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When it comes to preparing for retirement, one of the most important factors to consider is how to replace one's income. Living off of the proceeds of one's own capital often requires a proper investment strategy and the foresight to put it to work as early as possible. Yet while saving money in a bank often entails an element of a fixed principal amount, the same can not be said about the stock market. Investments fluctuate in value, as can their income components, which are found in dividend payments.

For this reason, finding companies that have illustrated their ability to steadily increase their dividends over the course of decades can often serve as a convincing indicator of their overall stability. Not only does this factor help the investor in a practical manner by protecting them against the woes of inflation, but such a trend also demonstrates that the company can perform over the course of an extended time period. As a result, these companies themselves also tend to trade with a steady incline and with limited volatility.

The following companies represent a diversified selection of five such names that have exhibited dividend growth over the past two decades and longer. They were chosen based on the following criteria. Each of these companies carries a market capitalization in excess of $5 billion. Each of these companies also has a reputation as a leader in their respective industry. Above all, each of these companies has had multiple decades of dividend payments in order to provide a historical basis for performance to which they can be held accountable. While I have chosen these five companies below in order to provide a well-rounded basis for any given income portfolio, it is by no means a comprehensive list. Investors should keep in mind industry diversification in their selections while also paying attention to a steady upward trend in historical dividend rates. Companies that have cut their dividends in times of crisis (including the latest recession) should be held with a more skeptical eye.

The five companies below have all continued to raise their dividends, even throughout the latest recession. The following price chart (shown with the generally accepted time of the latest recession in gray) proves that these companies has performed with relative upwards stability, as stated in my thoughts above. They each operate in unique sectors of the economy to provide investors with another layer of risk protection through market diversification. Above all, each of these companies has steadily increased its dividends every year for at least two decades, as seen in the dividend history charts shown further below. All values were taken as of December 9, 2012.

PG Chart

PG data by YCharts

Procter & Gamble Co. (NYSE:PG)

The company provides consumer packaged goods for domestic markets and around the world. P&G's self-proclaimed five core strengths are Consumer Understanding, Scale, Go-to-Market Capabilities, Brand-Building, and Innovation. Some of the company's largest brands include Crest, Old Spice, Tampax, Charmin, Dawn, Tide, and Pepto-Bismol. The company currently trades at a forward price-to-earnings ratio of 16.35, a price-to-book ratio of 3.03, and a current ratio of 0.97. The stock yields a forward dividend of 3.2% with a rate of $2.25. The company has been raising its dividend since 1957.

General Dynamics Corporation. (NYSE:GD)

General Dynamics is a large aerospace and defense company whose expertise largely addresses the armed forces. The company designs and manufactures combat vehicles, weapon systems, and munitions. General Dynamics has also developed as a leader in commercial aviation, marine systems, and information technology, and its origins date back to 1952. The company carries a market capitalization of $23.7 billion and a forward price-to-earnings ratio of 9.18. General Dynamics now supports an annual yield of 3.0% with a quarterly rate of $0.51 per share. The company has been raising its dividend since 1992.

Genuine Parts Company (NYSE:GPC)

Genuine Parts Company is a business engaged in the distribution of automotive replacement parts, industrial replacement parts, office products, and electrical and electronic materials. The company was founded in 1928 and has since expanded into a large network of over 2,000 operations throughout North America. Genuine Parts Company currently supports a market capitalization of $9.94 billion and a reasonable forward P/E ratio of 14.79. The company offers a forward annual dividend of 3.1% with a quarterly rate of $0.495. The company maintains a respectable payout ratio of 49% and has been raising its dividend since 1957.

Walgreen Co. (WAG)

As the operator of nearly 8,000 drugstores in the United States, Walgreen operates as a local provider of prescription and non-prescription drugs. The company was founded in 1901, and now maintains a presence throughout all 50 states as well as Puerto Rico. Walgreen currently supports a market capitalization of $34.08 billion and a below-average forward price-to-earnings ratio of 10.00. The company offers a forward annual dividend of 3.0% with a quarterly rate of $0.275. Walgreen maintains a comfortable payout ratio of 39% and has been raising its dividend since 1976.

The Coca-Cola Company (NYSE:KO)

The Coca-Cola Company engages in the manufacturing, marketing and selling of nonalcoholic beverages around the world. The company's popular brands include names such as Coca-Cola, Sprite, Fanta, Minute Maid, Powerade, and vitaminwater. The company now employs 146,200 employees around the world, offers over 3,500 beverage products, sells its products in over 200 countries, and has been in business for over 126 years. The Coca-Cola Company currently supports a market capitalization of $169.14 billion and a reasonable forward P/E ratio of 17.22. The company offers a forward annual dividend of 2.7% with a quarterly rate of $0.255. The company maintains a respectable payout ratio of 52% and has been raising its dividend since 1963.

(click to enlarge)

Company NameMkt. Cap.BetaIndustry2002 Qtr. Div Rate2012 Qtr. Div Rate
Procter & Gamble Co.$192.19 Billion0.23Personal Products$0.205$0.562
General Dynamics Corp.$23.72 Billion1.24Aerospace & Defense$0.15$0.51
Genuine Parts Company$9.94 Billion0.66Auto Parts$0.29$0.495
Walgreen Co.$34.08 Billion1.22Drug Stores$0.038$0.275
The Coca-Cola Company$169.14 Billion0.38Beverages$0.10$0.255

A quick look of the above portfolio illustrates the significant advantages of dividend growth. The average beta of these five companies comes out to 0.75, suggesting that it will experience less volatility than the market average, represented by a value of 1. Additionally, over the last 10 years, the average portfolio value has grown by 67.4% when looking only at company stock prices. However, the most important factor of this portfolio lies in the fact that these companies have all significantly increased their income components, as seen in the table above. When taken together, these dividend growth companies appear advantageous for investors preparing for retirement.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.