There is a name assigned to stocks that fit the description in the headline, and that’s “dividend aristocrats.” I don’t really care for the name because it can mislead investors into thinking that these are perpetually safe stocks.
I don’t think any stock is perpetually safe, so to speak, because even the greatest companies are going to see their stocks crater in a broad market crash. Aside from that, it is a good idea for retirement and income investors to sort through some of these stocks to see if they fit their own long-term diversified portfolio.
I’ve got three candidates to consider, and I chose these three because in the “dividend aristocrat” family, they are actually lesser-known names, despite being some of the highest yielders.
The key with dividend aristocrats is cash flow. They’ve been making enough of it for a very long time to pay the dividends, so be sure that remains the case.
3 Dividend Aristocrat Stocks to Buy: Community Trust Bancorp Inc (NASDAQ:CTBI)
Community Trust Bancorp Inc. (NASDAQ:CTBI) is a 112-year old community bank that truly fits the category of the easily-overlooked dividend aristocrat. You couldn’t find a more boring company that an 81-branch bank with most of its operations in Kentucky, and stretching a bit into West Virginia and Tennessee.
That’s exactly why you should look into CTBI stock. The term “community bank” couldn’t be more applicable in this case. By dint of fate, I’m good friends with someone from Kentucky and not only is he aware of the bank, but his father and grandfather have banked there for decades.
The reason they stay with it? Customer service. My pal tells me the company remains firmly entrenched in the days of the personal banker.
I was almost expecting him to say they serve apple pie on Fridays.
This very modest operation doesn’t blow the doors off cash flow, but CTBI stock generates 3-4x dividend payout, which is presently at 3.7%, and has been raising the dividend for 34 years.
3 Dividend Aristocrat Stocks to Buy: WGL Holdings Inc (NYSE:WGL)
Could there be a less descriptive name for a dividend aristocrat than WGL Holdings Inc (NYSE:WGL)? That’s because it was founded in 1848 when people with stove pipe hats didn’t have the imagination to come up with a cool name.
WGL stock sells and delivers natural gas to retail customers, and owns its own storage and pipeline facilities in West Virginia. It also expanded into sustainable products from businesses and governments in Maryland, Virginia and Washington, D.C.
It has quite an impressive operation, with almost 13,000 miles of distribution services and 15 million gallons of propane storage capacity. WGL services 157,000 natural gas customers and 162,000 electricity customers in the East.
The P&L and balance sheets are a bit complex, as they often are with energy plays like this. However, if you crunch through the earnings reports, you’ll find that there is plenty of cash flow available to pay out its dividend, which it just increased 5% to $1.85 per share per year, or 3.4%.
So it goes for the past 38 years.
3 Dividend Aristocrat Stocks to Buy: Nucor Corporation (NYSE:NUE)
Nucor Corporation (NYSE:NUE) was founded 75 years ago and for the past 41 years it has been raising its dividend, which is now at 3.1%. It’s definitely a dividend aristocrat.
Nucor is known for its position in the steel industry as one of the top companies for the metal. It manufactures and sells steel to just about every facet of American construction, and you’ll find its products in everything from joist girders to wire mesh. It handles both finished product and raw materials.
The steel industry is considered “basic materials,” but even basics go through cycles of boom and bust. Over the many decades of its existence, management has learned how to handle cash flow. Things have been tough for the steel industry the past few years, but Nucor again raised its dividend.
It may even present a slight value at its current level.
As of this writing, Lawrence Meyers did not hold any positions in the aforementioned securities.