When it comes to dividend stocks, it’s income and retirement investors that are most interested. These ongoing sources of income during retirement can be crucial to maintaining one standard of living.
Now I’m very wary of dividend stocks these days. Ever since the Fed lowered interest rates, retirement investors have had to move further out on the risk curve to find yields to support the level of income they were used to making.
The problem is that all these buyers have pushed the valuation of these stocks to unreasonable levels. Dividends are great, but not if there is risk of the prices of dividend stocks crashing by 20% or 30% or even more.
That’s why you have to be careful about which dividend stocks you buy. The strategy of The Liberty Portfolio, for example, is to find stocks and other securities that not only pay higher yields but offer less risk than standard dividend stocks. Some of these include dividend aristocrats — dividend stocks that have raised dividend payments every year for more than 25 years.
With that in mind, here are three dividend aristocrats to consider for your portfolio.
Dividend Aristocrats to Buy: PPG Industries (PPG)
Dividend aristocrats tend to be boring businesses, and that’s just fine with me. Slow and boring wins the long-term race. PPG Industries, Inc. (NYSE:PPG) is a 134 year old company that manufactures and distributes coatings, specialty materials and glass products.
- The Performance Coatings segment provides coatings, sealants and transparencies for commercial, military, aircraft and transparent armor for specialty applications; protective and marine coatings and finishes; architectural coatings and chemical management services.
- The Industrial Coatings segment provides adhesives and sealants for the automotive industry; metal pretreatments and related chemicals for industrial and automotive applications and even things like substrates used in radio frequency identification tags and labels, e-passports and even the drivers’ license in your wallet.
- The Glass segment produces fiber glass for use in commercial and residential construction, wind energy, energy infrastructure, transportation and electronics industries.
PPG does this all through a worldwide network of almost 6,000 locations.
For 42 years, PPG has been increasing its dividend, now at $1.80-per-share or 1.52% and PPG stock itself if up 80% over the past five years.
Dividend Aristocrats to Buy: Genuine Parts Company (GPC)
While we are on the subject of pieces and parts and substrates n’ things, I have long been interested in one of the greatest dividend stocks in American history, Genuine Parts Company (NYSE:GPC).
This 90-year-old firm is one of the biggest and most diversified distributor of industrial replacement parts, mostly for cars in the country.
I love businesses like this, just like PPG. They are boring, and they distribute things that everyone needs to have. All things break down, and cars especially need parts to be constantly repaired and fixed. With more and more used cars out there, parts will always be in demand. In fact, when the economy gets weak, that’s great for GPC stock. People stop buying new cars and buy used cars, creating more wear and tear on cars and therefore more need for parts.
I also love that GPC does not make these parts — it only distributes them. It’s just like being the guy who sells the shovels and picks during the gold rush. They didn’t make ‘em. They just sold them.
It has been 61 years and GPC stock continues increasing its dividend, now at $2.70-per-share of 2.59%. The stock itself is up 60% over the past five years.
Dividend Aristocrats to Buy: Ecolab (ECL)
Ecolab Inc. (NYSE:ECL) has been increasing dividends for 32 years and its stock has almost doubled in the past five years.
ECL basically provides industrial sanitization. It handles water treatment, and cleaning and sanitizing solutions for industrial customers in manufacturing, food and beverage processing, chemical, mining and primary metals, power generation, pulp and paper and commercial laundry industries. ECL can also take care of pest elimination services in restaurants, food and beverage processors, educational and healthcare facilities, hotels, quick service restaurant and grocery operations and other institutional and commercial customers. Vermin, begone!
Why is ECL so successful, and why has it been around for 95 years? Because they clearly provide a needed service. It may not be sexy, sanitizing water and removing rats, but it makes a fortune. With over a million customers in some 70 countries around the world, it manages to grow its dividend in double-digits most years.
The dividend is $1.64-per-share, or 1.19%.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 1,800 articles on investing. Lawrence Meyers can be reached at [email protected].