5 ultimate dividend stocks

These stocks have juicy payouts that are long-lasting and rising.

By InvestorPlace Jul 17, 2012 4:16PM

Image: Woman counting money (© Jose Luis Pelaez, Inc/Blend Images/Getty Images)By Jeff Reeves

Dividend investing is all the rage, but as I have mentioned before, yield isn't everything these days. There's a lot to be said for chasing sustainability instead of paydays that won't last.

So to that end, I poured myself a scotch and spent an evening crunching numbers for all you dividend stock investors out there. My intention was to find stocks that offer nice paydays -- but also that were steadily increasing those dividends and outperforming the market.

The result is this lineup of 13 dividend stocks that I call the Ultimate Dividend list.

For starters, I screened for yield. After all, nobody wants a dividend that's less than 1%. What’s the point? So I demanded better than 2.5%.

Then I made sure the dividends were very old (the "youngest" payment started 60 years ago) and constantly growing (the "worst" stock on this list has increased distributions annually for 29 years in a row.)

Last, I had to compare share price returns. To incorporate dividends, I used total returns with dividends vs. the S&P performance plus dividends. Any stock that didn't at least come close to tracking the market was kicked out.

That in itself is worth noting because with dividends, the S&P 500 is up roughly 82% (as of this writing) since July 2002 -- but without dividends, the index is up only up 50%. Speaks to the power of dividends in your portfolio, no?

For good measure I tried to quantify how much dividends have increased in the last 10 years as a percentage. The worst boosted payouts by only 9% in 10 years, but most doubled their distributions in the last decade -- with the leader posting a whopping 271% jump in dividend payments in just 10 years.

I could bog you down with lots of words and commentary, but most investors just want to see the data. So on with the show: Here are 5 of my Ultimate Dividend stocks, ordered by year they started paying out, and the results of my research:

Consolidated Edison (ED)

  • Current Yield: 3.8%
  • Dividends Since: 1885
  • Consecutive Annual Increases: 38
  • Quarterly Dividend in 2002 vs. 2012: 55.5 cents vs. 60.5 cents (9% higher)
  • 10-year Return Including Dividends: 180% vs. 82% for S&P

Procter & Gamble (PG)

  • Current Yield: 3.5%
  • Dividends Since: 1891
  • Consecutive Annual Increases: 56
  • Quarterly Dividend in 2002 vs. 2012: 38 cents vs. 56.2 cents (48% higher)
  • 10-year Return Including Dividends: 94% vs. 82% for S&P

Kimberly Clark (KMB)

  • Current Yield: 3.5%
  • Dividends Since: 1935
  • Consecutive Annual Increases: 40
  • Quarterly Dividend in 2002 vs. 2012: 30 cents vs. 74 cents (147% higher)
  • 10-year Return Including Dividends: 109% vs. 82% for S&P

Emerson Electric (EMR)

  • Current Yield: 3.6%
  • Dividends Since: 1947
  • Consecutive Annual Increases: 55
  • Quarterly Dividend in 2002 vs. 2012: 19.4 cents (adjusted for split) vs. 40 cents (106% higher)
  • 10-year Return Including Dividends: 127% vs. 82% for S&P

PepsiCo (PEP)

  • Current Yield: 3.1%
  • Dividends Since: 1952
  • Consecutive Annual Increases: 40
  • Quarterly Dividend in 2002 vs. 2012: 14.5 cents vs. 53.75 cents (271% higher)
  • 10-year Return Including Dividends: 109% vs. 82% for S&P

While those were some of the highest yielders, eight other stocks made my list. Read more about them here.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing he did not own a position in any of the stocks named here.

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Jul 18, 2012 6:46AM
how did he get this posted. 3% lol my granny could pick better
Jul 17, 2012 10:48PM
Those dividends are nothing. I invest in REITs for dividends and most of mine are paying around 11%. My favorites are MFA, DX, and NCT. They're holding up better than the rest of the market.
Jul 17, 2012 10:14PM
Those dividend rates don't seem so decent to me compared to a utility company like AEP.
Jul 18, 2012 3:46AM
Those payouts are far from "juicy", article should be titled ultimate no-risk retirement dividends.
Jul 18, 2012 3:22PM
Did you people read the article first or are you just trying to promote your stocks?

How many REITs have been paying our for 29+ years and were constantly growing? - I am going to just throw out a guess of 0.

How many REITs have kept up with the S&P? I honestly don't know the answer but given the last 10 years, I am guessing not many.

aod, eoi, ggn, csp, igd, ztr are all funds. since they aren't stocks, they wouldn't show up in a STOCK screener.

You people need to read before you comment.

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