10%
- Current dividend yield: 2.8%
- Total return since 2004: +141%
- Dividend increase since 2004: 131%
- Consecutive annual dividend increases: 52, since 1962
- Years of dividends paid: 70, since 1944
Johnson & Johnson (JNJ) is another healthcare play, but also a consumer staples play thanks to its very popular brands including Band-Aid, Tylenol and even Splenda.
This brand power and stability makes JNJ a must-own for any long-term investor with an eye on dividends.
Of course, don’t think JNJ is just a sleepy do-nothing play, however. The stock has returned about 140% in the last 10 years, including an impressive double-digit gains YTD despite a pretty flat S&P 500.
Dividend Stocks — Kimberly-Clark (KMB)
- YTD return: +6%
- Current dividend yield: 3%
- Total return since 2004: +146%
- Dividend increase since 2004: 110%
- Consecutive annual dividend increases: 42, since 1972
- Years of dividends paid: 79, since 1935
Another company with great brand power is Kimberly-Clark (KMB), the company behind Huggies diapers and Kleenex tissues, among other products. Consumer staples are the ultimate recession-proof business, because babies still need their diapers and adults still need their tissues to sneeze in.
Of course, while the stability of KMB stock is attractive, there is also growth here. Kimberly-Clark has tacked on a total return of about 146% in 10 years and has more than doubled its dividend in the same period.
That’s the kind of performance that long-term investors can take to the bank.
Dividend Stocks — Universal Health Realty Income Trust (UHT)
- YTD return: +5%
- Current dividend yield: 5.9%
- Total return since 2004: +195%
- Dividend increase since 2004: 25%
- Consecutive annual dividend increases: 27, since 1987
- Years of dividends paid: 27, since 1987
Universal Health Realty Income Trust (UHT) is another real estate investment trust like HCP Inc. that owns and leases health care-related facilities.
In addition to being a growth business thanks to Obamacare and the aging Baby Boomers, it’s also important to note that healthcare is a recession-proof sector. After all, you will cut back on a lot of other spending categories before you stop buying treatments that keep you healthy or improve the quality of your life.
UHT is admittedly down from its 2013 peak, but has perked up again in 2014 — and most importantly, has nearly tripled in the last 10 years, proving it has long-term potential.
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Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.