The Only 4 Dividend Stocks You’ll Ever Need

by Lawrence Meyers | December 13, 2013 11:10 am

dividend-stocks[1]Don’t be fooled into thinking you should buy a stock just because it’s a dividend stock. There are plenty of dividend stocks out there, but only a few are worth owning.

Some dividend stock may pay 15%, but if it isn’t sustainable or it fluctuates, then you’re buying into more risk than you probably should.

If you’re going to hold dividend stocks in a long term diversified portfolio, then you’ll want to hold dividend stocks that have not only paid dividends, but paid them for a long time[2] and have been consistently increasing them.

These four dividend stocks are solid stocks with a long history of increasing their dividends. That makes them prime candidates for your portfolio.

Compare Brokers[3]

Diebold (DBD)


Most people associate Diebold (DBD[4]) with electronic voting machines but next time you’re at a Bank of America (BAC[5]) ATM, look for the manufacturer’s name.

Diebold is a self-service solutions pioneer, and handles machine functions as well as all the support services like strategic planning, systems integration, security and engineering. I doubt the company handled Civil War-era voting slips, but it has been around since 1859 and has paid a dividend for fifty-nine years.

The $1.15 annual payout equates to about a 3.5% yield. Dividends are paid out of the company’s robust cash flow, making one of this the most stable dividend stocks out there.

Compare Brokers[3]

Emerson Electric (EMR)

dividend-stocks-Emerson-Electric-EMR-stock[6]Emerson Electric (EMR[7]) is exactly the kind of boring company I like. It engages in many disciplines, including process management that handles measurements, controls and monitoring for both power and food treatment facilities.

It stands to reason that process involves automation, which is another discipline. Automation requires network power systems, and they target end-users with various climate technologies. As a tech company, it is constantly involving and innovating, and it has a brand name trusted by many during its 123 years in existence.

EMR stock has been on the list of solid dividend stocks for 56 years, with a present payout of 2.5%. It pays this dividend successfully because it keeps a lid on its debt ($4 billion), offset by $3.275 billion in cash[8]. The dividend payout is 30-40% of its free cash flow[9].

Compare Brokers[3]

3M (MMM)

dividend-stocks-3m-mmm-stock[10]3M (MMM[11]) has always been one of my favorite dividend stocks. Besides selling a host of products you likely have in your own home, 3M operates in multiple other segments.

3M handles packaging and interconnection devices, personal and commercial protection products, film solutions and filters, reflective transportation sheeting, and an endless list of what I call “tech-accessory” items. It’s the stuff you don’t think about, like insulation for electronic devices and even drug delivery systems.

Investors should take comfort in the fact that 3M has been one of the best dividend stocks for 54 years. Its 2% yield is more than covered by free cash flow[12], as the yield represents about 40% of historical FCF.

Compare Brokers[3]

Altria Group (MO)

dividend-stocks-Altria-MO-stock[13]Finally, what dividend stock could be safer than one that pays its dividend by selling an addictive product all over the world?

Altria Group (MO[14]) sells tobacco products, and no matter how much people are told that smoking is bad for them, they continue to use tobacco. That’s never going to change, and I don’t think Altria’s 43-year history of being a dividend stock is going to change, either.

The yield is very generous at 5%, and almost all of Altria’s free cash flow is paid out as dividend. Free cash flow[15] is almost equivalent to operating cash flow because there just isn’t much capex in this business. It’s the beauty of a repeat purchase product that makes this one of the absolute best dividend stocks.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Broker, Inc.[16], which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books[17] and blogs about public policy, journalistic integrity, popular culture, and world affairs[18]. Contact him at[19] and follow his tweets @ichabodscranium.

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  2. paid them for a long time:
  3. Compare Brokers:
  4. DBD:
  5. BAC:
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  7. EMR:
  8. keeps a lid on its debt ($4 billion), offset by $3.275 billion in cash:
  9. its free cash flow:
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  11. MMM:
  12. covered by free cash flow:
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  14. MO:
  15. Free cash flow:
  16. PDL Broker, Inc.:
  17. written two books:
  18. blogs about public policy, journalistic integrity, popular culture, and world affairs:

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