What’s the worst thing that can happen to dividend stocks?

Is it the CEO leaving for “personal reasons”? No. Is it two bad quarters in a row? No. Is it some kind of crisis that requires it to hire a top-notch crisis PR firm? No.

The worst thing that can happen to dividend stocks is a reduction in its regular payout.

Few things will crater a dividend stock more than announcing it is reducing the amount of money it returns to shareholders. That’s because people have likely chosen the dividend stock as an investment because of the dividend (or at least, that’s one of the top reasons).

Suspending or reducing a dividend makes it easy to bail. The reason for the cut is often that cash flow is waning and needs to be deployed elsewhere, and that signals that the company’s story has changed. That’s reason enough to reconsider the investments. However, investors — especially retired investors — view a dividend yield cut as a betrayal. It’s psychological more than anything having to do with the actual business.

Fortunately, there are a number of dividend stocks you can invest in with little concern of a dividend cut, because these companies have been in the income game for the long haul. Specifically, these Dependable Dividend Stocks have all been paying out dividends for at least 50 years.

Dependable Dividend Stocks – 3M (MMM)

MMM Dividend Yield: 2.4%

3M (MMM) is not only among a small group of Dependable Dividend Stocks, but it has become one of my favorite Peter Lynch stalwarts.

Every time I think of this 3M, I just shake my head in amazement. I associate MMM stock with the things around my house — from office supplies to kitchen cleaners. Yet 3M is a conglomerate of global impact, with a presence in industrial products, safety products, graphics, electronics, energy, healthcare, and of course, consumer.

I mean, the darn company makes roofing granules. Roofing granules. You don’t get more boring than that. But you also don’t get more ubiquitous than that.

3M continues to grow EPS at an 8% to 10% annual clip. It has $4.8 billion in cash and investments offset by $4.3 billion in debt that costs it a mere $145 million in interest each year. But it’s that free cash flow that remains so impressive. 3M is so consistent that its FCF always hovers between $4 billion and $5 billion. Meanwhile, MMM stock pays $1.73 billion annually to fund its 86-cent quarterly dividend, which comes to a modest but not unsubstantial yield of 2.4%.

And it’s not going anywhere. 3M’s dividend is nearing the century mark, with payouts made since 1916.

Dependable Dividend Stocks – Emerson Electric (EMR)

EMR Dividend Yield: 2.5%

In a somewhat similar vein, Emerson Electric (EMR) has graced dividend stock investors with a payout for 67 years, and presently yields 2.5%. This is another case of a conglomerate with global reach, of which I’ve seen but a few products.

I’ve seen the Emerson brand name on garbage disposals (the InSinkErator!) and instant hot water dispensers. But the company goes so much further. EMR handles storage for healthcare and food services. It’s involved in software, all manner of tools, process management for over a dozen industries, have a massive industrial automation division, and systems management for another half-dozen industries.

I could write a thesis on the breadth and depth of what Emerson does. (But I won’t — you’ll get bored.)

Emerson also sits squarely in the stalwart category, growing at 9% per year, and featuring ample cash and manageable debt. Like 3M, it has incredibly consistent FCF ($3 billion annually) and pays about a third of it in dividends.

Dependable Dividend Stocks – Illinois Tool Works (ITW)

ITW Dividend Yield: 1.9%

Finally, we have another boring company, Illinois Tool Works (ITW).

Illinois Tool Works has been paying dividend stock investors for 50 years. The company is similar to the other two I’ve mentioned, in that it offers industrial goods and diversified machinery, but focusing on components of machinery rather than the machinery itself. Did you know that a car manufacturer’s OEM parts might have components and fasteners produced by Illinois Tool Works? ITW also makes food equipment, welding and construction products, and all kinds of polymers and fluids.

You won’t be surprised to find it has a similar balance sheet to the others, with $3.5 billion in cash and $4.8 billion in debt that costs it about 5% annually in interest. That all-important FCF? Once again, very consistent in the $1.6 billion to $2.2 billion range.

All of that powers a dividend that has gone out to investors since 1933.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at pdlcapital66@gmail.com and follow his tweets at @ichabodscranium.