The safest dividend stocks deliver dependable income each and every year.
That’s not an easy thing to find. Considering the average lifespan of a company listed in the S&P 500 has dropped from 67 years in the 1920s to just 15 years today, conservative income investors have fewer places to go for reliable income.
The pace of technological change is faster than ever, consumer preferences are rapidly evolving and increased globalization has made competition all the more fierce. No wonder it can be a challenge to find safe stocks.
Of the thousands of publicly traded dividend stocks in the market, very few have survived for the last 100 years. Even fewer have paid reliable dividends over that time. But we have found nine high-quality dividend stocks that have been writing checks since at least 1900.
Such longevity is extremely rare and often signals a company with numerous competitive advantages and excellent financial health. Translation: You should seek these dividend stocks out if you don’t already own them.
Investors living off dividends in retirement and seeking safe, reliable income growth should take a close look at these stalwart dividend stocks. In order by yield …
Long-Lasting Dividend Stocks: PPG Industries (PPG)
Dividends Paid Since: 1899
Dividend Yield: 1.5%
PPG Industries, Inc. (NYSE:PPG) is a major supplier of paints and coatings that began operations in 1883. Most of its customers are involved in the construction, automotive, industrial, and aerospace industries.
PPG’s business has proven to be highly durable because its coatings help products look more appealing and last longer. The company intentionally focuses on the most demanding applications for its paints, helping it command high margins and generate excellent free cash flow.
As a result of its sturdy customer relationships, reputation for quality, scale and proprietary coatings technology, PPG has been able to reward shareholders with very dependable dividends. The company has written checks since 1899 and raised its dividend for 45 consecutive years. Annual dividend growth has averaged 4.5% over the past two decades, but the company’s low payout ratios near 30% can support higher growth down the road.
As PPG continues taking share in the $130 billion global coatings market, steady earnings and dividend growth should continue.
Long-Lasting Dividend Stocks: Stanley Black & Decker (SWK)
Dividends Paid Since: 1877
Dividend Yield: 1.9%
Stanley Black & Decker, Inc. (NYSE:SWK) has been in business since 1843 when Frederick Stanley began manufacturing bolts and hinges from iron.
SWK now sells over 500,000 different products, including power and hand tools, industrial equipment and security systems. Stanley’s business is very global, with roughly half of its revenue coming from outside of the U.S.
Few companies have been in business for more than 170 years. Stanley Black and Decker’s longevity has been driven by its portfolio of well-known brands (Stanley, DeWalt, Black+Decker, Bostitch), relentless focus on new product innovation and established distribution channels around the world.
Stanley Black and Decker has raised its dividend each year since 1968 and has paid dividends for 139 consecutive years.
No other industrial company comes close.
Dividend growth has remained very consistent over the years. SWK’s dividend has increased 5.7% per year over the past 20 calendar years, and management last boosted the quarterly dividend by 5.5% this July. Future dividend growth should continue for many years to come. Stanley Black and Decker maintains a payout ratio below 40%, generates excellent free cash flow and has numerous opportunities for long-term growth.
For now, however, dividend growth will remain in line with earnings growth. SWK management targets a payout ratio of 30% to 35% as growth investments remain a priority.
Long-Lasting Dividend Stocks: UGI Corp (UGI)
Dividends Paid Since: 1885
Dividend Yield: 2.1%
UGI Corp (NYSE:UGI) was founded in 1882 and has grown to become a Fortune 500 company with more than $5 billion in annual revenue. The company’s four business segments distribute and market energy products and services, focusing on natural gas, propane, butane, and electricity. Its operations span 17 countries.
In fact, UGI holds the title as the biggest distributor of propane in the country and provides its services to residential and commercial customers.
UGI boasts 128 years of consecutive dividend payments because of its predictable business model. UGI’s diversification across different customers, commodities and geographies hedges its bets. Its products are largely non-discretionary in nature, too, because they are used for needs such as heating and cooking.
Not surprisingly, UGI’s dividend growth has been highly reliable. The company has raised its dividend for 29 consecutive years. UGI shareholders have enjoyed 5.5% annual dividend growth over the last 20 calendar years and 7.4% annual income growth over the last five years.
Management continues to target a 4% annual dividend growth rate going forward, which should more than offset inflation to protect investors’ purchasing power.
With a payout ratio near 40% and steady mid- to upper-single digit earnings growth, UGI’s dividend payment is extremely safe and should continue growing for many years to come.
Long-Lasting Dividend Stocks: Colgate-Palmolive (CL)
Dividends Paid Since: 1895
Dividend Yield: 2.1%
Colgate-Palmolive Company (NYSE:CL) was founded in 1806 and sells a number of well-known consumer and hygiene products. Some of its most popular offerings include toothpaste, soap, mouthwash and household cleaners. Many of the company’s famous brands, including Colgate, Palmolive, Speed Stick, and Irish Spring, are sold all over the world. In fact, over 80% of Colgate’s revenue comes from outside of the U.S.
As per capita hygiene spending rises around the world, Colgate’s business should benefit. The company’s expenditures on advertising and product innovation keep its non-discretionary products in strong market positions.
Colgate is a dividend king that has rewarded shareholders with higher dividends for 53 consecutive years. More impressively, CL has paid dividends each year since 1895.
Colgate’s dividend has grown by 10.1% annually on average for the past 20 years. However, income growth has slowed to a mid-single-digit pace in recent years. This pace of dividend growth will likely continue to match earnings growth and maintain Colgate’s payout ratio, which sits near 60%.
So yes, Colgate’s dividend growth might not be as electric, but few dividends are safer.
Long-Lasting Dividend Stocks: York Water (YORW)
Dividends Paid Since: 1816
Dividend Yield: 2.2%
York Water Co (NASDAQ:YORW) was incorporated in 1816 and is the oldest investor-owned utility in the country. Since its inception, the company has reliably provided customers with water services.
York Water’s utility services are essential for survival. Without the company’s purification and distribution activities, towns wouldn’t have a reliable source of water. Many utility companies effectively have monopolies in the regions they serve because of their costly infrastructure and regulatory oversight.
All this might sound boring, but here’s the hook: York Water has paid consecutive dividends for 200 years — the longest record of consecutive dividends in America!
YORW last raised its quarterly dividend by 4% in November 2015 to 62.2 cents per share. The dividend has now grown at a moderate pace of 3.6% per year over the last decade, yes. But investors should celebrate the company’s 19 consecutive years of payout growth.
Long-Lasting Dividend Stocks: Johnson Controls (JCI)
Dividends Paid Since: 1887
Dividend Yield: 2.6%
Johnson Controls Inc (NYSE:JCI) incorporated in Wisconsin in 1885 and manufactured and installed temperature regulation systems for buildings.
Today, the company has a presence in more than 150 countries and is a diversified technology and industrial leader with products ranging from heating, ventilation and air conditioning (HVAC) systems to automotive seating and batteries.
Investors should note that Johnson Controls is in the process of merging with Tyco, a global fire and security provider. The combined company will have $32 billion in revenue and be a leader in building products and technology, energy storage and integrated solutions.
Shareholders have enjoyed strong dividend growth for a number of years. Johnson Controls has increased its dividend by 12.1% per year over the last decade, including a 12% bump at the end of 2015.
Long-Lasting Dividend Stocks: Procter & Gamble (PG)
Dividends Paid Since: 1890
Dividend Yield: 3.1%
Procter & Gamble Co (NYSE:PG) is a favorite holding for many conservative income investors and is in Warren Buffett’s portfolio of dividend stocks. The company was founded in Ohio in 1837 and now serves more than 150 countries around the world.
Procter & Gamble’s branded consumer products raked in $65 billion in sales during its most recent fiscal year. Some of its famous billion-dollar brands are Pampers, Tide, and Head & Shoulders.
The company is in the midst of a major transformation that will significantly reduce its number of brands and categories. Baby Care, Fabric Care, Hair Care and Grooming will represent around 60% of P&G’s profits once work concludes.
P&G has been very durable because its products are household staples that are needed in any economic environment. Rivals can’t compete with the billions of dollars P&G pumps into marketing and R&D to keep its market share strong.
Procter & Gamble has boosted its dividend for 60 consecutive years and maintains a safe payout ratio near 60%. While dividend growth will remain rather low until growth firmly returns after the portfolio transformation, the company’s payout is extremely secure.
Long-Lasting Dividend Stocks: Exxon Mobil (XOM)
Dividends Paid Since: 1882
Dividend Yield: 3.5%
Exxon Mobil Corporation (NYSE:XOM) holds the title of being the largest publicly traded integrated oil business in the world. Exxon’s operations span the entire energy process from discovery to the extraction and refining of oil and gas.
XOM was incorporated in 1882 and has steadily increased its resource base ever since. The company consistently earns higher returns than the other oil majors, thanks largely to Exxon’s low-cost resource base, integrated operations, efficient operations, and technological capabilities.
While the price of oil has eroded Exxon’s profits, its upstream and downstream operations have helped it better weather the storm than most of its peers. The company’s excellent credit rating also provides XOM with the financing it needs to continue investing for growth, making selective acquisitions and paying dividends.
Speaking of dividends, Exxon Mobil’s dividend payments have compounded by 6.4% per year over the last 33 years. Dividend growth will remain at a low-single-digit rate until oil prices rebound, but the company has the financial strength to continue paying dividends and keep its growth streak going.
Long-Lasting Dividend Stocks: Consolidated Edison (ED)
Dividends Paid Since: 1885*
Dividend Yield: 3.6%
Consolidated Edison, Inc. (NYSE:ED), known as ConEd by consumers, is a regulated utility that was founded in 1823 as the New York Gas Light Company.
Today, ConEd provides electric service nearly 4 million customers and gas service to more than 1 million customers located primarily in New York City.
The utilities sector is one of the best for dividend income because of its stability. Most regulated utilities are essentially monopolies in their service territories because it would be impractical and inefficient to have multiple competitors servicing the same population. As a result, customers have little to no choice over their utility supplier and rates are often regulated by state authorities. This helps Con Ed earn a fair return on the large capital expenditures its business requires to maintain reliable service.
Here’s where we should note the asterisk. Consolidated Edison did halt its dividend once, in 1974, when ED was much more involved in power generation, not just distribution, and the price of residual oil unexpectedly quadrupled, crimping profitability. Management also made a few executional missteps, and ED was heavily dependent on capital markets to finance its ongoing operations. Investor confidence in utility companies plunged.
We don’t view this as a risk today (ED is not involved in electricity power generation, only distribution), but it’s worth mentioning. Altogether, we believe ED’s dividend payment is very safe. ConEd has raised dividends for 42 straight years.
ConEd’s high payout ratio of 70% could be a concern for some businesses, but again, regulated utility companies’ earnings are usually very steady, eliminating any concern in this case.
As of this writing, Simply Safe Dividends was long CL, ED, PG, PPG and XOM.