Stocks had a good year in 2012 even though the economic fundamentals were mediocre. Dow Jones Industrials rose 7.3%, but finished the year slipping and sliding from the highs in October, largely because of confusion about going over the fiscal cliff and where that would take the US economy. While recovering from the recession, the economy is stumbling and high unemployment remains a major concern of the Federal Reserve.
Capital appreciation in 2013 is uncertain because little is known how tax changes and budget cuts will affect the economy. Dividends with higher reliability are the other ingredients for growing wealth. Dividend Aristocrats are the best stocks for dividends, having raised annual dividends for a minimum of the prior 25 years. Increases in 2013 and beyond should continue because of strong business fundamentals.
Below are 12 Dividend Aristocrats with attractive yields. They will be raising dividends in 2013 and for many more years.
(1) AT&T (T) is descended from the original telephone company founded in 1883. It is a leader in mobile broadband and emerging 4G capabilities offering the most wireless phones around the world along with advanced TV services. The stock provides a yield of 5.1% and the annual dividend has been increased for the last 29 years.
(2) HCP, Inc. (HCP) is a REIT that invests primarily in healthcare real estate, including senior housing and related facilities. Its leverage is conservative with a high credit rating, levered at 40% debt and 60% equity. The annual dividend was increased for the last 28 years and its yield is 4.4%.
(3) Leggett & Platt (LEG) sells components for bedding, furniture and automotive seat support. It has been recovering from the recession, which hurt EPS but earnings are recovering. Weak businesses were sold, paying for an aggressive stock buyback program and modest dividend increases. The stock yields 4.2% and the annual dividend has increased for the last 42 years.
(4) Sysco (SYY) is the global leader in marketing and distributing food products to restaurants, healthcare and educational facilities and hospitality businesses. It has been increasing the annual dividend for the last 44 years and offers a 3.5% yield.
(5) Clorox (CLX) sells a variety of household products around the world such as Clorox bleach, Armor All, STP, Kingsford, Hidden Valley, Brita and Glad bags. It has been increasing the annual dividend for 36 years and yields 3.5%.
(6) Johnson & Johnson (JNJ) ranks as the world's largest and most diverse healthcare company with more than 250 operating companies. It is expanding in the BRIC countries: Brazil, Russia, India and China. JNJ has maintained its AAA credit rating. Its streak of higher annual dividends is 51 years and the yield is 3.5%.
(7) Kimberly-Clark (KMB) is a paper company with popular brands such as: Kleenex, Scott, Huggies, Pull-Ups and Kotex. These brands typically hold #1 or #2 share positions in more than 80 countries. The stock has been increasing the annual dividends for 41 consecutive years and yields 3.4%.
(8) McDonald's (MCD) restaurants are familiar to consumers around the globe. It is committed to global expansion with the greatest growth expected in Asia. The stock offers one of the highest yields in MCD history. The dividend has been increased annually since its IPO in 1976 and yields 3.4%.
(9) Procter & Gamble (PG) consumer packaged goods are purchased more than 40 billion times a year across the world. Dividends have increased annually for the last 57 years at a compounded average rate of 9.5% and the stock yields 3.3%.
(10) Emerson Electric (EMR) is a diversified worldwide technology company that supplies engineering services and solutions to industrial, commercial and consumer markets. The dividend has increased at a compound annual rate of 11% since 1956 (an unusually impressive record), providing a 3.0% yield.
Additionally, I'm partial to 2 stocks I've owned for more than a decade. They demonstrate how increasing dividends, reinvested dividends and higher stock prices increase the worth of investments - the definition of successful investing.
(11) Coca-Cola (KO), the largest provider of non-alcoholic beverages, business is split into sparkling beverages (carbonated) and still beverages (Minute Maid, Dasani and vitaminwater). This is the 51st year of dividend increases and the stock yields 2.7%. The dividend was 44¢ in 2003 and should be raised to $1.08 next month. The stock rose almost 70% in 10 years.
(12) VF Corp. (VFC) is the largest apparel manufacturer in the world. In the last decade, it switched emphasis from traditional brands (Wrangler and Lee jeans) to casual branded lines such as: Vans, The North Face and Timberland. The dividend has been increased for the last 41 years and the stock yields 2.3%. In 2006 VFC jumped the dividend. In 2007 it was $2.23 and increased to an annual rate of $3.48 in Q4 2012. The stock quadrupled in 10 years.
Stocks began the new year with a surge despite growing uncertainty over what fiscal cliff legislation will bring in 2013. Higher Social Security taxes will reduce take home pay, Congress must raise the federal debt ceiling (which already has been reached) next month and federal budget cuts will take effect in March. Analysts are lowering GDP estimates for the first half of 2013. However, companies with outstanding records of increasing dividends will extend their streaks and reward shareholders in 2013 and beyond. A bonus is higher dividends lead to higher stock prices.