Top 5 Dividend Achievers

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September 21, 2015 11:53am NYSE:LVL NYSE:PFM

fiveMarshall Hargrave:  With the S&P 500 offering an average dividend yield of 2.1%, everyone is clamoring for yield.


It’s times like these that you might find yourself reaching for a high-yielding stock that looks good on the surface. However, it’s not always the high yielders that you want to be reaching for.

For example, the Guggenheim Global Dividend Opportunities Index ETF (NYSEARCA:LVL) is offering a 7.6% dividend yield. The ETF has been offering a 5%-plus yield for five years. But investors haven’t been rewarded by this high-yield ETF in the past.

Consider the PowerShares Dividend Achievers ETF (NYSEARCA:PFM), which pays just a 2.4% dividend yield. That doesn’t seem like much, but dividend achievers have been upping their dividends for 10 years or more. And the PowerShares Dividend Achievers ETF has been outperforming that same high-yielding Guggenheim ETF for the last five years.

The PowerShares Dividend Achievers ETF has posted a 67% return on a total return basis (price appreciation and dividends) for the last five years, while the Guggenheim Global Dividend ETF is down 11%.

With that, the best bet for income seekers might be stocks that aren’t high yielding, but have a history of upping their dividends.

The Dividend Achievers

That brings me back to the dividend achievers. There’s a set of 19 companies that have been upping their annual dividends for 50 years or more – quite a record. Let’s start with 14 of the dividend achievers:

First up is ATM manufacturer Diebold (NYSE: DBD), which has upped its dividend for 61 straight years and is paying a 3.6% dividend yield.

American States Water (NYSE: AWR), pays a 2.3% dividend yield and has upped its dividend for 60 straight years.

Northwest Natural Gas (NYSE: NWN) has been upping its dividend for 59 years and is paying a 4.2% dividend yield.

Procter & Gamble (NYSE: PG) is the mega-cap consumer products company that’s paying a 3.8% dividend yield. It’s upped its dividend for 58 years.

Vectren Corp. (NYSE: VVC) is a utility company offering a 3.8% dividend yield. It has upped its annual dividend for 55 years.

Cincinnati Financial (NASDAQ: CINF), a property and casualty insurance player, has upped its dividend for 54 years and pays a 3.5% dividend yield.

Coca-Cola (NYSE: KO), the beverage giant, has upped its dividend of 52 years and pays a 3.4% dividend yield

Johnson & Johnson (NYSE: JNJ) is another consumer products company that offers a 3.2% dividend yield and has upped its dividend for 52 years.

Lowe’s (NYSE: LOW), the home improvement retail giant, has upped its dividend for 52 straight years and is offering a 1.6% dividend yield.

Lancaster Colony Corp. (NASDAQ: LANC), a food products company, pays a 1.9% dividend yield and has upped its dividend for 52 straight years.

Illinois Tool Works (NYSE: ITW) has upped its dividend payment for 51 consecutive years and pays out a 2.6% dividend yield.

Colgate-Palmolive (NYSE: CL) is paying a 2.4% dividend yield and is another consumer products company on the list. It’s upped its dividend for 51 straight years.

Nordson Corp. (NASDAQ: NDSN), a dispensing equipment company, pays a 1.5% dividend yield and has upped its dividend for 51 straight years

Clarcor Inc. (NYSE: CLC), a filtration systems manufacturer, has upped its dividend for 50 years and pays a 1.7% dividend yield.

The Top 5

Now for the good stuff. Here are the top five dividend achievers:

No. 1 Dividend Achiever: Dover Corp. (NYSE:DOV)

Dover is paying a 2.8% dividend yield and has a 59-year streak of dividend increases. It’s a manufacturer of industrial products, but shares are down 27% over the last year. This comes as a quarter of its business is tied to the troubled oil and gas industry.

Yet, the stock is enticingly cheap, with a price-earnings ratio of less than 15. It still has one of the strongest profit margins, coming in at over 17%.

No. 2 Dividend Achiever: Genuine Parts (NYSE:GPC)

Genuine Parts offers a 3% dividend yield and has upped its dividend payment for 58 years. It’s a wholesale distributor of auto parts which should benefit from the rising age of cars on the road. Its approximately 1,100 NAPA Auto Parts stores generate the bulk of its auto profits.

It’s quite a solid business which has generated free cash for decades. In fact, Genuine Parts generates one of the strongest returns on invested capital among our dividend achievers, coming in at 17.5%. It also has one of the strongest balance sheets, with a debt-to-equity ratio that’s just 26%.

No. 3 Dividend Achiever: Emerson Electric (NYSE:EMR)

Emerson Electric pays a juicy 4.2% dividend yield and has upped its dividend for a cool 58 years. The company designs technology for various industrial customers.

Shares are down 25% year-to-date, given the fact that it generates about 40% of its revenues from the oil and gas business. However, it trades at the lowest P/E ratio of our 19 dividend achievers, coming in at 12.5.

No. 4 Dividend Achiever: Parker Hannifin Corp. (NYSE:PH)

Parker Hannifin is another cheap dividend achiever, trading at less than 15 times earnings.

As a manufacturer of motion and control technologies, it’s relatively under the radar. It has a 55-year streak of consecutive dividend increases and offers a 2.5% dividend yield.

Parker Hannifin has a wide distribution network and over 12,000 Parker stores, giving it a strong economic moat. It also has engineers in the field, providing an edge when it comes to offering maintenance and repairs to industrial distributors.

No. 5 Dividend Achiever: 3M Co. (NYSE:MMM)

The $87 billion company needs no introduction. It’s a diversified products company operating in the health care, industrial, office and electronics industries. However, over half its revenues are from high-margin consumables, which gives it an edge over other industrial companies.

It has upped its dividend for 56 years and offers investors a 2.9% dividend yield. And 3M has one of the highest returns on invested capital on our list of dividend achievers, coming in at over 25%.

All 19 of the dividend achievers that have been upping their dividends for more than 50 years have a great track record of rewarding shareholders. It’s a record that’s often overlooked and overshadowed by higher-yielding stocks.

This article is brought to you courtesy of Marshall Hargrave from Wyatt Research.


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