The World Cup began in 1930. After a 12-year break due to World War II, the soccer — oops, fútbol — tournament has been played every four years since 1950. This weekend we watched France beat Croatia 4-2 to win the 2018 World Cup. But it got us thinking, what about a World Cup for dividend stocks?
The World Cup format brings in 32 teams from around the globe who square off until only one remains. After the first round, 16 teams are eliminated, then 8 more bite the dust. We figured that would be a good place to start.
With that in mind, here is a look at the the World Cup of dividend stocks. It’s the eight toughest, strongest dividend titans out there, and they’re all vying for a piece of investors’ funds. These companies have not only paid out a dividend for many consecutive years, they’ve also raised that dividend for many consecutive years.
There are some runner-ups, like Coca-Cola (NYSE:KO), Johnson & Johnson (NYSE:JNJ) Lowe’s (NYSE:LOW) and Colgate-Palmolive (NYSE:CL). But surprisingly, none of them made the top eight. We’ll start from the back of the list (No. 8) and work forward.
World Cup of Dividend Stocks: 8th Place
With its increase in January, 3M (NYSE:MMM) has not only paid a dividend for 60 years, but it’s consistently raised its payout for six decades. Talk about consistency. It’s crazy to think that after sixty years, 3M only finds itself eighth on the list. Either way, it has allowed investors to sleep well at night for quite some time.
Through all the recessions, bubbles and interest-rate fluctuations, 3M has raised its annual payout.
The thing I really like about 3M though? Its business is going pretty well. Earlier this year we took a closer look at the industrial group and said investors could apply the basket approach to the group.
With global economies churning out growth and CapEx budgets increasing, many of these companies’ end markets are strong. That bodes well for 3M going forward. Analysts expect 5.7% revenue growth this year and 3.5% next year. With 13% earnings growth in 2018 and almost 9% in 2019, MMM shows its got decent growth.
This is one stock income investors should have on their list, given its 2.7% yield. Especially down near its recent 52-week lows.
World Cup of Dividend Stocks: 7th Place
Emerson Electric (EMR)
Emerson Electric (NYSE:EMR) is next, as it has paid out and raised its dividend for 61 straight years.
Despite rising interest rates keeping a lid on companies like Emerson, investors keep coming back to the stock and its 2.75% yield. While the stock is about flat on the year — up just 1.3% — it’s putting in a series of higher lows. Perhaps it can take out its recent highs near $74, should it take out $73 resistance.
In any regard, with a healthy payout and another slight bump likely coming in November, investors can take comfort in knowing their payout is secure.
Analysts expect a whopping 13% bump in revenue growth this year and for earnings to grow almost 20%. Trading at 22 times this year’s earnings seems a bit rich, but the dividend alone deserves a premium. Throw in double-digit revenue and sales growth and a nice yield and it’s hard to like the 10-year Treasury more than EMR stock.
World Cup of Dividend Stocks: 6th Place
Dover (NYSE:DOV) is up next, with its 62 consecutive years of a pay-and-raise dividend. I hate to spoil the fun, but the next several names are also tied at 62 consecutive years.
Nevertheless, Dover shouldn’t be ignored, particularly with shares down a whopping 25% so far this year and especially because it’s about to jump to 63 consecutive years next month.
Last August, Dover gave its dividend a 6.8% hike, following a 4.8% boost from the prior year. Unlike EMR, which has consistently bumped its payout about 1% in more recent years, DOV has been giving significant boosts to its payout. Shares now yield 2.55% and we should see another dividend increase next month.
A look at the chart tells us DOV has a big downtrend line to get through, while support is in the low-$70s. Chart-savvy, income-oriented investors can consider buying DOV once it breaks out of its downtrend channel.
World Cup of Dividend Stocks: 5th Place
Genuine Parts (GPC)
In February, Genuine Parts (NYSE:GPC) gave a 6.7% hike to its quarterly dividend, making it to 62 consecutive years. Now yielding 3.1% and down about 2% on the year, GPC is starting to pop up on investors’ radar.
Trading at about 14 times this year’s earnings helps too. Analysts expect GPC to grow earnings 21% this year and almost 5% next year. Revenue growth of almost 13% in 2018 is also attractive.
A look at the chart shows a series of higher lows trending toward ~$96 resistance. Should GPC break through, its January highs near $106 are on the table. Investors with a low risk tolerance can take profits on a notable close below $89 trend-line support.
World Cup of Dividend Stocks: 4th Place
Northwest Natural Gas (NWN)
When you think of a six-decade dividend champ, large companies are the ones that usually come to mind. A $1.9 billion company usually isn’t on the list.
But that’s exactly what we have with Northwest Natural Gas (NYSE:NWN), which has raised its dividend for 62 consecutive years and will likely do so later this year, in October.
The stock now yields close to 3%, even though the recent rise in energy prices has given a boost to its stock price. Growth here is pretty unimpressive to be honest, with sub-1% growth for both revenue and earnings this year. Further, the company has only raised the dividend marginally over the past several years.
Trading at 28 times this year’s earnings and 26 times next year’s numbers, investors can likely find a better bargain elsewhere. On the flip side though is 60+ years of dividend-rising dependability.
World Cup of Dividend Stocks: 3rd Place
Like 3M, Industrial equipment maker Parker-Hannifin (NYSE:PH) has been beaten down so far this year. While shares are about flat over the past 12 months, PH stock is down almost 20% over the past year.
In April, PH investors got a massive 15.2% dividend increase, bringing the yield up to almost 2%. While it’s not the largest yield in the world, that’s a pretty big increase for a company that’s already bumped its dividend for 62 straight years.
It’s not just the dividend that’s making PH attractive though. Trading at just under 16 times earnings, investors may feel that’s a bargain for a stock with a dividend track record like this. Further, analysts expect revenue growth of 19% and 5% this year and next, respectively. That goes alongside 24.4% earnings growth this year and 14% growth next year.
Seriously, why is no one scooping this stock up?
Investors should be even more interested with support between $152.50 to $155, providing a low-risk entry. That’s especially true if there’s another pullback and it holds. If PH breaks out over its downtrend line, look for a decent rally to commence.
World Cup of Dividend Stocks: 2nd Place
Procter & Gamble (PG)
Remember when I said not many people would think of a sub-$2 billion market cap stock for a dividend champion? Well, what I meant was that a name like Procter & Gamble (NYSE:PG) is usually first in investors’ mind.
Well, in the investing world, P&G is tied when it comes to dividend consistency. It’s 4% dividend boost in April bought its annual increase streak to — surprise! — 62 years.
Despite its more recent woes and its clash with activists, Procter is a blue-chip stock that almost every income investors keeps tabs on. Admittedly though, the estimates aren’t wildly impressive, as the company works through a multi-year reorganization to makes it business more lean.
Mid-single-digit earnings growth on low-single-digit sales growth for the next two years is expected. While shares are down more than 13% so far this year, most investors in the name seem content to wait out the slow years and collect their 3.65% dividend yield.
To be honest, those with a prehistoric cost basis probably don’t care how long it takes to turn the company around, so long as it continues to grow little by little and payout a nice dividend.
World Cup of Dividend Stocks: 1st Place
American States Water (AWR)
Another small winner in the dividend-consistency world? American States Water (NYSE:AWR). What it lacks in market cap though it makes up for in consistency, leading all U.S. stocks with 63 consecutive years of dividend increases. Its latest came last August in the form a 5.4% increase.
Despite it $2.2 billion market cap, look for AWR to notch its 64th consecutive year of dividend increases next month.
That’s a real eye-opener for investors who enjoy doing their investing homework. Just because a company is small, under-followed and relatively unknown, doesn’t mean it lacks serious value. Case in point, shares are up 105% over the past five years and 25% in the last 12 months.
Could it come to an end though? Analysts expect flat revenue growth this year and just 3.5% next year. On the earnings front, they expect a 110 basis point decline this year before a 6.9% rebound in 2019.
That’s rather unremarkable, particularly at 33 times this year’s earnings. But as the old saying goes, don’t bet against the trend until it bends. Below $55 and perhaps it’s time to worry a little bit. But until then, there’s no reason for investors to bet against the most consistent dividend-raiser in the market.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long JNJ.
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